The Role of a Property Lien in Bankruptcy in St. Peter, MN

If you’re considering filing for bankruptcy, you should understand that you must not only fully disclose all property that you own either entirely or in which you have any partial ownership interest but also provide your attorney sufficient documentation substantiating any such ownership interests/claims.  You must provide your attorney with copies of all titles, deeds, real estate mortgages, life insurance policies, retirement account documentation, homeowner’s insurance policy information, vehicle loan promissory notes, financial statements, tax assessment statements, tax returns, copies of judgments and all other like documentation.  Generally an attorney will require you to provide your financial information for the past 3 years. This means you’ll have to provide all personal records along with your public records. Because gathering your financial information correctly can be difficult without experience and legal knowledge, the help of a bankruptcy attorney is essential. Behm Law Group, Ltd. offers professional legal support and counsel that can help you throughout the process of filing for bankruptcy in St. Peter, MN.

While you gather your personal records for your attorney to consider in relation to your case, you should also consult with the local court administrator’s office, court recorder’s office and county tax assessor’s office to examine any public records you may have against you. Records such as deeds, county tax assessor valuations for any real estate you own, judgment liens and title certificates for vehicles are public records.

Another example of a public record of your financial history is a property lien or mortgage lien.

What is a Property Lien?

Property liens are a matter of public record and they legitimize and provide notice of the claim your creditor has on your property to secure the money you owe to that creditor.  It is used by a creditor to provide public notice to other creditors that it has first secured standing on certain property you own.  In other words, it is announcing to all other creditors that it is first in line to collect its debt against the property.  For example, if there is a mortgage on your home regarding money you owe to a bank, the mortgage will be publicly listed in the county recorder’s office.  Any other bank who may want to lend you money will search the county recorder’s office and see the property lien to the first bank.  Any such bank will understand that it will not be able to utilize your house as collateral for any financing it extends to you to the detriment of the first bank.  If it does elect to extend financing to you and if it does want to use your house as collateral, the property lien to the first bank will provide the second bank notice that it will be second in line to the first bank if you default on your payments and it proceeds to initiate foreclosure proceedings against your house.  Liens work to protect a creditor’s claim on the property if you file for bankruptcy relief. A properly filed property lien is enforceable against any and all parties in a bankruptcy proceeding.

A bankruptcy filing does not extinguish the creditor’s property lien.  If you want to retain your house through a bankruptcy proceeding, you must continue to pay on any outstanding property liens against it.  Any equity or value above the amount of any property liens can be protected from your creditors, however.  For instance, if your house is worth $100,000 and you owe $20,000, you have $80,000 worth of value or equity.  You can protect the $80,000 equity/value against all of your creditors and against the bankruptcy trustee but you must still pay the underlying $20,000 to the bank that holds the property lien.  If you don’t pay the underlying $20,000 property lien, the bank that holds the property lien can still initiate foreclosure proceedings against your house.

With the help of a bankruptcy attorney you can easily access public records concerning your finances to determine if you have any property on which your creditors have claimed property liens. It’s important to be aware of any liens on your property, especially if you’re filing for Chapter 7 bankruptcy.

For more information about property liens and to learn how Behm Law Group, Ltd. can help you file for bankruptcy in St. Peter, MN, contact us at (507) 387-7200 today.

Changes to Your Proposed Plan in Chapter 13 Bankruptcy in Jackson, MN

In Chapter 7 bankruptcy, the Chapter 7 bankruptcy trustee and United States Trustee have more control and authority over the process.  In Chapter 13 bankruptcy, however, the journey can be much more complex and requires more time and effort from you. Because you play such a significant part in determining the results of your Chapter 13 case, working with a legal professional can guide your hand in a way that will give you a plan that you can benefit from as much as possible. Behm Law Group, Ltd. can provide you with expert legal counsel with the filing of a Chapter 13 bankruptcy petition in Jackson, MN.

One of the most important parts of your Chapter 13 case that you’ll play a part in deciding is your repayment plan. In the process of reorganizing your debts in a Chapter 13 repayment plan, you are required to propose a payment plan based on your income, your living expenses and the claims or debts/amounts you owe to your creditors.

Claims

Chapter 13 bankruptcy claims are essentially the amount of debt claimed to be owed by the debtor to the creditor. These claims can be made by a debtor and a creditor alike, and they are used to determine the amount to be repaid to each creditor during the repayment plan term. Debtors can file claims based on their own estimates of what they owe their creditors.  Also, debtors can file claims on behalf of creditors if creditors either forget or refuse to do so.  Creditors can also file claims to denote how much they were owed by the debtor when the bankruptcy case was filed.  The Chapter 13 trustee pays creditors according to their claims.  If creditors do not file claims, they don’t get paid anything by the trustee.  When the claims of debtors and creditors differ, formal claim disputes can arise.

Creditor vs. Debtor

Claims of the creditor and the debtor may be in dispute. If a debtor doesn’t know the correct amount one owes to a creditor and then files a claim based upon only the debtor’s personal estimate, the impacted creditor can dispute that claim and change the outcome of a Chapter 13 repayment plan.  A creditor can file its own claim which could be significantly higher than the debtor’s estimate.  In such a case, that creditor would receive a larger payment every month from the Chapter 13 trustee.  Similarly, a debtor can dispute a claim a creditor makes if a debtor has viable proof of inaccuracy. When disputes are settled, a final plan is established. However, the plan may be further altered if the bankruptcy trustee appointed to administer the case doesn’t agree with the repayment structure.  For instance, the trustee may think that the chapter 13 plan does not pay a sufficient dividend to one’s unsecured creditors. Further, the trustee may disagree with the amounts of the monthly expenses claimed by a debtor.  The trustee may also believe that a debtor’s income has been understated.  The trustee can petition the bankruptcy court to alter the terms of your chapter 13 plan and the trustee could request that the payment amount be increased.  If a debtor and the trustee disagree about the payments or other terms of a debtor’s chapter 13 plan, the matter is submitted to the bankruptcy court for determination via a contested confirmation hearing.

If you plan to file for Chapter 13 bankruptcy, taking advantage of the help of an expert bankruptcy attorney can change the outcome of your repayment plan. For more information about how Chapter 13 works, or for legal advice and assistance with your petition for bankruptcy in Jackson, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.

Understanding the Feasibility Requirement in Chapter 13 Bankruptcy in New Ulm, MN

Working through a debt reorganization is a complicated process. All aspects of your financial situation, including the details of your income, property, debts, and expenses must be taken into account. Most individuals who choose debt reorganization file for Chapter 13 bankruptcy. The long process of building a repayment plan with Chapter 13 bankruptcy in New Ulm, MN, can be difficult, but Behm Law Group, Ltd. can help you avoid issues that may lead to the dismissal of your case.

To have your debts reorganized into a Chapter 13 repayment plan that fits your financial situation and remains fair to your creditors, you have to pass a number of requirements. One of these stipulations is that you must pass the feasibility requirement in order for your bankruptcy repayment plan to be confirmed or approved by the bankruptcy court. Your trustee will expect you to be able to continue making payments regularly throughout your plan. The trustee will question your ability to pay and will analyze the feasibility of your chapter 13 repayment plan in the event of the following:

  • Meeting the First Payments: Because your plan will be put into effect within 30 days of your filing as a sort of “test” before it’s confirmed, you may be required to make 3-6 payments to your trustee before your plan is actually set in stone. It’s likely you can make these payments if you have worked through the plan with a bankruptcy lawyer, but in some cases, plans are dismissed even before confirmation—often because a filer’s financial circumstances have changed.
  • Balloon Payments: During your repayment plan period, it’s possible your trustee will request a future “balloon payment.” Balloon payments occur at the end of a chapter 13 plan term.  Balloon payments are necessitated where you may have missed a few monthly payments or you may have made only partial payments during some months.  At the end of the chapter 13 plan period, a large balloon payment of the remaining balance of your accumulated payments must be met for your plan to remain feasible.
  • Income Change: Because Chapter 13 plans span 3-5 year periods, it’s possible for the filer’s income to change during that period. If your income increases, you may be required to increase payment amounts each month. If your income decreases, your plan feasibility will come into question, and your trustee will investigate your ability to keep meeting payments.  Your plan payments could also be lowered.
  • Asset Sales: In the event you choose to sell an asset and use the proceeds gained to meet payments in your plan, your trustee may investigate the market values and have input in the selling of asset, especially if the market is poor. If you cannot make a payment without making the asset sale, the feasibility your chapter 13 plan may come into question.

There are several other reasons you may not pass the feasibility requirement for your repayment plan when you file for Chapter 13 bankruptcy in New Ulm, MN, but with the support and counsel of Behm Law Group, Ltd., you can avoid many difficulties of the process. For more information, contact us at (507) 387-7200 today.