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How does the Chapter 7 bankruptcy process work?

Crippling debt and constant contact from creditors may be one of the many reasons why you are looking for a way out of your current financial situation. You may no longer be able to manage your payments, and you may not be able to see a way to regain your financial footing without a significant intervention. One way this could be possible is through a bankruptcy filing. The bankruptcy process could offer you the way to deal with certain types of balances once and for all.

There are different bankruptcy options available to consumers, but a popular choice is Chapter 7 bankruptcy. This is liquidation bankruptcy, but that does not necessarily mean that you will have to give up your personal property in order to complete this process. Before you file or make any important decisions about your future, it might be helpful to learn more about how this process works and how it could benefit your specific financial situation.

Details of the Chapter 7 bankruptcy process

One of the reasons that many Minnesota consumers opt for Chapter 7 bankruptcy is that it only takes a few months to complete. Qualified applicants may be able to discharge certain unsecured debts, such as medical bills, credit card debt and more. If you are considering this step, the following may provide you with a general idea of what to expect from this process:

  • You will file your bankruptcy petition with the designated bankruptcy court.
  • You will also provide the court with information regarding your assets and liabilities, current income and more.
  • The court will expect payment for processing fees at the time you file, but it may be possible to pay these fees in installments.
  • If you are married, you will also have to provide financial information for your spouse, even if you are not filing for bankruptcy jointly.
  • The automatic stay will go into effect, halting all creditor contract and collection efforts.
  • The trustee will hold a meeting with creditors, and during this meeting, you may have to answer questions about your finances.
  • The debtor will follow any terms required by the court-approved bankruptcy plan.
  • At the completion of the bankruptcy process, the court will discharge eligible debts.

An assessment of your specific situation may provide insight regarding how Chapter 7 could provide you the way to secure a better and stronger future. While bankruptcy may not be your first choice, it could be a way for you to navigate debt challenges and emerge to better financial health long-term.