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Four Main Types of Fraud According to the Bankruptcy Code in Worthington, MN

Like any legal proceeding, bankruptcy is a big step to take in your life, and if you’re considering filing, you should prepare to be completely frank with your bankruptcy attorney about your financial circumstances/problems and you should prepare to collect paperwork that substantiates the assets you own and the debts you owe.  Due diligence and a careful review of your financial troubles and of how those troubles came about are big components that come into play with every case.  Unfortunately, there is a lot of irresponsible advertising misinforming people that bankruptcy is “easy”, “simple” and consists of “just a bunch of forms” that you fill out.  It is important to understand that the papers you complete and file are legal pleadings.  When you sign and file them with the bankruptcy court, you make representations in those pleadings under oath and subject to penalty of perjury.  Many parties rely upon the accuracy of those representations.

 

Even though it’s a big step to take, bankruptcy is undeniably helpful for thousands of households every year. It may be the best choice for your financial wellbeing as it will provide long-term debt relief and stability.  While bankruptcy is nothing to be afraid of, one must have due respect the for the process and certain rules and procedures must be observed and done correctly to get you through it with as little disruption to your life as possible.

 

The two main types of bankruptcy available to individual consumers are Chapter 7 liquidation bankruptcy and Chapter 13 reorganization bankruptcy. They are each designed to treat debt specific to each filer’s income, types of property, and types of debt.

 

At Behm Law Group, Ltd., we offer services to people seeking to file for Chapter 7, Chapter 12 and 13 bankruptcy relief. Our attorneys can guide you through the process of preparing and filing your case and they can help you understand how to do it correctly in Worthington, MN.

 

No matter what type of bankruptcy chapter you file, you will be required to provide documentation of your financial circumstances and you will have to do certain things, including completing a credit counseling course, before your case is filed. If you work with Behm attorneys, you can be sure your petition will be correctly filed and you will receive hands-on guidance on what to do so that your case is properly prepared.

 

Filing without the help of a trained professional comes with significant risks.  Without the assistance of an attorney, you could fail to list assets, fail to list creditors or engage in other conduct that could be perceived as fraudulent.  The permanent financial benefits of bankruptcy are intended for individuals who are honest and forthright.  It is important to understand that even simple mistakes could be perceived as fraudulent conduct.

 

There are four main ways a filer could commit bankruptcy fraud. Some of those actions could be accidental, but the court could still view them as fraudulent and could dismiss your bankruptcy case. In addition, you could be federally prosecuted for bankruptcy fraud.   The penalties for making a false statement, concealing property, or obtaining money or property by fraud in connection with a bankruptcy case can result in fines of up to $250,000, or imprisonment for up to 20 years, or both.

 

The four most common ways bankruptcy fraud is committed are as follows:

 

  1. The filer might try to bribe a bankruptcy trustee. This is generally the most obvious type of fraudulent behavior but it is also very rare.
  2. The filer might hide property to keep it from being liquidated or included in a case. This is the most common fraudulent action. One may even engage in this type of fraud accidentally if a filer fails to fully understand the asset-listing section of the bankruptcy petition paperwork.
  3. The filer might file fake, inaccurate, or incomplete forms in their petition. Again, this may happen accidentally without the guidance of an attorney during the process of constructing a bankruptcy case. However, even though it may be unintentional, this may be deemed as perjury depending on the circumstances.
  4. The filer might file multiple cases in an unlawful time frame using false information. Filers must wait a minimum of eight years between Chapter 7 cases, and a minimum of two years between Chapter 13 cases.

 

Mistakes and accidents that can be perceived as unintentional fraud are easily avoidable with the expert knowledge and legal counsel of a bankruptcy attorney. Contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com for information on filing and bankruptcy code in Worthington, MN.

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Review of Bankruptcy in 2020

The year 2020 was a blockbuster one for disaster, with a global pandemic and a contentious U.S. presidential election, respectively, as the opening and closing credits. For many Americans, the biggest impact was the financial changes they had to face due to COVID-19’s effect on the U.S. economy. Despite the small boost the Coronavirus Aid, Relief, and Economic Security (CARES) Act provided in early 2020 and the short span of federally increased unemployment checks, many households are still struggling to make ends meet due to coronavirus-related circumstances. If you’re among the thousands who are finding it impossible to make financial ends meet, bankruptcy is still available to debtors even in times when some courts may be closed for in-person cases. Those considering filing for bankruptcy in Owatonna, MN, and the surrounding areas can find guidance and protection from Behm Law Group Ltd. attorneys.

 

As we move into 2021, we can look back and see how the pandemic and government actions to support citizens impacted bankruptcy statistics. We can also predict how cases may increase or decrease depending on how stimulus bills and other support systems are enacted this year.

 

Some Basic 2020 Statistics*

*Cited from a GlobeNewswire report published January 21, 2021.

 

  1. The total number of 2020 bankruptcies cases across all chapters was 529,068. This is the lowest case rate in the United States since 1986.
  2. Chapter 11 business bankruptcy cases reached 7,128—a 29% increase from 2019.
  3. Chapter 13 individual consumer cases reached 147,144—a 46% decrease from 2019.
  4. Chapter 7 individual consumer cases reached 348,42—a 22% decrease from 2019.
  5. The 2020 CARES act released in March totaled $2.2 trillion, sending $1,200 per adult and $500 per child to households making under $75,000 a year.
  6. The second 2020 stimulus act released in December totaled $900 billion, sending $600 per person in households making under $75,000 a year.
  7. In 2021, the U.S. Congress may approve President Joe Biden’s proposed stimulus act totaling $1.9 trillion, sending an additional $1,400 per person in households making under $75,000 a year.

 

The balance between government-issued stimulus checks and increased unemployment benefits most likely played a role in helping people facing daunting financial circumstances. For many U.S. citizens struggling with debts, the stimulus checks gave temporary stability during difficult times. That stability may continue through some of 2021 if more stimulus support is provided through Biden’s proposed plan. However, if the current situation continues the way it is and the coronavirus dangers aren’t relieved, the economy will have a hard time recovering back to pre-COVID conditions. This may mean an increase in bankruptcy cases this year.

 

The distribution of vaccines to prevent coronavirus and time will be major factors in considering our country’s future economic health. If you’re struggling now, it could be the best time to file for bankruptcy in Owatonna, MN, and the surrounding communities. To learn more about the process, call Behm Law Group Ltd. at (507) 387-7200 or email stephen@mankatobankruptcy.com.

 

 

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Credit Repair and Getting Loans After Bankruptcy

Even if you’re facing severe financial difficulties, the social stigma around filing for bankruptcy can get in the way of making decisions that will positively affect your circumstances in the long term. But, getting past the negative social ideas around filing for bankruptcy might be the best choice you can make for your household’s financial health and overall quality of life.

 

The debt relief that bankruptcy provides alleviates the burden of unpaid bills and loans, prevents creditor harassment, stops foreclosure, and eliminates wage garnishment. Despite the truth that bankruptcy will damage your credit score temporarily, once your case is closed, you can start with a fresh financial slate where a lowered credit score might not even matter.

 

If you’re considering filing for bankruptcy, Behm Law Group, Ltd. can guide you through the process and help you begin your path to credit repair in Marshall, MN and the surrounding areas.

 

Though its damage to your credit score is far outweighed by its benefits, filers should keep in mind their standing after their case is closed. Filers with good credit scores will experience a significant drop after filing for bankruptcy, but those with a poor score will only see minor changes. Even though your score drops when you file, the post-bankruptcy period is an ideal time for effective credit repair.

 

In addition to having an opportune moment for credit repair, filers will most likely still be able to get loans of necessity after their case is closed despite a score drop. Credit card loans are often the easiest lines to open after filing, but other important loans like mortgages and car loans are also possible.

 

Credit Cards: Credit card companies will jump to offer you lines of credit if they know you’ve just finished a bankruptcy case. Because you won’t be allowed to file another case any time soon, they know you won’t be able to discharge any debts you rack up on their cards. Those who have just filed for bankruptcy should be wary of extreme interest rates, high annual fees, and potential hidden charges.

 

Auto Loans: Even if you have a large dent in your credit score after filing, you’ll probably still be able to get a reasonable car loan. However, most of these loans will come with poor loan terms and excessive interest rates. Autocreditexpress.com is a service available that helps you determine if you’re eligible for better car loans other than those offered by “bottom feeder” creditors.

 

Mortgages: For the most part, you’ll have to wait two to four years after your bankruptcy case is closed to be eligible for conventional mortgages. FHA loans might be available to those still in their Chapter 13 bankruptcy repayment period or to those two years after their Chapter 7 case is closed. While these are minimum periods, many filers will have to wait longer to get a mortgage depending on the lender and their current finances.

 

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

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3 Factors to Consider When Using Bankruptcy for Business Debt Relief

For individual consumers and businesses alike, bankruptcy is always an option that can help restructure, dissolve, and generally treat debts that filers wouldn’t be able to repay. The process of bankruptcy is designed with fairness to both the filers and creditors, but also serves to support economies from local municipalities to the national economic system. At Behm Law Group Ltd., we provide services for Chapter 7, 13, and 12 cases, guiding filers through the complex process of each step in their case and providing legal protection against creditor harassment and abuse. While we primarily work with individuals filing for Chapter 7 liquidation bankruptcy and Chapter 13 reorganization bankruptcy, we also guide small businesses using bankruptcy for long-term debt relief in Luverne, MN, and the surrounding areas.

 

Chapter 7 bankruptcy is the most commonly filed case for individuals and businesses. It functions to liquidate non-exempt assets in exchange for the permanent discharge of debt. Business owners who file Chapter 7 can have only their business debts or both their business and personal debts handled in the case, depending on how their business is structured and depending whether both the business and they themselves, personally, are contractually liable on the debts.  Sometimes a business will close following the completion of a business chapter 7 case.  Many times, a business will continue operating after a business chapter 7 case has concluded but the business will operate with a lot less debt.  Sole proprietorship businesses can also file for Chapter 13 bankruptcy and have personal and business debts rolled into one case. This chapter works to reorganize debts into a manageable repayment plan lasting three to five years. Business operations can continue during a Chapter 13 case as long as the business finances fit into the case requirements.

 

If you plan to use any type of bankruptcy for business debt relief, it’s important to take these three major factors into consideration:

 

  1. Is your business currently profiting? If your business is still making money, filing for bankruptcy might not be the right choice. For example, if you’re facing a temporary hard time, incurring more debt to help you through the difficult period that you would be able to repay when your business situation is more stable is probably a better choice than bankruptcy. Filing for bankruptcy is the right choice when your business is consistently losing money with no end in sight.
  2. What’s the asset-to-debt ratio? Every business has assets, whether that includes real estate, equipment, or stock holdings. If the value of your assets exceeds the total debt your business owes to its creditors, bankruptcy might not be the best option. Rather, it may behoove you to engage the services of a lawyer to help you construct various non-bankruptcy work-out arrangements with your creditors.
  3. Who is liable for the business debt? If you own a sole proprietorship, you are personally responsible for business debts. In this case, you can use Chapter 13 to restructure both business and personal debts into one manageable three to five year repayment plan, but this may only be effective if you are also struggling with personal finances. If you don’t file for bankruptcy relief and you’re personally responsible for business debts, the business creditors can use legal action to pursue your personal assets.

 

To learn more about bankruptcy and business debt relief in Luverne, MN, and the local region, contact Behm Law Group Ltd. by calling (507) 387-7200 or email stephen@mankatobankruptcy.com.

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Chapter 12 Bankruptcy Cases in the Midwest Peak in 2019 and 2020

Of the eight American Midwest states, over 127 million acres are made up of agricultural land that, just twelve years ago, generated a market value of over $80 billion annually. That value steadily declined from 2013 to today. Meanwhile, farm bankruptcies climbed to their greatest peak since the 2009 economic crash, with total Midwest cases reaching 595 in the 2019 calendar year.

 

That total reflects a rapidly changing agricultural economy for all farmers, but especially for dairy farmers in the past five years and now for farmers facing COVID-19 restrictions. If you are a family farmer or fisher struggling to make ends meet, Behm Law Group, Ltd. can help you file a successful Chapter 12 bankruptcy case in Pipestone, MN and the surrounding area to reorganize your debts and help you continue your farming operations for the long-term.

 

The Chapter 12 bankruptcy is a process exclusive to family farmers and fishers who generate at least 50% of their annual gross income through agricultural or fishing operations. Chapter 12 is designed to help farmers and fishers resolve debt through a manageable repayment plan lasting three to five years while maintaining fairness to the creditors involved. The goal of Chapter 12 bankruptcy is to provide long-term debt relief – a reorganization of one’s agricultural-related debts under adjusted and more favorable loan terms – for American agricultural operations and allow them to continue successfully under those adjusted terms even after a bankruptcy case has concluded.

 

Dairy Farmers

A complex combination of trade wars, pricing systems, and a general market shift away from some types of dairy products (replacing milk, cheese, yogurt, and other dairy products with a variety of dairy-free alternatives) have all coalesced to create a decline in the overall dairy economy. Hundreds of Midwest farmers have been forced to shift large-scale operations from dairy to the meat industry. Operations like Wylymar Farms in Wisconsin and Jones County Farm in Iowa have rapidly converted dairy farms with hundreds of milk cows into meat farms to stay afloat. In 2018 alone, almost 3,000 dairy farms converted, filed for Chapter 12 bankruptcy, or closed down operations altogether. Farmers filing for Chapter 12 bankruptcy in the Pipestone, MN region and local Southern Minnesota areas can find expert counsel and guidance from Behm Law Group, Ltd. attorneys to help them regain control of their finances and stabilize their farming operations.

 

COVID Struggles

Economic struggles from the past five years aside, farmers and fishers face almost daily updates and challenges regarding COVID-19 related regulations, restrictions, and codes that make it more difficult than ever to maintain steady operations. While the distribution of vaccines promises to offer better conditions in the near future, farms will likely have longer recovery periods from a year of COVID struggles, much of which took place during peak growing, harvesting, and selling seasons. Numbers concerning the effects of the pandemic and 2020 restrictions are still trickling in, and the total financial impact for farmers and fishers after the economic assistance from the various stimulus relief packages has been extinguished will not be known for several months.

 

To learn more about filing for Chapter 12 bankruptcy in Pipestone, MN for long-term debt relief, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

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Understanding the Debt Settlement Process of “Mega” Bankruptcies

In the United States, different types of bankruptcy processes are available to a wide range of filers, from individual consumers filing Chapter 7 bankruptcies to large corporations filing complex Chapter 11 cases.

 

At Behm Law Group Ltd., we primarily work with individuals filing for Chapter 7 liquidation or Chapter 13 reorganization bankruptcy, but we also provide filing services and legal protection to local businesses qualifying for either Chapter 7 or Chapter 13, and we provide Chapter 12 bankruptcy services for family farmers and fishers in the southern Minnesota region. Outside of small business and individual bankruptcy, other types of businesses like LLCs, corporations, and partnerships will typically utilize Chapter 11 bankruptcy to handle large debt loads and complex financial situations. While we don’t provide services for Chapter 11 debt settlement in Mankato, MN, and the region, at Behm Law Group Ltd., we still think clients need to understand the role that all types of bankruptcy play in the U.S. economy.

 

One significant segment of the total annual bankruptcy cases filed in the United States is comprised of “mega” bankruptcies. Typically, Chapter 11 “mega” bankruptcy cases address either the debt loads of numerous affiliated and closely intertwined businesses which are consolidated into a single “mega” bankruptcy case or the large-scale debts of a single massive business entity.

 

What Makes a Bankruptcy “Mega?”

To fit into the category of “mega bankruptcy,” a business must have either $1 million or more in debt or have over 1,000 creditors involved. Business entities who file “mega” cases can also have relatively large debt loads that may be under $1 million or have under 1,000 creditors involved, but have a significant degree of public involvement, interest and investment. Some of the most famous mega cases include the bankruptcy cases of Lehman Brothers in 2008 (involving over $691 billion), General Motors in 2009 (involving over $82 billion), and Washington Mutual in 2008 (involving over $327 billion). Many of the recent retail store bankruptcies that have been filed in the United States, including JCPenney, Toys“R”Us, and Sears, have also been handled as mega cases.

 

How are Mega Cases Handled?

Because of the massive sizes of many businesses involved in mega cases, the outcomes of such cases can have rippling economic effects that the majority of other business and individual cases do not. Bankruptcy courts must monitor these potential effects and handle the cases accordingly to eliminate any negative large-scale economic impacts as much as possible. This usually means mega cases are handled with a much higher degree of involvement and scrutiny by bankruptcy court judges. Bankruptcy judges will often employ Omnibus hearings to allow the parties to review and generally “clean up” or “pre-package” a case before allowing it to proceed through the full court process. Omnibus hearings are pre-trial hearings through which the parties to the bankruptcy gather records and financial documents, and then outline the overall situations of the bankruptcy filer and the creditors involved.  Such Omnibus hearings help alleviate the overall administrative stress “mega” bankruptcy cases can place on the court and court staff and provide a more direct and expeditious way to handle the complexities of such cases.

 

To learn more about how our attorneys can help you use bankruptcy for debt settlement in Mankato, MN, contact Behm Law Group Ltd. by calling at (507) 387-7200 or emailing stephen@mankatobankruptcy.com.