If you’re facing a large amount of debt and unable to make payments each month on those debts without severely compromising your quality of life, you may want to consider filing for bankruptcy. Chapter 7 bankruptcy is the most commonly filed case for individual consumers. In fact, there were over 400,000 non-business Chapter 7 bankruptcy cases filed in 2017. If you are considering filing for Chapter 7 bankruptcy in Redwood Falls, MN, Behm Law Group, Ltd. can help you put together a strong case that will provide long-term debt relief.
Chapter 7 bankruptcy works as a liquidation process. You will have to provide all your financial information including debts, income, and properties to the bankruptcy trustee assigned to oversee your case. The trustee will then liquidate (sell) any non-exempt assets (properties) you have if you cannot claim an exemption on them. You can claim exemption amounts on properties like your home or car and other assets to protect them from liquidation. Once your non-exempt assets have been liquidated, the debts tied to them are discharged along with your unsecured debts such as credit card and medical debt.
There is one other way your secured properties can be treated in Chapter 7 other than with liquidation or exemption. They can be redeemed.
Property redemption essentially means you are buying the property back from your creditor for the value it’s currently worth. This is a beneficial option for filers if they owe a debt on the property larger than its value. By redeeming the property, you may pay less than actually paying back the debt, and you will be able to keep the asset.
The value of the property is either agreed upon by you and your creditor, or, if you disagree, the court holds a valuation hearing. When the value is determined, you have to buy it back by paying one lump sum.
To redeem a property, there are several requirements that must be met. These include:
- The property cannot be of value in the Chapter 7 case. This may mean you exempted it from liquidation or the trustee has determined that it has no value to your bankruptcy estate.
- The property must be a tangible item.
- The property cannot be real estate. It has to be a personal item such as a vehicle or computer – something other than your home or other real estate properties.
- The property cannot be used for business purposes (i.e. if you use your car for onsite jobs).
Redemption is an effective way to reclaim property you owed a debt on that was much higher than its actual value. If you want to own your property debt-free, the Chapter 7 bankruptcy process and redemption is one way to do it.
To learn more about redemption and filing for Chapter 7 bankruptcy in Redwood Falls, MN, contact Behm Law Group, Ltd. at (507) 387-7200 or via email at email@example.com today.