On June 1, the Supreme Court ruled that junior mortgages could not be stripped during a Chapter 7 bankruptcy if the owner was underwater on the property. The ruling further clarified that this was the case so long as the loan was secured by the home and the claim was allowed under bankruptcy law. It is expected that this ruling will help mortgage lenders who are junior lien holders.
Filing for bankruptcy can be a smart move for many people in Minnesota who have more debt than they can afford to pay back. In 2012, more than 1.2 million people in the United States filed for bankruptcy as a way get a fresh financial start. Before making the decision to file for bankruptcy, a person should carefully evaluate their financial situation.
Minnesota residents who have large amounts of unsecured debt may look to filing for Chapter 7 bankruptcy. Unlike Chapter 13, which involves a reorganization of debt and a repayment plan, Chapter 7 does not require an individual to pay back creditors for debts that are eliminated. However, only unsecured debt can be discharged by this type of filing, and not all debts are eligible; for example, student loans usually cannot be discharged. Additionally, liens on a property are not eliminated.