Filing for bankruptcy brings a lot of relief to thousands of Minnesotans each year. When a person files a personal chapter 7 bankruptcy case, they are afforded a great deal of protection from their creditors and relief from their debts, most of which are completely wiped out forever when they receive their discharge. Up until when a person files a bankruptcy case, they often continue to attempt to pay their creditors as much as they can. Often, it is only when a person realizes that it is futile to continue to pay their debts, and simultaneously afford to pay their other necessary bills, that a person decides to file bankruptcy and stops paying their creditors.  

Filing a chapter 7 bankruptcy is a great way to provide needed financial relief for Minnesotans whom find themselves unable to manage their debts. In a chapter 7 bankruptcy case, the debtor (what you call a person whom files bankruptcy) receives a discharge within 3 to 4 months after filing their case, which eliminates the debtor’s legal liability to pay those debts forever. 

    A chapter 7 bankruptcy is a great and powerful tool that allows people to get rid of huge amounts of debts that they can no longer financially afford to pay. Unlike, in a chapter 13, in which a person pays as much as they can towards their debts in a 3 to 5 year repayment before receiving a discharge of their remaining debts, a person in a chapter 7 bankruptcy case is not required to make payments towards their debts, and typically receives a discharge within 3 to 4 months after filing their case. Any person is allowed to file for chapter 7 bankruptcy so long as they qualify based on their income (the person must have an income that is below the State median income for their family size).  

    A debtor filing a Chapter 7 bankruptcy may keep their tax refunds in certain situations. Whether they can keep their tax refunds and how much they can keep, largely depends on whether their case was filed using state or federal exemption law to protect all of their property. A debtor typically chooses federal exemptions when they have little to no equity in their homestead property. Under federal exemption law, debtors get up to $15,425 to protect miscellaneous property that is not specifically protected under another exemption law.

 If you own an LLC or a corporation, and are thinking about filing for bankruptcy, you may have some questions or concerns regarding whether your business debt will be discharged in a Chapter 7 bankruptcy. By owning an LLC or a corporation, you probably have business debt and personal debt. Business debt is debt that arises from the operation of your business. It is money that you owe from running your business. It is debt that is owed by the business entity, which is separate from the debt owed by you as the owner of the business. Personal debts from running a business can come in the form of taking out loans and incurring credit card debt to pay business expenses. It can also come about when you as the business owner, agree to “personally guarantee” a business loan, which means that you as the owner, agree to be personally responsible for repaying the business loan, in the event the business is unable to pay the loan itself.