Filing for Bankruptcy Has Ups and Downs

For those who haven’t been able to meet debt payments on time for several months and suspect they may never be able to fully repay their debts, bankruptcy is always an option. Bankruptcy was designed to support consumers and businesses that can’t repay debts. It’s a failsafe support system that benefits filers, creditors, and the economy overall.

While bankruptcy helps thousands of Americans each year climb out of debt and find long-term financial stability, it’s not just a bailout, and it has its ups and downs just like any other legal process. However, in the majority of cases, the good vastly outweighs the bad. At Behm Law Group, Ltd., we help clients work through the process of filing for bankruptcy in Windom, MN and the local region. In fact, we’re the only law firm in South Central and Southwestern Minnesota that works exclusively with bankruptcy cases.

While the benefits typically outweigh the detriments, it is important to be aware of how bankruptcy can affect you overall.

The Good

Bankruptcy provides direct and permanent debt relief for many types of debts. When you file, the court will also place an immediate automatic stay on your creditors. They will not be able to collect debts or harass you in any way. You will also most likely be able to protect all of your property from liquidation with the many generous bankruptcy exemptions that are allowed in a typical case. You will find that you may have an increase in credit card solicitations/offers and more access to banking opportunities after your case is concluded. Additionally, negative credit marks against you from missed debt payments will be wiped from your credit record. Overall, bankruptcy can give you a completely clean financial state.

The Bad

Filing for bankruptcy can be reflected on your credit profile usually for 5 to 7 years.  Sometimes, after a bankruptcy is concluded, one must wait 2 to 3 years to get approved for a mortgage loan.  Sometimes, one will experience slightly higher interest rates on vehicle loans.  Also, you generally can’t qualify for Chapter 7 liquidation bankruptcy if your income is higher than the state average or median income for a household of your size.  However, this doesn’t mean that you won’t be able to file for Chapter 13 reorganization bankruptcy. Also, some debts, such as student loans, are more difficult to discharge in any kind of bankruptcy and some debts, like most tax debts, child support debts and alimony, are generally not discharged at all. In a Chapter 7 case, you can lose some property if the value of that property exceeds your bankruptcy exemption allowances.  Also, if you have co-signers on a loan, the creditors could pursue them for collection on the debt.  Finally, bankruptcy can be costly when court fees and attorney costs are added together.  While there is no set fee for a bankruptcy case and while the fee one winds up paying depends on how complicated the case is, the typical range is between $1,500.00 and $3,000.00.  However, having to pay an attorney $1,500.00 to $3,000.00 is generally preferable to having to continue paying on thousands of dollars of credit card debt, medical debt and other debts.

If you’re unsure whether filing for bankruptcy in Windom, MN and the surrounding communities is the right choice for your financial situation, contact Behm Law Group, Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com today. Our attorneys can help determine which type of bankruptcy you qualify for and whether filing bankruptcy is even in your best interests.

 

How Bankruptcy Code Handles Common Sole Proprietorships

There are several types of business ownership in the United States, from large corporations to sole proprietorships. When it comes to the bankruptcy code, each type of business is handled in a specific way. For almost every type of business, the owner’s debts are separated from the business bankruptcy case. However, because sole proprietorships are owned by one person or jointly by spouses, the business debts and personal debts are rolled into one bankruptcy case. If you own a sole proprietorship and are considering filing for bankruptcy, Behm Law Group Ltd. can help you navigate your case when facing the complex bankruptcy code in Waseca, MN, and the surrounding area.

Many types of businesses are commonly owned as sole proprietorships, typically they include:

  • Bookkeepers and financial planners
  • House cleaners
  • Landscapers
  • Home healthcare providers
  • Caterers
  • Hair stylists
  • Computer repair providers
  • Freelance writers
  • Tutors
  • Electricians

Of course, in addition to these common ones, there are many other types of businesses that can be run as sole proprietorships, and they will also have their debts as well as their owners’ personal debts included in a bankruptcy case. Those people who own a sole proprietorship and cannot repay their debts generally have two options for bankruptcy: Chapter 7 or Chapter 13.

Chapter 7 bankruptcy works to liquidate both business and personal non-exempt assets in exchange for the discharge of business and personal debts. Filers can claim exemptions to protect their assets from liquidation, including exemptions of a homestead, a motor vehicle, tools of the trade, and a wild card exemption that can be applied to miscellaneous property. In any Chapter 7 case, unsecured debts, like credit card debts, medical debts, debts to suppliers of material/products will be discharged in full. With secured debts (debts secured/guaranteed by collateral such as vehicle loans and mortgage loans), creditors can sometimes claim/take their collateral or a filer will simply agree to surrender the collateral back to them.  Any debt that remains after the collateral is liquidated or sold will be discharged.  For instance, if you owe $5,000.00 on a vehicle loan and the vehicle serving as collateral is worth only $1,000.00, the creditor could not pursue you for the $4,000.00 difference after it liquidated or sold the vehicle.   Sole proprietorship business owners who have filed for Chapter 7 can often protect most or all of their business equipment/machinery with their bankruptcy exemptions and can resume operating their businesses with considerably less debt.

Chapter 13 bankruptcy is a debt reorganization process. Business and personal debts are restructured into a repayment plan suited to the person’s income and lasting three to five years. While you work through your plan, you can continue to run your business, and you will even have some options to relegate funds for new equipment or repairs on facilities or tools that are necessary to continue normal business operations.

Whether you file for Chapter 7 or Chapter 13 bankruptcy as a sole proprietorship, be prepared for your business debts and your personal debts to both be included in your case. To learn more about filing for bankruptcy and the bankruptcy code in Waseca, MN, call Behm Law Group Ltd. at (507) 387-7200 or email stephen@mankatobankruptcy.com.

 

Credit Card Debt and Chapter 7 Bankruptcy

The United States bankruptcy code is in place to discharge many different types of individual consumer and business debts.  However, some debts are more difficult to have discharged and some debts are not discharged in bankruptcy at all.  For example, there is a common misperception that student loans cannot be discharged in bankruptcy.  While student loans are typically exempted from the general discharge a bankruptcy court grants a filer at the conclusion of a typical bankruptcy case, one can formally request the bankruptcy court to discharge student loans.  The process can be protracted and expensive, however, because one must hire a bankruptcy attorney to start a lawsuit against a student loan creditor in bankruptcy court.  The burden of proof is on the filer who is asking the bankruptcy court to discharge the student loan.  A filer must show that the student loan could cause the filer to experience an undue financial hardship going forward.  Common types of debt that are often not discharged through the bankruptcy process include alimony, child support, most tax debts, and debts resulting from personal injuries that someone may have caused while driving under the influence of alcohol or drugs. Though there are whispers of changes to make it easier to discharge student loans in bankruptcy, the other aforementioned debts will likely remain excluded from discharge in any bankruptcy case. However, some of the more common debts that the majority of filers use bankruptcy to resolve include medical bills, mortgages, car loans, and credit card debts. At Behm Law Group Ltd., our attorneys can help you build a successful case for Chapter 7 bankruptcy in Fairmont, MN, and the surrounding region. Behm lawyers will work with you from start to finish to help get your debts discharged and find long-term financial stability through the Chapter 7 bankruptcy process.

Most individual consumers in Minnesota have credit card debt. The average amount of credit card debt across the state since 2019 is around $6,000 to $30,000, but those who file for Chapter 7 bankruptcy can have anywhere between $3,000 and upward of $100,000. Since there is no debt limit in Chapter 7, filing for Chapter 7 bankruptcy is the most effective solution for those with serious amounts of unsecured debts like credit card and medical debts.

The Chapter 7 bankruptcy process works to liquidate your non-exempt assets in exchange the discharge of your debts.  A discharge will vary on a case by case basis depending on debt types, but overall, credit card debt and other unsecured debts are discharged in full. In order to find out if you qualify for Chapter 7 bankruptcy, you need to take the Means Test, which determines whether your income is under or over the state median/average income for a household of similar size. If your income is lower, you qualify for Chapter 7 and you can start your bankruptcy petition.

Once you have made the decision to seek debt relief through the Chapter 7 bankruptcy process, it is not advisable for you to make further payments to most of your creditors because any debts to those creditors will be fully discharged. As soon as you find out that you qualify to file a Chapter 7 case and you’ve gotten the go-ahead from your lawyer, stop paying your credit card and other debts that you don’t want to keep. If you continue payments past that point, it will simply put you in a worse financial situation because you could be using that money for other, more productive purposes.

When you file your petition, an automatic stay under 11 U.S.C. § 362 is imposed upon your creditors preventing them from initiating or continuing any collection actions against you. This means that those creditors will not be able to impose additional late fees against you as your case continues.  It also means that your creditors cannot harass or sue you. If any creditors start or continue collection actions against you, Behm Law Group bankruptcy attorneys are here to protect you and hold those creditors accountable in court by formally asking the court to hold them in contempt.

Thousands of Americans resolve their credit card and other debts through the  bankruptcy process. To learn more about filing for Chapter 7 bankruptcy in Fairmont, MN with the help of a skilled attorney, call Behm Law Group Ltd. at (507) 387-7200 or email stephen@mankatobankruptcy.com.

 

 

 

 

 

How a Bankruptcy Attorney Can Help Prevent Case Dismissal

If you’re struggling to make monthly debt payments, you’re not alone. Especially after the impacts the coronavirus pandemic made on the U.S. economy, thousands of American households are finding their finances catastrophically impacted. Despite all the changes the pandemic forced on our country, there is still an option that has always been there for those who cannot repay their debts: bankruptcy. While bankruptcy is sometimes cast in an unfavorable light, it’s actually a process that has helped many debtors regain long-term financial stability. However, the process of filing a bankruptcy petition can be complicated, and the handling of debt in any given case is nuanced. Because of this, the help of a bankruptcy attorney can be key to filing a successful case. At Behm Law Group Ltd., we offer comprehensive legal services, including protection and guidance for those looking for an expert bankruptcy attorney in St. Peter, MN, and the surrounding area.

Filing for any type of bankruptcy comes with a set of requirements and thorough examination of the filer’s financial records. This includes detailed paperwork and documentation of debts, income sources, and properties. It also includes a set of pre-bankruptcy requirements that almost every filer must satisfy before his or her petition is even set into motion. The guidance and support of a bankruptcy attorney can help prevent many common reasons that could cause the dismissal of your bankruptcy case.

The help of a bankruptcy attorney can prevent case dismissal due to:

  1. Failure to attend credit counseling: Every filer is required to attend a credit counseling session within 180 days before the filing of his or her bankruptcy petition. A bankruptcy attorney can help you find a court-approved credit counseling agency so you can attend the 60- to 90-minute session at your convenience.
  2. Intentional or unintentional fraud: If you’re planning on committing bankruptcy fraud, forget about any credible attorney helping you in that effort. Filers attempting intentional fraud will likely have their cases denied and could even be criminally prosecuted. However, there are occasions in which a filer is well intentioned, but because of mistakes on his or her petition paperwork, there is no actual fraud committed.  A bankruptcy attorney will, for the most part, put your paperwork together for you, ensuring accuracy and helping to prevent mistakes that might lead to your case being dismissed.
  3. Ineligibility for Chapter 7 bankruptcy: Because Chapter 7 bankruptcy is reserved for those with an income below the state median income for a similar household, there are many filers that won’t qualify for that chapter. While a bankruptcy attorney can’t make you qualify for chapter 7 bankruptcy if you do not pass the Means Test, the attorney can help you organize your paperwork, review your monthly income and expenses, and help you file a Chapter 13 bankruptcy case in which a reasonable three to five year repayment plan is proposed.

Both Chapter 13 and Chapter 7 bankruptcies are nuanced processes that can vary greatly from case to case. Take advantage of the skill and protection that a bankruptcy attorney in St. Peter, MN, and the local area can provide you, and contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com today.

 

Actions to Consider Before Filing a Chapter 7 Bankruptcy Case

The process of Chapter 7 bankruptcy works to liquidate the filer’s non-exempt assets, distribute the value to creditors, and provide a discharge of debts to the filer. In 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act established stricter regulations for Chapter 7 cases. These regulations were intended to make it more difficult to commit bankruptcy fraud without repercussions when filing a Chapter 7 case.

Qualifying for Chapter 7 bankruptcy today means passing the Means Test, completing pre-bankruptcy requirements, and filing a bankruptcy petition that accurately represents your financial situation. With the help of Behm Law Group, Ltd., you can build a strong, successful case for Chapter 7 bankruptcy in Redwood Falls, MN and the surrounding area.

When you file for Chapter 7 bankruptcy, the bankruptcy trustee assigned to your case will review your financial records, both to cross-check the representations made on your bankruptcy documents and to determine if you qualify for bankruptcy relief. Because some of your financial records will be under review and because bankruptcy debt relief is intended to benefit only an honest and forthright filer, there are several actions to avoid before you file for Chapter 7 bankruptcy:

  • Favoring a creditor: Choosing to pay more to one creditor over another is considered a “preferential transfer”.  It could result in the trustee suing that creditor, recovering what you paid the creditor and evenly splitting that amount between all of your creditors. Generally, you want to show that you have acted with fairness to all of your creditors and that you have done everything you can do to repay your debts in an ordinary fashion.
  • Transferring assets: If you transfer any asset out of your name to someone else before filing for bankruptcy relief and then don’t disclose that transfer in your bankruptcy paperwork you will be deemed to have committed a “fraudulent transfer”, even if you made the transfer without any bad intent. While such a “fraudulent transfer” generally won’t be considered a criminal act in most cases, it could result in the denial of a bankruptcy discharge and the trustee could sue the person you transferred the asset to in order to undo the “fraudulent transfer” and recover the asset.
  • Credit card purchases: Credit card debt is included in your bankruptcy case, and is almost always fully discharged in a Chapter 7 bankruptcy. If you are using your credit card for anything not considered a necessity (food, gas, etc.) before filing, however, you could be deemed to be acting with fraudulent intent by purposefully adding to the debts you know will be discharged. A good example of this would be charging a vacation to Europe or Hawaii on a credit card and then filing for bankruptcy relief a month later.  Under such a scenario, the credit card company could sue you in bankruptcy court and ask the bankruptcy court to except or exclude the debt from the discharge granted to you at the end of your case.
  • Receive future payments: If you are aware that you will receive future payments while your case is still open, you will have to report those future payments and such future payments could be seized by the chapter 7 trustee and used to pay your creditors.  A good example of this is if someone passes away within 180 days of the filing of your bankruptcy case and you inherit money or property.   If this happens you must report it to the bankruptcy trustee and to your attorney.  If you fail to report it, the trustee could ask the bankruptcy court to revoke or deny any debt relief that you would otherwise receive.
  • Sue someone: If you have the right to sue someone for personal injury or property damage, (vehicle accident, someone else’s tree falling on your house etc.) you will have to disclose any such claims in your bankruptcy petition.  Sometimes, the trustee will assist you and your attorney in resolving the claims.  Sometimes, any settlement proceeds will be able to be fully protected/retained.  Sometimes, some of the settlement proceeds will have to go to the trustee for the benefit of your creditors.  If you have the right to sue someone, it is essential that you disclose this to your bankruptcy attorney before   your bankruptcy case is filed so that you and your attorney can determine how to properly disclose and prosecute the claim and protect as much of the resulting settlement proceeds as possible.

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

Things to Consider as a Retiree Filing for Chapter 7 Bankruptcy

Financial struggles can happen at any age, whether you’re in your 20s living paycheck to paycheck at an entry level job or a senior citizen surviving on a retirement fund. No matter your age, chapter 7 bankruptcy is the only form of permanent, reliable and court enforceable debt relief available.

Filing for bankruptcy can turn around an individual’s life at any age and help them maintain long-term financial stability debt free. If you’re considering filing for bankruptcy as a retiree, there are several things to take into account that might affect you differently than a similarly situated younger person. At Behm Law Group, Ltd. we provide expert legal guidance and protection throughout the process of filing for Chapter 7 bankruptcy in Jackson, MN and the surrounding area.

Chapter 7 bankruptcy is called “liquidation bankruptcy”. Quite simply, a filer’s non-exempt assets are liquidated or sold by a chapter 7 trustee and the proceeds are used to make some sort of payment to one’s creditors. The vast majority of one’s debts are completely discharged in 90 to 120 days. However, in the vast majority of cases, the bankruptcy exemptions provided by the bankruptcy code are quite generous and are more than sufficient to protect all of a person’s property and the only things a person loses are one’s debts.

If you plan to file for Chapter 7 bankruptcy as a retiree, there are some things to consider before you file a bankruptcy petition that are specific to your age and situation:

• Retirement funds: In Chapter 7 bankruptcy cases, retirement funds are exempt from the liquidation process. The bankruptcy exemptions protect 401(k) and 403(b) accounts, as well as profit sharing accounts and certain other types of IRAs and retirement funds from liquidation. However, if you’re living off income from those accounts as a retiree, keep in mind that you might not qualify for Chapter 7 bankruptcy if the monthly retirement income causes your income to exceed the state median income for a household of your size. Fortunately, other income from Social Security benefits, veterans’ disability assistance and COVID-19 relief/stimulus will not affect whether you qualify for chapter 7 bankruptcy relief.
• Home equity: Most retirees have paid off their mortgages and fully own their homes. This means they have built up a significant amount of home equity or value. If you do have a lot of equity in your home and plan to use that value to support you financially in the coming years, under the Minnesota state bankruptcy exemptions, you will be able to protect that value or equity up to $420,000 if your homestead is not used for agricultural purposes or up to $1,050,000 if your homestead is used for agricultural purposes.
• Medical bills: The majority of senior citizens and even younger retirees face health issues as the years pass. Because of this, it’s common for medical bill debt to become a significant factor in the decision to file for Chapter 7 bankruptcy. If you have severe medical debt, filing for Chapter 7 bankruptcy is the most effective way to find relief from medical bills and other unsecured debts. In fact, medical debt is sometimes the only reason retirees file Chapter 7 bankruptcy.

To learn more about filing for Chapter 7 bankruptcy in Jackson, MN as a retiree, contact Behm Law Group, Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com.