How clean your financial slate becomes depends on how many debts are discharged. Which debts are discharged depends on the type of bankruptcy you are filing and how many unsecured debts you have.
To get an idea of the specific debts that can be discharged, you and your Minnesota bankruptcy lawyer will review your debts and your bankruptcy filing options.
Discharging Debt Through Chapter 7
When you file Chapter 7 bankruptcy, you are filing what is called “liquidation bankruptcy.” This means that some assets may be liquidated to pay off some of your debts. However, only unsecured debt can be discharged. This means that you cannot file on taxes, child support, alimony, student loans, or any secured debt. Unsecured debt covers debts such as unsecured personal loans, credit cards, and anything that hasn’t been secured by collateral or isn’t a government debt of some kind.
You can keep your home or car if it is feasible for you. You do this through reaffirming those loans. You will need to include all debt in the bankruptcy filing so that there is an accurate accounting of your financial situation, but you can reaffirm those debts that you wish to keep.
Discharging Debt Through Chapter 13
Chapter 13 bankruptcy works differently than Chapter 7 in that you can have all debts discharged. This is done by having your Minneapolis bankruptcy lawyer include all of your debt in the filing and in the Chapter 13 repayment plan. In this case you can include taxes, student loans, and other secured debt. The reason is because it can all be included in this plan and paid back as you make your payment each month.
If you default on your Chapter 13 repayment plan, then all of your debts go back to the way that they were. This means that the past due nature of your mortgage is restored, as is any interest and fees on any other debts included in the plan.
If you do not default on your repayment plan, then the bankruptcy judge will declare your debts discharged after the last payment is made. Once all of these debts are discharged, you are able to start over with a clean slate.
Chapter 13 is a way in which individuals relieve themselves of all debt and protect their assets at the same time. However, it is a matter of being able to establish an affordable plan according to one’s financial situation. For those that have no disposable income to enter into such a plan, they typically choose to file Chapter 7.
Contact A Minnesota Bankruptcy Attorney
When you file bankruptcy, you want to have as many debts discharged as possible. This is so your slate can be wiped clean or nearly clean. Knowing which debts are dischargeable and not dischargeable will help you know what to expect after bankruptcy. To learn more about how the McKinney Law Office can help you, call the Minneapolis office at 612-206-3706 or the St. Paul office at 651-379-4110 for a free consultation.
This law firm is a debt relief agency, and we help people file for bankruptcy relief under the United States Bankruptcy Law.