Consumers or business, so deeply in debt that a reorganization could not solve their credit problems, may liquidate their assets to remove debt. If you meet the requirements, a Chapter 7 bankruptcy could help you move quickly past debt and begin a fresh start. Liquidation can be a difficult process, but some property is exempt from the reach of creditors. We will work together to protect your most critical assets, and can often save houses and cars from repossession.
Details of Chapter 7
While there is a perception that bankruptcy clears the debtor of all commitments, there are a number of non-dischargeable debts that must be paid for over time. You cannot clear recent taxes, student loans, child support, and other well-defined debts. If you have any questions regarding non-dischargeable debts, please review my Chapter 7 resources and then schedule an appointment to discuss your options.
There are also numerous restrictions in Minnesota regarding your actions prior to a Chapter 7 bankruptcy. Before filing for bankruptcy, it is unlawful to spend large amounts of money or transfer possessions that would otherwise be used to repay your creditors. My Chapter 7 resources address many of these transfer details.
"Who can file a Chapter 7 bankruptcy?"
Any individual or business entity unable to pay his, her, or its debts as they come due can file a Chapter 7 bankruptcy. There is no debt ceiling or threshold for a Chapter 7 bankruptcy. For some people, owing a few thousand dollars is more than they can financially handle, while others do not file a Chapter 7 unless their debts exceed tens or hundreds of thousands.
"What role does the Trustee play in a Chapter 7 bankruptcy?"
In Chapter 7, the Trustee is charged with the responsibility of reviewing the debtor's documentation filed with the Court, meeting with the debtor and debtor's counsel at the meeting of creditors, liquidating any non-exempt assets, and distributing the funds to creditors under the supervision of the Court.
"What must I do to receive a discharge in a Chapter 7 bankruptcy?"
If a debtor accurately lists his or her debts, assets, income, and expenses, correctly answers the questions posed on the Statement of Financial Affairs, cooperates with the Trustee in providing any additional information requested, and likewise is honest and forthright with the Court, the debtor will receive a discharge. If a particular creditor believes that a certain debt should not be discharged because of the nature of the debt or the conduct of the debtor before filing bankruptcy, the creditor can request the Court to not allow the debtor to receive a discharge with respect to that debt. Even if the creditor is successful in convincing the Court that that one debt should survive the bankruptcy, all the remaining debts will be discharged.
Benefits of Chapter 7
Some debtors, in their initial visit with bankruptcy counsel are depressed and distressed by the pressures associated with significant debt. They have been criticized and harassed by their creditors and generally feel humiliated when considering bankruptcy as an option to free them from debt. Chapter 13 can offer them significant relief, but they may instead simply need to move past the debt as quickly as possible and restart their financial lives. For these individuals, Chapter 7, with its relatively prompt discharge, offers greater relief. It is incumbent upon counsel to distinguish between those individuals who can benefit from Chapter 13 and those who must use Chapter 7 to get past this difficult time in their lives.