Minnesota Bankruptcy Lawyers and Attorneys of Loraas & Loraas are Bankruptcy and Consumer Law Advocates.

The Facts about Consumer Bankruptcy Protection


Consumer bankruptcy protection, also called personal bankruptcy, is a legal process where some or all of your debts are discharged by a court order. There are essentially two different types of consumer bankruptcy in the United States, both of which may provide you with relief when you are suffering from debt.
Chapter 7 bankruptcy is the most common form of bankruptcy in America and is often referred to as 'liquidation bankruptcy.' It will liquidate all non-exempt assets to pay the creditors and discharge any remaining debt. Chapter 13 bankruptcy provides a debt consolidation option that allows the consumer to keep most of their property (and the debt), but establishes a payment plan that works around the consumer's financial situation.


Filing for Consumer Bankruptcy Protection


For those looking into filing for bankruptcy, it is important that you discuss your options with a lawyer and determine if consumer bankruptcy protection is the right choice for you. It's also important that you understand what you stand to lose, and gain, from the bankruptcy process. The bankruptcy process requires you to file a detailed account of your finances including your monthly incomes and expenses as well as your property and additional possessions. You may find that some of this debt you will want to keep, such as your car payments or your mortgage. If this is the case, then Chapter 13 bankruptcy may be the best option. However, before you make any decision, it's best to speak to a professional. After you have filed for bankruptcy you will attend a trustee meeting confirming your consumer bankruptcy protection case and allowing the court to either discharge your debts or establish a payment plan for you.
 

Secured and Unsecured Debt in Bankruptcy


For many, the choice to file for consumer bankruptcy comes down to their secure and unsecured debts. A secured debt is one that is secured by collateral including a mortgage or car loan. Unsecured debt, on the other hand, include credit card debts, medical bills, legal fees and some bank loans. Many people will want to keep their secured debt in order to keep their house and their car. Of course, this all comes down to your financial situation.


What Happens Next?


It's important to understand that filing for bankruptcy is not something that will negatively impact your life forever. Although bankruptcy is often the last resort, it certainly does not mean you have hit rock bottom. It is still possible to obtain student loans and a home mortgage after filing for bankruptcy. Furthermore, as long as you have a steady income, you will be able to obtain other loans and even credit cards in the near future. Be sure to keep track of your debt after filing for bankruptcy. Unfortunately, in many instances, after filing for bankruptcy, you cannot obtain any additional relief for up to six years. Most people who file for consumer bankruptcy protection will be able to continue in the job force and work towards a profitable debt-free future.