How Common Types of Lawsuits are Handled During Bankruptcy in Redwood Falls, MN

Filing for bankruptcy is a difficult legal process on its own, but often filers can be simultaneously
dealing with lawsuits and other legal actions. The help of a bankruptcy attorney is the key to
successfully navigating the complexities of any type of bankruptcy. With the legal advice and
assistance of Behm Law Group, Ltd. attorneys, we can help you understand how lawsuits will be
handled when you file for bankruptcy in Redwood Falls, MN.

It’s not unheard of for someone to be working through multiple legal proceedings at the same
time, and bankruptcy is no exception. If you’re considering filing for bankruptcy but you are
worried how it may affect another lawsuit or court process you’re currently working through or one
that you suspect you may encounter soon, Behm Law Group, Ltd. can help you determine
whether entering into bankruptcy is the right choice given your situation.
The most common lawsuits individual consumers encounter can often be handled at the same
time as a bankruptcy case.

Domestic Disputes: Divorce, child support suits, alimony claims, and other common domestic
court actions will have little to no effect on bankruptcy proceedings. This means the court will
allow both processes to continue, without staying or suspending the domestic disputes, until the
bankruptcy concludes. The exception is that some courts will delay discharge and debt
reorganization results until final divorce settlements on property are determined.

Criminal Proceedings: Because criminal cases are handled through local governments and
police powers, they’re often unaffected by bankruptcy proceedings. For violent crimes, theft, and
other common criminal allegations, a bankruptcy filing won’t interfere. However, if the criminal
proceedings involve other money and property related schemes (i.e. bad checks, fines, fraud)
against the government, the potential fines and payments involved are sometimes suspended by
the automatic stay of 11 U.S.C. §362. This effectively halts court proceedings until the bankruptcy
is concluded or the automatic stay is lifted for another reason.

Bankruptcy-Related: Lawsuits can also arise during a bankruptcy case. While creditors are
prevented from collecting pre-bankruptcy debts when a bankruptcy case is filed and the
automatic stay is implemented, they can commence lawsuits against you in bankruptcy court to
request that their debts not be discharged. Many such claims are asserted under 11 U.S.C. §523
(Exceptions to Discharge). For instance, a creditor that extended you credit or lent you money
can sue you in bankruptcy and request a bankruptcy court not to discharge any debt incurred as
a result of alleged fraudulent conduct, such as providing a creditor with a false financial
statement.

Other: Lawsuits like foreclosure and eviction are handled from case to case in bankruptcy, but
are often dismissed or suspended as a result of a bankruptcy proceeding. Other common
lawsuits such as building code enforcement and administrative court actions are almost always
unaffected by bankruptcy proceedings. If you want to bring a lawsuit against another party while
you’re filing for bankruptcy, you can often do so without any obstacles, but you absolutely should

list any such claim as an asset in your bankruptcy petition and related schedules. Sometimes, the
bankruptcy trustee administering your case will have an interest in any such claim and must be
involved. However, there are cases when the automatic stay must be lifted to continue with the
legal action.

If you’re struggling to reconcile multiple legal processes, Behm Law Group, Ltd. can help. Contact
us at (507) 387-7200 today to learn more about filing for bankruptcy in Redwood Falls, MN.

Understanding Bad Faith Cases When Filing for Bankruptcy in New Ulm, MN

If you are considering filing for bankruptcy, there are a number of ways you can prepare your financial situation before you file a bankruptcy petition that can help your case and bring about the best results for you. Many of these preparation techniques are acceptable methods for improving the possible outcome of your bankruptcy case—for example, choosing a certain time to file or avoiding certain financial obligations. However, there are instances when certain actions done before filing for bankruptcy or during a bankruptcy case can result in the dismissal of your case on the grounds of “bad faith.” Behm Law Group, Ltd. offers legal advice and assistance to help prevent a potential bad faith bankruptcy case when you’re filing for bankruptcy in New Ulm, MN.

While there are legitimate means of preparing for filing for bankruptcy or altering your finances to your advantage before you file a bankruptcy case, some such techniques could be considered bankruptcy “red flags” and prompt your bankruptcy trustee to determine that your case has been filed in bad faith. When you file for Chapter 7 or Chapter 13 bankruptcy, you must meet the “good faith” requirement in order to proceed. If there are aspects of your case that suggest you may be trying to take advantage of the bankruptcy system, your bankruptcy trustee or even one of your creditors could view your case as having been filed in bad faith and could ask the bankruptcy court to dismiss your case.

Examples of common actions or circumstances that could be construed as bad faith include:

  1. The filer hid certain assets, like keeping cash in a coffee jar or in a safe in one’s home, and did not disclose the cash in one’s bankruptcy petition.
  2. The filer has little to no cash flow and is not registered as being unemployed with the government (this could alert a trustee to think that there is hidden income somewhere – the trustee could conclude that you are working for cash only and not disclosing it).
  3. The filer had a job change during the bankruptcy period or recently prior to filing for bankruptcy and did not reveal an income increase to the trustee.
  4. The filer made one or more large luxury purchases prior to filing for bankruptcy (vacation expenses, electronics, and jewelry are common examples).

Another common occurrence that may lead to a dismissal for bad faith is an attempted conversion from a Chapter 13 case to a Chapter 7 case.

Chapter 7 Conversion When Filing for Bankruptcy

If a filer is in a Chapter 13 repayment plan, one may attempt to convert that case to a Chapter 7 case if one can no longer pay the monthly Chapter 13 plan payments. This can occur if the filer had a job change, experienced a temporary period where one was unemployed, or incurred unexpected large expenses. However, if the filer begins to convert a case to Chapter 7 and one’s situation improves during that time (for example, one gets a better paying job, or a family member gives one a large sum of money through inheritance or otherwise), one’s case could be dismissed for bad faith.  In short, it would be seen that one would be inappropriately trying to convert to a chapter 7 case – essentially indicating that one does not have the financial ability to make any payments to one’s creditors – from a chapter 13 case.  Given the receipt of a large sum of money from a relative or given a higher paying job, the trustee and the bankruptcy court would conclude that one would have the ability to continue making payments to one’s creditors and should, therefore, be required to stay in a chapter 13 case.

There are other examples of why your case may be dismissed for bad faith, and you can learn about all the additional circumstances that may lead to bad faith in the American Bankruptcy Institute Journal.

Find out more about filing for bankruptcy in New Ulm, MN with the help of Behm Law Group, Ltd. and contact us today at (507) 387-7200.

Possible Plan Outcomes with Chapter 12 Bankruptcy in Jackson, MN

The seasons of winter and spring in Minnesota are the most difficult times for farmers who support their households with income from agricultural sources. In fact, it’s a time when bankruptcies filed by family farmers spike across the country. In 1987, Chapter 12 bankruptcy was added to the bankruptcy code to help family farmers recover from extreme financial difficulties through the process of debt restructuring and debt consolidation. Behm Law Group, Ltd. offers legal advice and assistance for farmers who are considering filing for Chapter 12 bankruptcy in Jackson, MN.

The process of Chapter 12 bankruptcy is similar to that of Chapter 13 reorganization bankruptcy, but offers specific benefits tailored to fit the financial circumstances of a family farming household. The process of Chapter 12 takes a filer’s debts and restructures them to create a new payment plan that can last 3 to 5 years. This plan requires a full repayment of priority unsecured debts, such as tax debts, and, generally, a specific percentage (0%-100%) repayment of all other debts.

The outcome of a Chapter 12 bankruptcy case can be decided in one of five ways:

  1. Converted: If your household income is low enough to pass the Means Test and you have either failed to propose a repayment plan or your proposed plan was not confirmed by the bankruptcy court, you can have your case converted to a Chapter 7 liquidation case.

 

  1. Confirmed without discharge: If your repayment plan proposal is accepted, your plan will be confirmed or approved by the bankruptcy court. Depending on the amounts you owe and the types of debts you have, you may not actually receive a discharge of your debts and you may only need the assistance of a chapter 12 bankruptcy proceeding to simply restructure or consolidate your debts.

 

  1. Confirmed with discharge: The most common outcome for approved Chapter 12 cases includes a repayment plan that is confirmed by the bankruptcy court and provides for the restructuring or consolidation of some debts and for the discharge or other debts. Debts that are often discharged in a Chapter 12 bankruptcy include medical bills and credit card debts. This is the optimal outcome of a Chapter 12 case.

 

  1. Dismissed before confirmation: If your Chapter 12 case is filed in bad faith, or if you have engaged in other fraudulent behavior either before or after your case is filed, your bankruptcy case could be dismissed before you begin the chapter 12 plan confirmation process.

 

  1. Dismissed after filing: If you engage in fraudulent behavior within the 3 to 5-year repayment plan period, your plan can be dismissed, even after you successfully get the bankruptcy court to approve or confirm your chapter 12 plan. This can result from a number of different circumstances, for example, if you hide additional income or attempt to convert your case to Chapter 7 in bad faith.

 

If you’re a local family farmer and struggling to meet debt payments and daily financial obligations, Chapter 12 bankruptcy might be a way to recover. Contact Behm Law Group, Ltd. at (507) 387-7200 today for more information about filing for Chapter 12 bankruptcy in Jackson, MN.

Filing for Bankruptcy in St. Peter, MN While Unemployed

U.S. citizens from all walks of life can come into dire straits when it comes to finances. If the many recessions and stock market crashes over the last 100 years have taught us anything, it’s that finances can be unstable, even for those with high incomes. Those with seemingly secure jobs can find themselves unemployed when inner-company practices or the economy go wrong. Even now, there are many currently unemployed U.S. citizens who are faced with the debts of their past and present. The good news is there’s always an option for debt relief through bankruptcy. Behm Law Group, Ltd. provides the assistance you need to successfully navigate bankruptcy in St. Peter, MN.

Whether you’re employed part-time, full-time, or are unemployed, bankruptcy is a viable option to resolve debts. A common concern for those considering bankruptcy is how unemployment will affect the process. Despite the fees involved with filing for bankruptcy, unemployment may actually be a benefit in some cases. On the other hand, certain cases may be negatively impacted by unemployment. Whether unemployment will have a positive or negative effect on your bankruptcy case depends on which chapter you choose to file.

Positive Effects

If you choose to file for Chapter 7 bankruptcy, it may help you qualify for Chapter 7 relief if you’re unemployed. To be eligible for Chapter 7 bankruptcy, all filers must complete and pass the Means Test. This test examines the income-to-debt ratio of all filers to determine if a Chapter 7 bankruptcy is right or if another bankruptcy chapter will be more appropriate. If your income is lower than the state median income for a household of your size, you can file for Chapter 7 relief to discharge your debts. If you’re unemployed, you can very easily qualify to file a Chapter 7 case.

On the other hand, there may be certain instances when unemployment negatively affects a bankruptcy case.

Negative Effects

If you don’t want to possibly have some of your assets liquidated and possibly lose some property in a Chapter 7 bankruptcy, you can choose to file for Chapter 13 bankruptcy. This process restructures your debts into a repayment plan that’s applicable to your situation, allowing you to repay some of your debts in a three to five-year period. However, unemployment can severely affect your ability to repay debts in a Chapter 13 case. If you’re only income is from unemployment, you may not be able to pay your reasonable and necessary living expenses and make your Chapter 13 plan payments. In order to make a chapter 13 bankruptcy work, your total monthly income must be higher than your total monthly living expenses.

Unemployment will affect your situation when you file for bankruptcy. However, depending on whether you choose Chapter 7 or Chapter 13 bankruptcy, it can have very different results.

If you choose to file for bankruptcy and are currently unemployed or have a low income, Behm Law Group, Ltd. can help you find the right options for your case. Contact us at (507) 387-7200 today for more information about filing for bankruptcy in St. Peter, MN.

How a New Job Affects Chapter 7 Bankruptcy in Mankato, MN

If you’ve been struggling with extreme financial difficulties, bankruptcy is a way to find relief and recovery. If you have a low income or are unemployed, Chapter 7 bankruptcy is designed to help your situation. For individuals, Chapter 7 is the most common type of bankruptcy. It’s applicable to most situations for unemployed filers, low income filers, and high debt filers. Behm Law Group, Ltd. provides expert counsel if you’re considering Chapter 7 bankruptcy in Mankato, MN.

The most important thing to be aware of when filing for bankruptcy is that honesty counts in every aspect of your case. The U.S. Bankruptcy Courts and bankruptcy trustees are highly experienced and trained in examining bankruptcy cases and detecting mistakes and fraudulent behavior. With the guidance of a bankruptcy attorney, you can more effectively lay out your financial circumstances establishing your need for Chapter 7 relief.

Qualifying for Chapter 7 bankruptcy requires you to pass the Means Test to determine if your income is too low to make debt repayments possible. If you pass this test, your income is either lower than the state median income of a similar household size or the total amount of your debt is exceedingly high.

After you’ve passed the Means Test and qualified for Chapter 7 bankruptcy relief, you’ll begin to work through the process of discharging certain debts, exempting certain properties, and figuring out the details of your bankruptcy estate. In most cases, a filer’s job status doesn’t change during the bankruptcy process. However, there are some times during the pendency of a case when some filers have employment or other income changes.

New Income

If you have a change in employment during the pendency of your bankruptcy case, it’s likely that your income will change as well. If this happens, the best thing to do is to immediately notify your attorney. This change in income may significantly alter your case.  New income can affect your case in several ways:

  1. Your case can be converted to a Chapter 13 bankruptcy case, and you could enter a restructured debt repayment plan that could last three to five years.
  2. If you receive income from lawsuit settlements, lottery winnings, divorce settlements or if you inherit any money or property within 180 days after your case is filed, such income could be used by the bankruptcy trustee administering your case to pay your creditors.
  3. Your case may be dismissed because of your lack of disclosure of any income changes or for other fraudulent behavior.

Other sources causing an income change are also taken into account in a Chapter 7 case, and you should be open and honest about all alterations to your financial situation. For more information about filing for Chapter 7 bankruptcy in Mankato, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.

Priority Claim Treatment for Debts Resolved With Bankruptcy in Worthington, MN

If you’re an individual struggling financially in the United States, you have several options to resolve your debts effectively. These options include bankruptcy, which in many cases is a far more beneficial option than other remedies such as debt settlement or debt consolidation. Individual bankruptcy options commonly take the form of asset liquidation/debt discharge or debt reorganization, known respectively in bankruptcy terms as Chapter 7 and Chapter 13. If you choose to file for bankruptcy in Worthington, MN, Behm Law Group, Ltd. provides legal advice and assistance in navigating the process from start to finish.

With either bankruptcy chapter, any individuals, companies, or organizations to which you have debt obligations are categorized into types of creditors based on the kind of debt owed. These categorizations will determine how your debts are handled and how your creditors may be paid in your bankruptcy case.

One type of debt that is commonly encountered in bankruptcy cases is priority, unsecured debt. This kind of debt is generally treated more preferentially than general, unsecured debts.  Priority creditors will often file proofs of claim regarding the debts you owe.  In a chapter 7 bankruptcy case, priority, unsecured debts will not be discharged and a debtor will remain liable on those debts after a chapter 7 bankruptcy case is concluded.  In a chapter 13 bankruptcy case, priority, unsecured debts must be paid in full in order for a chapter 13 repayment plan to be approved by the bankruptcy court.

Creditors with priority claims will often have debts that are directly linked to the well-being of another person or organization. This includes debts owed to employees, child support and other spousal support obligations, contracted amounts owed in return for promised services, taxes, and settlements for injuries caused by intoxicated or substance-influenced motor vehicle accidents.

These claims are treated in accordance with the chapter regulations that delegate how all other debts are handled in a case.

Chapter 13: Priority claims in a Chapter 13 case determine in part how the filer’s repayment plan will be structured. In most cases, these debts will be handled in a process similar to secured debts. This means filers might be required to repay priority debts in full during their 3 to 5-year repayment plan period.  However, unlike secured debts, priority claims are not paid interest.

Chapter 7: In a Chapter 7 case, debts are processed in terms of discharge and exceptions to discharge.  As indicated above, the claims of priority, unsecured creditors will not be encompassed by the discharge issued by the bankruptcy court at the end of the case.

If you’re considering filing for bankruptcy in Worthington, MN, it’s important to understand how your creditors will be defined and what options they might have in the process. Behm Law Group, Ltd. provides counsel and support for both Chapter 13 and Chapter 7 cases. Contact us at (507) 387-7200 today for more information.

Categorizing Creditors When You File for Bankruptcy in Owatonna, MN

Almost all U.S. citizens hold one or more forms of debt in their day-to-day financial obligations. This includes anything from mortgages to credit card debts, and most individuals find ways to work those debts into their budgets. If you’ve found yourself struggling to do this, however, you might consider bankruptcy. If you choose to file for bankruptcy, Behm Law Group, Ltd. offers legal support to help you navigate through the process when you file for bankruptcy in Owatonna, MN.

If you have debts, the individuals, companies, or organizations that loaned you those debts are your creditors. Even with personal loans from family members or employers or friends, the lenders are considered your creditors until those debts are fully repaid. When you file for bankruptcy, the status of your creditors is determined based on the type of debts you owe to them.

This categorization of creditors can impact how your debts are repaid in bankruptcy. For a Chapter 7 bankruptcy, this means one creditor may not collect a higher return over another creditor. In a Chapter 13 plan, this categorization of creditors determines the percentage of debt you will repay throughout your repayment period.

These are the types of creditors involved in a bankruptcy case: 

  1. Secured: Any debt that involves a tangible property (i.e. mortgages or car loans) is considered secured, and the lenders of those debts are secured by that property, even in the event of a bankruptcy filing. Chapter 7 secured creditors will take back any collateral that secures their claims. In a Chapter 13 repayment plan, the secured creditors are generally repaid the present value, plus reasonable interest, of the assets securing their claims.
  2. Unsecured: Virtually every other type of debt not involving a property is an unsecured debt, and the creditors of those debts are also unsecured in repayment if you file for bankruptcy. For example, credit card debts, personal loans not involving property, medical bills, and certain older tax debts are all unsecured. The creditors of these debts will often only receive small partial repayments in a Chapter 13 plan and, often, will not receive any payment in a chapter 7 bankruptcy case.
  3. Priority: Priority creditors are, in fact, unsecured creditors much like credit cards or medical debts. However, for certain public policy reasons, the drafters of the bankruptcy code wanted to make it much more difficult to discharge or get rid of these debts.  Some examples of priority creditors are unpaid employees of the debtor, spouses with unpaid child support or alimony, or children of the debtor with certain unpaid obligations, tax debts, and criminal court fines and restitution awards.

These creditors are involved in most bankruptcy cases. Behm Law Group, Ltd. offers protection and counsel throughout your case. Contact us at (507) 387-7200 today for more information about filing for bankruptcy in Owatonna, MN.

Details on the Credit Counseling Requirement for bankruptcy in Marshall, MN

If you’re struggling to meet your financial obligations month-to-month, filing for bankruptcy is a real option. There’s often a vibe of foreboding around the idea of having to file for bankruptcy relief, but while it may not be what one wants to do (no one ever actually wants to file for bankruptcy relief), it can provide a way out of a bad place. The process of bankruptcy was designed to get debtors back on their feet – to give them a “fresh start” – and to provide fair treatment to creditors by means of debt reconstructing or asset liquidation. No matter what type of chapter of bankruptcy relief you file for, Behm Law Group, Ltd. provides legal advice and assistance with bankruptcy in Marshall, MN.

With every bankruptcy case comes a wide variety of requirements, including the requirement of each filer to undergo credit counseling within 180 days before one even files a bankruptcy petition. The credit counseling requirement has been in place in bankruptcy law since the passing of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005 and all filers are required to take a credit counseling course in order to obtain bankruptcy relief.

Purpose

When the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) was passed in 2005, it was the sense of Congress that people had been filing for bankruptcy relief flippantly without seriously considering the possible complications in the process and without having any idea as to the possible effects on their credit rating profiles.  Congress basically thought that it was too easy for people to incur a bunch of debt and then file for bankruptcy relief to get out of paying it.  Congress intended the credit counseling requirement not only to provide people with insights as to the various options/alternatives to bankruptcy relief but also to provide guidance on proper budgeting techniques.   The requirement applies to all debtors, not just those who owe banks and credit card companies. Another purpose for the credit counseling requirement is to determine whether your financial situation warrants a bankruptcy filing and whether someone will actually benefit from the process.

Counseling Agencies

Court-approved credit counseling agencies are your safest option to fulfill the counseling requirement. These agencies provide all necessary information and course material at reasonable fees. The fee can be based on a sliding scale that is determined by your household income. This means that if you prove your income is 150% below the poverty line for a Minnesota household of similar size, court-approved agencies must waive the cost.

If you plan to file for bankruptcy, be prepared to undergo a credit counseling course with an approved agency. With our help, finding an agency that is right for you will be easy. Contact Behm Law Group, Ltd. today at (507) 387-7200 and find the help you need before you file for bankruptcy in Marshall, MN.

Understanding the Predischarge Debtor Education Requirement for Bankruptcy in Luverne, MN

Whether you file for liquidation or debt reorganization bankruptcy, it’s likely that one or more of your debts will be discharged in the process. Discharging debts in Chapter 7 serves to simultaneously relieve debtors of unmanageable financial hardship and allow fair treatment of creditors despite a lack of full repayment. In a Chapter 13 case, certain debts can be discharged through a repayment plan. Foreseeing which debts will be discharged can be difficult, and organizing your case without the help of a professional may change that outcome. Behm Law Group, Ltd. offers legal advice and assistance if you choose to file for bankruptcy in Luverne, MN.

In addition to the many requirements involved in bankruptcy cases, filers who will have debts discharged must undergo predischarge debtor education before the bankruptcy process can be completed and before the bankruptcy court can issue a discharge order.

Predischarge Education

The predischarge debtor education requirement was established with the purpose of advising those who’ve fallen into debt and filed for bankruptcy on how to better manage their finances. This course is different from the credit counseling requirement which debtors must undergo prior to filing a bankruptcy petition. Instead, debtors must go through a predischarge education course after their petition is filed but before they’re granted a discharge on any debts.

The financial management education course must be provided by a court-approved agency within a forty-five day period after the meeting of the creditors. The course lasts around two hours and covers materials that teach debtors how to improve their financial situation after bankruptcy. Topics include effective budgeting practices, handling taxes sensibly, and other court-required material.

You’ll certify your fulfillment of the predischarge debtor education requirement with bankruptcy Form 423, and if you file a joint bankruptcy petition, you and your spouse must both take the course. Additionally, the agencies that provide the necessary predischarge debtor education course don’t have to follow the same non-profit regulations as credit counseling providers. This means you may have to pay a fee to take the required course.

If you’re contemplating filing for bankruptcy, it’s important to consider fees for requirements like predischarge debtor education and other milestones in your case before you begin. Behm Law Group, Ltd. offers assistance at every step whether you file for Chapter 7 or Chapter 13 bankruptcy in Luverne, MN. Contact us at (507) 387-7200 today for more information.

 

Repayment Plan Periods and Their Role in Chapter 13 Bankruptcy in Pipestone, MN

As an individual consumer, you have two options if you choose to file for bankruptcy. You can—if your income fits the requirements of the Means Test—file for Chapter 7 bankruptcy and have many of your debts discharged in the process. However, if you do not pass the Means Test, your second option is to file for Chapter 13 bankruptcy. In this case, your debts are restructured into a new payment plan that better suits your financial situation. Because the process of Chapter 7 liquidates most nonexempt property and because it can be difficult to pass the Means Test, many debtors opt to file for Chapter 13. If you plan to file for bankruptcy in Pipestone, MN, Behm Law Group, Ltd. can help you navigate the complexities of a Chapter 13 or Chapter 7 case.

Because the conditions of each filer are unique, each Chapter 13 case is different in its own way. These differences depend largely on the types of debts a filer owes. These debts determine how a repayment plan will be structured. Another aspect of the filer’s situation that determines the repayment plan is one’s income.

Income plays a key role in determining the length of time a repayment plan period will last. In Chapter 13 bankruptcy, repayment plans can last three to five years.

Three-Year Plan

Simply put, if your monthly income when you file your bankruptcy petition is lower than the median income of a Minnesota household the same size as yours, your Chapter 13 repayment plan can last either three years or up to five years. While one would most likely choose the three-year time period because one would complete one’s plan, get one’s discharge and exit bankruptcy sooner, one could voluntarily choose a time period longer than three years, but not longer than five years, if one needs a longer time period to pay off tax debts or mortgage delinquency debt.  Chapter 13 bankruptcy is designed to keep people with low incomes from continuing the same financial struggles they faced before filing for bankruptcy.

Five-Year Plan

If a three-year plan is based on income lower than the state median, the opposite determines a five-year plan. When your current monthly income is higher than the median income of a similar Minnesota household, your Chapter 13 repayment plan must be five years. The five year commitment period is mandatory.  This plan period was designed by the drafters of the bankruptcy code as a compromise regarding the debts of a higher-earning filer and the fair treatment of creditors.  The rationale is that higher-earning debtors should have the ability to pay proportionately more to their creditors than lower-earning debtors.  Additionally, the rationale is that higher-earning debtors probably incurred higher levels of debt prior to a bankruptcy filing and, therefore, they should be compelled to pay more back to their creditors.

Current Monthly Income

Your current monthly income includes all income from your wages or salary and it also includes all other sources like pensions, annuities, and tax returns. Additionally, it’s based on the income of the most current month, which may vary from your average income over the past 12 months. This means that if your income changes significantly while you are in bankruptcy, your three-year plan could be extended if you experience an income increase or your five-year plan period could possibly be shortened if you experience an income decrease.

For more information about repayment plans and filing for Chapter 13 bankruptcy in Pipestone, MN, contact Behm Law Group, Ltd. today at (507) 387-7200.