Bankruptcy is a legal procedure allowing a person or business to have their debts absolved, in part or in whole. It is normally treated as a last resort, because, while it can prevent financial catastrophe, it has some huge long-term consequences. This warrants careful consideration of the costs and benefits. Since it's a creation of federal law, bankruptcy is handled in federal courts. Therefore, the rules and procedures governing it in Minnesota will be the same as everywhere else in the country. Particular courts in Austin, Minnesota will have some unique rules, however, so you should consult with a local lawyer before you file.

Chapter 7 Bankruptcy in Austin, Minnesota

In Austin, Minnesota, there are 2 commonly-used types of consumer bankruptcy: Chapter 7 and Chapter 13. Chapter 7 bankruptcy involves liquidation of some of the debtor's assets. It requires some percentage of the debtor's property to be sold in order to pay off as much of his or her debt as possible. However, the majority of property that most people own is exempt. This normally includes homes, vehicles, insurance policies, and retirement accounts. These do not have to be sold.

Once the non-exempt property is sold, the rest of the dischargeable debt is excused. Some forms of debt, however, is non-dischargeable, including student loans, criminal fines, and others. If most of your debt in Austin, Minnesota is not dischargeable, Chapter 7 may not be the best option.

Chapter 13 Bankruptcy in Austin, Minnesota

Chapter 13 bankruptcy in Austin, Minnesota is markedly different. It may or may not be a better option than Chapter 7, depending on the facts of your individual case. Chapter 13 bankruptcy does not excuse debt, it restructures it. This involves a court coming up with an altered repayment plan designed to be manageable for the debtor. This new plan sets aside the terms of the original contracts that created the debt in the first place. This creates a new payment structure, normally involving a single monthly payment, that the debtor should find manageable.

Which Type of Consumer Bankruptcy Should I File in Austin, Minnesota

Which Bankruptcy type to file under depends strongly on the facts of each particular case. If you have a stable stream of income (enough to make a payment plan manageable), and a large amount of non-exempt property that you don't want to part with, Chapter 13 may be best for you. If you don't have a stable income or large amounts of non-exempt property, you may be better off filing for Chapter 7.

In any case, it would be a good idea to consult a local bankruptcy Lawyer in Austin, Minnesota. Your Lawyer can make an educated judgment as to what your best option is, and advise you accordingly (of course, the choice to file for bankruptcy is ultimately yours).