Bankruptcy is a legal procedure allowing a person or business to have their debts discharged, in part or in whole. It is usually treated as a last resort, because, while it can prevent financial catastrophe, it has some major 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. Individual courts in Fairmont, Minnesota will have some unique rules, however, so you should consult with a local lawyer before you file.
Chapter 7 Bankruptcy in Fairmont, Minnesota
In Fairmont, Minnesota, there are 2 commonly-used types of consumer bankruptcy: Chapter 7 and Chapter 13. Chapter 7 involves liquidation of part of a debtor's assets. It requires that a certain percentage of the debtor's property to be sold to pay off as much debt as possible. The majority of property that most people own, however, is exempt. This usually includes homes, vehicles, retirement accounts, and others. These are not available to creditors.
Once the non-exempt property is sold, the rest of the dischargeable debt is cleared. Some forms of debt, however, is non-dischargeable, including student loans, criminal fines, and others. If most of your debt in Fairmont, Minnesota is not dischargeable, Chapter 7 may not be the best option.
Chapter 13 Bankruptcy in Fairmont, Minnesota
Chapter 13 Bankruptcy in Fairmont, Minnesota is very different from Chapter 7. Whether or not it is a better option is very dependent on the facts of each individual case. Chapter 13 does not discharge debt, but restructures it instead. Usually, various debts are consolidated into a single monthly payment. This is designed to make the debt more manageable, giving the debtor the chance to pay off the debt over a longer period of time, without all of it coming due at once. This is usually manageable, as long as the debtor can make some sacrifices.
Which Type of Consumer Bankruptcy Should I File in Fairmont, Minnesota
This depends entirely on the facts of your particular case. If you have a decent amount of stable income, and a large amount of non-exempt property which you don't want to part with, Chapter 13 may be the best option for you. If most of your property is exempt, and you don't have much stable income, Chapter 7 might be the best option.
Regardless of your situation, you should speak with an attorney in Fairmont, Minnesota who is accomplished in bankruptcy before making a decision. They will be able to advise you of your options, and the likely consequences of each one, allowing you to make a much more informed decision.