Chapter 7 Bankruptcy is where you do not make payments back to your creditors. It is for those people who say look, after I pay my reasonable and necessary monthly expenses, I have no money left over to make a payment back to my creditors. And I am not talking about a budget of ramen noodles and watery soup. I am talking about a budget that protects the health and welfare of your family but without any unreasonable or unnecessary expenses. For example, taking a vacation to Hawaii every year is not reasonable and necessary.
The focus in a Chapter 7 Bankruptcy is on debtor’s assets. If debtor’s assets are all exempt, debtor loses no assets. If debtor has some non-exempt assets on the date of filing, those assets are liquidated by a Chapter 7 trustee and the proceeds are used to pay down your debt. Whatever debt that is not satisfied, gets wiped out, tax free, forever.
In a Chapter 13 Bankruptcy, debtors make payments back to their creditors based on what they can afford to pay back after they use whatever monies are reasonable and necessary to feed, clothe, house, protect the health, and transport your family. You do not lose assets in a Chapter 13 Bankruptcy but you must pay back your creditors what they would have received had you filed a Chapter 7 Bankruptcy. That amount becomes the hurdle you must jump in your Chapter 13 Bankruptcy.
Whether you file a Chapter 7 or 13 Bankruptcy, you get substantial relief.
CONCLUSION
When the time is right or when you are ready, reach out to Minnesota’s OLDEST bankruptcy law firm at www.kainscott.com. You will be so glad you did!