Filing for bankruptcy in Minnesota could be the first step on your path to a financial fresh start. However, the exact steps along that path will depend on a few factors including the type of bankruptcy proceeding you have selected.
The moment you file your bankruptcy petition, the legal protection provided by the bankruptcy code take immediate effect. Obtaining permanent relief from your debt requires an ongoing effort by you and your legal counsel. To get started, contact the bankruptcy attorneys at Kain & Scott today.
The Automatic Bankruptcy Stay
One of the most important benefits under the bankruptcy code goes into effect the moment you file your petition. In most cases, the automatic bankruptcy stay prevents your creditors from pursuing you during the course of your bankruptcy.
The stay goes into effect automatically, and can be enforced as soon as your creditors receive notification of the filing. Once notified, your creditors are barred from suing you or even contacting you about your debt. Any active lawsuits are paused and garnishments are halted. The violation of the automatic stay carries steep penalties, resulting in most creditors immediately complying. The automatic stay can dramatically reduce the stress you are facing on day one.
Filing Lists and Schedules
The bankruptcy petition is only the first step of the process. There are many other documents you must also file along with the petition or shortly afterwards. These documents are known as lists and schedules.
The lists and schedules associated with your bankruptcy petition will give the trustee and courts a clearer picture of the state of your finances. This will also include a list of your creditors along with their contact information, allowing the court to notify them of the filing.
Your schedules will also outline all of your assets and liabilities beyond the information contained in your petition. These schedules must be accurate, as they will be used by the Trustee and the court throughout the process.
The Meeting of Creditors
No matter the type of bankruptcy you pursue, you will be required to attend a meeting of creditors early on in the process. The meeting of creditors—also known as 341 hearing—is an informal meeting outside of bankruptcy court proceedings. Despite the name, the chances are good that your creditors will not send a representative.
Most of the time, the meeting of creditors will involve only two parties: you (and your attorney) and the U.S. Trustee. The trustee will not only oversee the meeting but also provide you formal notice of its time and location.
The meeting of creditors is the trustee’s opportunity to ask questions that were not answered by your petition. They could use this meeting to clear up any misconceptions about your assets or liabilities. This meeting is also used by the trustee to identify any potential assets that were not included in the bankruptcy. The trustee is charged with investigating fraud, and the meeting of creditors could be used for that purpose.
In most cases, the meeting of creditors is short and informal. Additionally, the presence of your attorney could ensure that you are treated fairly.
What Happens to your Property?
What becomes of your personal and real property will depend in part on the type of bankruptcy you pursue. One factor that pushes some people away from bankruptcy is the fear of losing their belongings. While some types of bankruptcy could lead to the liquidation of some of your assets, there are a number of exceptions that will protect much of what you own.
In a Chapter 7 bankruptcy, you may be required to sell some of your belongings. However, there are many exceptions under the law that will exempt certain property. Examples include your home, your vehicle, your clothes, and family keepsakes.
In a Chapter 13 bankruptcy, you will not be forced to liquidate your assets. However, you will need to come up with a plan for things you own that are secured by debt. You must either develop a plan to reorganize your debts or surrender your assets you cannot afford.
Discuss the Bankruptcy Process with an Attorney
Only an experienced attorney can provide you with a thorough understanding of the bankruptcy process. To learn more, schedule your free consultation with Kain & Scott today.
