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An Overview Of Bankruptcy In Minnesota

In a time where millions of jobs have been lost and people are all too often left dealing with life's financial challenges on their own, the Bankruptcy Code provides a safety net. By providing immediate protection from creditors and the ability to discharge debts, bankruptcy helps people get on with their lives and enables some businesses to survive in overwhelmingly tough economic conditions.

What is Bankruptcy?

Bankruptcy is a court proceeding designed to protect people. At its core, filing for bankruptcy protection provides two main benefits:

  1. Immediate protection from creditors and collection activity; and
  2. The ability to discharge or restructure debts.

Immediate Protection From Creditors

When a person (or business) files bankruptcy, he or she is afforded immediate protection by a court order known as the Automatic Stay. As the name implies, the order goes into effect immediately and automatically upon filing. In many cases, the automatic stay in bankruptcy can help stop collection efforts on judgments (including garnishments and levies), repossessions, and foreclosures. Bankruptcy can also help eliminate credit card bills, medical bills, and many other dischargeable debts.

Discharge Or Restructuring Of Debts

Most people who file for bankruptcy protection in Minnesota do so under chapter 7 or chapter 13 of the Bankruptcy Code and receive a discharge of their debts before the end of their case. In a chapter 7 bankruptcy the discharge is usually obtained about 100 days (a little over three months) after filing, while in a chapter 13 the discharge may be delayed 36 to 60 months after filing. The bankruptcy discharge usually eliminates unsecured debts such as credit cards, medical bills, and personal loans. It may also be used to eliminate certain taxes and the personal liability on secured debts such as home mortgages or vehicle loans.

Individuals may also be able to use a chapter 13 bankruptcy to catch up on late payments for their homes or other real estate and vehicle payments. They may also be able to force a repayment plan of tax debt that may not otherwise be discharged.

Businesses that file for bankruptcy protection usually file under chapter 11 of the Bankruptcy Code to restructure or eliminate debt in order to maximize value for the estate. They usually propose a chapter 11 plan and must complete it to receive a discharge.

How Do You File Bankruptcy?

The first step in filing bankruptcy is to determine whether bankruptcy makes sense for you. Understanding how bankruptcy may help you and consulting an experienced bankruptcy attorney to discuss your situation and goals, and answer your questions, are essential steps in making that determination.

If you're ready to discuss your situation with one of our bankruptcy attorneys, please use our contact page, click the 'Schedule' button, or submit your information for review to see if you qualify. To read more about how bankruptcy can help you, click the 'Next Article' button.


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