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Using Bankruptcy for Debt Relief as a Senior Citizen

If you’re considering filing for bankruptcy, you’re not alone. People of all ages and financial circumstances file bankruptcy cases of varying types with results that provide long-term debt relief.

At Behm Law Group, Ltd., we’ve worked with clients in many different situations, from young couples to divorcees and even senior citizens. There are many reasons why filing for bankruptcy as a senior citizen is a positive step forward. If you’re unsure about using bankruptcy for debt relief in Waseca, MN and the greater Mankato area, Behm attorneys can help you determine what type, why, and how you can file.

There are two types of bankruptcy available to the majority of individual consumers: Chapter 7 and Chapter 13. Chapter 7 works to liquidate (sell) your non-exempt assets (properties) in exchange for debt discharge (debt relief). Chapter 13, on the other hand, works to reorganize your debts into a manageable repayment plan lasting three to five years. This repayment plan is tailored to your income and other financial circumstances, including your obligations to repay debts not included in bankruptcy.

For many senior citizens, Chapter 7 is a more effective, beneficial type of bankruptcy. This is largely due to the income and types of debts senior citizens are likely to have.

Income: Because most seniors are living with income from retirement accounts, pensions, and government support, the average income of U.S. senior citizens is much lower than that of younger, still employed filers. To be eligible for Chapter 7, filers must pass the Means Test. In other words, their income has to be lower than the state median of a similar household. Not only are most seniors eligible for Chapter 7, they also don’t have the income to support a long-term repayment plan through Chapter 13.

Debt: Chapter 7 discharges unsecured debts and debts that are tied to properties in full. Many senior citizens have medical debts due to the minimal coverage of Medicare programs or a lack of work-provided health insurance. Credit card debt is another common debt that senior citizens hold, along with most Americans of all ages. Both credit card and medical debt are discharged completely in Chapter 7. Additionally, most seniors have paid off debts on their properties in years prior, which means they won’t have to worry about their non-exempt properties being liquidated in the Chapter 7 process.

While some seniors can effectively file a Chapter 13 case, most will find more relief through Chapter 7. If you’re considering filing for any type of bankruptcy, contact Behm Law Group, Ltd. at (507) 387-7200 or via email at stephen@mankatobankruptcy.com for more information about debt relief in Waseca, MN.

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How Filing for Bankruptcy Will Affect Embezzlement Judgments

Bankruptcy is a highly effective debt relief option available to individual consumers and businesses alike. It’s a system that is designed to protect the economy on varying scales from the oversaturation of debtors unable to continue making regular payments. It’s also designed to protect debtors from destitution while maintaining fair treatment for any creditors involved. If you are considering choosing bankruptcy as a long-term debt relief option, it’s important to understand how difficult it could be to file without professional experience, knowledge, and guidance. With the help of Behm Law Group Ltd, you can work through the nuances and complexities of filing for bankruptcy in Fairmont, MN, and build a strong, successful case.

While bankruptcy is an efficient tool for debt relief, it doesn’t necessarily wipe out all debts. Unsecured debts like credit card debt or medical bills are almost always discharged, but other debts like some taxes or priority obligations like child support are largely exempt from discharge in bankruptcy. Like those debts, not all legal debts like lawsuit judgments, fines, or other debts are always discharged in a bankruptcy.

Embezzlement judgments, for example, may or may not be discharged in your bankruptcy. If you have committed embezzlement fraud and have gone through the legal processing of that crime, you will most likely have a criminal fine or restitution on your record. Criminal fines or restitution fall into the category of priority (non-dischargeable) debt and they will not be discharged in your bankruptcy. However, you may be able to have that debt discharged if it is only classified as a civil judgement.

Civil judgments are claims against you that fall into the category of debts owed for “fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny.” If your debt for embezzlement is a civil judgment rather than a criminal fine or restitution, the creditor you owe that debt to must request that the court declare it non-dischargeable. To do this, they must take action early on in your case, specifically, within 60 days of the date set for the 341 meeting of creditors.

To request this, a creditor will have to file an adversary proceeding (i.e., lawsuit) with the court. In this proceeding, the creditor must prove that your embezzlement actions were fraudulent, that you were not authorized by the company or by the law to take the money or property, and that the property taken was held in trust for another party (i.e., the company or person embezzled from). If a creditor files a successful adversary proceeding, your civil judgment debt will not be discharged in bankruptcy.

If you are considering filing for bankruptcy in Fairmont, MN, and want to learn more about how different debts will be affected, contact Behm Law Group Ltd. at (507) 387-7200 or via email at stephen@mankatobankruptcy.com today.

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Newlyweds Using Joint Bankruptcy to Find Debt Relief in Mankato, MN

When people find themselves in a relationship with the person they want to spend the rest of their life with and they decide to take the next step into marriage, not much will stop them from tying the knot. Even something such as financial circumstances, which can be considered relatively trivial in the grand scheme of life, will be unlikely to prevent a marriage if a couple is truly determined. This means that many couples enter a marriage with substantial debt, low incomes, or otherwise less-than-stable finances. If you and your spouse are finding it difficult to pay your debts, bankruptcy might be the next step to finding long-term financial improvement. With the help of Behm Law Group Ltd., you and your spouse can file a successful joint bankruptcy case and receive effective debt relief in Mankato, MN.

Individual consumer bankruptcy chapters, including Chapter 7 liquidation and Chapter 13 reorganization type bankruptcies, can also be filed jointly by a married couple. Joint filings allow the combination of both your and your spouse’s debts into one case, requiring only one each of the pre-bankruptcy requirements, including the meeting of creditors, Means Test, credit counseling, and more. In addition to the consolidation of two of each pre-bankruptcy requirements into one, the bankruptcy fees are the same for individuals as for joint-filing spouses. This cuts in half the amount you and your spouse would pay if you each filed for an individual case.

If you choose to file a joint bankruptcy, all your financial information will be combined into a report that essentially represents as a single filer. Your assets (properties) and liabilities (debts) will be combined, and both of your incomes will be taken into consideration. For most joint filers, we recommend considering Chapter 13 more seriously than attempting to file for Chapter 7 for two reasons: eligibility and exemptions.

With a higher income from your combined jobs, accounts, or any other sources, you may not qualify for Chapter 7 because you may not pass the Means Test. The Means Test assesses your income-to-debt ratio. To be eligible for Chapter 7, your income-to-debt ratio must be lower than the state median of a similar household. Additionally, you can only claim the same exemptions of an individual filer. This means you may not be able to protect some of your property from liquidation in Chapter 7 because your debts are higher, your assets are more valuable, but your exemptions are not adjusted accordingly.

Filing for joint Chapter 13, however, means you save money in bankruptcy fees and attorney costs, save time on pre-bankruptcy requirements, have an easier time meeting repayment plan requirements with both of your incomes, and can pay off your plan more quickly than you would as two individuals.

To learn more about joint bankruptcy and debt relief in Mankato, MN, contact Behm Law Group Ltd. today at (507) 387-7200 or via email at stephen@mankatobankruptcy.com.

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Redeeming Secured Property in Chapter 7 Bankruptcy

If you’re facing a large amount of debt and unable to make payments each month on those debts without severely compromising your quality of life, you may want to consider filing for bankruptcy. Chapter 7 bankruptcy is the most commonly filed case for individual consumers. In fact, there were over 400,000 non-business Chapter 7 bankruptcy cases filed in 2017. If you are considering filing for Chapter 7 bankruptcy in Redwood Falls, MN, Behm Law Group, Ltd. can help you put together a strong case that will provide long-term debt relief.

Chapter 7 bankruptcy works as a liquidation process. You will have to provide all your financial information including debts, income, and properties to the bankruptcy trustee assigned to oversee your case. The trustee will then liquidate (sell) any non-exempt assets (properties) you have if you cannot claim an exemption on them. You can claim exemption amounts on properties like your home or car and other assets to protect them from liquidation. Once your non-exempt assets have been liquidated, the debts tied to them are discharged along with your unsecured debts such as credit card and medical debt.

There is one other way your secured properties can be treated in Chapter 7 other than with liquidation or exemption. They can be redeemed.

Property redemption essentially means you are buying the property back from your creditor for the value it’s currently worth. This is a beneficial option for filers if they owe a debt on the property larger than its value. By redeeming the property, you may pay less than actually paying back the debt, and you will be able to keep the asset.

The value of the property is either agreed upon by you and your creditor, or, if you disagree, the court holds a valuation hearing. When the value is determined, you have to buy it back by paying one lump sum.

To redeem a property, there are several requirements that must be met. These include:

  • The property cannot be of value in the Chapter 7 case. This may mean you exempted it from liquidation or the trustee has determined that it has no value to your bankruptcy estate.
  • The property must be a tangible item.
  • The property cannot be real estate. It has to be a personal item such as a vehicle or computer – something other than your home or other real estate properties.
  • The property cannot be used for business purposes (i.e. if you use your car for onsite jobs).

Redemption is an effective way to reclaim property you owed a debt on that was much higher than its actual value. If you want to own your property debt-free, the Chapter 7 bankruptcy process and redemption is one way to do it.

To learn more about redemption and filing for Chapter 7 bankruptcy in Redwood Falls, MN, contact Behm Law Group, Ltd. at (507) 387-7200 or via email at stephen@mankatobankruptcy.com today.

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Overview of the Basic Differences between Chapter 7 and Chapter 13 Bankruptcy

In the United States, there are two main types of bankruptcy available to individuals and businesses alike: Chapter 7 and Chapter 13. While both types provide government-administered debt relief, the two chapters work very differently. Both are valuable options for debtors, and the more suitable one depends on the financial and personal circumstances of any given filer. If you are considering bankruptcy but don’t know where to start, Behm Law Group Ltd. can help. We can work with you to determine which chapter is right for you, and we can guide and protect you throughout your case. Filing for bankruptcy in St. Peter, MN, isn’t the impossible process it might seem to be, and our expert attorneys can help you see that every step of the way.

The main differences between Chapter 7 and Chapter 13 lie in how the debts are handled and how long the cases take.

Debt Handling

  • Chapter 7 is a liquidation process. This means your non-exempt assets/properties are liquidated/sold, and the amount realized from that sale is given to your creditors. This payment to your creditors allows any debts tied to those sold properties to be discharged. Your unsecured debts, such as credit card or medical debt, will also be discharged in the Chapter 7 process.
  • Chapter 13 is a reorganization process. This means that you will take your debts and reorganize them into a repayment plan customized to your income. The repayment plan requires one lump monthly payment until your plan is complete. You may be able to repay your secured debts in full under different terms, but your unsecured debts will be fully discharged after your chapter 13 plan has concluded.

Time

  • Chapter 7 takes between three to four months to complete. The time period varies depending on how quickly you complete the pre-bankruptcy credit counseling and other requirements, how long it takes your trustee to liquidate any non-exempt assets, and whether there are any judgment claims in your case that need to be expunged. 
  • Chapter 13 takes three to five years to complete. Your repayment plan will either be a three-year or a five-year period. If your income is lower than the state median of a similar household, it will be a three-year plan. If it’s higher, then your plan will be five years.

There are other differences between Chapter 7 and Chapter 13 as both are nuanced processes that vary case by case. Another major difference, for example, is that you can only qualify for Chapter 7 if you pass the state Means Test. This test measures your income-to-debt ratio. You’ll only be eligible for Chapter 7 if that ratio is lower than the state median of a similar household.

To learn more about the differences between the two chapters or to begin filing for bankruptcy in St. Peter, MN, contact Behm Law Group Ltd. at (507) 387-7200 or via email at stephen@mankatobankruptcy.com today.

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Unusual Properties Involved in Chapter 7 Bankruptcy

Filing for bankruptcy is a highly effective process for finding long-term, permanent debt relief. Not only does bankruptcy treat the majority of common individual debts, it also creates a situation for debtors to learn better financial practices and it protects the local and national economies from an excess of debts that won’t be repaid. If you are considering filing for bankruptcy, you’re not alone. Thousands of Americans file each year. With the help of Behm Law Group, Ltd, you can build a successful case for Chapter 13 or Chapter 7 bankruptcy in Worthington, MN.

Chapter 7 bankruptcy is the most commonly filed type of bankruptcy for individuals and consumers alike. It works to discharge your debts in exchange for the liquidation of your non-exempt assets. This means you may lose some non-exempt property in Chapter 7, but it doesn’t mean you’ll be left destitute with nothing to your name. In fact, thanks to the allotted exemptions you’ll be able to claim, most if not all of your property, like your home or car, will be protected.  In fact, in the vast majority of chapter 7 bankruptcy cases, all people lose are their debts and no property is lost at all.  

On the other hand, the property that cannot be exempted or protected will be liquidated or sold by the chapter 7 bankruptcy trustee. This often includes luxury items and other uncommon properties. Some unusual properties that might be subjected to the liquidation process include:

  • Pets: Most pets won’t be of any interest to your trustee because their monetary value is often insignificant in comparison with the rest of your property. However, if your pet is a rare breed, exotic animal, show-breed, or other expensive animal, it could literally be worth thousands of dollars. In that case, your pet could, unfortunately, be sold in the bankruptcy process.
  • Artwork: If you own valuable artwork, you may not be able to exempt or protect all of it from the bankruptcy process. Depending on the circumstances of your case, if it has a lot of value, your trustee could sell or liquidate it.
  • Jewelry: While exemptions can protect some of the value of one’s jewelry, some people could lose some of their jewelry depending on its overall value.
  • Boats: Boats are expensive, and if you’re filing for bankruptcy and own a boat, it’s likely you have a lot of debt to get rid of in a bankruptcy. Because of this, it may be difficult to exempt a boat from liquidation if that vessel has a lot of value.
  • Collections: Valuable collections often include rare items, complete assortments, antiques, or specialty trading cards. Even card collections like Magic the Gathering or Pokémon can be of value today. If you’ve put time and energy into compiling a valuable collection, it’s important to understand that, depending on its overall value, it could be liquidated in a Chapter 7 bankruptcy.

If you are considering filing for Chapter 7 bankruptcy in Worthington, MN and want to know more about exemptions, contact Behm Law Group, Ltd today at (507) 387-7200 or via email at stephen@mankatobankruptcy.com.