Understanding Secured Debt

In case of Minnesota bankruptcy a secured debt, the creditor has constitutional rights in the security (or collateral) along with the rights against the debtor. In Chapter 7, explains Minnesota bankruptcy lawyer, the debtor's own liabilities can be discharged whereas the lien rights in the collateral can go through bankruptcy unaltered except when they are evaded or exposed. The debtor can opt for a manner to provide for the creditor's rights in cases where the lien cannot be avoided in the collateral.

Long term secured debt for example mortgages go through the bankruptcy unaltered by the discharge. The majority creditors secured in real property are content in receiving continued payments on the debt, providing they are current. Chapter 13 can be used for curing defaults in long-term secured debts.

The preferences in dealing your secured debt in Minnesota bankruptcy incorporate –
•    Redemption. You pay the current value of your asset (collateral) to the secured creditor for the debt in a single cash payment. Once you make the payment, the asset becomes yours and free of secured debt. The remaining debt is dealt as unsecured debt in the bankruptcy and is discharged along with your other debts.
•    Reaffirmation. It is an agreement for waiving the discharge concerning the reaffirmed debt and paying the debt as per the terms of the original agreement. Reaffirmed debt is lawfully enforced upon violation (stop paying) later and allows the creditor to retain the security interest against the asset pending the payment of debt.
•    Surrendering the collateral. Turns the debt into an unsecured debt in the bankruptcy and permits the creditor to sell the asset in order to reclaim at least some part of the claim. In cases where the asset may not be worth compared to what was owed on it, the due balance is discharged in the bankruptcy.

Minnesota bankruptcy lawyer, makes it clear that if the asset at present has lower value compared to the cost of repossessing it (e.g. used computers, major appliances, automobile tires) the debtor can merely refuse to redeem, reaffirm, or surrender and await for any action from the creditors side for recovering the collateral after the bankruptcy.

Getting Discharge in Bankruptcy

The debtor typically and automatically gets a discharge except if there is lawsuit concerning protest to the discharge. The clerk of the bankruptcy court is permitted to mail a copy of the 'Order of Discharge' under the Federal Rules of Bankruptcy Procedure to the U.S. trustee, all creditors, the trustee in the case, and the trustee's attorney as well as the debtor and the debtor's attorney receive copies of the discharge order. The notice is merely a copy of the final order of discharge, not exactly specifying the debts that are non-dischargeable or not covered by discharge determined by the court. The creditors are simply informed by the notice that the debts owed by the debtor have been discharged and they should not even attempt any further collection by any means or else they will be punished for any collection efforts explains Minneapolis bankruptcy lawyer. Any unintentional failure on behalf of the clerk to send a copy of the discharge order promptly within the time required by the rules to the debtor or any creditor does not change the legality of the order conceding the discharge.

All debts are not necessarily discharged. The debts discharged differ under each chapter of the Bankruptcy Code. Section 523(a) of the Code particularly accepts various types of debts from the discharge granted to individual debtors. Consequently, the debtor is required to repay those debts after bankruptcy. It has been determined by the Congress that such sorts of debts are not dischargeable for public policy and the reasons depends either on the nature of the debt or the fact that the debts were earned due to inappropriate behavior of the debtor, like debtor's drunken driving says Minneapolis bankruptcy attorney.

Under chapters 7, 11, and 12 there are 19 categories of debt excepted from discharge whereas an added limited list of exceptions pertains to cases under chapter 13.

Generally, the exceptions to discharge affect automatically if the language approved by section 523(a) is relevant. The kinds of debts described in sections 523(a)(2), (4), and (6) (debts affected by fraud or maliciousness) are not automatically excepted from discharge. Creditors should ask the court to establish if these debts are excepted from discharge. In the nonattendance of an affirmative request by the creditor and the granting of the request by the court, the kinds of debts set out in sections 523(a)(2), (4), and (6) will be discharged suggests Minneapolis bankruptcy lawyer.

Questions Concerning Bankruptcy

Explain Pre-Bankruptcy Credit Counseling?

• The Pre-Bankruptcy Credit Counseling or Budget Briefing is an analysis of your existing financial situation along with a study of factors leading to this condition, counsel about options to bankruptcy, and assists in formulating a plan in response to the financial situation to prevent any more debt. The counseling usually lasts 60 to 90 minutes. A non-profit credit-counseling agency permitted by the U.S. Trustee's Office can provide bankruptcy counseling which is mandatory before filing for bankruptcy suggest Minnesota bankruptcy attorney.

Explain Post-Bankruptcy Debtor Education Course?'

• The Post-Bankruptcy Debtor Education Course or Debtor Education by default consists of written instructions and information on budget making, managing money, sensible credit usage, and consumer guidance in duration of at least two hours. An agency approved by the U.S. Trustee’s Office can provide the course. File the certificate of completion before the 45th day after the creditors meeting or 341 meeting for Chapter 7 cases. Chapter 13 cases should file the certificate no later to the date - of the last payment under the repayment plan or the date of the filing of a Motion for a Discharge.

'How much do these services cost?'

• Pre-Bankruptcy Counseling costs $29 per household, Post Bankruptcy Debtor Education is $29 per household, Post Bankruptcy Debtor Education Home Study Course is for Individuals $49.00 and Joint $69.00

'How long are the certificates good for?'

• The Pre-Bankruptcy Counseling Completion Certificate remains applicable for 6 months or 180 days from the date noted on your certificate.

'What information do I need before beginning the course(s)?'

• Pre-Bankruptcy Counseling require documentation of - Monthly household income, Monthly household expense, Complete Asset information including real-estate, vehicles, savings, 401k, IRA’s and etcetera, also Unsecured debt (credit cards, personal loans) and Secured debt (mortgage, car) having creditors name and current balance.
• Post-Bankruptcy Debtor Education needs documents of Bankruptcy case number and District of bankruptcy filing obtained from your Minnesota bankruptcy attorney.

Minneapolis bankruptcy lawyer advices only Credit Counseling agency approved by the Executive Office for the United States Trustees (EOUST) can issue Pre-Bankruptcy Counseling Certificates complying with the bankruptcy code. After being certified for completion of the course by a counselor, the certificate of completion is sent to you.