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Understanding the Means Test Eligibility for Chapter 7 Bankruptcy

In times of financial difficulty there are many options for individual consumers to find relief from the hardship of debt. One of the most effective methods of debt relief is the process of bankruptcy. Filing for bankruptcy provides a government organized relief system that offers long-term results. The most common types of debt, such as credit card debt, medical debt and mortgages, can be treated and discharged in bankruptcy. If you’re considering filing for bankruptcy relief, Behm Law Group, Ltd. can provide guidance and protection in Chapter 13 and Chapter 7 bankruptcy in St. Peter, MN.

Both Chapter 13 and Chapter 7 bankruptcy offer debt relief in different formats. With Chapter 13, your debts will be worked into a repayment plan lasting three to five years where the terms of payment can be much more lenient and beneficial. In Chapter 7 bankruptcy, your debts will be discharged in exchange for the collection and sale of any non-exempt assets by the chapter 7 bankruptcy trustee. However, the vast majority of chapter 7 cases are “no asset” cases where there are no non-exempt assets that are collected and sold by the chapter 7 trustee and where the only things that are lost are filers’ debts. This means Chapter 7 is ideal for most filers’ situations, but without proper vetting, some might be able to abuse this type of bankruptcy. To prevent bankruptcy abuse, the court applies a method for the examination of the financial conditions of filers called the Means Test.

The Means Test works in two steps to determine if your income-to-debt ratio merits eligibility for Chapter 7 bankruptcy. Put simply, if your disposable income is equal to or lower than the state median disposable income of a similar sized household, you qualify for Chapter 7 bankruptcy relief.

• The Means Test calculates your current household disposable income. If your initial income, without taking debts into account, is lower than the state median disposable income, you qualify for Chapter 7 and can continue to file.

• If the Means Test calculates that your disposable income is higher than the state median disposable income, other steps must be performed in the examination of your financial situation. To complete this calculation, you must complete a significantly broader range of paperwork. This paperwork determines your disposable income after all reasonable and necessary living expenses are accounted for. The types and allowed amounts of these expenses (such as food, gas, and other necessities) are set forth in the bankruptcy code itself and are used to determine your disposable income. If your disposable income is equal to or higher than the median disposable income for a household of similar size, you would not be eligible for Chapter 7 bankruptcy.

If you can’t qualify for Chapter 7 bankruptcy relief after going through the Means Test, you still will most likely be eligible for Chapter 13 bankruptcy relief. If your disposable income is determined to be higher than the state median disposable income for a similar sized household, your Chapter 13 repayment plan will be scheduled for a five-year period. If your disposable income is lower than the state median disposable income as determined by the Means Test and you still choose to file for Chapter 13 bankruptcy relief, your repayment plan will be set for a three-year period.

To learn more about how the Means Test will decide the course of your Chapter 13 or Chapter 7 bankruptcy in St. Peter, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today or stephen@mankatobankruptcy.com.

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Increased Rates of Small Business Bankruptcy in Coming Months

The effects of the coronavirus pandemic on the global economy have been rapidly and frighteningly apparent. With stay-at-home orders and nonessential operation shutdowns now in place, many businesses have experienced layoffs, requested extensions on payments, and filed for government aid. Despite the large-scale federal stimulus package distributed after the CARES (Coronavirus Aid, Relief, and Economic Security) Act, hundreds of businesses of all shapes and sizes are still struggling. In the coming months, many companies will find themselves in dire financial conditions with no sign of improvement through an economic upturn. If you own a small business and are struggling even with the help of federal and state stimulus loans, filing for bankruptcy can help. With the advice and protection of Behm Law Group Ltd., you can file for small business bankruptcy in Jackson, MN, and receive relief from past and present debts.

 

Though the impact on the economy will affect everyone, the projection of a sharp increase in small business bankruptcies in the next year will disproportionately change the financial standings for a few industries.

 

Restaurants: The shutdown of nonessential businesses has had a severe impact on the food industry and restaurants in particular. The majority of all restaurants have shut down completely, while a few others are getting by via curbside and delivery services. Family-owned restaurants are having an especially difficult time, and hundreds will file for bankruptcy relief before the pandemic ends.

 

Luxury Stores: Boutiques, gift shops, and other luxury retailers are also having a hard time getting through the recession caused by the pandemic. Consumers dramatically limit spending on luxury goods when budgets get tight. That decrease in spending may last a long time, as past recessions have shown us, and for luxury retail business owners, bankruptcy may be the only way to survive.

 

Independent Oil Operations: Large oil and fossil fuel processors may have a good chance of getting through this time of extreme travel bans, but smaller independent companies may not survive. Oil costs are the lowest they’ve been in the last 10 years and demand continues to decrease. For owners of smaller oil processors, filing for bankruptcy may be the best way to protect themselves and their creditors.

 

Small Airlines: Despite multiple sources of federal support, small airports and airlines may have a hard time getting through the recession caused by the pandemic. With unsaturated airways and restrictions on air travel, most independent or privatized local airline companies have shut down completely. Increases in travel won’t pick up for some time, and it will be an uphill battle to return to pre-pandemic operations.

 

If you own a small business and are struggling to make ends meet during the coronavirus pandemic and its resulting recession, bankruptcy might be the right choice for you. To learn more about filing for bankruptcy in Jackson, MN, contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com.

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Working through COVID-19-Related Delays, Cancellations, and Court Closings with a Bankruptcy Attorney

During this time of a global health crisis, everyone is dealing with shutdowns of nonessential businesses, government organizations, and nonprofit services. Unfortunately, the COVID-19 pandemic has also effectively forced the shutdown of most court operations in Minnesota. So, for example, if you are working through a civil case, contesting tickets and other civil infractions, or filing for bankruptcy, you will most likely have to adapt to some new court stipulations until the spread of the virus and infection rates decrease enough to merit the reopening of courts for normal operations. For those working through dire financial times that require filing for bankruptcy relief, the shutdown of businesses and loss of primary income can put them in an even more difficult financial footing. If you are struggling with a COVID-19-related case issue or are looking to file for bankruptcy, you can benefit from the guidance and advice of a Behm Law Group Ltd. expert bankruptcy attorney in New Ulm, MN.

Although the majority of shutdown statuses for nonessential operations are a day-to-day condition that may be extended or shortened with little notice, some rules currently outline the bankruptcy court and other legal processes.

Court Timeline from March to April

1. On March 13, the President declared a national emergency.
2. On March 27, the President signed the CARES (Coronavirus Aid, Relief, and Economic Security) Act into law.
3. On March 29, the U.S. Court District of Minnesota declared the CARES Act will affect court actions generally in the coming future.
4. From March 30 to April 10, general orders No. 5 through No. 8 adjusted and outlined various ways COVID-19 will affect and change the court operations, including delays, cancellations, rescheduling, remote hearings, and closings.
5. On April 15, the court released general order No. 9, which delayed the majority of civil hearings, including bankruptcy court hearings, until after May 17.

While the court is officially “closed” for in-person bankruptcy hearings until after May 17, you do not need to wait until then to file for bankruptcy relief and any presently pending bankruptcy cases can be continued. In fact, you can file a petition with relative ease electronically through the court website. Additionally, you can work with a bankruptcy attorney via phone and remote communications to build a case that may be stronger and easier to file than an electronic non-bankruptcy case.

The issues you will most likely run into if you cannot wait to file for bankruptcy relief until the national emergency is lifted are any requirements that involve in-person contact with an attorney and the bankruptcy trustee. These requirements may include completing the credit counseling course, attending the meeting of the creditors, and any meetings with your attorney or trustee. To handle these potential issues, the majority of attorneys, creditors, trustees, and court representatives are offering remote meeting services through online conferencing programs.

If you are struggling with the financial hardships of the current pandemic, filing for bankruptcy is still an option even though the physical court is closed. To learn more about filing and working with a bankruptcy attorney in New Ulm, MN, during this time, contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com.

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Debt Assistance in a Major Recession

Despite the $2.2 trillion stimulus package of the CARES (Coronavirus Aid, Relief, and Economic Security) Act in March 2020, the impacts the novel coronavirus is having on the local, national, and global economies will most likely continue, potentially causing a recession that may result in the same severities as the 2008 Great Recession. In fact, some studies show the economic downtown due to COVID-19 may become a full-blown depression. Despite the dire financial reports and record rise in unemployment rates, individuals and their communities can implement many methods to weather difficult financial times, no matter how widespread the fallout. If you’re already experiencing the effects of the current economic downturn, consider the many options for debt assistance in Owatonna, MN, and the surrounding area, including filing for bankruptcy. With the help of Behm Law Group Ltd., you can use the bankruptcy process for long-term, effective debt relief during this time of crisis.

 

The projected recession will affect millions of U.S. citizens and businesses for an unforeseeable amount of time. Because of this uncertainty, many people will have difficulties meeting debt payments on time and they may accumulate delinquencies. Some options always available, such as debt settlement, loan consolidation, and debt workout, require direct communication with creditors or include the involvement of third-party agencies. In addition, the CARES Act provides several other options for debt assistance, including loan extensions, and payments deferments and modifications. Likewise, some private lenders are providing assistance programs and case-by-case work outs of debt.

 

While all of these non-bankruptcy debt assistance options vary in effectiveness, presuming you find a trustworthy third-party who will work with you in good faith instead of one of the many bad actors who simply want to make money off of you and cut and run, as the months wear on, you may need to do more for sustained and permanent debt relief in the long term. For many people, this will be the filing of a bankruptcy petition.

 

Bankruptcy is one of the longest used debt assistance options during times of recession and depression in the United States. In the 2008 recession, over 4 million non-business bankruptcy cases resolved individual debts in the time it took to turn the economy around (between 2008-2010). The history of bankruptcy successes during times of economic recession is a sign of hope for the future.

 

Bankruptcy is an effective tool whether you file to resolve a large portion of credit card debt and medical bills as a direct result of the COVID-19 crisis, or if you need to restructure your mortgage and other secured debts into a manageable repayment plan. During this current health and financial crisis, the majority of debt increases will be medical bills and credit card debts, both of which are dischargeable in bankruptcy. Other common debts taken on in a recession, such as tax debts and car loans, can also be resolved with the bankruptcy process and payment terms that are more favorable to you can be established.

 

To learn more about using bankruptcy as a form of debt assistance in Owatonna, MN,

during a recession, contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com today.

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How the 2020 CARES Act Affects Individual Consumer Bankruptcy

In March of 2020, the impact of the COVID-19 pandemic forced stay-at-home orders in most states, temporary closures of many businesses, and financial turmoil for many U.S. citizens. Unemployment rates soared over 4% nationally in March, and many more will continue to need government unemployment support until they can return to work.

If you’re one of the 22 million+ individuals who filed for unemployment due to the effects of the novel coronavirus crisis, you may still be struggling to meet debt payments even if your unemployment application was accepted. Fortunately, the 2020 CARES Act (Coronavirus Aid, Relief, and Economic Security Act) offers many forms of support, including several impacts on bankruptcy as a form of debt relief. If you’re filing for bankruptcy in Worthington, MN, Behm Law Group, Ltd. can provide guidance and protection during this difficult time.

When it comes to direct impacts on the bankruptcy code, the CARES Act has several effects that are currently in place:

• Monthly Income: In order to determine eligibility and the various economic circumstances of a bankruptcy filer, the court needs information about a filer’s current monthly income. However, many filers have an altered income during this time of national crisis due to the support of the CARES $2.2 trillion stimulus package. Most citizens will receive a stimulus check up to $1,200 in addition to other state and federal payouts. These government financial aid payments are NOT included in your monthly income and will not prevent you from qualifying for bankruptcy based on that income.

• Disposable Income: In addition to eliminating government payments related to COVID-19 and the CARES package, these amounts will not be included as disposable income in your bankruptcy case. This means those filing for, or currently in, a Chapter 13 repayment plan will not have to dedicate stimulus checks or other CARES payments to repaying creditors.

• Chapter 13 Modifications: For those who are already working through Chapter 13 repayment plans, there are some options for plan modifications based on changes to their financial circumstances caused by the COVID-19 pandemic. For both direct and indirect impacts of the COVID-19 crisis, Chapter 13 filers can request plan extensions up to seven years as well as other various plan modifications.

• Creditor Claims: In a typical bankruptcy case, creditors will file a claim on the debt owed to them and on any property involved regarding that loan. While the CARES Act doesn’t modify creditor claims in a new petition or a current bankruptcy case, it does allow filers to request payment deferments and cure defaults on liens. These conflicts will likely be resolved on a case-by-case basis during this time.

If you’re considering filing for bankruptcy in Worthington, MN and want to know more about how the CARES Act may affect that process, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

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Comparing Debt Management Options

Despite many best efforts from national and local governments, banks, and other financial support providers, the global economy is struggling in the current recession caused by COVID-19. If you’re seeing the effects of this recession, you are not alone. Unemployment funds provide some support, but for many, that income doesn’t fill every budget need. Those who are finding it difficult to meet monthly debt payments have several options available to them. With the help of Behm Law Group Ltd., you can learn how bankruptcy and other options of debt management in Mankato, MN, are valuable tools you can use to your advantage during times of financial stress.

 

While filing for bankruptcy may be one of the most legally dramatic options available to you in comparison with many other methods of debt management, it may also be the most effective because it is permanent and binding. Bankruptcy helps thousands of U.S. citizens and businesses recover from moderate to severe debt each year. If you file for bankruptcy, you will either have:

 

  • Your debts discharged in exchange for the liquidation of non-exempt assets, or
  • Your debts reorganized into a three to five-year repayment plan suited to your income and providing more favorable payment terms.

 

Both of these bankruptcy options are effective in their own ways, depending on the situation of the filer. If you aren’t ready to file for bankruptcy, or if it doesn’t make sense for your debts, there are other ways you can manage your debts and find relief. Some common methods include:

 

Loan modifications

Unlike many other ways of working out debts with your lender, loan modifications are a permanent change to debt terms. If you are able to work out a loan modification with your creditor, there will be one or more requirements altered in your payment plan. Your creditor may allow an interest rate reduction or convert a variable rate to a fixed rate. A creditor might also forbear a portion of the principal amount. This means that amount will be set aside before the monthly payment rate is calculated, which lowers the per-payment rate, but does not reduce the loan total.

Non-bankruptcy repayment plans

If you have been unable to make a debt payment for some time, you may be able to work out a repayment plan with your lender for the delinquent amount you owe. This repayment plan will likely spread the amount you owe from past payments evenly over future payments. Typical repayment plans only span three to six months, however.  Lenders very rarely extend payment plans beyond three to six months.

Forbearance agreements

Forbearance agreements are similar to both loan modifications and repayment plans, but they typically occur before you are delinquent on a loan. You can request a reduction or pause on payments for a short time and work out a way to repay the amount you owe from that time.

 

All these options of debt management in Mankato, MN, are short-term. If the recession continues, and you still cannot meet debt payments, bankruptcy is always an available and permanent option. To learn more about bankruptcy, contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com.