703 West Saint Germain Street
St Cloud, MN 56301
2299 Waters Drive
Mendota Heights, MN 55120
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612-438-8006
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St Cloud, MN 56301
Mendota Heights, MN 55120
612-438-8006
Kain + Henehan was opened in April of 2021. It’s made up of Bill Kain, who is my business partner. He has practiced bankruptcy since 1982 so he’s got 40 years of bankruptcy experience under his belt. Then I am Margaret Henehan. I’ve been practicing bankruptcy since 2013. Our law firm only does consumer bankruptcy so we don’t work with creditors. We don’t protect creditors rights. We protect consumer rights, people that have debt. This is our only area of practice. You don’t want to hire us for your divorce or your personal injury case. We are just a bankruptcy law firm. Bill and I worked together previous to 2021 at a different bankruptcy law firm and broke off last year to start Kain + Henehan.
I’m a lifelong resident of St. Cloud. I was born and raised there. After I went to law school at the University of Minnesota that I came back to St. Cloud. I came back to my hometown. St. Cloud’s a city of about 75,000 people. There are surrounding communities, Sauk Rapids, Sartell, St. Joseph, Waite Park, Cold Spring that creates a metropolitan area of about 100,000 people or so. St. Cloud is right on the Mississippi River. It’s the reason the city is there. The other reason St. Cloud exists is that we have significant granite deposits surrounding the city. St. Cloud’s nickname is the granite city. The population is fairly diverse now, much more so than when I was growing up. Our diversity is welcomed.
St. Cloud is actually in three different counties. It’s the county seat of Stearns County, which is where most of St. Cloud is located. Parts of St. Cloud are also, that are across the Mississippi River, are in Benton County and Sherburne County. St. Cloud has three different high schools. There’s St. Cloud Tech, St. Cloud Apollo, St. Cloud Cathedral. There’s a state university in St. Cloud, St. Cloud State University. There’s two private colleges just outside of St. Cloud, St. John’s University, College of St. Benedict. There’s technical and community college in St. Cloud. Our educational institutions are big drivers of the economy of St. Cloud.
St. Cloud is also kind of a retail center for outstate central Minnesota so people who are not inclined to travel to the Twin Cities Metro to do their shopping often who live in central Minnesota often come to St. Cloud. I’ve enjoyed living there. I practiced law there for 40 years. I grew up with the folks that I represent. I went to school with them. They’re my friends, a few of my relatives, and so I’ve always enjoyed living there.
Eagan is a suburb of the Twin Cities, specifically of St. Paul. I grew up in St. Paul so I’m very familiar with the Eagan area. My office has been in Eagan for the past three years or so working at a previous law firm in Eagan and now having my office at my newer law firm here in Eagan. We see a lot of clients from the Dakota County suburbs. I get lots of clients from Eagan, Apple Valley, Inver Grove Heights, Rosemount. I get a lot of clients coming from St. Paul, even Minneapolis and the suburbs from Minneapolis is a convenient city to get to. My office is right off of 494 and 35, so two major freeways. It’s pretty easy to find in Eagan.
Yeah, so the two types of bankruptcy that consumers regular people file are Chapter 7 and a Chapter 13. A Chapter 7 is the bankruptcy people are more familiar with. It’s the one that wipes the slate clean. It’s a fresh start. Those are the words you’ll see a lot. It’s the one that’s going to discharge medical bills, credit cards, unsecured loans. It doesn’t take care of tax debt typically. It doesn’t take care of student loans typically. It’s going to really get rid of the unsecured debt. It takes care of utility bills, pass due landlord debts, any type of unsecured debt. The Chapter 7 you have to income qualify for. You’ve got to be under a certain median income for the state of Minnesota in order to qualify for, though it’s quite high at this point for income because there’s high cost of living in Minnesota. For example, a household of one is right around $63,000 you have to earn under that for the annual income. If you are over that income, you qualify then for a Chapter 13 bankruptcy which is the repayment plan bankruptcy. I say it looks like debt consolidation. All your debt goes into a pool. You pay one monthly payment to the trustee and the trustee divides that amongst your creditors. A Chapter 13 is the three-to-five-year payment plan. It’s a great bankruptcy option for people that are behind on their mortgage reviews, who have tax debt. Even if you’re under a certain median income, you always can file a Chapter 13. It’s not just reserved for higher income people. If you’ve got debt that you need to catch up on or you’ve got assets that you would lose in a Chapter 7 then Chapter 13 is a great option.
As a general rule, no, not through your – not through anything that’s disclosed by either our office or the trustee or the court system. If you don’t owe your employer money, your employer does not have to be listed. Can employers find out? I suppose they can. However, there is a very clear section of the bankruptcy code that says that a person who files bankruptcy cannot be discriminated against in employment simply because they filed a bankruptcy case. It’s embarrassing for people to go through this and we understand that. One of the things that people worry about is that everyone will know that they filed, their friends, their relatives, and in this case, employers, but as a rule, no, it’s not going to be publicized. Your employer is not going to be told by anyone in the bankruptcy court system that you filed a bankruptcy case.
You have to be careful as far as your bank accounts are concerned. The first potential problem is if you have a credit union account and you owe the credit union money. When you file a bankruptcy case, the credit union is going to assume that you’re going to cost the credit union a financial loss. If you cost the credit union a financial loss, they have the right to close your account, and they will. The first question is, is there money in a credit union account and the credit union is also a creditor? That does not apply to chartered banks, state banks or federally chartered banks. They can’t, as a matter of course, close your account, even if you owe the bank money.
There’s one bank, and I’ll say it’s Wells Fargo, that’s the name of the bank, that has a policy that if you have $5,000 or more on deposit with Wells Fargo, they will then freeze your bank account until the bankruptcy trustee instructs them to open the account up again. Letting the attorney who’s representing you know where your bank accounts are located, giving accurate information as well as if you owe a credit union money is absolutely important to do this. For the most part, for most people, your bank accounts are untouched if you file a bankruptcy case.
When you file bankruptcy, the idea is that all your creditors are going to be treated fairly. They’re going to be treated the same. You can’t decide to keep one credit card out and continue making payments on it. That’s not fair to the rest of your creditors. They have to be included, too. Really common one is trying to keep the Kohl’s credit card out of the bankruptcy. Everyone wants to keep their Kohl’s credit card and you can’t. You’ve got to throw it in the bankruptcy like everybody else. If you need a credit card at some point in the future post-bankruptcy, I always tell clients you’re eligible for credit again if you want to get a small credit card or a secured credit card post-bankruptcy, but when you file, everyone is treated the same. Everyone goes in the bankruptcy.
Yeah, so I usually tell clients it’s really only people that are going to run your credit report. While bankruptcy is technically public information, it’s really hard to find public information. It’s within the federal court system. Many people know how to search state records, but the federal records are much harder to search. Really, it’s going to be people you authorize to run your credit report. They’ll see the bankruptcy appear there. Employers are not going to find out, your neighbor, your family or friends, unless you tell them, you’re really not going to have that exposure.
Chapter 7 bankruptcy trustee has a duty to administer non-exempt assets in the bankruptcy case. Chapter 7 clients have a duty to completely list the assets that they own. However, if we are complete and correct and accurate in listing the assets that we own and putting value on them, it’s extremely unlikely that a bankruptcy trustee is going to take that next step to actually have somebody take a look. Honesty at the very beginning, being honest, being complete, being accurate will lead to a much better result than not – will lead to a much better result as far as keeping the bankruptcy trustee with some separation. It’ll allow the trustee if you’re accurate in your list of assets, the trustee will administer those assets in cooperation with you where you don’t have to worry about somebody driving by, somebody knocking on your door. There’s no surprise visit. There’s no bankruptcy court police force. You can be assured that if you are being honest in presenting your financial information, you don’t have to worry about that kind of intrusion.
Human nature when somebody is aware of the fact they own an item that is valuable to them, whether or not it’s valuable in the marketplace, there is an instinct that takes over. I don’t want to lose this. How can I keep from losing it? Maybe if I put it in somebody else’s name, that’ll solve that problem, but it doesn’t. It creates more problems. It makes our client look like they’re being dishonest or sneaky. The bankruptcy trustee in a Chapter 7 case has the ability then to sue the person that received the property that they probably thought they were doing a favor to you for. In a Chapter 13, if you do that, again, it’s not advised because you’ve got to pay to the Chapter 13 bankruptcy trustee the value of the asset. It’s better, if you have a non-exempt asset, tie things over with the attorney, decide whether or not in the big scheme of things it’s a good idea to retain the asset, and if it is, you’re putting a price tag on it for you. If you have a non-exempt asset in a Chapter 7 case, you can always buy it back from the trustee if it’s important, but what you can’t do is hide it or transfer it. That gets you into trouble and it can get other people into trouble also.
Yeah, so Chapter 13 is the bankruptcy that stops a foreclosure and allows you to get current on your mortgage again. A Chapter 13 is a really powerful tool. It stops a sheriff’s sale in its tracks. It comes up with a payment plan that allows you to get current on your mortgage again and stay in the home long term. The other type of bankruptcy that stops a foreclose is a Chapter 7. That I usually kind of describe as a Band-Aid where it’s going to stop a foreclosure, but in three months’ time or so when your bankruptcy is over, the foreclosure could be reinstated, a new sheriff’s sale set back up. It’s not a long-term solution. It could buy you time to sell the home or maybe try to look into other options for funding, but to actually stop a foreclosure, stay in the home long term, a Chapter 13 is a really powerful tool to get people back on track with their mortgage or even their Homeowners Association dues.
Yeah, so rebuilding credit after a bankruptcy does a lot to help just getting post-bankruptcy letting time kind of work some of it’s magic, but there are proactive steps you can do to improve your credit faster. Credit reports want to see on time monthly payments. When you have no debt after a bankruptcy, sometimes to improve your credit score, you do have to take out something like a secured credit card, charge your groceries on it every month, pay it in full every month. Something like that can help to show a credit history and rebuild your credit. Student loans are something that are going to continue to report on your credit and so making monthly student loan payments are going to reflect – on time monthly payments are going to reflect on your credit report as well.
Mortgages and car loans are not going to report on your credit after a bankruptcy so you’re not going to get that benefit of having that monthly payment, but I think it works to your advantage because you don’t have this large debt load on your credit report anymore. You don’t have a $200,000 mortgage weighing down your debt-to-income ratio anymore. Even though you don’t get credit for those on time payments for mortgage, for instance, you don’t have this big debt reporting either. You do have to do some work to get back on track with your credit. Usually, I do recommend a secured credit card and then kind of building from there to get your credit score moving again.
The short answer is no. Business bankruptcies can be publicized in one of four newspapers in Minnesota – well, three are in Minnesota and one’s in North Dakota, in Fargo, North Dakota. If there’s a business filing, then it’s possible that the bankruptcy case will appear in the finance section of the newspaper. However, for a consumer, for just a generic, a regular person who files a bankruptcy case, no, those newspapers will not cover that and no smaller city or smaller town local newspaper ever publish bankruptcy filings.
This is one of the most frequent questions I get is, is it going to work? Is it going to get approved by the court? I say I think we’ve got probably a 99% track record of bankruptcies getting approved. It’s because the bankruptcy court has this default that everyone’s bankruptcy is going to go through unless really fraud is found. For most of my clients, there’s no fraudulent debt incurred. Everyone is filing in good faith. They’re listing their assets. They’re listing all their creditors. Therefore, bankruptcies usually go through quite smoothly. When we see a bankruptcy not make it to discharge, it’s when there’s actions a client has taken to conceal assets, fraudulently take out debt, something that is a big red flag that we usually don’t see. For almost all of my clients, a bankruptcy is going to get approved, go through, all the way to discharge.
Yeah, so one of the most important questions we ask as attorneys is what are your assets. We’ve got to figure out, do you own real estate? Is your name on anyone else’s real estate? Is someone else driving a car under your name? Because we have to make sure that you have assets that we can protect. Because when we do a Chapter 7 bankruptcy, we are more limited in the assets that everyone can keep. You can keep equity in your house, but you probably aren’t going to be able to keep your cabin if it has any equity in it. There are limited assets in a Chapter 7 that we would have to make sure are protected if you do that type of bankruptcy. If you have other types of things, a second property, multiple vehicles, a boat, that’s when maybe we have to look at a Chapter 13 bankruptcy which allows you to keep all your assets, but it’s a payment plan. Depending on people’s assets, we want to make sure that you aren’t losing your assets, but we’ve got to pick the right bankruptcy for you.
Yes, so credit cards close as part of a bankruptcy getting filed. Even if you have a zero-balance credit card, most likely that is going to close, too. Any balance owed on a credit card is going into the bankruptcy and is going to be discharged as part of the bankruptcy and then any credit card that has a zero balance is also going to close. It is going to wipe the slate completely clean for you to start over with.
Yeah, so this is kind of interesting. There’s no set amount with the court. You could file bankruptcy and only owe $2,000. Now, no one’s going to do that because it’s a bankruptcy and that’s not a lot of money. You could come up with that money usually to pay your debts. Usually, I want to see someone that has more than $10,000 in debt, but it really depends for everyone. I mean, if you make $15 an hour and you’ve got kids and you’ve got $8,000 worth of debt, that can be just as insurmountable to someone who has $50,000 in debt and makes better money. There really isn’t a set amount to file bankruptcy. What I like to see is somewhere right around that $10,000 number and higher that we’re discharging, so medical bills, credit cards, personal loans, unsecured debt that we can get rid of in a bankruptcy, we want to see at least $10,000 or so, but right around that number, depending on if people are lower income, more dependance, it’s a fluctuating number.
Yeah, so a Chapter 7 bankruptcy from filing to discharge takes around three months or so. It’s a fairly quick court proceeding. I mean, just from filing to discharge, you’re going from having debt you can’t pay to having the slate wiped clean. A Chapter 7 is a quick court proceeding to get back on with your life. A Chapter 13 is the payment plan bankruptcy. It’s going to take longer. It takes between three to five years depending on what your payment plan is set up to be. A Chapter 7 that just wipes the debt clean takes about three months or so with the court.
The process to file bankruptcy through our office is to set up a free consultation at the beginning. That can be done in-person, over the phone, or via Zoom. At that consultation, we’re going to go through income, assets, debt, we’re going to figure out if a bankruptcy is the right option, and then we’re going to figure out if it’s a Chapter 7 or Chapter 13 bankruptcy. From that jumping off point, if a bankruptcy is the right option, the client will then be sent a checklist of documents to gather, things that are pretty easy to get their hands on. There are things like their paystubs, tax returns, statements on the credit cards or whatever type of debt they have, then once we have the documents all gathered, the client is going to have a second meeting with our office. Again, that meeting can be in-person, over Zoom. I don’t like to do them over the phone because this is a longer meeting. I like to be able to sit down and at least see you to do the second meeting because this is when we’re doing the bankruptcy paperwork.
The bankruptcy paperwork is about 60 pages of paperwork. It’s the petition and the schedules and we’re building those out together. We’re going through the information you gathered and we’re putting it all together in the paperwork. You sign off on the paperwork at that appointment and then usually within a couple of days your case is filed. That’s when I always tell clients that’s when the wall goes up between you and your creditors. No one can contact you anymore. No one can call, write you letters, try to collect, take money out of your bank accounts. Everything stops at that point. No further lawsuits, everything goes through me and my office. That is when the bankruptcy is officially filed with the court. Then depending on what type of bankruptcy, if it’s a Chapter 7, it’s about 90 more days that the case is open until discharge, Chapter 13 is the three-to-five-year payment plan.
Then after the case is filed, there’s one meeting of creditors that everyone has to attend. It’s your one appearance in court, even though it’s not really court. It’s a meeting with the trustee and the trustee is someone who is overseeing your case, making sure you’ve listed all your assets, making sure you’ve listed all your creditors. At this point, this meeting of creditors is taking place over phone or over Zoom. The courthouses have not opened back up to do these meetings in-person due to the pandemic. I don’t think we’re going to see them open back up. I think we’re going to continue to see them via Zoom or phone, which I think is really convenient for clients. People have had to drive depending on where they live into the Twin Cities oftentimes to do these meetings. You don’t have to pay for parking, try to figure out downtown Minneapolis or downtown St. Paul. The meeting can just be done at home, at work.
It takes about ten minutes, just a series of yes, no questions. That’s really the only appearance you have to make. Then depending on what type of bankruptcy, a Chapter 7, there’s really not much work to do after that meeting. It’s really just waiting for discharge. Chapter 13, you’re making your monthly payments every month and there’s not too much more to do after the meeting in a Chapter 13 either besides just making your payments.
Yeah, so a Chapter 7 is going to report on your credit for ten years. It’s a long time. It doesn’t have an effect for the ten years it’s reporting. I usually say it has an effect for about two years or so. That is going to be a period when you’re going to see higher interest rates when you do go to do lending. The longer you can wait to do lending after a bankruptcy, financing a vehicle, a mortgage, taking out a credit card, the lower your interest rate is going to be. For a Chapter 7, it’s going to be reporting for ten years. For a Chapter 13, because you’re making payments, it doesn’t report as long. It reports for seven years for a Chapter 13. For most people, they’re in a Chapter 13 for five years. It’s really just two additional years post-bankruptcy that it’s going to report on credit.
No, you don’t have that choice. One of the theories of bankruptcy is that everyone is going to be treated the same. If you’re in a situation where you know you’re going to pay the debt no matter what – by the way, there’s nothing wrong with that. You can pay your creditors after you’ve filed a bankruptcy case, but one of the questions that the trustee will ask you if you file a bankruptcy case when you meet with the trustee is, did you list all of your creditors? That’s literally what it means. The trustee needs to see the complete picture of your finances, how much money you owe and what kind of assets you have. Again, complete disclosure of accurate information is critical to having a successful trip through this process.
We look at a number of factors. We need to know what kind of assets the client owns, what kind of debt the client owes. Some assets are easy to protect, household goods, furnishings, a vehicle that doesn’t have a lot of value, your home, those assets, equity in your home, those assets are pretty easy to protect in a bankruptcy case. You might have some other assets that are important that you – that are not protected in a bankruptcy case, and specifically a Chapter 7. In a Chapter 7 bankruptcy case, if you have recreational vehicles, if you have some cash accounts with balances in them, you could have trouble protecting those. Whereas an asset may not be protected in Chapter 7, it can be protected in Chapter 13. That’s one thing we look at, what kind of assets do you own, what kind of debt do you have.
Some kinds of debts are very efficiently discharged in Chapter 7, credit card debt, medical bills, unsecured debt, pretty easy to discharge. There are some debts that are harder to discharge. If you’re behind on a tax account, if you owe back child support or alimony, those debts aren’t going to go away if you file a Chapter 7, but if you file a Chapter 13, they can be discharged. We look at assets. We look at debts. Then the other thing that we look at is income because bankruptcy has a means test in it that if you’re above the median income for a household of your size in the state where you live and you apply the means test to that income, you might have to do a Chapter 13 instead of a Chapter 7. Assets, debt, income are the three big factors we look at.
Surprisingly enough, some income tax obligations can be discharged in a bankruptcy, whether it’s a Chapter 7 or a Chapter 13. There are several requirements. The basic one is that it’s been a while since the tax liability was assessed. For most people, the taxes they owed are going to have to be paid. If you’re in a Chapter 7 bankruptcy case, there isn’t any mechanism or provision for payment of taxes in a Chapter 7. In a Chapter 13, however, you can pay your back taxes without penalty through a three-to-five-year repayment plan. Chapter 13 could be a very useful tool if you owe back taxes.
Yeah, so no one, obviously, sets out to file bankruptcy more than once, but lots of circumstances can lead someone to having to do a second bankruptcy. In a Chapter 7, you can do a bankruptcy every eight years if you did a Chapter 7. There is a timeframe when you do have to wait it out. The other type of bankruptcy is a Chapter 13 and that’s a payment plan bankruptcy. For that, you can file more frequently because you are paying your creditors back something, but for a Chapter 7, you do have to wait it out eight years post filing.
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This is probably one of the biggest myths we have is I will never be able to get lending again after I file bankruptcy. My credit score is going to tank all the way to the very bottom. I won’t be able to purchase a house. I won’t be able to get finance for a vehicle. This is the biggest myth I think surrounding bankruptcy because clients rebound quite quickly after a bankruptcy. Usually, I see credit scores fall between 100 and 150 points when people file bankruptcy. There is that drop, but within a year, two years, people are going to be really close to where they were. If you were in the 700s, you’re going to be back there. If you were in the 600s, you’re going to be back there. You are going to be able to get lending. You are going to be able to get finance for a mortgage. Many of my clients are homeowners just two years or so post-bankruptcy. You’ll get car offers immediately after filing bankruptcy. You’ve got to be a little careful with interest rates and that sort of things, but no, you’re not going to be a piranha in the lending world. You’re going to be able to get back out there and do what you need to do in order to move on with your life.
These files may have chatter, direction, production comments, etc. You want these to be clean and ready to publish, so leave all that out. We only want what’s said directly to the camera in answer to the question. Leave out off-topic stuff. Clean up grammar, make it clean. Name the audio file whatever the question is being answered.
Bill Kain and Margaret Henehan have filed thousands of chapter 7 and chapter 13 cases. We have seen about every twist and turn that can develop in a bankruptcy and we use this experience to guide our clients down the path to getting control of their finances.
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