Before You File Bankruptcy in Minnesota


The First Legal Steps Creditors Will Take, Before You File Bankruptcy

Debtors who are unable to pay debts are often forced to file for bankruptcy. Often, when a debtor is considering bankruptcy it is because creditors have not only been calling relentlessly, attempting to collect unpaid debts, but are also taking collection a step further and into the legal system.

Debt collectors will often file lawsuits, garnish income and financial accounts, and attach to other property of the debtor.

Restrictions on Debt Collectors

Debt collectors are strictly prohibited from engaging in unethical conduct through enforcement of the Fair Debt Collection Practices Act and Minnesota’s correlating statutes found in Chapter 332 of the 2010 Minnesota Statutes.

There are other restrictions placed on debt collectors found in the Fair Debt Collection Practices Act and Chapter 332 of the Minnesota Statutes as well.

Debt Collectors May be Willing to Work Toward Resolution

When debt collectors and creditors become aware that a person may be forced to file for bankruptcy, they may become more willing to work out an acceptable resolution.

Efforts at acceptable resolution will nearly always be beneficial to the debtor, but they are not always successful.

It may be helpful to understand the steps creditors will take to collect debts when nothing else has been worked out with the debtor. Before creditors can begin garnishment, creditors must initiate an action. Next, they must take steps below. There is more involved after this, but below is an explanation of the first legal actions that will be taken.

Creditors Will Attempt to Obtain a Judgment Against the Debtor

The first step toward collecting a debt owed to a creditor by a debtor is obtaining a judgment against that debtor for the amount the creditor is seeking.

A “judgment” is a final decision by a court.

Once a creditor has a judgment from a court for a certain amount owed, the creditor can begin the process of collecting that amount.

The Creditor Will Docket the Judgment

The creditor must docket the judgment. The court administrator or clerk’s office for the court in which the creditor received the judgment dockets the judgment for the creditor upon request.

A “judgment docket” is a list of judicial orders of a particular court, recorded by the court’s clerk, and available for inspection by the public.

The judgment docket provides the ability for interested parties to learn of the existence of the judgment. Recording a judgment in a judgment docket is considered official notice to all parties of the existence of the judgment.

Note – If you Satisfy the Debt or Make another Agreement the Creditor Must Stop

At any time the debtor satisfies, or pays the judgment, the creditor is obviously no longer permitted to seek collection of that amount – the creditor has already collected.

If the creditor agrees with the debtor to settle the case in some other way, the creditor is also not permitted to seek collection in violation of that agreement.

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