Here are the answers to a few common Bankruptcy Questions MN.
How are Chapter 7 bankruptcy and Chapter 13 bankruptcy different? Chapter 7 bankruptcy is a liquidation of assets. In Chapter 7, all assets with limited exceptions for personal necessities are placed into an estate and sold off with the proceeds going to the creditors. Chapter 13 bankruptcy is reorganization. In Chapter13, the debtor, with the assistance of the court, enters into a plan of making payments for a term of years with their creditors that may be for less than the original debt.
Who is eligible to file for Chapter 7 bankruptcy? Chapter 7 bankruptcy is available to every person with the exception of those who have recently been involved in other bankruptcy proceedings.
Who is eligible to file for Chapter 13 bankruptcy? Chapter 13 bankruptcy requires a regular source of income that is adequate to make payments under a payment plan. The court has some discretion in determining this amount and creditors can challenge a Chapter 13 filing.
Do I need an attorney to file for bankruptcy? There is no legal requirement to have an attorney during bankruptcy proceedings, however it is recommended to consider retaining one has bankruptcy involves giving up important legal rights and could have long term consequences for credit reports and certain jobs.
What information is required to file for bankruptcy? A debtor will be required to submit detailed financial statements to the court. This will include a list of all assets, expenses, and sources of income. If the debtor is married, spousal information will be required whether or not the spouse is also filing for bankruptcy.
How long does bankruptcy take? The length of time depends on the type of bankruptcy. In a liquidation bankruptcy, the sale of assets will occur a few months after filing and the bankruptcy will be completed shortly thereafter. In a reorganization bankruptcy, the bankruptcy will not be complete until the repayment plan is over or up to five years later.
What happens when a bankruptcy is completed? Following satisfactory completion of the terms of the bankruptcy, the debt is discharged and creditors are no longer allowed to make any collection efforts.
