In most cases of bankruptcy, the individuals or businesses that file are struggling with multiple types of debt. These debts can involve mortgages, credit card debt, tax debts, and even personal loans. If you’re finding it impossible to meet payments on your debts, filing for bankruptcy might be right for you. Behm Law Group, Ltd. can help you decide, based on your own situation, whether you should file for Chapter 13 bankruptcy or Chapter 7 bankruptcy in Fairmont, MN.
If you’re overwhelmed by debts that can be discharged in a successful Chapter 7 case, then liquidation bankruptcy is most likely the best choice. Chapter 7 bankruptcy cases are often most effective when a large portion of your debt types are secured debts.
Secured debts involve property. In short, if you’ve agreed to make payments on a property that you have rented, borrowed, or bought, you have a secured debt on that property. When secured debts are treated in a Chapter 7 case, they’re most beneficial to all parties involved. This is because the debt can be discharged, relieving you of all payment obligations to that debt, and the property asset involved in the debt can be liquidated to repay your creditor. However, even during a Chapter 7 case, there are several ways a secured debt can be handled.
Surrendering Secured Properties
If you choose to surrender your properties involved in a secured debt, you’ll simply return them to your creditor. Under the protection of Chapter 7 bankruptcy, this surrender will remove your creditor’s lien on the property and erase your liability to the loan when the debt is discharged. This is the most common action under Chapter 7 for secured debts.
Redeeming Secured Properties
If you wish to retain the property involved in a secured debt (for example, if you want to keep your car or house), you can choose to redeem it. This requires you to pay your creditor the value they would request for replacing the property without taking the interest you owe on the debt into account. If you owe a large amount more in loan interest than the property itself, this may be a beneficial choice.
Reaffirming Secured Debts
Finally, you may choose to reaffirm a secured debt after your bankruptcy case is concluded. In most cases, this will reinstate your original debt on the property and loan, but you may attempt negotiation with your creditor for a lower debt. This protects creditors from reselling your property at lower costs than you owe, and it allows you to keep your property with an opportunity to negotiate lowered debt obligations.
If you’re considering filing for bankruptcy, you have to choose which type of bankruptcy will be most beneficial given your financial situation. Contact Behm Law Group, Ltd. today for expert legal advice and assistance with Chapter 13 bankruptcy and Chapter 7 bankruptcy in Fairmont, MN.