Pros and cons of chapter 7 bankruptcy
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Pros and cons of chapter 7 bankruptcy

Pros and cons of chapter 7 bankruptcy

If You are Considering the Filing of Chapter 7 Bankruptcy in Minnesota, you may be concerned about how bankruptcy:  affects your future credit, your reputation, and your self-image and your ability to keep houses and cars.

The fact is, if a competent bankruptcy attorney is consulted and recommends filing a Chapter 7 bankruptcy, you can expect the following:  1. Improvements in your quality of life; 2. Lower stress; 3. No more calls, letters or collections; & 4. Ability to reestablish credit.

What are the pluses and minuses of filing for bankruptcy:

You keep your property and possessions, your debt is discharged:

Most Chapter 7 bankruptcy cases that are filed in Minnesota are no-asset cases, meaning the debtor does not own any non-exempt assets, which could be sold to pay for debts owed to creditors. So, in a no-asset Chapter 7 bankruptcy case, a trustee will file a no-asset report for your case and your creditors will not receive any payments from you through the bankruptcy proceedings.

Each state has its own set of exemptions that allow consumers to protect and keep certain types of property and assets when filing for Chapter 7 bankruptcy. Minnesota allows for an election of both federal and state exemptions.  Because filer can choose which exemption is more advantageous a filer will know almost exactly the true cost of filing. A competent bankruptcy attorney should be able to show you what assets are exempt and which are not. Again, in most cases, all assets are protected.

Benefits of Chapter 7

The main reason to file for Chapter 7 bankruptcy is to stop creditors from collecting. Chapter 7 can relieve the pressure of your debts in different ways, including:

  • Automatic stay – The moment you file your bankruptcy petition with the court, an order called the “automatic stay” goes into effect. As soon as this happens, all collections efforts for debts must stop, including calls, letters, garnishments, repossession, lawsuits, evictions, and foreclosures.
  • Discharge of debts – Upon successful completion of the bankruptcy, your debts will be discharged.  The discharge will include of many types of debts, including credit cards, some tax debt, past due rent and utilities, medical bills, personal loans, among others. This means you will not be obligated to make payments on these debts ever again.

Potential Drawbacks of Chapter 7

Bankruptcy does have certain components that can be seen as negative by filers. The following are some of the most common concerns about Chapter 7:

  • Property seizure – In some cases, the bankruptcy court may require you to turn over certain property and assets. There are exemptions under the Minnesota Bankruptcy Law that help you protect most of your property. However, a skilled attorney can help you protect as much property as possible.
  • Not all debts are discharged – While many types of debts are dischargeable, other major debts such as your mortgage liens, car loans, student loans, and child support will not be discharged. However, discharging your other debts will free up money so that you can keep up with your remaining debts.


  • You can mainly eliminate most, if not all, of your unsecured debts through a Chapter 7 case.  This includes credit card bills, medical bills, personal loans, payday loans, and cash advance loans.
  • So, the typical Chapter 7 case takes approximately 3 months from the date your case is filed to the date you receive your discharge.
  • You mainly do not have to make payments to a bankruptcy trustee each month for three to five years as you do in a Chapter 13 case.
  • You can begin improving your credit score with the filing of the bankruptcy case. So, creditors cannot continue to report late payments on your credit report and the balances due will now be zero.


  • Mainly in a few cases, a debtor may lose property by filing a Chapter 7 case.  The trustee basically assigned to your case will review your assets to determine if there is any non-exempt equity in a property that the trustee can liquidate to pay your creditors.  So, the good news is that very few Chapter 7 cases filed in Minnesota result in the loss of property.
  • You will be required to meet with the trustee and attend a short meeting.  So, this does take time out of your day; however, the result is eliminating thousands of dollars in debt while retaining your property and income.
  • Paying attorney’s fees and a filing fee.  The Bankruptcy Filing Process in Minnesota fee is charged by the bankruptcy court and cannot be modified.  It is also much less costly to pay our Chapter 7 Bankruptcy Attorney’s fee than to repay thousands of dollars in debt.

There may also be pros and cons of Chapter 7 that are unique to your case depending on your financial situation. During your free Chapter 7 Bankruptcy Lawyer, the attorney will discuss all of the pros and cons of Chapter 7 as they relate to your case so that you are mainly able to make an informed decision about the best way to resolve your debt problems.

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