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The Strange (and Unnerving) History of Bankruptcy

If you’re struggling with financial hardship, you are not alone. Today, over 38 million people in America live at or below the poverty line. While finances should never be paired with human decency, unfortunately for hundreds of years, they have gone hand in hand with social comment. In years past, millions of people living in poverty with debts to pay were treated much differently, and more severely, than they are today. If you are in need of financial relief and are filing for bankruptcy in Windom, MN, you are making a positive choice for your household that is trending away from any social stigma. Indeed, Behm Law Group Ltd. can help you work through your bankruptcy case and receive long-term debt relief that is much different than history’s strange and often drastic reactions to debt.

 

In the past, holding debt was much more dangerous and unsettling than it is with today’s bankruptcy laws. Years ago, in many parts of the world, if you were a debtor and were unable to repay your lender, you could be subject to some unnerving consequences such as those that follow.

 

Corporal punishment: Throughout the majority of history, debtors were punished with physical harm if they did not or could not pay their lenders. A sentence might have manifested itself as a beating, stockage, mutilation, or other similar negative reprisal. In fact, throughout many societies, corporal punishment in varying degrees of severity was the most common consequence of not repaying your debt.

Death penalty: The most severe punishment for unpaid debts was execution. Infamously, the vast empire of Ghengis and Kublai Khan demanded an execution penalty for unpaid debts that was typically inflicted by trampling a debtor to death under horse foot.

Jail time: Throughout history, being thrown into a dungeon or jailed for some time was another common punishment. While jail conditions of the past were significantly less sanitary and more dangerous than they are today, at the time, imprisonment was considered one of the least severe punishments for debtors.

Slavery: Ancient Greeks and Romans implemented debt slavery laws that forced debtors (and often their family members) into indentured labor positions. Debt slaves could work off what they owed over time, but more frequently than not, they faced a life sentence of hard servitude.

“Compromise”: In societies where debt settlements were directly worked out between the lender and borrower, certain compromises were available. These “compromises,” however, were often less than fair to the debtor and could include sacrificing your wife and daughters as property, offering sons into slavery, or facing public humiliation. One compromise is where bankruptcy, which comes from the Latin bancus ruptus, literally “broken bench,” got its name. In ancient Rome, businesses operated from a simple bench or a stall. If they could not repay their debts, creditors could carry off or destroy/break their bench/storefront.

 

There are many other strange ways we have handled debts in the past, but today, we have a well-established system of government-mandated bankruptcy law. If you are considering filing for bankruptcy in Windom, MN, contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com today.

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Filing with the Help of a Bankruptcy Attorney During Quarantine

After a long spring of dark news and constant worry as we shelter in place, the severity of the COVID-19 pandemic is beginning to show signs of lifting. However, while states are relaxing aspects of the coronavirus lock down, many of us are still coping with work, communication, and other parts of our lives remotely.

 

Minnesota district courts implemented a preparedness plan outlining how they will navigate in the face of COVID-19, but civil cases like bankruptcy are still being conducted largely through remote contact. If you’re struggling with debt and considering filing a bankruptcy case during this unsure time, you can benefit greatly from the advice and guidance of an expert bankruptcy attorney in Pipestone, MN and the surrounding area. Behm Law Group, Ltd. attorneys offer the skill, knowledge, and experience you need to navigate a case in times like this when bankruptcy rules are changing rapidly to address the circumstances of the coronavirus outbreak.

 

Fortunately for all parties involved, bankruptcy is a legal process that can, in part, be done remotely. With phone, video conferencing, email, and other remote contact resources, you can work through the preparation process with relative efficiency. On the other hand, understanding the new rules when it comes to those remote processes can be difficult, and accessibility to continually updated information is less than ideal. Currently, the basic conditions of filing under quarantine include remote scheduling of the following:

 

  • Meetings with your bankruptcy attorney: These can be scheduled over the phone or through video conferencing. Attorneys can provide online drop boxes for forms and all signatures. Your lawyer has the ability to conduct the 341 meeting of creditors with the trustee remotely.
  • Meeting of creditors: The meeting of the creditors (or 341 meeting) is one of your bankruptcy requirements. All creditors may attend, as well as the trustee, the bankruptcy filer, and the bankruptcy filer’s attorney. Currently, these meetings are scheduled through video conferencing or telephonically.
  • Credit counseling: One other bankruptcy requirement that can be conducted in person is credit counseling. All filers must complete a credit counseling course through a court-approved agency within 180 days prior to filing their bankruptcy petition. These counseling sessions are now being scheduled remotely through various means.
  • Document exchange: Finally, all document exchanges between the filer, court, trustee, creditors, and bankruptcy attorney can be done digitally. This includes the suspension of wet (in person) signature requirements. In addition to electronic document exchanges, attorneys are providing digital packets that unpack the nuanced and complicated rules of current filing conditions for bankruptcy.

 

Overall, courts and attorneys have reacted quickly to state shutdowns and other coronavirus conditions, putting remote options into place and changing rules as things progress. To start your filing process remotely, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com for a trusted, experienced bankruptcy attorney in Pipestone, MN.

 

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How the CARES Act Affects Mortgage Forbearances for Those in a Chapter 13 Bankruptcy

Since the beginning of 2020, and for the foreseeable future, everyone in the United States and across the world is dealing with some serious difficulties in the face of COVID-19. One of the most prominent issues many in the United States are struggling with is a lack of income due to shelter-in-place orders and nonessential business shutdowns. Combined with layoffs and other factors, the situation is worse for those who struggled with finances even before the outbreak of the virus. These people are having to take actions to protect themselves and they are working with creditors, banks, and other loan providers to come up with a sound financial plan.

 

The CARES Act was put into place this past March to provide relief to U.S. citizens and businesses through various means. For many, one of the most helpful parts of the CARES Act is the allowance of a mortgage forbearance for up to six months. However, for those working through a Chapter 13 repayment plan, the CARES Act may affect a mortgage forbearance differently than for other individuals. If you are considering filing a Chapter 13 bankruptcy in Waseca, MN, or the surrounding area during this time, Behm Law Group Ltd. can help you understand how the CARES Act could change a mortgage forbearance and other aspects of your finances.

 

For those not in a Chapter 13 bankruptcy, the CARES Act allows individuals to request a forbearance on their mortgage lasting up to six months. There may also be an option to delay making payments on mortgages through forbearance of an additional six months. Requesting this forbearance for those in a Chapter 13 bankruptcy, however, becomes a bit more complicated.

 

For any changes in a Chapter 13 repayment plan, including a mortgage forbearance, all parties involved must be notified. While requesting a mortgage forbearance on the bankruptcy filer’s end is almost the same as for individuals outside of a bankruptcy, the passing of information among the loan services, trustee, and bankruptcy attorney can be complicated. Because the COVID-19 pandemic is an unprecedented situation, the bankruptcy code doesn’t have in-place guidelines to handle issues related to it. Consequently, the reporting of mortgage forbearance requests to parties involved in a Chapter 13 bankruptcy depends on a local district bankruptcy court’s regulations.

 

To properly provide a temporary mortgage forbearance notification in a chapter 13 bankruptcy, the National Association of Chapter 13 Trustees has established a few basic ways mortgage lenders can provide forbearance information to parties involved in a bankruptcy proceeding.

 

  1. General notice: Mortgage lenders can file a general notice with the bankruptcy court outlining the forbearance terms in the court docket for a particular bankruptcy case.
  2. Claims register: Mortgage lenders can also file a claim on the claims register, which is typically more directly linked to the chapter 13 trustee’s system.
  3. Mail a letter: Mortgage lenders can send a physical letter to the bankruptcy filer, the chapter 13 trustee and all interested parties detailing the mortgage forbearance terms.
  4. Notice of payment change: Finally, mortgage lenders can file a notice of payment modification in the bankruptcy court claims register for a particular bankruptcy case.

 

All of these options have their advantages and disadvantages, depending on the locality. Mortgage lenders should be working through whichever process is best for each bankruptcy judicial district.

 

To learn more about mortgage forbearance in a Chapter 13 bankruptcy in Waseca, MN, contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com today.

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When and Why You Should Redeem Property in Chapter 7 Bankruptcy

If you’re struggling with a low income and looming debts, it may be time to start thinking about taking positive actions for relief that keeps your finances stabilized in the long term. One of the most effective resources available to you for debt relief is bankruptcy. Specifically, if you’re facing a severe imbalance between debt and income, you’ll likely benefit most from a liquidation type of bankruptcy that discharges your debts. The U.S. bankruptcy code outlines Chapter 7 as a liquidation bankruptcy for individuals and businesses alike. Behm Law Group, Ltd. attorneys have helped many clients file successful cases in Chapter 7 bankruptcy and receive effective debt relief.

 

Chapter 7 bankruptcy, like all other types of bankruptcy, is still a process that must remain fair to debtors and creditors alike. This means that, though the filer will have their debts discharged, they also could lose some of their non-exempt assets to a liquidation process that returns a monetary value to creditors. Even if they’re not repaid in full on the debts you owe, creditors will sometimes not be left empty handed.  However in the vast majority of cases all of a filer’s assets can be protected from liquidation with the bankruptcy exemptions (such as the homestead or motor vehicle exemption) provided under the bankruptcy code or provided by state law.

 

While exemptions are the primary method of protecting assets, there are some other ways to save your property. One less common way to keep your property is through redemption.

 

Why to redeem: Typically speaking, you will only benefit from redeeming a property in Chapter 7 bankruptcy if you owe substantially more debt on the property than the actual value of the asset. For example, if your car is not protected by the motor vehicle exemption and it’s currently worth $2,000 but you still owe a debt of $5,000 on the loan, you can redeem that property by paying the $2,000 value of the car to the creditor.

 

When to redeem: You can only redeem an asset if certain requirements are met:

 

  1. The property is tangible, but the asset cannot be real estate or business property.
  2. The property is collateral for a secured debt.
  3. The bankruptcy trustee abandons the property.
  4. You are able to repay the value of the property in one lump sum.

 

For the most part, those who redeem property use it for vehicles because they are products that depreciate quickly in comparison with the large amounts of the debts that remain on them. Other common properties redeemed in a Chapter 7 case are household appliances, furniture, antiques, and luxury goods.

 

With our guidance, you can build a strong case for Chapter 7 bankruptcy and determine the best course of action for exemptions, redemption, and other aspects of the process. To learn more about filing, contact Behm Law Group, Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com today.

 

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4 Most Common Types of Bankruptcy Fraud

In the United States today, bankruptcy law has many rules that serve to prevent fraudulent cases. Despite these rules, there are times when trustees catch mistakes or intentional abuse, which results in a case being dismissed, the denial of debt relief or the filing of criminal charges.  With the exception of a filer intentionally committing fraud, the chances of one engaging in fraudulent conduct are low.  The guidance and advice of a bankruptcy attorney will ensure the filing of a clean, strong case where there would be less of a chance for mistakes which could be interpreted as fraudulent conduct. If you are considering filing for bankruptcy in Redwood Falls, MN, or the surrounding area, Behm Law Group Ltd. can help you understand what can be interpreted as fraudulent conduct and how to avoid it in your Chapter 7 or Chapter 13 bankruptcy filing.

 

As an individual filer, you have two primary options for bankruptcy: liquidation or reorganization. Chapter 7 liquidation bankruptcy works to discharge your debts in exchange for the sale of your non-exempt assets. Chapter 13 reorganization works to structure your debts into a manageable repayment plan lasting from a three- to five-year period. There are various nuances in the types of fraud between the two bankruptcy options, but in general, four kinds of fraudulent actions make up the most common causes of case dismissal and possible bases for legal action, including the filing of criminal charges, against you.

 

  • Intentional falsification of forms: Whatever chapter you file for, you will be required to submit a large number of forms, documents, and other paperwork detailing your financial history and current situation. False information or the intentional failure to provide any part of these documents can be considered fraud and result in a case dismissal. If you intentionally falsify information, you may even be charged with perjury, which could result in criminal charges being filed against you.
  • Asset hiding: One common type of bankruptcy fraud in Chapter 7 cases is asset hiding. Because some filers can lose assets in liquidation during a Chapter 7 case, they can be tempted to hide assets. While it’s possible that some filers may get away with this, you will be denied debt relief if the trustee discovers that even a small asset of low value has been hidden.
  • Multiple filings: You will be committing fraud if you file multiple cases with different information or in different jurisdictions either at the same time or within unacceptable periods of time between cases. You must adhere to court-regulated timelines between cases and provide requested information, or your case will be dismissed.
  • Bribes: Bribery of bankruptcy trustees is rare but it has happened.  The few who have at first gotten away with it are often caught later. Any bribery on your behalf will result in a dismissal of your case. Depending on the circumstances, there may be even more severe consequences for having offered someone a bribe.

 

If your case is dismissed for any reason, you may have to wait up to 180 days until you can file again. The easiest and most assured way to avoid any case dismissal or other issues with your case’s success is to work with a skilled and knowledgeable bankruptcy attorney.

 

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

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What Current Big Businesses Bankruptcies Mean for Individuals Already Seeking Debt Relief

The continued COVID-19 crisis is still showing the impact it’s having on the global economy. More and more large companies, local businesses, and nonprofit organizations will struggle to make ends meet, and those that cannot may find debt relief in bankruptcy. With the cases of Neiman Marcus and J.Crew, we’re seeing the first of many large business bankruptcies that are an almost direct result of the coronavirus pandemic and shelter-in-place orders.

 

There are many signals that big business bankruptcies send to individual consumers, including the fact that we’re entering a recession. An economic recession often includes increases in individual debts. If you’re struggling with worsening financial circumstances, Behm Law Group, Ltd. can help you join others who are finding debt relief in Mankato, MN through bankruptcy.

 

While big business bankruptcies might not affect you directly, they’re a signal of a changing economy. This often means that you may be impacted in other ways. If you haven’t already seen harder financial times due to the pandemic and national crisis shut down, these big business bankruptcies might be a sign of worse times to come:

 

  • Art Van Furniture filed for reorganization bankruptcy on March 8th. In April, that reorganization was converted to a liquidation case which will require the closure of Art Van as a whole.
  • Bar Louie shuttered almost half of its locations in January after struggling with early COVID-19 shutdowns.
  • CMX Cinemas filed to reorganize its debts on April 25th, shutting down all 41 locations in the meantime.
  • Frontier Communications filed a $10 billion debt reorganization plan on April 14th. It’s one of the largest telecom companies in America.
  • J.Crew filed on May 4th for a reorganization plan of $1.7 billion in debt. 181 J.Crew stores, 140 J.Crew-owned Madewell brand stores, and 170 factory stores are currently closed but will open after COVID-19 restrictions are lifted.
  • Pier 1 filed reorganization bankruptcy on February 17th with almost 1,000 stores. The company’s stock has declined steadily since 2013.
  • Rubie’s Costume Company is the largest costume supplier in the world. The company filed for bankruptcy on April 30th.

 

Other large oil companies and retailers have also begun the process to file for reorganization or liquidation bankruptcy. The big takeaway from these large business bankruptcies for individual consumers is a wide view of how the economy is changing as a result of the coronavirus pandemic.

 

Individuals with growing debts should know that they’re not alone. If you’re considering filing bankruptcy for debt relief in Mankato, MN, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.