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 Little Falls, Minnesota will have some unique rules, however, so you should consult with a local lawyer before you file.

Chapter 7 Bankruptcy in Little Falls, Minnesota

In Little Falls, Minnesota, there are 2 commonly-used types of consumer bankruptcy: Chapter 7 and Chapter 13. Chapter 7 bankruptcy involves a liquidation of some of the debtor's assets, which pays off part of his or her debt. Once this is done, the remaining debt is discharged. Fortunately for debtors, many forms of property are exempt from liquidation, including homes, vehicles, essential personal items, and retirement accounts.

Once eligible assets are sold, and the proceeds turned over to the creditors, most remaining debt is excused. However, some forms of debt cannot be discharged in bankruptcy, including student loans, taxes, child support, personal injury awards, and fines. If most of your debt in Little Falls, Minnesota is not dischargeable, you may want to consider other options besides bankruptcy.

Chapter 13 Bankruptcy in Little Falls, Minnesota

Chapter 13 Bankruptcy in Little Falls, Minnesota differs significantly from Chapter 7. It might be a better option than Chapter 7, depending on the facts of your case. Chapter 13 Bankruptcy involves a court setting up an altered payment plan, which allows the debtor to pay off most or all of his debts over a longer period of time, through monthly payments that should, assuming that the debtor is willing to make a few sacrifices, be manageable.

Which Type of Consumer Bankruptcy Should I File in Little Falls, Minnesota

Whether Chapter 7 or Chapter 13 is the right choice for you depends heavily on your individual situation. If you have a stable income stream, and a lot of non-exempt property, Chapter 13 might be right for you. If you don't have a stable income, and most of your property is exempt, Chapter 7 might be a better way to go.

Regardless of your situation, you should speak with an attorney in Little Falls, 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.