COVID-19 Medical Expenses and Chapter 7 Bankruptcy

Even for those with excellent health insurance, mounting medical bills can put a serious strain on finances. During this time especially, with the threat of COVID-19, many U.S. citizens fear a serious medical bill might cause a loss of financial stability. In fact, a recent survey showed that about half of Americans felt a serious medical cost would force them to file for bankruptcy relief.

 

Because of the coronavirus pandemic, this belief has increased by around 5% since 2019. While the threat of poor health and financial downturn is a scary possibility to keep at the forefront of your day-to-day, it’s important to remember that if you do have to file a bankruptcy case, those medical debts and many others will be quickly resolved. With the guidance and support of a Behm Law Group, Ltd. attorney, you can file a successful case for Chapter 7 bankruptcy in Owatonna, MN and receive long-term, effective debt relief.

 

Chapter 7 bankruptcy is a liquidation bankruptcy process. Essentially, this means your non-exempt assets will be sold (liquidated) and that non-exempt value will be paid to your creditors. The liquidation/sale of non-exempt assets is the exception rather than the rule of how things usually transpire in a chapter 7 bankruptcy case, however. Typically, all that people lose in a chapter 7 bankruptcy case are their unwanted debts.  Because the bankruptcy system is in place to help debtors who cannot repay their debts reorganize and rehabilitate their financial affairs, you will have the opportunity to assert bankruptcy exemptions that protect your property from the liquidation process. This typically includes protecting your house with the homestead exemption and protecting your car with a vehicle exemption. This means filers aren’t left completely destitute while fairness to creditors is still taken into account.

 

There are three main types of debt broken down in a Chapter 7 bankruptcy case:

 

  1. Priority debt, including child support, alimony, some tax debts, and others, all of which will be generally excepted from discharge in any bankruptcy process.
  2. Secured debt, such as a mortgage or car loan, you’ll pay in full if you want to retain the property securing (serving as collateral for) the debt. If you don’t want to retain the property, you’ll have that debt fully discharged.
  3. Unsecured debt, including medical bills and credit card debt, is discharged in a Chapter 7 bankruptcy case. If you’re struggling from severe medical debt from a COVID-19 case or any other treatment cost, a Chapter 7 bankruptcy might be the most effective debt relief option for you.

 

If the majority of your debts are unsecured and you know you can protect your home or other important property with exemptions, Chapter 7 will likely be a very effective way of obtaining long-term financial reorganization and rehabilitation.

 

To learn more about Chapter 7 bankruptcy in Owatonna, MN or the surrounding area, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

 

COVID-19 Stimulus and Bankruptcy

As the future of potential stimulus bills is still undecided, households across the United States are keeping a close eye on their finances. For some, a stimulus check may mean the difference between making a rent payment or being evicted. Not only do proposed stimulus bills offer a second check, they also extend several aspects that protect debtors from backlash if they are unable to meet monthly payments. If you are one of those debtors who faces unstable finances for any reason, this may be the ideal time to take action for long-term debt relief. Filing for bankruptcy may be the best option for your circumstances. With the help of Behm Law Group Ltd., you can determine if filing for bankruptcy in Luverne, MN, and the surrounding area is right for you.

 

When the CARES (Coronavirus Aid, Relief, and Economic Security) Act was established in March 2020, $2.2 trillion was used for various support systems for individuals and businesses across the United States. Anyone who filed for bankruptcy after the CARES Act passed knows that the stimulus checks and other aspects of the bill were protected assets in their bankruptcy cases. They could not be seized by the trustees administering their bankruptcy cases.  If you are worried about losing that vital stimulus support after the next bill passes, fear not. Any income from COVID-19 stimulus will be exempt from liquidation in Chapter 7 bankruptcy or a repayment plan in Chapter 13 bankruptcy. Additionally, the boost in income from the stimulus won’t prevent you from qualifying for bankruptcy.

 

While we wait for the next stimulus bill to pass, we can compare the CARES Act to what might be coming. Nearly all of us experienced the benefits of the CARES Act, so if we look at the differences between the proposed HEROES (Health and Economic Recovery Omnibus Emergency

Solutions) and HEALS (Help End Abusive Living Situations) Acts, we can predict how each might affect us.

 

Total cost of each packages

  • CARES: $2.2 trillion
  • HEROES: $3 trillion
  • HEALS: $1 trillion

 

Stimulus check amounts

  • CARES: $1,200 for each individual earning under $75,000, $2,400 for joint earners making under $125,000 with a reduction of $5 from every $100 for earners making more than income maximums
  • HEROES: same as CARES
  • HEALS: same as CARES

 

Stimulus check additions for dependents

  • CARES: $500 per dependent 16 and younger, which eliminated college students from receiving either a stimulus check or dependent additions
  • HEROES: maximum of three additions of $1,200 per dependent
  • HEALS: $500 per dependent with no age limit

 

Unemployment benefit additions

  • CARES: additional $600 per unemployment check, plus the usual state benefits
  • HEROES: same as CARES
  • HEALS: starting additional $200 per unemployment check, which will increase to an additional $500 per unemployment check to match 70% of lost wages subtracted against the state unemployment check

 

Many parts of the CARES Act expired at the end of July, but eviction moratoriums and other protections are still in place for those unable to meet rent and debt payments. Because of these protections, it is still viable to file for bankruptcy during this time. To get started on your bankruptcy in Luverne, MN, today, contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com.

COVID-19 Federal Aid for Farms and Chapter 12 Bankruptcy News

For many reasons, farmers across the United States frequently struggle financially. Not only is it difficult, especially given our country’s current economic difficulties, to generate a profit from a family-owned farm, but also American farms often incur much debt from the purchase of equipment and the payment of property taxes. Fortunately, the government is aware of the difficulties that many farmers across the nation face, and it works to provide support systems in many ways. Most recently, the CARES Act stimulus support has helped many farmers weather the economic shutdown as a result of COVID-19. When the stimulus support ends, however, family farmers and fishers will still have options for resolving their debts and stabilizing their finances. One debt relief option for farmers and fishers is filing for Chapter 12 reorganization bankruptcy. With the help of Behm Law Group Ltd., you can file a successful case for Chapter 12 reorganization bankruptcy in Pipestone, MN.

 

Chapter 12 bankruptcy is a reorganization type of bankruptcy designed specifically for farmers and fishers who derive at least 50% of their gross income from farming or commercial fishing operations. The Chapter 12 process works to restructure 100% of secured and priority debts and 0%-100% of unsecured debts into a manageable repayment plan. Chapter 12 has some special rules for the circumstances of farmers and fishers, differentiating it from Chapter 13, the other primary form of reorganization  bankruptcy relief for individuals.

 

Right now, the number of Chapter 12 bankruptcy cases that will be filed during the next year is difficult to predict, largely due to the added support of the CARES stimulus act. With the stimulus support, Chapter 12 bankruptcy cases decreased from 509 in the first half of 2019 to 284 in the first half of 2020. Additionally, many bankruptcy courts were closed and online filing was the only option up until as late as June. This closure and limitation to virtual-only filings contributed significantly to reduced Chapter 12 cases.

 

As the country moves forward with much less support from the stimulus act and with bankruptcy courts re-opening, most people expect to see a dramatic increase in the filing of Chapter 12 reorganization bankruptcy cases. Farms will struggle with the continuing COVID-19 restrictions and lowered sales without the unemployment and stimulus support. Potential acts that may be put into place for more COVID-19 stimulus relief are not guaranteed, but farmers and fishers will have the option to file Chapter 12 bankruptcy.

 

Because the majority of U.S. Chapter 12 bankruptcy cases are in the Midwest, Minnesota farmers are among the most at risk for financial difficulties. Taking positive action for debt relief by filing for Chapter 12 bankruptcy might be the best option farmers and fishers have for protecting their homes and businesses in the long run.

 

To learn more about the rates of Chapter 12 bankruptcy in Pipestone, MN, and the surrounding area, or to start your own Chapter 12 case, contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com.

Income-to-Debt Ratio and What It Means for Liquidation Bankruptcy

Many people have been struggling financially during 2020 because of the countless destructive economic impacts of the coronavirus pandemic. Even those with a stable income may be finding it difficult to meet debt payments each month.

 

If your finances are out of balance, no matter the cause, you always have the option to file for bankruptcy and receive long-term debt relief. At Behm Law Group, Ltd. we help clients work through reorganization chapter 13 or liquidation chapter 7 bankruptcy in Windom, MN, offering legal protection and guidance from start to finish.

 

One of the aspects of your finances that’s considered for any type of bankruptcy, but especially for liquidation bankruptcy (Chapter 7), is your income-to-debt ratio. This ratio measures your net surplus income after all debts are paid, and the ratio is a percentage of that value. For example, if your income is $35,000 before taxes and other deductions are removed and your total annual debt amount is $14,000, your income-to-debt ratio is 40%. When mortgage lenders or landlords take a look at your finances to see if you are eligible for a contract or loan, they typically measure your income-to-debt ratio on a monthly basis. For most lenders, a minimum income-to-debt ratio allowance is 43%.

 

When it comes to Chapter 7 liquidation bankruptcy, the income-to-debt ratio determines if a filer is eligible for that process. Chapter 7 bankruptcy works to discharge debts in exchange for the liquidation or sale of non-exempt assets.  In most cases, the bankruptcy code exemptions allowing one to protect one’s property are more than adequate to protect all of a person’s property from liquidation, however.  To prevent abuse of this system, filers are required to pass a legal mathematical threshold called the Means Test.

 

The Means Test asks a series of questions and requests the submission of some financial documents. It essentially determines your income-to-debt ratio and decides whether that ratio is below or above the state median or average income for a household of a similar size. If your income-to-debt ratio is lower than the state median or average, you qualify for chapter 7 bankruptcy.

 

The reason your income-to-debt ratio is considered rather than just your gross monthly income is because the debt load of each household can vary so greatly. You might have a low income but very little debt, and that combination could be a deterrence for filing Chapter 7. Likewise, a very high-income household might also have very high debt that renders an income-debt-ratio that is appropriate for the filing of a chapter 7 bankruptcy.

 

Income-to-debt ratio is also used to calculate certain aspects of your repayment plan in a Chapter 13 case if you’re ineligible for Chapter 7 or if you simply don’t wish to file chapter 7. Mainly, this ratio helps determine how much you will pay to the trustee every month for distribution among your creditors during your Chapter 13 repayment plan period.

 

If you are considering filing for bankruptcy or would like to learn more about chapter 7 bankruptcy in Windom, MN, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

 

Why Chapter 7 Bankruptcy Is Essential

Because the United States is currently in a financial crisis due to the economic shutdowns taking place during the coronavirus pandemic, many people are now struggling to meet monthly debt payments. If you are among the many individuals fighting against debt and unstable finances, you may need to take positive action for debt relief. One debt relief option that is available to all individuals and businesses is the process of filing for bankruptcy. At Behm Law Group Ltd., we work with clients to support and guide them through filing for Chapter 13, Chapter 12 and Chapter 7 bankruptcy in Mankato, MN.

 

Bankruptcy is often incorrectly viewed negatively or as some kind of bail-out tool for big businesses. The truth is that bankruptcy is a highly important legal process that protects the economy from failure in many ways. Chapter 7 bankruptcy, in particular, is an essential process for sustaining and invigorating the U.S. economy.

 

Especially during these financially challenging times, Chapter 7 bankruptcy is important to both individuals and businesses.

 

  1. Individual consumers: Chapter 7 bankruptcy is a powerful debt resolution tool for individuals. This type of bankruptcy works to liquidate filers’ non-exempt assets in exchange for the discharge of certain debts. In most cases, however, the bankruptcy exemption laws are more than adequate to protect all property and all people lose are their debts.  With the help of Chapter 7, filers are rid of debts that they would never be able to repay, such as high credit card debt and medical bills. Creditors are also protected in this process as they are paid in part from the value gained in the possible liquidation/sale of non-exempt assets. The ability to help both debtors and creditors is key in preventing economic impediments. Chapter 7 bankruptcy allows both parties to re-enter the economy and continue participating in that system more efficiently.
  2. Businesses: Chapter 7 bankruptcy is also important for business debt relief. When businesses file for Chapter 7, the process is similar to when individuals file. Business assets are liquidated in exchange for the discharge of all business debts. The major differences between business and individual Chapter 7 bankruptcies is that businesses usually close operations when they file and businesses do not have bankruptcy exemptions with which to protect assets/property. The closures of businesses that file for bankruptcy relief serve to eliminate continually failing companies from the economic network. The fact that businesses only file for Chapter 7 when they have absolutely no other options shows that it’s critical to have that bankruptcy process available when no other solution works. If a business cannot be revived, it is best for the economy to have it closed and have creditors paid as much as possible.

 

Chapter 7 bankruptcy is a powerful and essential tool that many people have used to receive relief from severe financial burdens. If you are finding it impossible to meet individual or business debt payments, consider whether filing bankruptcy might be right for you. Contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com to learn more about filing for Chapter 7 bankruptcy in Mankato, MN.