Chapter 7 and Chapter 13 Bankruptcy are like different sides of a coin. They are as different as night and day. When most people think about bankruptcy they think about Chapter 7 Bankruptcy. And a lot of people are confused about what a Chapter 13 Bankruptcy is, and is not.

A Chapter 7 Bankruptcy is a bankruptcy where you do not make payments back to your creditors. Your liability for your debt goes away and you don’t make any payments back to your creditors. You say, well what’s the catch because this sounds too good to be true? There really isn’t a catch but the focus in a Chapter 7 Bankruptcy is on your assets. If your assets are all “exempt” that means they cannot be taken by a Chapter 7 trustee and used to satisfy your debts. At the end of a 4 month process, whatever debts don’t get paid off, get wiped out, tax free. The vast majority of Chapter 7 Bankruptcies work just like stated.

A Chapter 7 Bankruptcy is a bankruptcy where your liability on your debts goes away and you do not make payments back to your creditors. Instead, the focus is on your assets not your income. With assets, the question is, are all your assets protected or are some of them not protected and you will lose. Most people who file bankruptcy in St. Cloud, Minnesota have no assets to lose. In other words, all the assets they own they get to keep.

Once you made the decision to file Chapter 7 Bankruptcy, you want to know how long does this process of filing Chapter 7 Bankruptcy take. The answer is approximately 4 months from the time you file the Chapter 7 Bankruptcy until the time you receive your Chapter 7 Bankruptcy discharge. But that is the 2000 foot view of the overall process.

You have decided that it is time to end the nightmare staring at you in the form of debt. You summoned the courage and now you want to plow forward. What do you do now? How do you actually file a Chapter 7 Bankruptcy? This is a great question and one has to use a lot of caution here.

A Chapter 7 Bankruptcy has often been referred to as a “fresh start” bankruptcy or like hitting a “reset” button. The reason for this is in Chapter 7 bankruptcy you do not make payments back to your creditors. Instead, your liability on those debts gets “discharged” and the creditor can no longer collect on those debts, forever.

At Kain & Scott, we pride ourselves on being able to file a bankruptcy case as quick as any other firm in the country, but the reality is that for many situations, you do not have to rush to file for bankruptcy relief. The decision of “when should you file bankruptcy” can be as important as the question “should I file for bankruptcy” in the first place. This is why it helps to go over your most-important concerns the first time you speak with an attorney to set a timeline.

This question is very simple, yet infinitely complicated, and where the law is grey a bankruptcy judge or jury will decide if any of your debts will survive a bankruptcy filing. It is 11 U.S.C. § 523 (see https://kainscott.com/us-bankruptcy-code/chapter-v/ss-ii/code-523) which states which debts will be excepted from discharge, but unfortunately there is a lot of misinformation out there on the internet about what debts you may get rid of (ie discharge) in a bankruptcy filing. The term is called “excepted” because the default rule is everything gets discharged unless there is an exception.

Filing bankruptcy creates a public record of your request for relief, but it does not mean the general public can search and look-up all the information in your bankruptcy filing. In order to look up the information in a bankruptcy, you need an account in the government’s PACER system, and you are charged for searching through this database. So, while technically most of the information in the bankruptcy filing is public, your coworkers and employer often do not have to know about the bankruptcy filing.

Secured debt can sound like a foreign term for a lot of people, but it is in fact quite a simple concept. A secured debt simply means your loan or line of credit is attached to some form of property or asset. Secured debts are commonly used for your home (ie mortgage or home equity line of credit), car and equipment loans, or there are even secured credit cards, where the line of credit is attached to funds already deposited.

What exactly does filing a bankruptcy involve? Well that largely depends on if you choose to have an experienced bankruptcy lawyer do the work for you or not. What the law requires is stated in 11 U.S.C. § 521. (See https://kainscott.com/us-bankruptcy-code/chapter-v/ss-ii/code-521). These are strict requirements which can result in you being denied a discharge in your bankruptcy, and your debt not being eliminated if you do not comply with the requirements.

When a bankruptcy case is filed you are saying to the Court, I have listed everything I own or have an interest in.

I  like to create lists when I am thinking about the positives and negatives of doing something. It could be buying a vehicle or hiring a professional etc. If you are contemplating filing bankruptcy, I would want to know what are the pros and cons of filing bankruptcy.

At Kain & Scott, we know how much courage it takes to reach out to us for help. We know because all of our former clients felt the same way you do now. And yet, what our clients found is that life on the other side of debt is beautiful. Just yesterday, I had a former client of mine call me and thank me. It was touching to hear his story. He told me I was his attorney 4 years ago in a Chapter 7 Bankruptcy. He said he was driving by our office and wanted to call me and thank me again for helping him and his wife get their lives back. He said he and his wife bought a house, bought new vehicles, and their credit scores are great! He said filing bankruptcy was the best thing he ever did and he was so thankful for help in the process.

In my last post, I wrote about issues involving IRAs in bankruptcy cases.  IRAs are a common retirement savings product and Congress and the Bankruptcy Courts have been consistent in giving retirement accounts protection from creditors in bankruptcy cases.

 Chapter 7 Bankruptcy: What is a Chapter 7 Bankruptcy? A Chapter 7 Bankruptcy is frequently referred to as a “fresh start” bankruptcy. The focus in a Chapter 7 Bankruptcy is on your assets. The vast majority of Minnesotans do not lose any assets in Chapter 7 Bankruptcy. Most assets are what we call “exempt” and are not lost to a Chapter 7 trustee. Some assets can be “non-exempt” and those assets get turned over to the estate and liquidated and the proceeds used to pay down your debt. Whatever debt that doesn’t get paid off gets wiped out, tax free, forever. These debts are typically in the nature of credit card debt, unsecured loans, personal guarantees, trade payables etc.