Bankruptcy is an option for individuals and families suffering from these difficult economic times. Chapter 7 bankruptcy often offers individuals a fresh start by discharging most debts, while allowing the debtor to retain all of his or her exempt property.
There are certain qualifications that a debtor must meet in order to qualify for a Chapter 7 bankruptcy. To determine whether or not you would qualify for a Chapter 7 bankruptcy it is best to contact one of our attorneys. The income requirements change regularly and vary depending upon where you live and the size of the debtor's household.
How Long Does a Bankruptcy take?
Typically our office prepares your bankruptcy petition in about 2 weeks after we have received all the information requested from you. We have filed bankruptcy the same day for emergency/rush bankrutpcy filings, however that is unusual and requires a premium fee. Once a petition has been filed, the debtor will receive a discharge from the bankrutpcy court within about 90 days for a Chapter 7 bankruptcy Petition Filing. A Chapter 13 takes 3-5 years to receive a discharge based on the Chapter 13 Plan filed and approved by the Bankruptcy court.
After we have filed a bankruptcy petition on the debtor's behalf, the court schedules a meeting of creditors about 20-40 days from the date of filing. This hearing is known as a "341 hearing" where the trustee assigned to the case questions the debtor to verify the bankruptcy petition filing information. Every bankruptcy client will have an attorney from our office present at the 341 hearing to assist you through this hearing. This hearing takes only 5-10 minutes unless there are complicated assets or issues that the Trustee needs to deal with.
What are the Steps in filing a Bankruptcy petition?
We have provided the main steps below in filing bankrutpcy along with your estimated time for each. We handle most of the work in conducting our bankrutpcy due diligence research to verify the information you provide, pulling credit reports, state and county records, obtaining valuation documentation for your assets, and preparing and filing your peititon for you.
- Schedule a meeting with our bankrutpcy attorneys. (Est. Time 1 hour)
- Complete our Online Questionaire and provide all requested bankruptcy documents and information.(Est. Time 1-3 hours)
- *Complete a required online bankruptcy credit counseling class (Required by the court to file a bankruptcy petition and costs approx. $10-15). (Est. time 1-1.5 hours)
- Your bankrutpcy attorney files your bankruptcy petition (Est. Time 0 for the debtor)
- Attend the "341 bankruptcy hearing". (Est. Time 1 Hour including travel/waiting time)
- *Complete a required online bankrutpcy financial management course (Required by the court to get a bankruptcy discharge and costs approx. $10-15). (Est. time 1-1.5 hours)
- Receive a bankruptcy discharge of your debts.
* these are the only two items you must pay for and complete on your own however we will advise and assist you with how to do this.
If there are questions regarding non-exempt assets or money transfers, there may be additional documents required after the "bankrutpcy 341 hearing" to support the information provided or amend any errors. Fortunately for the debtor who has been receiving daily calls from creditors, the filing of a Chapter 7 petition stops all collection actions, including lawsuits, garnishments, levies, phone calls and letters from creditors.
What are the Steps in filing a Bankruptcy petition?
For more information please look at the United States Department of Justice Bankruptcy Information Sheet. You may also check into Minnesota Bankruptcy Court's bankruptcy process information
Bankruptcy Property Exemptions in a Chapter 7 Bankruptcy
Both Minnesota and Federal laws dictate what property is exempt in a bankruptcy. The vast majority of debtors filing Chapter 7 bankruptcy have a no asset bankruptcy, meaning that all of the assets of the debtor are exempt and not liquidated or sold by the trustee.
A debtor has a great number of exemptions he or she can use to keep their property exempt during a Chapter 7 bankruptcy. You must choose between using either Federal or State exemptions when you file your bankruptcy. Each has very different sets of exemptions and reasons why one is better for your situation than the other.
For example under Federal bankruptcy exemptions you can currently only exempt (protect) $25,150 of equity in your home but under Minnesota bankruptcy exemptions you can exempt up to $450,000 equity in your home for each person as of 2021. Although you have a higher home equity bankrutpcy exemption in MN, you will find that some liquid assets and accounts do not have protection.
Federal bankruptcy exemptions have a Wildcard exemption to protect things that do not fit in any other category of asset. So there are trade offs depending what equity you have in various types of assets. We will determine exactly what we can or cannot exempt in both situations and let you know where you stand so you get the most protection the law allows. You can read more about Minnesota Bankruptcy exemptions and Federal Bankruptcy exemptions but hiring a good Minnesota Bankruptcy Lawyer can help determine which is the best for your specific situation.
For instance, debtors can exempt some or all of the following; car, home, household goods and furnishings, jewelry, certain investment accounts, including IRAs and 529s, life insurance policies, and under Federal exemptions, you even have a wild card exemption for property that does not have a specific exemption provided for by law. If you would like to find out if a specific asset or piece of property is exempt, or what amount you can exempt for a specific type of asset, please contact one of our attorneys to discuss.
Bankruptcy's Effect on Credit and Ability of Debtor to Borrow Money, Obtain Credit Cards, or Purchase a Home
Every debtor's situation is different. However, many clients are surprised to learn that in as short as one year following bankruptcy their credit score may increase above what it was before filing. Typically, recently-discharged debtors begin receiving credit offers soon after their discharge. Every situation is unique and if you would like a more comprehensive examination of your situation please contact our office and ask to speak with one of our bankruptcy attorneys.
