In West St. Paul, Minnesota, bankruptcy is a legal proceeding in which a person or business has some or all of their debts legally cleared, when they are unable to pay them. This hopefully allows them to begin over with a clean slate and move on, after having learned to better manage their use of credit in the process. Bankruptcy should be treated as an option of last resort, and should not be viewed as a fitting way to get out of debt that you just don't feel like paying. Bankruptcy can have severe consequences, including but not limited to damage to your credit rating. A bad credit score can impact your ability to get loans in the future, to rent an apartment, and possibly even your ability to get hired at some jobs (as some employers now run credit checks on prospective employees).

For that reason, it would be advisable to speak with a good West St. Paul, Minnesota bankruptcy attorney. This attorney will be able to advise you as to whether or not filing for bankruptcy is a good idea, given your specific situation. This determination is highly dependent on the details of each individual case, so a West St. Paul attorney's advice is really indispensable.

Types of Bankruptcy in West St. Paul, Minnesota

There are three basic bankruptcy schemes that are most commonly used in West St. Paul: Chapters 7, 13, and 11. Bankruptcy is a creation of federal law, so the process for filing for bankruptcy in West St. Paul, Minnesota will be roughly the same as it would be anywhere else in the U.S. Chapter 7 bankruptcy involves liquidation of many of the debtor's assets in order to pay off as much of the debt as possible. This sounds harsh, but there is an upside: once the liquidation is complete, the debts are legally viewed as having been paid in full, whether or not the full amount was covered by the liquidation. Liquidation involves selling some personal property, and using the funds to pay off debt. Numerous types of property are exempt from liqudiation, and therefore may not need to be sold. They include homes, cars, and insurance policies, among others. You should know that some types of debt cannot be discharged in Chapter 7 bankruptcy, including taxes, student loans, and child support.

Under Chapter 13 bankruptcy in West St. Paul, most of the debtor's debt is not discharged. Instead, the bankruptcy court, working with the debtor and participating creditors, work out a payment plan that allows the debtor to pay off most of his or her debts over an extended period of time, therefore theoretically making the debt far more manageable. Once a payment plan is approved by the court, creditors are prohibited from attempting to collect payment under their original agreements that gave rise to the debt in the first place. Chapter 11 bankruptcy is almost always used by businesses, but there is nothing that legally prevents it from being used by individuals, and its use by individuals is very rare. Chapter 11 bankruptcy requires the debtor to come up with a restructuring plan - telling the court how they propose to cut costs, fix their operations, and pay down their debts. The plan has to be approved by a majority vote of participating creditors.

A major advantage of Chapter 11 bankruptcy is that businesses can continue their operating while going through the process. Also, they can continue to buy and sell their stock.

How Can a West St. Paul Bankruptcy Lawyer Help?

The decision to file for bankruptcy in West St. Paul is not one to be made easily, and it definitely should not be made without first obtaining the advice of an efficient West St. Paul bankruptcy attorney.