Money problems can quickly get out of hand. It may seem as if a simple issue arose for you at first, but then additional financial burdens piled on. As a result, you found yourself with substantial debt, and now, you worry that you will never be able to pay off what you owe.
Unfortunately, this type of scenario affects many individuals in Minnesota and across the country. Job loss, medical emergencies, unexpected expenses and more could quickly lead to your having a hard time keeping up with your bills. If the problem continues to for some time, creditors may start calling and taking other actions in attempts to collect on the outstanding balances.
What can you do?
If you have tried to get on top of your bills on your own without much luck, it may be time to consider more drastic actions, especially if you may face foreclosure proceedings or repossession of certain assets. It may be possible for bankruptcy to help you address your outstanding debt in a way that allows you to get back on track. The type of personal bankruptcy you may qualify for can depend on several factors, but your income level will play a major role.
Types of bankruptcy
If you do not have a steady income or if your disposable income falls below the middle-range income for other residents in the state, you may qualify for Chapter 7, which is liquidation bankruptcy. With this process, your nonexempt assets would be liquidated, or sold, and the profits would go toward your outstanding debts. The court may then discharge, or forgive, any remaining qualifying debts.
If your income level is above the middle range for the state, you may not qualify for Chapter 7, but you could qualify for Chapter 13. This type of bankruptcy does not involve the selling of assets. Instead, you would work with a repayment plan approved by the court and pay back your debt over time. If any debt remains after you complete your plan, the court will likely discharge it.
What’s right for you?
Each bankruptcy case is different, and it can be difficult for anyone to know exactly what option could work best. If you believe that bankruptcy may be able to help your situation, you could find it helpful to discuss your personal situation with an experienced attorney. This legal professional could help assess your case and explain which routes may be available to you.