Being in a bad financial situation is typically a precursor for bankruptcy and there are many individuals throughout Minnesota who have been very good candidates for it. Perhaps they have lost their jobs and had to acquire jobs at a lower rate of pay. Then again, some have not been able to find work at all and are still waiting for the opportunity to come about. Divorce, cut hours at work, and many other factors can lead to a person filing Chapter 7 or Chapter 13 bankruptcy in Minnesota.

For several years, the economy has been to blame for the number of bankruptcy filings throughout the Twin Cities and Minnesota.

In the case of one couple, they wanted to declare bankruptcy nearly two years ago. They had not had good job prospects because of the economy. In the 6 years they were together, approximately 5 of those years were spent being unemployed or underemployed. In addition, they have piles of debt. The relationship started with a large mortgage and tens of thousands of dollars in credit card debt. Some of that debt was student loan debt.

They were able to dump the mortgage through a short sale, but they needed to discharge some of their other debts through bankruptcy. The issue is that they were having such a difficult time that the $1,300 they needed to pay their lawyer was almost impossible to pay their attorney. They didn’t want to waste their time filing the petition on their own because they feared they would botch the paperwork.

For the couple, avoiding bankruptcy was not considered a financial victory.

While bankruptcy filings are down, some of it does have to do with the situation this couple is in. Some are too big to fail, while some are simply too broke to file. Bankruptcy filing fees are competitively low in Minneapolis and St. Paul compared to the average around the country.

Then there are those who are not sure they should file. This is because they may see light at the end of the tunnel and believe they can get their debt under control. In the end, they find that they are so far behind on their bills that the wage at their new job or the hours they have gained back at work is not enough.

Those that are waiting are also contributing to the decline in bankruptcy filings.

In the case of the couple needing to file bankruptcy, but they have to wait so they can scrape up the cash, their student loans are going to stay. Right now, student loans are the one kind of student debt that has been rising steadily over the past five years. It is very difficult to discharge student loan debt in bankruptcy. Although the couple will get some relief from bankruptcy, the student loan debt will follow them around.

Fortunately, the both are working. Their finances are still difficult for them to deal with, but they will be able to file bankruptcy and relieve themselves of some of the debt.