The idea of bankruptcy for most is a scary proposition. But once you find out how it works, it softens the blow. For me, bankruptcy is a business tool, as Trump would say, to solve a business problem. That is, bankruptcy is a tool, to solve an overwhelming debt problem. Okay, well how does it solve the overwhelming debt problem?
The basic concept behind bankruptcy is this- we need an orderly way to solve an overwhelming debt problem for a business or individual that is fair to creditors too. For example, would it be fair to let one creditor know that debtor is suffering overwhelming debt, so that one creditor gets all debtor’s assets? Of course not. That is why, immediately upon filing a bankruptcy, whether it is a Chapter 7 or a Chapter 13 Bankruptcy, creditors are banned from collecting from debtor, including, but not limited to, taking any of debtor’s assets.
Now, would it make sense, upon filing a bankruptcy, to strip a debtor of all their assets? Of course not, debtor would be on the street and would need assistance form the state for survival. That is why we “exempt” (protect) assets for debtor to carry on with their lives. When an assets is “exempt” creditors cannot take the asset to satisfy their debts. The vast majority of debtors in bankruptcy lose no assets.
At the end of a Chapter 7 or Chapter 13 bankruptcy, whatever debts are not paid, get wiped out or discharged, tax free, forever. In a Chapter 13, creditors receive what debtor has left over after debtor pays his/her reasonable and necessary monthly expenses. Plans range in duration from 3 years minimum to a maximum of 5 years.
When the time is right, or when you are ready, reach out to Minnesota’s highest google reviewed and recommended bankruptcy law firm at www.kainscott.com. You will be glad you did.