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Bankruptcy is a legal proceeding in which a person who cannot pay his or her bills can get a fresh financial start. The right to file for bankruptcy is provided by federal law. Filing bankruptcy immediately stops all of your creditors from seeking to collect debts from you.
A Minnesota bankruptcy filing may make it possible for you to:
- Eliminate the legal obligation to pay most or all of your debts. This is called a "discharge" of debts. It is designed to give you a fresh financial start.
- Stop wage garnishment, creditor phone calls, debt collection harassment, and similar creditor actions to collect a debt.
- Stop foreclosure on your house or mobile home and allow you an opportunity to catch up on missed payments. (Bankruptcy does not, however, automatically eliminate mortgages and other liens on your property without payment.)
- Prevent repossession of a car or other property, or force the creditor to return property even after it has been repossessed.
The answer is "it depends." You are allowed to "exempt" certain property by using exemptions provided by either federal or Minnesota law. When you sit down with an attorney at Jensen Sondrall & Persellin, P.A. we will analyze your situation and make a determination as to what property you might be able to keep and what property you might lose. However, most debtors are able to keep their property, including their home.
What are the different types of bankruptcy?
There are several different types of bankruptcy procedures, however the two most commonly used by consumers are:
- Chapter 7: This is the form of bankruptcy most frequently used by individuals. Under this arrangement, a trustee is appointed to manage your estate. You file a Petition which lists your assets and debts owed to creditors. If you have assets that you can't exempt, they will sell the property to pay off your creditors. At the end of the bankruptcy process you will receive a discharge, releasing you from the debts you listed on your bankruptcy petition. You can keep assets that are exempt either under Federal law or the law of your home state. You cannot repeat this filing for eight years.
- Chapter 13: This form of bankruptcy is designed for an individual debtor who has a regular income and stable job. Under this form of bankruptcy you propose a payment plan to the trustee to pay your debts off over a three-to-five year period and keep your property. At a confirmation hearing, the court either approves or disapproves the plan.
- The other forms of bankruptcy that can be used by individuals include a Chapter 11 reogranization, which is generally targeted to businesses and a Chapter 12, which is generally used by farmers.
If you think you are possibly in need of filing for bankruptcy the first thing you should do it to contact an attorney at Jensen Sondrall & Persellin, P.A. to schedule a meeting. We will sit down and go over your assets and debts and figure out the best route for you to take so that you can get your financial situation under control.
The bankruptcy process can be confusing and complex and is best handled by those with experience. The attorneys at Jensen Sondrall & Persellin, P.A. have experience in this area and can help you with all your questions in regards to bankruptcy.