In Minnesota, there are four common bankruptcy types for individuals. Each type of bankruptcy is named after its chapter in the United States Bankruptcy Code.
This article presents a brief summary of the various types of bankruptcy available to Minnesota residents.
Chapter 7 – A trustee is appointed to take over your property. Any property of value will be sold or turned into money to pay your creditors. You may be able to keep some personal items and possibly real estate depending on the law of the State where you live and applicable federal laws.
Chapter 13 – You can usually keep your property, but you must earn wages or have some other source of regular income and you must agree to pay part of your income to your creditors. The court must approve your repayment plan and your budget. A trustee is appointed and will collect the payments from you, pay your creditors, and make sure you live up to the terms of your repayment plan.
Chapter 12 – Like chapter 13, but it is only for family farmers and family fishermen.
Chapter 11 – This is used mostly by businesses. In chapter 11, you may continue to operate your business, but your creditors and the court must approve a plan to repay your debts. There is no trustee unless the judge decides that one is necessary; if a trustee is appointed, the trustee takes control of your business and property.
If you have already filed bankruptcy under chapter 7, you may be able to change your case to another chapter.
Which Bankruptcy Type is Right for Me?
If you are contemplating a Minnesota bankruptcy, you should consult with a bankruptcy attorney who will analyze your circumstances, discuss your options, and recommend the type of bankruptcy that is right for you. For example, not everyone qualifies for a chapter 7 bankruptcy. And for those who do qualify, another chapter might be better for them because chapter 7 has some limitations and restrictions.
If you are contemplating bankruptcy, feel free to contact us. You can speak with a bankruptcy attorney for no charge. The best way to understand whether bankruptcy is a good option for you is to obtain a Minnesota bankruptcy attorney’s analysis of your situation.