What is a Chapter 7 Bankruptcy?
Unlike a Chapter 13 bankruptcy, there is no debt ceiling for individuals or businesses who wish to file Chapter 7 bankruptcy. Whether a single debtor or a company owes a couple thousand dollars or hundreds of thousands there is no threshold in a Chapter 7 that prevents certain debtors from filing based on the steepness of their debts.
Pre-Filing Actions & Non-Dischargeable Debts
Bankruptcy can remove a significant portion of an individual’s debts; however, after filing, debtors are still obligated to repay certain non-dischargeable debts. Current child support, taxes, student loans, and other debts can’t be cleared by filing for a Chapter 7. The bankruptcy attorneys at the Lamey Law Firm can provide insight into exactly how bankruptcy will affect your financial situation, and which debts you may or may not be responsible for after filing.
What you do prior to filing for bankruptcy is generally just as important as what you do after. In Minnesota, there are certain actions debtors are unable to take before filing a Chapter 7 bankruptcy. For instance, before filing, it’s considered illegal to spend money or transfer assets you could have put down on your debts. Attorney Lamey can provide more information on what sorts of actions are deemed unlawful before filing a Chapter 7, which could potentially save you headaches further down the road.
Liquidation in a Chapter 7
Assuming they meet the requirements outlined in a Chapter 7 bankruptcy, liquidation is an option for individuals and companies who are too deeply in debt to benefit from reorganization. Meeting with Attorney Lamey to discuss your situation is the best way to determine whether or not you’re eligible to file a Chapter 7. Liquidation isn't easy for debtors, but bankruptcy attorneys can help you retain property exempt from creditors. Working with experienced counsel will help you put your debts behind you and begin again with a clean slate, while protecting important assets, such as your home and car.
Responsibilities of Trustees
Trustees in Chapter 7 bankruptcies are tasked with going over individuals’ court documents, as well as consulting with debtors and their bankruptcy attorneys. Additionally, Trustees are responsible for liquidating assets that are non-exempt in a Chapter 7. After non-exempt assets have been successfully liquidated, Trustees are then responsible for appropriately allocating the funds from liquidations to creditors while being supervised by the courts.
How to Receive a Discharge
To receive a discharge, debtors must adhere to the requirements outlined in a Chapter 7. For one, debtors must list all of their debts, as well as their assets, income, and any expenses. Additionally, debtors must also answer the Statement of Financial Affairs questions correctly and completely. Finally, they are required to cooperate 100% with Trustees, and provide any and all information they may request, as well as remain candid and straightforward with the court. If a debtor can follow these requirements, they’ll receive a discharge.
In some cases, a creditor can argue that a specific debt should be repaid. Accordingly, the creditor can ask the courts to reconsider discharging said debt, based on its nature or the debtor’s behavior prior to filing. In the event the creditor is able to sway the court to grant their request, the court will still discharge all other debts, with the exception of the one.
Advantages of Filing a Chapter 7
The stressors associated with the burdens of financial debt are typically heavy on debtors when they seek the guidance of a bankruptcy lawyer. After being harassed by creditors repeatedly and not having the funds to pay even the minimum payments on their debts, they’re often humiliated at the thought of having to file bankruptcy. Chapter 13 bankruptcies provide individuals with a clean slate, but Chapter 7 plans allow debtors to move past their financial rough patches quickly, giving them the chance to reestablish themselves. The Lamey Law Firm can help you determine which option is best for you, based on your unique circumstances.
Much-Needed Sense of Direction
Contact the Lamey Law Firm today if you're in need of a bankruptcy counselor, and feel you could benefit tremendously from a Chapter 7. Our legal services extend to clients in numerous Minnesota communities, including Woodbury, MN, Cottage Grove, MN, Oakdale, MN and St. Paul, MN.