If your income is lower than the Minnesota state median or average income, either due to a low-paying job or a level of expenses that outpaces your income, you may qualify for Chapter 7 bankruptcy. This is the most common type of bankruptcy that individual consumers file in the U.S. Its purpose is to wipe out the majority of debts that filers would have to repay. This often includes credit card debts, medical bills, old utility bills, bounced checks, past due rent, personal loans, pay day loans and other debts. Debts that are secured to a property, such as your home or car, will be discharged if that property is repossessed or foreclosed and you do not wish to retain the property. If you’re considering filing for Chapter 7 liquidation bankruptcy in Owatonna, MN, Behm Law Group, Ltd. can help with legal protection and guidance. Our support will play a significant role in getting the most out of the debt discharge awarded to you in the bankruptcy process and protecting your property with the available bankruptcy exemptions. We can also help you work around any creditor objections to discharge that might arise.
Chapter 7 Liquidation Bankruptcy
In Chapter 7 liquidation bankruptcy, the trustee will liquidate (sell or auction) your non-exempt property and divide the sale proceeds among your unsecured creditors. Where your property is collateral for a loan, such as a vehicle loan or a home mortgage, the vehicle lender or mortgage lender would be able to sell the vehicle or house and retire as much of the subject debt as possible. Any debt that is remaining is discharged. Unsecured debts, such as credit cards, medical bills, etc., are discharged as well. You can prevent the liquidation of most or all your property with the available bankruptcy exemptions. In most cases, the available bankruptcy exemptions are more than enough to protect all your property. Learn more about exemptions.
If a debt is scheduled to be discharged, the creditor for that debt might object to the discharge if it believes that you incurred the debt through fraud or misrepresentation. Typically, a creditor will not object to the discharge of a debt unless it’s clear that someone has acted in obvious and excessive bad faith. The creditor bears the burden of proof to show why a debt should not be discharged.
Types of Objections to Discharge
- The debtor owes a debt because of malicious damage. For example, if a renter damaged their apartment purposefully before moving out and owed a debt for repairs to their landlord.
- Excessive charges on a line of credit that were made 90 days prior to filing a bankruptcy case or large cash advances that were taken within 70 days of filing.
- Debts related to damages or death caused while operating a vehicle under the influence of alcohol or drugs.
- They committed some fraudulent action, such as perjury, destroying property or documents, lying to the trustee, or failing to obey a court order.
Creditors can objection to the discharge of a debt in two ways: filing a motion or filing an adversary proceeding. When creditors file a motion to object discharge, they must do so within 60 days of the meeting of creditors. Adversary proceedings work more like an actual lawsuit and also must be filed within 60 days of the meeting of creditors.