Resolving Medical Bills and Other Debt Relief in Mankato, MN, with Bankruptcy

In the United States, the cost of healthcare is high, even with medical insurance. This expense is often a cause of much hardship for those who encounter medical costs of any kind, expected or otherwise. These expenses put pressure on household finances during an already stressful and often emotional time. If you are facing unmanageable hospital bills and medical expenses on top of other common debts (e.g., credit cards, mortgages, car loans, taxes), you can find debt relief that offers long-term, effective results by filing for bankruptcy. With the help of Behm Law Group Ltd., you can file a successful case and receive debt relief in Mankato, MN, from your medical bills and other debts.

 

While filing for bankruptcy may seem drastic, it is the most effective and direct way of resolving your medical expenses in addition to many other debts. Instead of working through the red tape of most hospital administrations without the assurance that your debts will be resolved at all, consider filing for bankruptcy, which kills several birds with one stone with the treatment of many debts and a guarantee that your medical bills will be completely dissolved.

 

Because medical bills are considered an unsecured debts, they will be fully discharged in any type of bankruptcy you can file for as an individual.

 

Chapter 7

As a liquidation type of bankruptcy, Chapter 7 discharges debts in exchange for the liquidation of your non-exempt assets. In most cases, the bankruptcy exemptions that are available to you are more than sufficient to protect all of your property from liquidation.  Unsecured debts such as credit card debts, and of course, medical bills, are discharged in full. Chapter 7 is the quickest and most expeditious type of bankruptcy to treat unsecured debts because the process usually takes only three to four months to complete.  However, you must pass the Means Test in order to prove you qualify for chapter 7 debt relief by showing that your household income is not greater than the state median income for a household of your size.

 

Chapter 13

Chapter 13 is a debt reorganization form of bankruptcy. Also referred to as wage-earner bankruptcy, Chapter 13 is an option available to those with an incomes too high to file for Chapter 7 or for those who want to protect their non-exempt assets from possible liquidation.  Chapter 13 reorganizes your debts into a manageable three- to five-year repayment plan. This means that you will pay your unsecured debts what you can afford to pay for a limited time with no interest, no late fees and no penalties.  At the end of your three- to five- year plan, whatever amounts of your unsecured debts that remain are discharged.

 

In a nutshell, filing for bankruptcy will ensure your relief from medical bills, and in most cases, many other debts as well. To learn more about filing for bankruptcy and receiving debt relief in Mankato, MN, contact Behm Law Group Ltd. at (507) 387-7200 today.

When and Why Bankruptcy Might Be Your Best Option for Debt Relief in Worthington, MN

In today’s fast-paced consumer world, it might seem easier than ever for businesses to thrive. Despite the increased spending most individuals and households have been doing, especially since the advent of online shopping, many businesses are still struggling with the debts that have existed for years on top of the new financial obligations of the technological age.

 

Debts like building mortgages, equipment expenses, online hosting subscriptions, credit card readers, licenses, and more are all part of running a typical business today. Because of the additional expense that technology requires and the high cost of owning a business, it’s not unexpected that most would benefit greatly from debt relief. Behm Law Group, Ltd. can help you determine if filing for bankruptcy is a form of debt relief in Worthington, MN, that’s right for your situation.

 

Bankruptcy as a form of debt relief can be highly effective for businesses in many different financial situations, but it’s not always the right option. In some cases, filing for bankruptcy may be more detrimental because of the effect it has on your credit and the potential loss of some of your business or personal assets, especially if you want to keep your business operating as usual.

 

Considerations for Debt Relief from Bankruptcy

Often, however, businesses considering bankruptcy at all will likely benefit greatly from the process. To understand if you should think about bankruptcy as a viable option, there are several red flags that can give you an idea of your business’s financial standing:

 

  1. Long-Term Standing: If your income-to-debt ratios show that even a long-term income wouldn’t be sufficient to rebalance your budget and cash flow your business, bankruptcy might be the right choice. Revenue is something that fluctuates throughout the year for every business, but if your bad month turns into a bad quarter, year, and so on, your long-term standing is precarious, if not nonexistent.
  2. At-Risk Assets: If your business is a sole proprietorship or a partnership, as many small businesses are, your personal assets may be at risk if you’re unable to repay your business debts. Creditors can take action to seize your personal property as well as your business assets to repay your debts. If you file for bankruptcy, you can halt any collections with the power of the automatic stay injunctive mandates of 11 U.S.C. §362.
  3. Other Options: There are options outside of bankruptcy that may provide the debt relief you need. Debt consolidation or settlement, negotiating with creditors, and other options may be more suitable to your situation than bankruptcy. However, non-bankruptcy options are often uncertain and precarious because your creditors are not required to work with you and they’re not required to stop collection efforts while you’re trying to work with them.  So-called “debt consolidation companies” who advertise very aggressively on the internet and who purport to deal with your creditors on your behalf are especially troubling.  They have no special influence or legal authority over your creditors and they can’t make your creditors do anything at all.  Often, the only parties who benefit from such non-bankruptcy “debt consolidation plans” are the debt consolidation companies themselves.  Often, people will pay into these plans for months and years only to have their creditors garnish their wages and freeze their bank accounts anyway.  Often, people will not be able to get the money back that they’ve paid to a debt consolidation company because the contracts they sign with such companies provide that the payments first go to satisfy the fees charged by the company before anything gets paid to creditors.  If you’ve considered all other options and still aren’t finding the relief you need, it may be time to think about bankruptcy.
  4. Post-Filing Plan: If you’ve considered bankruptcy and find you’re able to picture filing and establishing a long-term plan, it’s likely you can gain many benefits from filing a bankruptcy case. Behm attorneys can help you build your case and create a post-filing plan for reorganization after bankruptcy is concluded.

 

If you’re looking for debt relief in Worthington, MN, and are considering bankruptcy, contact Behm Law Group, Ltd. at (507) 387-7200 today to learn more.

Why Student Loans are Leading to Increased Rates of Chapter 7 Bankruptcy in Owatonna, MN

In many countries across the world, a college degree is considered necessary to enter a majority of job markets, and a bachelor’s degree is often viewed as the minimum standard for education. In the U.S., over 65% of high school graduates attend college, university, or other forms of higher education. The experience and certifications higher education provides are important to many students, but with the rising cost of tuition, a college degree can lead to financial troubles down the road.

Under the weight of large student loans, many college graduates are finding it difficult to keep their heads above financial waters. If you’re struggling to meet monthly debt requirements for any reason, Behm Law Group, Ltd. can help you determine whether filing for bankruptcy is the right choice. If you’re considering filing, our expert attorneys can guide and protect you from start to finish during a Chapter 7 bankruptcy in Owatonna, MN.

Student loans rates have increased significantly over the past ten years in the U.S. A recent study showed that 32% of yearly bankruptcies in the U.S. were driven primarily by student loan debts. Those that filed on the basis of student loan debts reported that almost 50% of their debt was made up of federal or third-party student loans. The total of U.S. student loan debt in 2019 is hitting a record high at $1.5 trillion and averaging at about $30,000 per student.  According to a July 24, 2018 Forbes article, the cost of attending a university and obtaining a degree has increased 8 times faster than wages.

With the highly competitive job market and the requirement of even further education within many career paths, new graduates are struggling to repay loans while facing the additional financial requirements of adult life. For many individuals, this struggle meets a breaking point, and bankruptcy or other forms of debt relief must be considered.  According to a May 24, 2012 Forbes article, the cost of higher education has risen 500% since 1986.

 

Student Loans and Chapter 7 Bankruptcy

In any type of bankruptcy, it is possible to discharge student loans. However, the process can be protracted, difficult and expensive.  In order to have student loans discharged in bankruptcy, you must actually sue the student loan lender in bankruptcy court and alleged uncommon financial and personal circumstances which would demonstrate undue hardship.   If one proves up circumstances demonstrating undue hardship, the bankruptcy court will discharge one’s student loans.  Typically, the process is unavailable to someone, however, because of the costs and time involved. So why would filing for Chapter 7 bankruptcy help college graduates with 50% of their debt in student loans?

 

Put simply, Chapter 7 bankruptcy discharges the majority of other common debts, including credit card debt, car loans, mortgages, medical bills, and personal loans. The process resolves these debts with a liquidation of non-exempt assets in exchange for debt discharge. Typically, in most cases, the bankruptcy exemptions one has available in bankruptcy are very generous and are sufficient to protect all of one’s property and the only things that one loses in bankruptcy are ones debts.  Chapter 7 bankruptcy is the most commonly filed and the most directly effective process of debt relief. However, it’s not a process everyone qualifies for. To be eligible for Chapter 7, filers must pass the Means Test to prove their debt-to-income ratio is severely out of balance. With the high numbers student loans censuses show, almost all college graduates struggling financially can qualify for Chapter 7 bankruptcy.

 

If you’re having a hard time meeting your debt payments due to student loans or other factors, contact Behm Law Group, Ltd. today at (507) 387-7200 to learn more about filing for Chapter 7 bankruptcy in Owatonna, MN.

Rebuilding Your Business or Starting Fresh after Bankruptcy in Marshall, MN

Owning and operating a business is a difficult endeavor, no matter how small that business is. This is why many businesses find themselves in a financial situation that is less than desirable. If your business is facing debts you’re unable to repay, filing for bankruptcy may be your saving grace in preventing further struggles down the road. With the help of Behm Law Group Ltd., you can file a successful case for bankruptcy in Marshall, MN, and even rebuild your business and your credit after your bankruptcy case is concluded.

 

Business bankruptcies vary depending on the legal status or structure of the business. Any corporations, LLCs or other business formats that have a separate legal and financial standings from their owners typically can file for Chapter 7 or Chapter 11. On the other hand, sole proprietorships and partnerships are directly tied to the owners’ personal assets and personal debts/liabilities, which means they can file for Chapter 7 or Chapter 13.

 

For all types of businesses, the Chapter 7 process works in the same way to liquidate business assets (properties, accounts, etc.) in exchange for the discharge of debts. In any Chapter 7 business case, the business is typically closed when the case is completed.

 

Though Chapter 11 and Chapter 13 work similarly to reorganize business debts into a manageable repayment plan, there are some differences. For small businesses, Chapter 13 is often ideal for many reasons. Learn more about the benefits of Chapter 13 here.

 

No matter what type of bankruptcy you file, your business can face a range of challenges down the line. From shutting down your business completely to severely lowering your credit standing, bankruptcy can force significant alterations or changes but those alterations or changes, in most cases, are both rehabilitative and beneficial long-term. It’s absolutely possible to rebuild your business and your credit after filing for bankruptcy relief, whether this means starting anew or rebuilding through a debt repayment plan. Every case is different, but there are some strategies that every business owner can do to rebuild after a bankruptcy filing:

 

  1. Change the way you budget. Something led to your business bankruptcy, and whether that was caused by your actions or by external reasons over which you had absolutely no control, you can make changes in your budget to prepare for challenging financial times. Creating a conservative spending and generous saving plan is often a vital step.
  2. Focus on rebuilding your credit. When your credit is good, your business can use that advantage to expand, which in turn, opens many other doors. Your credit will take a hit after bankruptcy, but you can take small actions to slowly rebuild it. Take care to pay all bills on time, meet your debt requirements, communicate often with your creditors and stay away from just paying the monthly minimum payments.
  3. Consider separating your business finances from your own. When you can (i.e., have the funds and are not on a Chapter 13 debt repayment plan), establish your business as a corporation or LLC (not a sole proprietorship or partnership) to protect yourself from any financial issues.

 

To learn more about how to rebuild your business and your credit after filing for bankruptcy relief in Marshall, MN, contact Behm Law Group Ltd. at (507) 387-7200 today.

 

 

Voluntary vs. Involuntary Case Dismissals When Filing Bankruptcy in Luverne, MN

Across the U.S., individuals and businesses are filing bankruptcy each month. Not only is the process of bankruptcy designed to help filers come back from severe debt as well as sometimes give creditors some financial return, it also provides a system of balance for the economy. If you are considering filing bankruptcy in Luverne, MN or the surrounding area to discharge your debts, you are contributing to the health of the economy of your community, Minnesota, and the U.S. as a whole.

Because bankruptcy was designed to help debtors, creditors, and the economy alike, bankruptcy law has complex, strict legal boundaries that can be difficult to navigate without the help of an experienced professional. Behm Law Group, Ltd. provides the advice and guidance required to file a successful case as an individual or as a business.

Filing bankruptcy is one of the few legal processes that individuals or businesses can take on without representation. Utilizing the skills of an attorney, however, is highly recommended because of the intricate nuances of bankruptcy law. When filing bankruptcy, every case can have unique and unexpected conditions. Navigating through these conditions without an expert’s advice often results in a case being dismissed or property being permanently lost.

When it comes to case dismissals, the guidance of an attorney can help you avoid involuntary dismissals or, in certain situations, receive a voluntary dismissal.

Filing Bankruptcy: Types of Dismissals

Involuntary Dismissal

If your case doesn’t meet the requirements of the bankruptcy code, you could face an involuntary case dismissal. This occurs most commonly when forms and documents are missing or are inaccurate or if the filer fails to meet pre-bankruptcy requirements. Other reasons your case may be dismissed include failure to make alimony or child support payments during your case period (including the three to five years of a Chapter 13 repayment plan), failing the Means Test if you plan to file Chapter 7, failure to pay court fees, lack of a credit counseling certificate, and more.

 

Voluntary Dismissal

There are many occasions when a filer may request dismissal on a voluntary basis. In some cases, it can be difficult to convince the court to grant the dismissal, and a bankruptcy lawyer can be key to petitioning for and processing the dismissal in these conditions. Dismissal of a Chapter 7 case, for example, is rare. The court will only grant a voluntary dismissal if your creditors will not receive any compensation or benefit from the liquidation of your assets (i.e. it’s not in your creditors best interests). Dismissal from a Chapter 13 case is much more attainable. Typically, the court cannot hold you to a repayment plan against your will, and you can file a dismissal request to end your case whenever you want. However, this does allow creditors to have the automatic stay lifted and resume debt collection activities.

 

To learn more about dismissals and why an attorney is important when filing bankruptcy in Luverne, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.

Recent Histories of Chapter 12 Bankruptcy in Mankato, MN and How It Affects Farmers Today

Farming as a profession has experienced more drastic changes to economic standing in the U.S. during the past 50 years than almost any other types of industry. In the 1970s, farming in Minnesota and across the U.S. was reaching an all-time high, with the value of land meeting higher heights than ever before. Export of goods increased, and farmers were able to get more credit with goals to grow their operations.

 

Unfortunately, the farm crisis in the 1980s quickly led to a downfall of many Minnesota farms and a spike in agriculture bankruptcies. This farm depression is still affecting family farmers and fishers even 20 to 30 years later, and Minnesota’s agricultural industry is walking a difficult road, especially given the ongoing trade dispute with China. If you’re considering filing for bankruptcy as a family farmer or fisher, Behm Law Group, Ltd. can help you build a strong case for Chapter 12 bankruptcy in Mankato, MN.

 

Chapter 12 bankruptcy is a process designed specifically for family farmers and fishers (those who earn over 50% of their gross income from their agricultural operations) who are in debt but maintain a steady income. This bankruptcy process works as a reorganization of debts into a manageable repayment plan suited to your income and expenses lasting three to five years.

 

Though the process of bankruptcy for farms has changed slightly since the 1980s farm crisis, the concept is the same, and Chapter 12 bankruptcy has helped many individuals find debt relief when desperately needed. However, the effect of that crisis is still on the table for a wide majority of farmers. During the time of the crisis, land values dropped an average of 50% towards the end of the 80s, equipment costs rose almost 25%, and the U.S. dollar value weakened considerably.

 

In 1986, Chapter 12 was added to the bankruptcy code under the Family Farmer Bankruptcy Act. By 1999 over 9,550 farms across the U.S. filed for Chapter 12 bankruptcy. Despite this, by 1987, the government issued subsidies to Minnesota farms with a total of just over $712 million.

 

In addition to these changes, the price of milk, wheat, corn, and soy fell gradually over the next decade, adding to the difficulties family farming operations face even now. In 1978, Minnesota was home to about 98,600 family-owned farms. Today, those numbers barely meet 75,000, despite the growth in population and crop demands.

 

The residual effects of the 1980s farm crisis still impact Minnesota farmers today, and the debt relief and long-term security that Chapter 12 bankruptcy provides is a valuable option to many famers. The help of an expert attorney when filing can make all the difference. To get started on your case today, contact Behm Law Group, Ltd. at (507) 387-7200 and begin your petition for Chapter 12 bankruptcy in Mankato, MN.

Five Things You Might Not Expect About Bankruptcy in Windom, MN

Because the average individual is not an expert on the legal nuances of bankruptcy, it’s understandable that most people use the internet as a guidebook for the process. While there are a few accurate sources of bankruptcy information online, there are also a lot of myths and general misinformation.

 

When it comes to correct and reliable information, nothing beats a professional opinion. Behm Law Group, Ltd. provides that expert opinion. If you’re considering filing for bankruptcy in Windom, MN, or the surrounding area, Behm Law Group, Ltd. can offer advice and more throughout the process.

 

You can find much about the basics of bankruptcy online, but the basics aren’t quite enough to file a successful case and see it through. Bankruptcy is an old practice, going back to ancient times, though it has evolved over time. Today, bankruptcy has many conditions that can change the course of a case, making it one of the most nuanced legal processes.

 

Because of this complexity, there are many unexpected things about bankruptcy, even as a nationwide occurrence. For example:

 

  1. About 1 in every 70 households file for bankruptcy each year. If you look at your community based on this information, it’s possible you may know someone who is working through bankruptcy.
  2. Almost 50% of households in the U.S. spend more than half their yearly income and have up to $15,000 in credit debt. This addition of credit debt to an already common pile of debts including student loans, mortgages, car loans, and more has led to a rapid increase in the number of consumer bankruptcies per year.
  3. The vast majority of people who file for bankruptcy relief don’t lose any property and only lose their debts.  The bankruptcy exemptions that are available to you to protect your property are typically very generous.  The bankruptcy exemptions you can use and the limitations of those bankruptcy exemptions vary from state to state.  Generally, you must reside in a particular state for two (2) full years before filing a bankruptcy case in order to use or benefit from the bankruptcy exemptions of that state.
  4. The amount of average debt per bankruptcy case has increased over in the past 10 years. An American Bankruptcy Institute report released in 2009 showed that cases averaged $100,000 in debt for individual bankruptcies alone. Business bankruptcies had even greater debt averages per case. This shows there is a notable increase in the time households and businesses are barely making ends meet before filing for bankruptcy.
  5. Bankruptcy has increasingly affected those with a college education as tuitions rise. Each year, college tuitions increase to match the growing inflation our economy experiences. Student loans must be listed, like any other creditor, in the bankruptcy process but they are generally difficult to get discharged, except under specific circumstances.  Student loan debts, in combination with the weight of others, still significantly contribute to bankruptcy filings, however.

 

To learn more about the process of filing for bankruptcy in Windom, MN, or to get started on your case, contact Behm Law Group, Ltd. at (507) 387-7200 today.

Lien Avoidance vs. Lien Stripping When Filing for Bankruptcy in Waseca, MN

Anyone struggling to meet monthly debt payments has more options than just slipping deeper beneath the water of financial difficulties. Instead of facing the stress of debt and the emotional toll it creates, those working through financial troubles can find relief within the government sanctioned process of bankruptcy.

 

If you think bankruptcy might be right for your financial circumstances, Behm Law Group, Ltd. can provide professional guidance and support. When you choose to file for bankruptcy in Waseca, MN, as an individual or business, you can gain the benefits of a debt treatment process that will lift the stress of a heavy financial burden.

 

When you file for bankruptcy, you may have many different types of debts to your name. Broadly speaking, the types of debts included in the bankruptcy process are generally secured and unsecured. Your secured debts are tied to or secured by an item of property or real estate, and it’s almost certain that the property or real estate will have liens attached to them.

 

Liens are tied to property loans like mortgages, car loans, and other commonly secured debts that are arranged through lending companies. These liens give the lenders the right to repossess or foreclose on the properties tied to the debts until the debtor pays the debts or the debts are discharged. In the bankruptcy process, mortgage liens can be stripped or avoided, depending on the situation.

 

Lien Avoidance in Chapter 7 Bankruptcy

When you file for Chapter 7 bankruptcy, you’re entering into a liquidation process that works to provide your creditors the value of your non-exempt property in exchange for debt relief. You can protect your properties from liquidation with your available bankruptcy exemptions, however. If there was a lien on a piece property, claiming the exemption is not considered lien avoidance.  Your available bankruptcy exemptions allow you to protect the equity – the value of an item of property above the debt you may owe against it – in your property.  Sometimes, you can avoid a creditor’s lien in full or in part regarding a certain piece of property and use your bankruptcy exemptions to protect the equity you gain from such lien avoidance.  In order to avoid a lien on property, a secured creditor’s lien must be a non-purchase money lien.  This means that the creditor did not give you any financing for the purchase of the subject asset itself.  For instance, if a creditor gives you a loan for home improvements and you give that creditor a lien or security interest in your furniture or a vehicle, farming equipment or some other assets, that creditor has a non-purchase money lien as to those items because it did not give you a loan to purchase them.  Rather, the creditor gave you a loan for some purpose that was completely unrelated to the assets on which you allowed the creditor to have a lien.  Presume that One Main Financial gave you a $10,000.00 loan for home improvements and further presume that you granted it a security interest in your furniture, appliances, and your car.  In a bankruptcy proceeding, you could avoid the entire $10,000.00 lien on those items and use your bankruptcy exemptions to protect the resulting $10,000.00 equity you would then have as a result of having avoiding the lien.

 

Lien Stripping in Chapter 13 Bankruptcy

If you file for Chapter 13 bankruptcy, your debts are reorganized into a manageable repayment plan lasting three to five years. If you have multiple mortgages on your property, you may be able to strip off second and third mortgage liens, if there is no value or equity to the real estate above and beyond the first mortgage.  If the amount of the first mortgage is greater than the value of your home, you’re considered “upside down” on that mortgage debt, and you can strip the junior liens away.

 

To learn more about the different types of bankruptcy chapters and how your liens are handled when you file for bankruptcy in Waseca, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.

How A Bankruptcy Lawyer Supports Your Pipestone, MN, Case

Bankruptcy is a process that affects a higher percentage of families, individuals, and businesses each year as many aspects of our economy change. There is absolutely no reason to feel shame in filing bankruptcy. In fact, bankruptcy is a government sanctioned process designed to help U.S. citizens find relief from debts, unexpected or otherwise. While some take on bankruptcy without a professional at their side, this is not recommended as filing for bankruptcy is one of the most complex and condition-based procedures an individual or business can undergo. Behm Law Group Ltd. can help you work through a case with the advice and support you need from a professional bankruptcy lawyer in Pipestone, MN.

 

Any bankruptcy trustee or legal professional will advise individuals and businesses to take advantage of the invaluable help a bankruptcy lawyer provides, and for good reason. No matter how much research you do to understand the process and your own circumstances, a bankruptcy lawyer provides legal protection in addition to the expert guidance and support you need in any type of case.

 

When you partner with a Behm attorney, you can expect knowledge, experience, outside-of-the-box thinking, and true caring for you, the client.

 

A Bankruptcy Lawyer’s Guidance

 

The key role of a bankruptcy lawyer is to provide guidance throughout a case. This includes:

 

  1. understanding aspects of your circumstances and determination of the best course of action when it comes to the type of bankruptcy you should file
  2. comprehensive assistance in gathering documentation for your case, including all financial information about income, debt, accounts, expenses, and more
  3. advice throughout credit counseling and other preliminary requirements outlined by the court
  4. support at the 341 hearing (meeting of creditors) or in court in the event your case advances beyond standard procedure
  5. advice and assistance in creating a Chapter 13 repayment plan proposal that fits the requirements of the court and your own financial situation
  6. support throughout the Chapter 7 liquidation process and assistance in claiming exemptions
  7. help in establishing a long-term plan for post-bankruptcy life

 

A Bankruptcy Lawyer’s Protection

 

Not only do bankruptcy lawyers provide guidance and insight from start to finish in your case, they also give vital protection from any parties involved. This includes:

 

  1. protection from creditors’ harassment that might occur
  2. support and protection in the event you may face a judgment claim from court or creditor
  3. defense against many reasons your trustee may attempt to dispute your case
  4. assistance during the meeting of creditors, the first critical time your case is introduced to the bankruptcy court

 

If you are considering filing a Chapter 7 or Chapter 13 case, Behm Law Group Ltd. can offer you the support and protection of a professional bankruptcy lawyer in Pipestone, MN. To learn more or to get started with us today, contact us at (507) 387-7200.

Reduced Pay for Educators Increases Cases of Chapter 13 Bankruptcy in Fairmont, MN

Across Minnesota, K-12 school budgets are dropping, and funding for private colleges is also suffering in several departments. This trend has had a marked effect on students, teachers, and administrators alike. For teachers and professors, the effect can be immediate or gradual. Specifically, those employed as educators at all levels have experienced an overall reduction in salaries, meaning their finances have changed for the worse. This shift has been a large part of why we’ve seen increased cases of educators filing for Chapter 13 bankruptcy in Fairmont, MN, and across the state. If you are an educator struggling to meet debt payments, Behm Law Group Ltd. can provide the guidance and assistance you need to file a successful case and find long-term debt relief.

 

Chapter 13 Bankruptcy for Educators

If you have made the decision to file for bankruptcy as an employed educator, you are most likely restricted to filing for Chapter 13 bankruptcy. While lowered salaries may be what brought you to the point of filing for bankruptcy, the fact remains that you still have an income. This means you won’t qualify for Chapter 7 liquidation bankruptcy unless your debts significantly outweigh your income.

 

On the bright side, Chapter 13 bankruptcy is often more desirable for those who want to keep their home and other possessions. Instead of liquidating your non-exempt assets in exchange for debt discharge like Chapter 7, Chapter 13 works to reorganize your debts into a reasonable monthly payment that you make to a chapter 13 trustee.

 

The reorganization process structures your debts into a repayment plan that lasts three to five years, depending on your income. If your income is lower than the median Minnesota income for a household of your size, your plan will last only three years. If your income is higher than the state median income for a household of your size, your plan is must last five years. In our experience, educator incomes do not typically exceed the median, even when filing jointly with their spouses. This means you can typically expect to have a three year repayment plan and pay a lower percentage of many types of debt.

 

How Chapter 13 Handles Debt

A Chapter 13 reorganization plan handles debt in several ways. First, you generally will continue to make your monthly payments to most of your secured debts, such as mortgage loans and vehicle loans, directly to those creditors.  Sometimes, however, if you have become delinquent with your mortgage payments or vehicle payments, any pre-petition or pre-bankruptcy filing delinquencies can be paid or “cured” through your chapter 13 plan.  For instance, if you have become $5,000.00 delinquent with your mortgage payments, this amount can be paid to the creditor by the chapter 13 trustee through your chapter 13 plan over the duration (36 to 60 months) of your plan.  You must, however, be able to make the ongoing, regular post-petition mortgage payments that come due after your case has been filed.  Second, priority debts such as certain tax debts, alimony and child support arrearages or even criminal fines, must be paid in full. Third, general unsecured creditors, such as credit card debts, medical debts, etc., do not receive interest, late charges or service fees.  Any amounts that are paid to those creditors go against the principal that you owed those creditors when your bankruptcy case was filed.  Typically, unsecured creditors are only paid a percentage of the total you owed them when your case was filed.

 

When the debt amounts are calculated and structured into your plan, you’ll be able to see the amount required to be paid monthly to your bankruptcy trustee. You can rest assured this amount will fit your income, though keep in mind your discretionary income will depend on a budget relating to your reasonable and necessary living expenses and your disposable income (income over and above what is necessary to cover your monthly reasonable and necessary living expenses) must be paid to unsecured creditors through your plan. This monthly payment may change if your monthly income and monthly reasonable and necessary living expenses change.

 

To learn more about filing for Chapter 13 bankruptcy in Fairmont, MN, as an educator, contact Behm Law Group Ltd. at (507) 387-7200 today.