Filing Chapter 13 in Minnesota

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In Minnesota, individual debtors can file for either Chapter 7 or Chapter 13 bankruptcy. In Chapter 7 bankruptcy, the debtor’s non-exempt assets are sold by the bankruptcy trustee and used to repay the debtor’s creditors. After the bankruptcy is complete, the debtor receives a bankruptcy discharge and all debts included in the plan are forgiven. However, if the debtor would like to keep her assets and the debtor has regular income, the debtor may qualify for Chapter 13 bankruptcy. In Chapter 13 bankruptcy, the debtor is given an opportunity to repay some or all of her debts through a repayment plan. The repayment plan usually includes better terms for the debtor such as lower or no interest.  

Filing Chapter 13 in Minnesota

To qualify for Chapter 13 bankruptcy, the debtor must have regular income for at least six months prior to filing for bankruptcy. The debtor must provide evidence of the regular income to the bankruptcy court. Regular income can include a debtor’s income from any source including the debtor’s job, disability benefits or a pension. In addition to the requirement that the debtor have regular income, the debtor is required to submit a repayment plan to the bankruptcy court for approval. The debtor and the debtor’s attorney develop the repayment plan and it must be a plan that the debtor can afford.

The repayment plan will take into account the debtor’s income and expenses each month. Under the United States Bankruptcy Code, the debtor is given an opportunity to pay off creditors over a period of up to five years. However, a repayment plan can be as short as three years. A repayment plan will vary according to the debtor. The debtor’s repayment plan is approved at the confirmation hearing. The debtor’s creditors may also attend the hearing and will sometimes object to the terms of the repayment plan. However, if the court approves the repayment plan, the debtor begins making payments immediately.

Bankruptcy Discharge

The debtor must make monthly payments to the bankruptcy trustee for the term of the repayment plan. It is a duty of the Chapter 13 bankruptcy trustee to keep track of all payments and ensure the debtor is making payments on time and in full. Failure to make a payment may result in the dismissal of the debtor’s case. However, if the debtor successfully completes the payment plan, at the end of the program the debtor receives a bankruptcy discharge. In many cases and with certain exceptions, this means that the rest of the debt in question is gone and creditors are ordered to leave the debtor alone.

Getting Legal Help

Filing for bankruptcy is an important decision. If you are considering filing for bankruptcy in Minnesota, contact an experienced bankruptcy attorney as soon as possible. An attorney will discuss your financial options with you and help you decide whether filing Chapter 13 bankruptcy is right for you.