The idea of “bankruptcy” can carry a shameful stigma that steers individuals away from the idea. But life (or COVID-19) happens! Whether you are treading water in a pool of credit card debt, being crushed by medical bills, trying to make ends meet while furloughed from work or being hounded by creditors and/or collections agencies, sometimes the only option for relief is bankruptcy. Bankruptcy can provide a fresh start that you desperately need.
While there are several types of bankruptcy, the traditional type people tend to think of when contemplating filing is a Chapter 7. A Chapter 7 bankruptcy provides a liquidation and discharge of those debts which are dischargeable. Another traditional type of bankruptcy is a Chapter 13. A Chapter 13 bankruptcy is a reorganization in which your debts are restructured for partial or full payment over a period of time via a payment plan.
In Part 1 of this series, we discussed whether you qualify for filing bankruptcy. In Part 2, we will discuss whether your assets are protected.
All of your assets must be disclosed when filing for bankruptcy – some of these assets may be exempt (protected) and some may not. Assuming you have lived in Minnesota for two years continuously, Minnesota is one of the few states that allows you to choose between state or federal exemptions. State and federal exemptions differ based upon how much equity they protect (i.e. value of your asset(s) versus the amount you owe on it). Both exemptions protect homesteads, motor vehicles, household goods, jewelry, etc., but the different exemptions protect different amounts of equity. We will do a detailed review of your assets to determine what exemptions are best suited for your case.
The process of filing a bankruptcy can be daunting and overwhelming; but if you reach out to one of our attorneys and begin the bankruptcy process, then you will obtain that lifeline before you know it.