If you’re grappling with debt and seeking a fresh start, Chapter 7 bankruptcy might be the solution you need. This comprehensive guide will help you understand Chapter 7 bankruptcy, the steps involved, and what you can expect throughout the process.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy, often referred to as the “clean slate” or “fresh start” bankruptcy in Minnesota, is designed to give individuals a fresh start by eliminating most unsecured debts, such as credit card debt and medical bills.
Who Qualifies for Chapter 7 Bankruptcy?
Not everyone can file for Chapter 7 bankruptcy. To qualify, you must pass the means test, which compares your income to your state’s median income. If your income is below the median, you likely qualify. If it’s above, further calculations will determine your eligibility based on your disposable income.
The Means Test
The means test ensures that those who can afford to pay their debts do so. It involves two steps:
- Median Income Comparison: If your current monthly income is below your state’s median, you pass the test.
- Disposable Income Calculation: If your income is above the median, we calculate your disposable income by deducting certain expenses. If it’s too high, you may need to file for Chapter 13 instead.
What Debts Are Eliminated in Chapter 7 Bankruptcy?
Filing for Chapter 7 bankruptcy in Minnesota eliminates most unsecured debts, such as:
- Medical bills
- Credit card debt
- Utility bills
However, there are exceptions. The following debts are not eliminated:
- Student loans
- Taxes
- Child support
- Credit card debt incurred in the 90 days prior to filing bankruptcy
The Chapter 7 Bankruptcy Process
Step 1: Your Free Phone Call
Begin by calling us for a free, confidential debt consultation at one of our four metro locations: Minneapolis, St. Paul, Blaine, or Brooklyn Park. Our knowledgeable and understanding staff will treat you with the respect you deserve. There’s no charge or obligation for this consultation.
Step 2: Your Free Debt Consultation
We’ll explain how Chapter 7 bankruptcy works and what you can expect. You’ll receive a detailed step-by-step breakdown of the process and the total cost to file. While the consultation is free, bringing $50 will allow you to retain our legal services, which goes towards your fees. After hiring us, you can refer your creditors to us.
Step 3: Gather Your Papers & Complete Credit Counseling
At home, gather your bills, documents, and other necessary information. Once you know that Chapter 7 bankruptcy is right for you, this part of the process can feel like a relief—it’s the last time you’ll have to deal with those bills. We’ll help you get set up with credit counseling, which takes about an hour and can be done online or over the phone.
Step 4: Your Finish-Up Appointment
Two weeks after receiving your documents, you’ll come in for a finish-up conference. We’ll review your paperwork and explain everything so you can sign it.
Step 5: Filing Your Case with the Court
We’ll electronically file your signed documents with the Court. Once filed, the Court issues an “automatic stay” that stops creditors from collecting debts from you. They can’t sue, garnish, repossess, foreclose, or harass you.
Step 6: The Meeting of Creditors (341 Hearing)
About 30 days after filing, we’ll attend the Meeting of Creditors, also known as the 341 Hearing. Creditors rarely show up because bankruptcy protection is strong. This meeting typically lasts less than five minutes.
Step 7: Financial Management Course
Within a month after your 341 meeting, you’ll need to complete a financial management course. It takes about two hours and provides useful information for your future.
Step 8: Discharge
About three months after filing, the Court issues your discharge, which means you no longer owe your discharged debts. Creditors are legally forbidden from trying to collect these debts.
How Long Does Chapter 7 Bankruptcy Take?
Generally, it takes between four and six months to complete a Chapter 7 bankruptcy in Minnesota. Our experienced Minnesota bankruptcy lawyers ensure all steps are completed accurately and promptly, increasing the likelihood of a timely discharge.
What to Do Next if You’re Considering Bankruptcy
If you’re ready to take control of your financial future, visit one of our offices in Minneapolis, St. Paul, Blaine, or Brooklyn Park to book your free bankruptcy consultation. You can also contact us at 612.824.4357 today and take the first step towards becoming debt-free. We’re here to help you every step of the way.
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