Things to understand about Chapter 7 bankruptcy

Minnesota residents who are considering filing Chapter 7 bankruptcy should understand certain important facts about it. The chapter is available for both individuals and businesses, and while it can provide financial relief and a fresh financial start, people should understand other potentially negative impacts it can have.

There are both federal and state exemptions available under the bankruptcy and Minnesota state law. People can choose which body of law they want to use when declaring their exemptions. Any property that is not exempt may be taken by the trustee and liquidated to pay the creditors a portion of what they are owed. There are also certain types of debts that will not be discharged in bankruptcy. These include owed taxes, including sales tax, student loans and child support, among others. Even if people file bankruptcy, they will still need to pay these debts off.

A Chapter 7 bankruptcy petition will also not get rid of secured interests in a home, an automobile or other assets. The creditors who have secured liens on property may be able to repossess them or foreclose on the property in which they hold an interest following the discharge in the case. The bankruptcy also remains on the filer's credit for a period of 10 years following the discharge.

Chapter 7 bankruptcy relief is still a good idea in many cases. This chapter has the ability to stop creditor harassment and prevent most unsecured creditors from ever making attempts to collect on the debt again. People who have questions regarding whether Chapter 7 is appropriate for them may want to consult with a bankruptcy attorney, who can explain the eligibility and other requirements associated with this chapter.

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