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There are two types of bankruptcy, Chapter 7 and Chapter 13 bankruptcy. When you seek bankruptcy, you ask a court to help you eliminate your debts or repay them under a special procedure and protection of the court.
Chapter 7 bankruptcy is commonly referred to as a “liquidation.” This is the process by which your property is taken and sold to pay back the debts. There are certain exemptions that allow you to keep certain property by law. Your bankruptcy lawyer will advise on this.
Chapter 13 bankruptcy is a type of "reorganization." You get to keep all your property, but you must make payments toward your debt. The debt must be paid back over a certain period of time.
Chapter 7 bankruptcy can be filed by individuals or a business. In Chapter 7 bankruptcy, sometimes your property is sold to pay your debt. If successful, most or all of your remaining debts will be removed. You get to keep certain property that is “exempt.”
Not everyone is eligible to file for Chapter 7 bankruptcy. If you have enough money to file under Chapter 13, you may not be allowed to use Chapter 7.
There a certain debts that you cannot erase through bankruptcy, like child support, spousal support alimony, and most tax debts.
In order to file for Chapter 13, you must have an income. You must be able to put together a repayment plan to pay back your debts over the next three to five years. There are also limits to the amount of debt you can have for Chapter 13. Currently, you may not have more than $1,010,650 in secured debt and $336,900 in unsecured debt.
For more information or to get started on your bankruptcy, call us now.
Cundy and Martin, LLC
Minneapolis, MN, Bankruptcy – (952) 746-4111