Ok, so you are researching Chapter 7 Bankruptcy and you come across a lot of legalese that is confusing and long. You say, why can’t anyone just explain what a Chapter 7 Bankruptcy is in a few short paragraphs that is easy to read and understand. Well, here we go!
Chapter 7 Bankruptcy is referred to as a “fresh start” bankruptcy. You do not make any payments back to your creditors. Instead, the focus is on your assets. Your assets are either “exempt” (which means protected and you keep them) or “nonexempt” (meaning you lose the assets to the trustee). Now, the trustee in bankruptcy does not want your “nonexempt” assets. They want money. In fact, trustees are required to turn all assets into cash so that the money can be used to pay your creditors.
Say you have 100k in credit card debt. And let’s also assume you own a 20k non-exempt yacht. The trustee will sell the yacht for 20k (or whatever they can get for it on the open market) and use the 20k in proceeds to pay down your debt. In this example, of the 100k in debt, 20k gets paid. Now, you ask, what happens to the other 80k in unsatisfied credit card debt? The 80k in unsatisfied credit card debt gets wiped out, tax free, forever!
Is losing 20k in assets worth getting rid of 80k in debt, tax free? You bet it is. Now, the vast majority of Chapter 7 Bankruptcy cases filed on behalf of Mankato, MN residents are no asset cases. This means that the vast majority of people lose no assets to a trustee in bankruptcy and their liability on their debt is eliminated, tax free.
CONCLUSION
When the time is right, or when you are ready, reach out to Minnesota’s LARGEST bankruptcy law firm at www.kainscott.com. You will be so happy you did!
