Bankruptcy: Chapter 7

Chapter 7 Bankruptcy is referred to as the “liquidation” bankruptcy or “straight” bankruptcy.

This is by far the most common form of bankruptcy that is filed. Chapter 7 is available to individuals, married couples, partnerships, and corporations. Individual debtors are usually granted their discharge within 90 days of the date of filing.

A Chapter 13 Bankruptcy is one in which you make a monthly payment to the trustee, for 36 to 60 months, to repay a portion of your debt to your creditors. You’re eligible for a Chapter 13 Bankruptcy discharge if you have a steady source of income, have not filed for a Chapter 7 Bankruptcy within the last four years, and have not filed for a Chapter 13 Bankruptcy within the last two years.

Bankruptcy Qualifications

In order to qualify for a Chapter 7 Bankruptcy, you cannot have filed for a previous Chapter 7 within the past eight years and you must be able to pass the Chapter 7 means test (income test). If you qualify, you may be able to discharge most of your credit card bills, medical bills, repossession deficiencies and older taxes. Most people are able to keep all of their personal property. If you don’t qualify for Chapter 7, you can file Chapter 13.

Filing for Chapter 7 initiates the “automatic stay” – which is an immediate protection for you. It will stop wage garnishments, creditor harassment, and will provide temporary relief to home foreclosure proceedings and car repossessions. Mortgage companies and automobile lenders will continue to accept monthly payments on the debts owed to them, as long as you remain current.

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There are certain debts that a Chapter 7 Bankruptcy does not allow you to discharge. Some of these debts include:

1. Recent taxes
2. Student loan debt
3. Child support obligations
4. Spousal support obligations
5. Debts not listed in the Chapter 7 Petition
6. Credit that was obtained from fraud
7. Debts with co-debtors – your co-signer will be liable for the full amount of the debt unless they also file bankruptcy

If you are behind on your mortgage payment or car loan, a Chapter 7 will not bring you current. However, there may be other options available to you., like Chapter 13.

It is also important to keep in mind that a Chapter 7 Bankruptcy may not protect all of your assets. If you own multiple homes with a lot of equity in them or other valuable assets such as boats or vehicles without loans against them, the bankruptcy trustee will either sell the item and use the proceeds to pay some of your creditors, or negotiate with you to receive the cash equivalent of the asset. We can help you negotiate with the trustee if this situation arises.

If you find yourself in this type of situation, where you have unprotected assets that you want to keep, it may be better to do some pre-bankruptcy planning or look into a Chapter 13 payment plan.

Chapter 7 Bankruptcy Attorneys In Minnesota

For all of your Chapter 7 Bankruptcy needs in the St. Cloud & Minneapolis, MN area, contact the trusted bankruptcy professionals at Heller & Thyen, P.A.


“Fast, efficient and friendly! Would and will recommend to everyone I know who needs an attorney. Very pleased how smooth the process was!”


“Heller and Thyen were very informative in helping me decide what type of bankruptcy to file and how the process works. I will recommend them to anyone who needs financial help.”


“Robb was very professional about my case and treated me like a real person who needed help. I would recommend him to anyone who needs legal help.” –


“Heller & Thyen were truly wornderful to work with! It’s so helpful to have always lawyers that truly care about the people who they are working with.”