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Part One: Utility Bills and Debt Relief This Winter

With the coldest months of the year just beginning, many family households that are in debt are wondering how the cold will affect their access to steady utility service. This blog is one part of a series covering frequently asked questions about utilities and debt relief through filing for bankruptcy in Minnesota. If your debts are significantly compromising your quality of life or if you are simply unable to pay your debts, you’ll likely be able to find permanent debt relief by filing for bankruptcy. Chapter 7 bankruptcy is the most commonly filed type of bankruptcy, and it works to liquidate your non-exempt assets in exchange for the discharge of your debts, meaning that your legal contractual obligations to pay your debts are nullified. With the help of Behm Law Group Ltd. attorneys, you can work through a Chapter 7 case and receive permanent, effective debt relief in Luverne, MN.

 

For those already struggling to make debt payments, utility bills can fall lower and lower on the priority list of bill paying. When utility debts start to stack up, you run the risk of service shut-off and/or potential creditor harassment. Filing for bankruptcy will most likely solve such problems. The following FAQs cover some points about how utility debts are handled in bankruptcy.

 

Can filing for bankruptcy stop my utilities from being shut off?

Typically, yes. When you file for bankruptcy relief, the automatic stay injunctive mandates of 11 U.S.C. § 362 go into effect against your creditors. This means your utility creditors will not be able to collect on the utility debts you owe, and they will not be allowed to deny you services, as long as you continue making your current utility payments that come due after the date you filed for bankruptcy relief.  All utility debt that you owe the utility provider as of the date that your case is filed will be discharged.  However, under 11 U.S.C. § 366, a utility provider may require a reasonable deposit from you within 20 days after your bankruptcy is filed in order to continue providing utility services.

 

Since I filed for bankruptcy, why did my utilities still get shut off?

While there are some rare cases when the automatic stay would not apply, you should immediately see the positive effects of the automatic stay on all creditor collection activities. If you’ve filed your petition and your utilities do get shut off, you should immediately contact your attorney.   Typically, your attorney will provide proof of your bankruptcy filing to the utility provider and the utility provider will reinstate your utility services.  Under 11 U.S.C. § 366, however, you will have to work with your attorney to provide a reasonable deposit to the utility provider within 20 days in order to have the utility services continued.

 

How are utility bill debts treated in bankruptcy?

Utility bill debts are unsecured debts and the amounts you owe the utility providers on the date that your bankruptcy case is filed will be discharged.  In Chapter 7 bankruptcy, unsecured creditors sometimes receive payments from the Chapter 7 trustee if the trustee is able to transact/sell non-exempt assets (assets you are not able to protect in Chapter 7 bankruptcy with your bankruptcy exemptions).  However, in most Chapter 7 bankruptcy cases, the bankruptcy exemptions are more than adequate to protect all of a person’s assets and unsecured creditors, including utility providers, get paid nothing. Along with credit card debt and medical bills, utility debts are fully dissolved in Chapter 7 bankruptcy. If the majority of your debts are unsecured, Chapter 7 bankruptcy is the quickest, most effective debt relief tool.

 

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

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How to Enjoy the Holidays While Working Through a Chapter 13 Bankruptcy

During the holidays, many households struggle with the financial expectations of gifts, decorations, and fancy foods. If you are one of the many individuals having a hard time meeting debt payments, it may be time to take action for permanent debt relief.

 

While there are options for debt relief outside of bankruptcy, such as debt settlement or debt consolidation these options are rife with fraud and full of bad actors who are only interested in taking your money, have no legal authority to make your creditors do anything and will not provide permanent debt relief.  At Behm Law Group, Ltd., we can guide you through the process of filing for Chapter 7 or Chapter 13 bankruptcy in Pipestone, MN and the surrounding area to receive immediate, effective and permanent debt relief.

 

Those who are already in the process of working through a three to five-year long Chapter 13 bankruptcy repayment plan can still enjoy the Holiday Season as they would any other year outside of the bankruptcy process. While it’s true that some income must be paid to the chapter 13 trustee to meet monthly repayment plan requirements, one can still purchase gifts for friends and relatives, spend money entertaining friends and relatives and plan and take trips to visit friends and relatives as one would normally do outside of the bankruptcy process.

 

Discretionary Income

When you enter into a Chapter 13 bankruptcy repayment plan, your income will be broken into disposable and discretionary categories. Your disposable income is what’s left after all reasonable and necessary living expenses are paid. Utility bills, food, gas, taxes, and all other household financial needs are considered reasonable and necessary living expenses that you can use any amount of your discretionary income to pay. What’s left of your income after reasonable and necessary living expenses are paid is called disposable income. For the full period of your Chapter 13 bankruptcy, your disposable income will be used to make your chapter 13 plan payments to the chapter 13 trustee and the chapter 13 trustee will divide those monthly payments among your unsecured creditors.  Christmas presents, decorations, and luxury foods are all things that you can use your discretionary income to purchase during the Holiday Season. Being in a Chapter 13 bankruptcy simply means that you and your attorney and the chapter 13 trustee will draft a monthly budget to help you spend your discretionary income more efficiently to cover your reasonable and necessary living expenses, including recreational expenses and charitable contributions.

 

Budgeting

Even with your disposable income being used to repay unsecured creditors through your chapter 13 plan, you can still enjoy the Holiday Season as you always have enjoyed it. One significant resource you can rely upon is part of your yearly income tax refunds. Although your yearly tax refunds technically constitute disposable income that should be used to repay unsecured creditors, the chapter 13 trustee will only require you to pay over a portion of your yearly tax refunds and permit you to use the rest as you wish. You could also request an adjustment to your repayment plan for the months during the Holiday Season.  Most chapter 13 trustees will allow a temporary change in your plan.

 

If you are facing serious debt problems this year, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com to learn more about filing for Chapter 7 or Chapter 13 bankruptcy in Pipestone, MN.

 

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The Timeline of a Chapter 7 Bankruptcy

In the United States, the bankruptcy system was put into place to help balance the economy in times of a depression, support individuals and businesses who will never be able to repay their debts, and provide creditors with some form of possible compensation. If you are struggling to meet debt payments each month, you may want to consider bankruptcy as a viable option for permanent debt relief. Behm Law Group Ltd. can provide you with important legal support and guidance through a Chapter 13, Chapter 12 or Chapter 7 bankruptcy in Windom, MN, and the surrounding area.

 

Chapter 7 bankruptcy is the most commonly filed type of individual bankruptcy case in the United States. The process of Chapter 7 bankruptcy works to liquidate the filer’s non-exempt assets in exchange for the discharge of one’s various debts. Credit card debts and medical bills are often the most common debts involved in an individual Chapter 7 bankruptcy, but other debts like mortgages and car loans can also be involved in many cases.

 

The process of filing for Chapter 7 bankruptcy is relatively straightforward, but each step must be done properly and in a timely manner or your case could be at risk of being dismissed. Generally speaking, the steps of a Chapter 7 bankruptcy include the following:

 

  1. Consultation: An initial consultation with a bankruptcy attorney is the first step in any case. Behm attorneys help you determine if Chapter 7 is right for your financial situation and where to go from there.
  2. Scheduling payments: After the initial consultation, we work with you to plan a payment schedule of our attorney costs and the court fees.
  3. Petition: Once we’ve determined a payment schedule that fits your income, we guide you in completing the necessary paperwork involved in your petition. This information includes comprehensive debt and income details, your tax returns, bank statements, and any other relevant financial documentation.
  4. Credit counseling: Part of qualifying for Chapter 7 bankruptcy is taking a court-approved credit counseling course. This course can be completed online and takes about 60 to 90 minutes to complete.  It is available at minimal cost.
  5. Case preparation: Once you submit your financial information to our attorneys, we review your paperwork and forms to ensure everything is correct. We also spend time pinpointing potential issues that might arise with creditors or the trustee, and we work to eliminate or mitigate any potential problems.
  6. The 341 hearing: The 341 hearing (or Meeting of the Creditors) is another requirement that must be completed before you receive your discharge and before your case can be closed. This typically involves a short meeting with the trustee to answer relevant questions to verify, under oath, the information in your bankruptcy petition. Creditors can attend, but they frequently don’t find it necessary to do so.
  7. Financial Management/Debtor Education:  Before you are eligible to receive a bankruptcy discharge, you must complete a second course called “Financial Management” or “Debtor Education”.  This course provides various tips and techniques to help one budget one’s finances more efficiently and manage one’s debts more effectively going forward.  Like the credit counseling course, this course can also be completed online and it takes about 2 hours to complete.  It also is available at minimal cost.
  8. Debt discharge: Once your petition is submitted to the court and your 341 hearing has been conducted and you’ve fulfilled all of the other bankruptcy code requirements, your debts are discharged and all of your creditors receive a copy of the discharge order issued by the bankruptcy court.  The discharge order permanently prevents your creditors from pursuing you for any debts that you owed them.  It also operates as a warning to your creditors that they could be sued and severely sanctioned by the bankruptcy court if they continue collection activities against you.
  9. Trustee administration: Finally, the trustee goes through the process of selling any non-exempt assets and distributing the sale proceeds to creditors. This is the last step in your case before it’s closed.  However, in most cases all one loses are one’s debts.  The bankruptcy code exemptions, which are used to protect property, are quite generous and they are normally sufficient to protect all of one’s property.

 

To learn more about the details of filing for Chapter 7 bankruptcy in Windom, MN, contact Behm Law Group Ltd. by calling (507) 387-7200 or emailing stephen@mankatobankruptcy.com.

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Averages and Other Bankruptcy Statistics from the Past Ten Years

After the housing crisis in 2009, bankruptcy rates increased dramatically but they eventually stabilized around 2015. Since then, an average of 760,013 cases were filed throughout the following four years. Now that we’re ending a pandemic year, those numbers might fluctuate again, with shutdowns, layoffs, illness, and the lack of federally funded unemployment benefits all adding to the financial difficulties of many Americans.

 

If you’re struggling to meet debt payments during this unsure time, you’re not alone. Despite a global pandemic, many individuals and businesses are still finding permanent debt relief and long-term financial stability by filing for bankruptcy. At Behm Law Group, Ltd., we can provide legal services and support from start to finish if you choose to file for bankruptcy relief in Fairmont, MN and the surrounding area.

 

Bankruptcy statistics in the coming years will likely bear out some unusual numbers compared to the last five years, largely due to the effects of the coronavirus and the economic changes that come with every election. The first half of 2020 actually saw a decrease in bankruptcy cases by about 92,200 compared to the first half of 2019. This decrease was likely due to federal stimulus checks and federally backed unemployment benefits giving everyone a little financial boost. In addition to stimulus help, many loan providers and landlords were more lenient with late fees and monthly payments.

 

For the past ten years, filing statistics have been relatively the same when it comes to age, education, income, and the marital status of filers, along with stats regarding repeat filers. Generally speaking, the median age of bankruptcy filers is between 38 and 45 years old.  However, people 55 and older make up about 20% of U.S. bankruptcy cases. Filers under 25 years old make up only 2% of cases.

 

About 20% of bankruptcy filers have a four-year bachelor’s degree or higher education level. 36% have a high school education, and 29% have some at least college education. In the coming years, the burden of increasing student loan debt may cause an increase in the bankruptcy filing rate for people with undergraduate and graduate degrees. About 60% of filers have incomes under $30,000 a year, while cases for those with incomes of $60,000 or more have recently increased by a few percentage points.

 

Most filers, about 64%, are married individuals, with the remaining 17% single, 15% divorced, and 3% widowed. Contrary to some popular beliefs about those living with debt, repeat filers only make up 8% of all bankruptcy cases. This is largely due to the BAPCPA changes to the bankruptcy code which passed in 2005.

 

As we finish the first year in a new decade with an election and a pandemic, we’ll have to wait and see how these conditions affect our economy and individuals’ finances. If you’re considering filing for bankruptcy relief in Fairmont, MN or the surrounding region, contact Behm Law Group, Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com for more information today.

 

 

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What the Student Borrower Bankruptcy Relief Act Means for Filers

As the only law firm practicing exclusively in bankruptcy in southern Minnesota, we’ve worked with many clients over the years at Behm Law Group, Ltd. Each of these clients had different financial circumstances, but they were all after the same goal of permanent debt relief and financial stability for themselves and their families. There are several types of debt that can be readily discharged in bankruptcy. However, the discharge of student loan debt is difficult. While student loan debt is largely excepted from discharge in the process, unless one can sue the student loan lender and show “undue hardship”, a new bill introduced in the United States House of Representatives may be a sign of changes in how student loan debts are treated in bankruptcy. If this new bill were to pass in the United States Senate and be signed into law by the President, filing for bankruptcy relief in Waseca, MN, and the surrounding communities may be a beneficial option to households with student loan debt.

In May 2019, the Student Borrower Bankruptcy Relief Act (SBBRA) was introduced in the United States House of Representatives. The SBBRA is “a bill to provide relief for student borrowers.” Essentially, this bill would remove restrictions from the bankruptcy code that have made it much more difficult to discharge student loans.

The current bankruptcy code requires filers to prove “undue hardship” in order to qualify for the discharge of student loans. Since the passage of the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) amendments to the bankruptcy code, the discharge of student loan debt became even more difficult because the exception to discharge under 11 U.S.C. § 523(a)(8) was expanded to include both federally guaranteed student loans and student loans made by private parties. In order to prove undue hardship, one must actually sue a student loan lender in bankruptcy court. Commencing a lawsuit against a student loan lender is an expensive and protracted process. The costs associated with such a process can be $20,000 or more.

If the SBBRA bill is passed into law, the requirement of having to prove undue hardship in order to have student loan debt discharged will be removed. This bill is a result of growing momentum around student loan debt forgiveness in the past five years. Although many don’t expect this bill to be approved by the United States Senate if it is passed in the United States House of Representatives, it’s still a possibility at this point. If the bill passes, thousands of individuals with hundreds of thousands of student loan debts and accrued interest would have bankruptcy as an option to be permanently rid of such debts.

If the bill doesn’t pass, many believe it is still a sign of changes in how student loans are handled in the United States. Other signs, like the recent McDaniel v. Navient case where $200,000 in student loan debt was discharged, point to growing concerns that individuals will not be able to repay student debts. The 2020 election will most likely be the tipping point that determines whether beneficial changes to the bankruptcy code allowing the discharge of student loan debts will become reality.

Even though it is presently very difficult and very expensive to try and discharge student loan debts in bankruptcy, there are still many other debts that can be effectively eliminated in a Chapter 7 or Chapter 13 petition. To learn more about filing for bankruptcy relief in Waseca, MN, with the assistance of Behm Law Group Ltd. attorneys, contact us at (507) 387-7200 or email us at stephen@mankatobankruptcy.com.

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McDaniels v. Navient Case Might Change How Student Loans Are Treated by the Bankruptcy Code

At Behm Law Group, Ltd., we work with clients to guide them through Chapter 7, Chapter 12, and Chapter 13 bankruptcy cases and the bankruptcy code as a whole. We primarily work with individual consumers but also provide legal representation to small businesses.

If you’re struggling to make debt payments each month, it may be time for you to consider filing for bankruptcy to find permanent debt relief. However, in order to determine if filing bankruptcy would benefit your situation you must consider the types of debt you have. While debts like credit card debt, medical bills, mortgages, and car loans are readily discharged in bankruptcy, some other common debts, such as student loans, are largely excepted from discharge in the bankruptcy process. With the help of Behm attorneys, you can find out how helpful the current bankruptcy code in Mankato, MN and nearby regions will be for discharging your debts.

For those with high student loan debt, it’s currently difficult to have that type of debt discharged in bankruptcy. Under 11 U.S.C. § 523(a)(8), student loans can be discharged in bankruptcy only if a person is able to commence a lawsuit against a student loan lender and establish facts showing that retaining the debt would create an “undue hardship”. After the recent McDaniels v. Navient case, though, there may soon be ways to have student loan debt discharged more easily. In the McDaniels v. Navient case, Laura Paige McDaniel was able to have $200,000 discharged in a Chapter 13 bankruptcy.

Details of the Case

Laura McDaniels originally borrowed $120,000 in student loans to cover her tuition to undergraduate and graduate school. When it became difficult for her to keep making high payments on this debt, her loan provider, Navient, did not offer any options for a repayment plan because only federal loan providers are required to work with borrowers to establish lenient payment plans. Unable to pay student loans and other debts, McDaniels went into bankruptcy. While her bankruptcy was ongoing, Navient continued to add thousands onto her student loans in interest.

After some time of being unable to pay the huge outstanding debt, McDaniels petitioned the bankruptcy court to reopen her case and include her private student loan debt for discharge. Though Navient appealed to the 10th Circuit Court of Appeals, the lower bankruptcy court ruling that her student loan interest was not “an obligation to repay funds received as an educational benefit” because they “were not made solely for the ‘cost of attendance’” was affirmed. McDaniels, therefore, received a discharge of $200,000 in student loan debt.

What This Changes

While this will most likely not affect changes to the bankruptcy code immediately, it’s a sign that changes that would help those who have student loan debt are coming. With the additional changes the proposed Student Borrower Bankruptcy Relief Act may make to the bankruptcy code, it’s highly possible that the treatment of student loans in bankruptcy might be very different in the near future.

Let the Professionals Help You Navigate the Bankruptcy Code

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