Frequently Asked Questions (FAQs)

1. What is bankruptcy?

The purpose of the bankruptcy laws is to give debtors a fresh start. Bankruptcy is a means by which to stop creditor collection actions such as foreclosures, wage garnishment and bank levies at least until they are sorted out by law.

In a Chapter 7 (liquidation) bankruptcy you wipe out all or most of your debts and in a Chapter 13 bankruptcy (individual debt adjustment) you pay back a portion of your debts over three to five years.

The types of debts generally discharged include most credit cards, medical debts, court judgments and loans.

Bankruptcy cases are filed in federal court.

2. What type of property do I get to keep in a Chapter 7 bankruptcy?

You can keep all property which is considered exempt from all creditors under the law.

3. What are the costs and/or fees?

The filing fee for a Chapter 7 bankruptcy is $299.00. The filing fee for a Chapter 13 bankruptcy is $274.00. There are also attorney’s fees. Please contact our office to find out more information about the attorney’s fees.

4. Is Credit Counseling Required?

In order to file a Chapter 7 bankruptcy or a Chapter 13 bankruptcy you must first complete a budget and credit counseling session from an agency approved by the U.S. Trustee’s office for your region within the 180-day period before you file.

5. Do I have to go to court to file for bankruptcy?

After you file your Chapter 7 bankruptcy, the court will schedule a date for what is called a “meeting of creditors.” This hearing is held in a separate room outside of court. In most cases, it is very informal. The trustee who has been assigned to your case will ask you some questions at this meeting. There is no judge present. The majority of Chapter 7 cases are handled in this manner.

6. What happens after the Chapter 7 bankruptcy?

Whatever debts you are allowed to discharge are discharged. The creditor can no longer seek to collect on the debt. Under the new bankruptcy law, you are required to complete a personal finance course with an authorized agency.

7. How is a Chapter 13 different from a Chapter 7?

In a Chapter 13 bankruptcy you pay either all or a portion of the debt you owe over a period of time. You need to have enough income to meet your payment obligations under the Chapter 13 plan. The payments are made to a trustee who oversees your case. The trustee takes this money and pays your creditors. Similar to a Chapter 7 bankruptcy, you must still complete a credit counseling course and budget counseling course before you get relief from your debts.

8. What property is exempt under the bankruptcy laws?

Minnesota has a list of property which is exempt. Alternative exemptions are available under the federal Bankruptcy Code.

9. How long will the bankruptcy stay on my credit report?

10 years. When a debt is discharged, the creditor is forever barred from reporting it to a credit bureau.