If your low income is preventing you from meeting financial obligations like debts and bills, you might benefit from looking into the process of bankruptcy. Bankruptcy is available to individuals who have come into difficult times, whether that means unemployment, sudden medical costs, long-term accumulation of debt, or any combination of circumstances. Unlike other types of debt relief, bankruptcy is a formal legal process with permanent results. This means you will be protected by things like the automatic stay, a trustee, and other provisions of the bankruptcy code. With the additional guidance of a Behm Law Group Ltd. attorney, you can file a strong case for Chapter 7 bankruptcy in Luverne, MN.
Chapter 7 bankruptcy is a liquidation type of bankruptcy. It’s the most commonly filed U.S. chapter for individuals and corporations alike. For those who haven’t filed before, there are often many frequently asked questions (FAQs), including:
- How does it work?
- Chapter 7 bankruptcy works to liquidate your non-exempt property and repay creditors with the value gained from the sale of non-exempt property. Most cases, however, are “no asset” cases where no assets are liquidated by the chapter 7 trustee and all of one’s assets are protected by one’s available bankruptcy exemptions.
- In exchange for this liquidation of non-exempt assets, your debts are discharged and you are permanently released from having to repay them.
- Will I get to keep my house?
- While Chapter 7 bankruptcy liquidates non-exempt properties, the bankruptcy code and Minnesota state law provide an allotment of exemptions you can claim to protect assets from sale.
- This includes the homestead exemption that protects the equity or value you have in your home and other exemptions that can be used to protect the equity or value you have in your car, additional real estate, personal items, or other properties.
- How will it affect my credit?
- While bankruptcy can be extremely beneficial for permanent, long-term debt relief, it will have a negative effect on your credit score.
- Your credit score will improve over time – indeed, it starts to improve the day after you file for bankruptcy relief – and a bankruptcy notation will generally be removed from your credit profile seven to ten years post-filing, although it is sometimes removed much earlier.
- How long does it take?
- Chapter 7 bankruptcy cases are generally closed in about three to six months depending on the case circumstances.
- How do I qualify?
- Individuals who pass the Means Test are eligible for Chapter 7 bankruptcy.
- The Means Test measures income-to-debt ratios against the state median income. If your income is lower than the Minnesota median income of a similar filer with a similar household size, you can qualify for Chapter 7.
- Which debts will be discharged?
- Your unsecured debts, including credit card debt and medical bills, will be discharged.
- Your secured debts that are tied to properties that are liquidated or surrendered will be discharged.
- Your secured debts related to property that you cannot exempt because there is no equity or value, since the amount of debt you may owe exceeds or is equal to the value of the property, will not be discharged if you choose to voluntarily reaffirm (reassume personal liability) the related debts.
- Your priority debts, including most tax debts, child support, and criminal fines, will not be discharged.
- Student loans can be discharged but the process can be very expensive and protracted. A person must actually sue the student loan lender in bankruptcy court, prove undue hardship , as that term is defined and interpreted under 11 U.S.C. §523(a)(8), and ask the bankruptcy court to discharge the student loan debt.
If you want to learn more about how the bankruptcy process will work and how it will affect your life, contact Behm Law Group Ltd. at (507) 387-7200 or via email at stephen@mankatobankruptcy.com for information about Chapter 13 or Chapter 7 bankruptcy in Luverne, MN.
