If you are struggling with overwhelming debt as an individual or business owner, filing for Chapter 7 bankruptcy may be the best way to resolve those debts in a government-approved legal process. Chapter 7 is the most frequent type of bankruptcy for both individuals and businesses with extreme debts and low incomes. If you choose to file for Chapter 7 bankruptcy, you can free yourself from a wide range of financial obligations, including anything from credit card debt to past-due medical bills. Behm Law Group, Ltd., offers legal advice and guidance to help you work through the process of filing and to help you understand the workings of bankruptcy code in Owatonna, MN.
Basic information to know about Chapter 7
- To qualify for Chapter 7 bankruptcy, you must pass the Means Test (your income must be lower than the state median for a household of your size or be unbalanced by your debt ratio)
- Chapter 7 bankruptcy code outlines the process of liquidation of assets (selling properties to gain a value that is used to repay your creditors) in exchange for debt discharge (dissolving the debts tied to the properties sold).
- Chapter 7 bankruptcy code also provides some protection for your properties in the form of exemptions (exemptions allot certain amounts you can claim on your home, car, and other properties that protect them from liquidation)
Exemption amounts are determined by federal and state bankruptcy laws, and in Minnesota, you can request state or federal bankruptcy exemptions. If you file for federal bankruptcy exemptions, you can claim Title 11 U.S. government allotted amounts (e.g., you can claim $23,675 on your home as of 2018). If you file for state exemptions, you can claim Minnesota Statute allotted amounts (e.g., $390,000 for your home as of 2018).
In some cases, it will be more beneficial for filers to choose state exemptions because they will typically have more wiggle room and because they can claim additional federal non-bankruptcy exemptions.
Federal non-bankruptcy exemptions cover a wide range of miscellaneous assets you may want to protect in a Chapter 7 liquidation process. These include:
- retirement benefits for military, civil, and foreign service, and pensions for veterans, social security, railroad workers, CIA employees, and Medal of Honor recipients
- death and disability benefits for government employees, longshoremen, and harbor workers as well as war, hazard, death, or risk compensation
- survivor’s benefits for military, court, and lighthouse workers
- miscellaneous benefits ranging from military deposits to savings accounts to certain Native American tribe homesteads
When it comes to filing for Chapter 7 bankruptcy, it can be difficult to navigate through the exemption claiming process and the bankruptcy code as a whole. Contact Behm Law Group, Ltd., at (507) 387-7200 today to learn more about the filing process and bankruptcy code in Owatonna, MN.