Posted on

Common Misunderstandings about the Risks of Bankruptcy in New Ulm, MN

There are several ways to find debt relief in the United States, each with varying effectiveness and cost. Debt relief programs may seem like attractive options, but in the long term, they always cost more than filing for bankruptcy, don’t relieve the stress of debt and are far worse for your overall credit profile/rating than a bankruptcy filing. A creditor will sometimes try and persuade you to do a “settlement” on a debt.  The term “settlement” is a gross misnomer and a half-truth.  While the creditor may allow you to pay less than the full amount of a debt, the creditor will sell the right to collect the remaining amount that you don’t pay to a third-party debt purchaser for 10 or 20 cents on the dollar.  The third-party debt purchaser will then start collection actions against you on that remaining balance.  Sometimes, you can try and work things out with your creditors through a so-called “debt settlement” company.  However, “debt settlement” companies are rife with fraud.  By far, the best way to quickly and permanently resolve debts is through the bankruptcy process. While many people are fearful of filing bankruptcy, the truth is that bankruptcy helps thousands of households find their way to financial balance and peace of mind each year. Behm Law Group Ltd. attorneys can protect and guide you through your case and help you understand the many misconceptions about filing bankruptcy in New Ulm, MN.

Avoiding bankruptcy mills and accepting the advice and support of a skilled bankruptcy attorney can help you find permanent relief from various kinds of debts. With bankruptcy, you can resolve debts related to credit cards, medical bills, foreclosed mortgages, car loans, personal loans, some tax debts, personal business expenses and debts, past due utility bills, overdraft lines of credit attached to your checking and savings accounts and many other types of debt.

The ideas behind the risks of bankruptcy are often inflated by third-party “debt settlement” providers, creditors and other self-interested, for-profit and credit-industry sponsored/financed parties who want you to be fearful of bankruptcy and who will profit from you choosing their questionable services over a permanent, court-enforced process. You will receive timely, expeditious, positive and permanent results by filing a bankruptcy case.  You’ll find the following prevalent myths to be false.

  1. “Filers lose all their property.” This is faulty thinking about Chapter 7 liquidation bankruptcy as Chapter 7 liquidates your non-exempt assets in exchange for the permanent discharge of your debts. While it’s true that some people can lose some property in a Chapter 7 case, it is not a common occurrence.  In the vast majority of Chapter 7 bankruptcy cases, all people lose are their debts.  Generally speaking, you’ll be able to protect all your assets (like your home and car) with the allotted bankruptcy exemptions which are quite generous.
  2. “Married spouses have to file together.” While married couples can file jointly,  it’s not a requirement for them to do so. One spouse can file as an individual and have that case handled like the bankruptcy case of any other unmarried filer.  With debts that are in both spouses’ names, however, the filing of a joint bankruptcy case is necessary for those debts to be completely handled and discharged.
  3. “Your credit will never recover.” This is a falsehood about bankruptcy that is exaggerated. Yes, your credit will take a hit, but it’s typically only around 200 points. Additionally, that drop can quickly be recovered. Many filers who spend frugally and practically after a bankruptcy end up seeing a jump in their credit scores to “good” ranges (650 – 720) within just six to eight months after the conclusion of a bankruptcy case. Plus, bankruptcy usually completely falls off your credit profile after five to six years.

One other common myth is that bankruptcy filers are not financially responsible. The reality is that people can find themselves in debt for myriad reasons which are completely beyond their control. (Learn about more bankruptcy myths here.)

Contact Behm Law Group Ltd. by calling (507) 387-7200 or emailing stephen@mankatobankruptcy.com for more information about the real benefits and risks of bankruptcy in New Ulm, MN.

 

Posted on

Unemployment, Bankruptcy, and Debt Relief in Worthington, MN

Since the beginning of 2020, the United States has gone through a crisis unknown since the 1918 influenza pandemic spread throughout thousands of communities. The coronavirus not only created a huge public health issue, but it also resulted in many social and economic problems. The economic impact of the COVID-19 pandemic happened for many reasons. The state-mandated shutdowns and overall pause of nonessential operations was a large part of that impact, but many other trickle-down effects added to the nuanced conditions of today’s current economic situation. One way to look at the ways our country has coped with the unprecedented economic changes is to examine the patterns of unemployment and bankruptcy from 2019 to 2020. If you are among the many still struggling with debt and financial instability from the past year or any time before that, Behm Law Group Ltd. can help you file a strong bankruptcy case for long-term debt relief in Worthington, MN, and the surrounding areas.

Bankruptcy is a court-enforced and court-administered process that legally provides for the discharge or the reorganization of your debts. A bankruptcy case works to provide a level of fairness to all parties involved by significantly leveling the economic playing field for bankruptcy filers.  Bankruptcy allows bankruptcy filers to not only discharge their creditors’ claims but also significantly modify the terms of payment such as reducing interest rates, reducing amounts of debt, etc.  A bankruptcy case also provides fairness to creditors because creditors are still paid but are simply paid under adjusted terms.

While some impacts of COVID-19 on our economy were predictable, others were more unexpected.

Bankruptcy 2019–2020:

Two of the most important reasons why bankruptcies decreased during the COVID-19 pandemic were the federal stimulus checks and increases in federal unemployment benefits. In December 2019, bankruptcy cases were hitting a low point of around 53,000 nationally (both business and personal). Just before the real effects of COVID-19 in the United States hit home, March 2020 bankruptcies spiked by about 10,000 to around 62,800. This kind of increase typically occurs in the beginning of a year due to many aspects, but often is most attributable to the after-effects of holiday spending. By the time the pandemic was causing national shutdowns, the U.S. government had begun to issue stimulus checks, and debt, rent, utility, and other providers/creditors were offering more lenient repayment terms. At that time (April–May 2020) bankruptcies dropped dramatically to around 38,500.

Unemployment 2019–2020:

From February 2019 to February 2020, unemployment rates hovered at around 5.7 million U.S. citizens. From March to April of 2020, that number jumped up to over 23 million. The increase was almost entirely due to stay-at-home orders, but many people also lost their jobs because their employer couldn’t sustain a temporary shutdown and had to close its business permanently. After the country began to open up again in July 2020, unemployment rates decreased rapidly to around 16.3 million.

This general overview of bankruptcy and unemployment throughout the pandemic is basic, but it provides some indication of what can happen during such a difficult financial time. If you are still facing difficulties with your finances, contact Behm Law Group Ltd. by calling (507) 387-7200 or emailing stephen@mankatobankruptcy.com for more information about bankruptcy and debt relief in Worthington, MN.

Posted on

Filing for Bankruptcy in Mankato, MN, Is Not about Morality

Although the concept of debt has been around since ancient times, the unnecessary social stigma of owing money hasn’t lessened much despite the increase in individuals with debts since the development of the credit card. Those people with debts they can’t repay still face socially imposed stresses that result in shame, guilt, and other negative impacts. However, recent studies show that up to 80% of U.S. citizens have debt of some kind, from mortgages to credit card debts. The high prevalence of debt should make having debt more acceptable in our society, but unfortunately that is not the case. At Behm Law Group Ltd., we work with clients filing cases for Chapter 7, 13, and 12 bankruptcy in Mankato, MN. Many of our clients communicate the severe stresses they face with unstable finances and how difficult it is to discuss these problems with their loved ones because of the stigma surrounding debs generally and bankruptcy specifically.

The idea that filing for bankruptcy is somehow a morality issue is simply not true. The misconception behind the social stigma of bankruptcy is that filers handled their finances poorly, perhaps even maxing out multiple credit cards, gambled excessively, or engaged in other irresponsible behaviors.  The truth is that people file for bankruptcy for all kinds of reasons and with many kinds of debt.

In the United States, the most common reasons individuals file for bankruptcy stem from unavoidable life circumstances that are completely beyond their control. Whether someone accumulated debt from various sources or from one sudden event, filers report the following as the most typical causes of bankruptcy:

  1. Medical expenses: Because U.S. healthcare bills can be very costly and because the way insurance covers medical expenses is complex, many people file for bankruptcy to resolve large medical debts. These bills are often sudden and unexpected, throwing financial stability out the window.
  2. Job loss: The loss of an income will certainly throw a wrench in making debt payments on time, especially if a household has been living paycheck to paycheck. In many cases, a job loss is completely out of an individual’s hands. A recent example of a large period of job losses that workers had no control over was during the U.S. coronavirus shutdowns.
  3. Divorce: Sometimes marriages just don’t make sense anymore, and divorce is the right path for a couple. However, divorce significantly changes financial circumstances for both spouses, and legal fees can be high. In addition, ordinary living expenses may become unmanageable because each spouse must support his or her own household on only his or her own income instead of both spouses having the benefit of both incomes to support one household.  Because of this, divorce is listed as a common reason why debts can’t be repaid.
  4. Natural disaster: Even with insurance, disasters like fires, floods, and tornados can put a serious strain on a household. If property is damaged from these natural disasters, repairs can add significant costs to an individual’s budget.

All these life events are situations that can’t really be avoided and have nothing to do with morality, responsibility or intellect.  The reality of bankruptcy is that filers are in their financial situations for a lot of reasons and none of the causes may be because of poor morals or bad choices.

To learn more about filing for bankruptcy in Mankato, MN, and the surrounding area, contact Behm Law Group Ltd. by calling (507) 387-7200 or by emailing stephen@mankatobankruptcy.com.

 

Posted on

Using Bankruptcy for Debt Assistance in Owatonna, MN After Divorce

One of the most commonly reported causes of debt and the filing of bankruptcy cases is divorce. No matter what a married couple’s financial situation is before a divorce, the legal, emotional, and physical process of ending a marriage wreaks havoc. If you’ve worked through a divorce and find yourself facing serious debt, you are not alone. Divorce is one of the most difficult life changes in many ways, including having a significant impact on your finances. Divorce typically splits savings and properties between spouses, legal fees and attorney costs can be high, child support payments are required from the spouse that does not gain custody of any dependents in the marriage, and alimony payments are generally assessed against one party in the divorce as well. All that said, it’s not surprising that post-divorce finances can be complex and burdensome. If you’re looking for debt assistance in Owatonna, MN after a divorce, Behm Law Group, Ltd. can provide legal support and protection throughout a bankruptcy case. Our skilled attorneys will handle your case with care, expertise, and sensitivity from start to finish.

 

Most attorneys will recommend waiting to file for bankruptcy until after a divorce is finalized or filing jointly as spouses before a divorce is started. This is largely because of the complexities of overlapping state and federal legal procedures and the significant costs with filing two different legal proceedings at the same time.

 

However, if you need to use bankruptcy for debt assistance after a divorce, you won’t need to worry about the overlap or going through two complicated legal processes – divorce and bankruptcy – at the same time. If you aren’t filing jointly with your spouse, it’s likely you’ll qualify for Chapter 7 bankruptcy. Those eligible for Chapter 7 have income-to-debt ratios below the state median or average income for a household of a similar size.

 

Chapter 7 works to liquidate non-exempt assets in exchange for debt discharge. Filers are allotted several bankruptcy exemptions that protect the equity or value they have in their home, car, furniture, and household appliances and many other assets from the liquidation process.  In the vast majority of chapter 7 bankruptcy cases, the only things people lose are their burdensome debts.

 

Why Divorced Spouses Will Qualify

  • If you have custody of your children, you have to support them with a lower income than when you were married. This situation means divorced spouses often resort to being more dependent on credit cards and other forms of borrowing.
  • The spouse that did not gain custody of the children of a marriage may be required to pay alimony and child support. Though they only support themselves in their household, there are many new financial obligations in their lives that result from a divorce.
  • Divorced spouses may lose health insurance that they otherwise had through their ex-spouse’s workplace. If they don’t qualify for state-supported programs, they may have significant trouble paying for health insurance or medical bills.

 

Chapter 7 will not allow the discharge of certain debts involved with divorce, like alimony and child support, but it will discharge many other debts, including medical bills, credit card debt, foreclosed mortgages, bounced checks, checking/savings account lines of credit, past due utility bills, loans concerning repossessed vehicles and many other loans.

 

To learn more about using bankruptcy for debt assistance in Owatonna, MN after a divorce, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

Posted on

Who Files for Bankruptcy for Debt Relief in Marshall, MN?

At Behm Law Group, Ltd., we work with clients experiencing a broad range of financial and personal circumstances. Our attorneys offer legal protection and services for those working through Chapter 7, 12, and 13 bankruptcies. Clients whom we’ve helped regain stable finances with long-term debt relief in Marshall, MN and local communities have a variety of demographics including age, income, debt load and type, race, economic standing, marital status, number of dependents, and much more. What we’ve learned in our twenty-six years of providing comprehensive services to our clients is that there is no single aspect of a filer’s life that causes the filing of a bankruptcy case. If you are among those struggling to make debt payments on time, you can join filers who have regained long-term debt relief and a balance of their finances through filing for bankruptcy relief.

 

We work primarily with individual consumer cases for Chapter 7 liquidation and Chapter 13 reorganization bankruptcies. We also work with family farmers and fishers who file Chapter 12 reorganization and businesses working through a Chapter 7 liquidation case.

 

While there’s a lot of variety in the reasons why people file bankruptcy for permanent debt relief, some statistics reveal trends in exactly who filers are in regard to some important demographics. The American Bankruptcy Institute provides very detailed statistics for time frames and regions in the U.S., but we can look at some broader information for our nation.

 

Statistics based on 2019-2020.

 

Top causes of bankruptcy:

  • Job loss makes it 2.5 times more likely for a household to file
  • Medical bills were cited as the reason for bankruptcy in 29% of survey participants that filed in a recent study, and 57% reported they had troubles with medical debt
  • Possibly due to the coronavirus pandemic, illness and related job loss has skyrocketed to the top-cited causes of bankruptcy
  • Divorce is a major life change that often results in bankruptcy for one or both spouses

 

Marital status:

  • 64% of filers are married
  • 15% are divorced
  • 17% are single
  • 3% are widowed

 

Age:

  • The median age of filers in the U.S. is 38 to 45
  • Senior citizen filer rates are increasing
  • Under-25-year-old filer rates are decreasing

 

Household Income:

  • Around 60% of filers have an income of $30,000 and below
  • Rates of filers with an income of over $60,000 have been increasing since 2007

 

Education:

  • About 20% of filers have a Bachelor’s degree or higher
  • 36% have a high school education
  • 29% have a high school diploma with some college education
  • These factors may change if laws are passed to allow the inclusion of student loan debt in a bankruptcy case

 

Some possible changes in the coming years to the bankruptcy code might show some alterations to bankruptcy statistics, but for now these numbers show who mostly files for bankruptcy relief in the U.S. today.

 

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

Posted on

You Probably Won’t Lose Property If You File Chapter 7 Bankruptcy in Luverne, MN

A common misconception about bankruptcy in the United States is that the individuals or businesses that file will lose all their property. While it’s true that property can be at risk in any bankruptcy case, the fact is that the vast majority of individual filers don’t lose a single piece of property in a liquidation, Chapter 7 bankruptcy.  In the vast majority of cases, all people lose are their debts.  This is largely because of the exemptions filers can claim to protect their property from the liquidation process and because of filers’ financial conditions prior to bankruptcy. For individual consumers, Chapter 7 is the liquidation process the bankruptcy code provides. If you’re considering filing for Chapter 7 bankruptcy in Luverne, MN, or the surrounding areas, Behm Law Group Ltd. provides legal protection and guidance throughout the process.

 

Chapter 7 bankruptcy is a liquidation process that works to discharge debts in exchange for the sale or liquidation of non-exempt assets. However, because of the situation most people are in when they file for Chapter 7 bankruptcy and because of the available bankruptcy exemptions, individuals will probably not lose any property to the Chapter 7 liquidation process.

 

Situation: In order to qualify for Chapter 7, filers need to pass the Means Test, which measures your debt-to-income ratio. If this measurement is lower than the state median or average for a household of similar size, you’ll be eligible for Chapter 7. This generally means you have a low income or you have a lot of debt that “outweighs” a middle to upper-middle class income. If this is the case, you probably don’t own much property of high value. You may have a house, a car or two, other common items like appliances and furniture, and maybe even some valuable jewelry or tools in your name, but these items often fit into the range of monetary values set by the bankruptcy exemptions.

 

Exemptions: When you file for bankruptcy, the goal of the process is not to devastate your finances or have you lose all your property, but instead to provide you with permanent debt relief while remaining fair to your creditors. This means that there are exemptions you can claim to protect your property up to certain values. Exemptions keep those properties from being vulnerable to the liquidation process.  In Minnesota, filers can claim the exemptions provided under Minnesota state law or the federal bankruptcy exemptions provided under the bankruptcy code, but they cannot mix and match between the two. The current exemption amounts filers can claim often cover the values of most people’s properties. Additionally, in some cases, exemption amounts can be doubled when spouses file jointly.

 

Because of the available exemptions and because filers who qualify for Chapter 7 bankruptcy often don’t own a lot of high-value property, most filers will not lose any property or very little property to the liquidation process. If you’re planning on filing for Chapter 7 bankruptcy in Luverne, MN, or other communities in the area, our attorneys can help you protect as much property as possible and work through a successful case. Contact Behm Law Group Ltd. today by calling (507) 387-7200 or emailing stephen@mankatobankruptcy.com.

Posted on

Vehicle Repossession and Chapter 13 Bankruptcy in Mankato, MN

When you purchase a car and establish a loan, that contract comes with certain requirements. If you miss monthly payments, you’ll likely have to pay late fees and other monetary penalties. When too many payments are missed, your vehicle will likely be in danger of being repossessed. In many cases, individuals whose cars are going to be repossessed are struggling financially in other ways as well. If you’re unable to meet monthly debt payments, including your car payments, filing for bankruptcy can halt the repossession of your car and offer long-term debt relief. If you file for Chapter 7 bankruptcy, your car may be at risk of being liquidated by the chapter 7 trustee or being taken by the vehicle lender after your bankruptcy case has concluded.  However, you may be able to protect it from the liquidation process by asserting an appropriate vehicle exemption.  You may also protect it from being seized by the vehicle lender after your case has concluded by entering into a reaffirmation agreement with the vehicle lender.  In a reaffirmation agreement, you and the vehicle lender mutually agree that the vehicle loan will survive the bankruptcy process and that you will continue to be contractually liable on it.  Another way to keep your car and stop possible repossession is through Chapter 13 reorganization bankruptcy. With the help of Behm Law Group, Ltd., you can build a strong petition for Chapter 13 bankruptcy in Mankato, MN and the surrounding areas, work through a Chapter 13 repayment plan, and find permanent financial stability.

 

Chapter 13 bankruptcy is a reorganization process. When you file a Chapter 13 petition, you’ll work with your bankruptcy attorney to create a proposal that takes your debts and structures them into a manageable repayment plan suited to your income and reasonable, necessary living expenses.  The proposal is called the Chapter 13 Plan and it lasts three to five years. The Chapter 13 Plan will provide for the discharge of up to 100% of unsecured debts.  It can also provide for the payment of your secured debts, including your vehicle loan, under terms that are much more favorable to you and which are designed or suited to your unique budget circumstances.

 

Because your car loan can be included in your Chapter 13 repayment plan, you will be able to keep your vehicle since you’ll still be repaying the debt; you’ll just be repaying the debt under different terms.  This aspect of Chapter 13 stops vehicle repossession, but repossession is also halted immediately when you file because of the automatic stay injunctive mandates of 11 U.S.C. § 362.  The automatic stay prevents creditors from starting or continuing their collection activities, including repossession. Even if the vehicle creditor has already taken your car (as long as they haven’t sold it), they may have to return it to you when your bankruptcy case is filed and the mandates of the automatic stay take effect.

 

When You File

  • The automatic stay is in effect
  • Your Chapter 13 repayment plan proposal is submitted to the bankruptcy court
  • All your creditors will be able to review your Chapter 13 Plan
  • Your car lender may return your vehicle if it has been repossessed
  • The case is resolved through the bankruptcy court and there is finality when your case is completed
  • You start making monthly plan payments to the Chapter 13 trustee within thirty (30) days after your bankruptcy case has been filed
  • You can catch up on any missed car payments
  • After the three- to five-year plan is finished, the debt on your car is completely paid off

 

Chapter 13 reorganization bankruptcy can also help you catch up on many other missed payments, such as missed mortgage payments, and it can help you pay off other secured debts in full under more favorable terms.  Chapter 13 can significantly help you resolve your financial problems in a short, three-to-five year period. Outside of Chapter 13 bankruptcy, you may have to repay missed payments in a lump sum instead of being able to spread the payments over a three-to-five year repayment period.

 

To learn more about vehicle repossession and Chapter 13 bankruptcy in Mankato, MN, contact Behm Law Group, Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com.