What Is Bankruptcy?
Have you found yourself in a monetary situation that you can’t seem to get out of? Are you having problems paying your bills and lowering your debts?
Filing bankruptcy may be the most effective option to solve your problems. It is very important to understand what bankruptcy is and what your options are so that you are prepared to discuss your situation easily with a lawyer who specializes in the process.
A person who is unable to pay off their debts and may even be hounded by collection agencies should think about bankruptcy as a legitimate option. Filing for bankruptcy is a legal process that is initiated through a petition from the debtor to a federal court that outlines the debtor’s assets and documents all of their outstanding debt.
Believe it or not, but bankruptcy is an established and much-used way to stimulate our economy while forgiving our debt at the same time. We are given a second chance to participate in the economy through either forgiveness or repayment of debts that we have accrued up until officially filing.
The entire idea of bankruptcy is to give you the best start available in your new life.
Chapter 7 Bankruptcy
Chapter 7 Bankruptcy is mainly for people with little assets and a somewhat unstable income. Chapter 7 will forgive you for any credit card and medical debt that liquidation of your unsecured assets cannot pay. You will be asked to liquidate all of your nonessential assets. But, what assets are considered nonessential?
Nonessential assets include:
- second homes
- extra vehicles
- expensive artwork/collections
- investments outside of retirement accounts
Many people who file for Chapter 7 bankruptcy have no extra assets to sell, as they may only have their personal vehicles, single home, and no investments to speak of. A means test has been created to determine the level of help that a person may need when they have nothing to liquidate.
The people who pass the means test are considered no-asset cases and qualified debts can be forgiven without payment. They cannot leave you without a roof over your head and basic transportation. Inexpensive clothing, household goods, and personal items used for business will also be left for you.
A Chapter 7 bankruptcy stays on your credit record for 10 years but is usually granted within six months from your petition date. You will then be considered debt-free.
There is another option if you don’t qualify for Chapter 7 debt relief.
Chapter 13 Bankruptcy
Chapter 13 Bankruptcy is mainly for people with intricate assets, disposable income, and a more steady paycheck. Instead of being a full fresh-start, you are given the chance to pay back part of your debt for a certain length of time to increase your credit rating and strengthen your relationship with your creditors.
A credit counselor will work with you and your creditors to come up with a payment plan that is maintainable for you and agreeable to your creditors. You may get to keep much of your property once a plan has been made.
A Chapter 13 bankruptcy will only stay on your record for 7 years and will you will not be considered debt-free until after you complete all payments until the agreed-upon end date.
Filing for Chapter 13 bankruptcy in Minnesota is notoriously intricate and it is essential to ask for guidance before you begin.
What Debts Cannot Be Dissolved Through Bankruptcy?
Student loan debt, in most cases, cannot be forgiven through bankruptcy. Alimony and child support will also not be forgiven.
Tax debts may, or may not, be forgiven depending on certain factors that a knowledgeable bankruptcy attorney can explain to you further.
Where Can I Get More Information?
Walker & Walker Law Offices, PLLC is, by far, the best bankruptcy law firm in the Twin Cities. Contact us online or at 612-824-4357 for a free case evaluation, by phone, online, or in person. Our team of professionals is always here to answer your questions.
We can get you out of debt, stop creditor calls, and help you increase your credit score. Don’t hesitate because you CAN begin again.