Priority vs. Non-Priority Tax Debts When Filing for Bankruptcy in Waseca, MN

The U.S. tax system is complex and affects many aspects of business owners’ and individual consumers’ finances. While intricate and sometimes invasive, taxes are a necessary part of a well-functioning government and economy. Understanding when and where taxes will come into play when you make financial decisions is important to prevent negative consequences such as tax debt. If you are struggling with tax debts along with other severe financial difficulties, bankruptcy might be the right choice. Behm Law Group, Ltd. provides the guidance and counsel you need to successfully file for bankruptcy in Waseca, MN.

 

Tax debts can be accumulated through a wide range of sources from property taxes to income taxes. When you file for bankruptcy, these debts are broken into two primary categories: priority tax debts and non-priority tax debts.

 

Priority Tax Debts

 

The majority of tax debt obligations fall under priority tax debt. This means they generally can’t be discharged the Chapter 7 liquidation process and that they must be paid in full during a Chapter 13 repayment plan. Priority tax debts include income taxes that don’t fall under non-priority requirements, property taxes incurred within a year of filing for bankruptcy, taxes you withheld or collected, some employment taxes, some excise taxes, custom duties, and penalties that have been assessed to any priority taxes.

 

If you file for Chapter 7 bankruptcy, your priority taxes will not be discharged in the process and you must repay them in full after your bankruptcy has concluded. If you file for Chapter 13 bankruptcy, your priority taxes must be included in your 3 to 5-year repayment plan and they must be fully repaid.

 

Non-Priority Tax Debts

 

Any tax debts that are considered non-priority can be discharged in Chapter 7 and Chapter 13 bankruptcy because they will be categorized and handled like all your other non-priority unsecured debts (e.g., credit cards and medical bills). Non-priority tax debts only include income tax debts if they were due at least three years prior to filing, if you filed the return for the tax debt at least two years prior to filing, if the IRS has not assessed your tax liability within 240 days of filing, and if you did not incur the tax debt through fraudulent behavior.

 

In most cases, filing for bankruptcy with the goal of discharging your tax debts can be a complicated and detail-specific process. The majority of your tax debt might not be able to be discharged in either a Chapter 7 case or a Chapter 13 case.  For example, filing for Chapter 13 bankruptcy will not result in the discharge of most priority tax debts, but you will be able to bundle those debt obligations into a manageable three to five-year repayment plan, tailored to your income, in which you will be able to pay them in full and be relieved the associated interest and penalties.

 

If you are considering filing for bankruptcy in Waseca, MN and want to learn more about how your taxes and other debts are handled, contact Behm Law Group, Ltd. at (507) 387-7200.

Action and Advice: The Benefits of a Bankruptcy Attorney in Pipestone, MN

The process of filing for bankruptcy has a poor reputation for its effect on property and long-term damage to credit. The legal process of bankruptcy, however, is designed to help filers emerge from crippling debt with a fresh start and a manageable approach to finances. Whether you choose to file for Chapter 7 or Chapter 13 as an individual consumer or small business, you gain more than counsel when you work with a Behm Law Group, Ltd. bankruptcy attorney in Pipestone, MN.

While it’s possible to file for bankruptcy without the help of a trained legal professional, it’s not advisable unless you have a thorough understanding of the process. Bankruptcy attorneys are invaluable for filing a successful case and navigating the highly nuanced bankruptcy process. Court employees and bankruptcy judges are not able to supply legal advice to non-attorney bankruptcy filers, which makes a bankruptcy attorney your most valuable source of counsel and guidance.

Behm Law Group, Ltd. attorneys are committed to helping our clients navigate through the complexities of bankruptcy. Our goal as bankruptcy attorneys is to work with clients to build a successful case that has as little impact on their quality of life as possible.

To put together a strong and accurate bankruptcy petition and put that case through the wringers of the bankruptcy process, everything must start with the right choices and actions to build a viable foundation.

Actions and Advice with an Attorney

When you work with a Behm attorney, your case starts with wise actions and choices made from training and experience. Our counsel will provide professional guidance and expert advice to help you with the following:

  1. Understanding the process of bankruptcy from start to finish.
  2. Choosing the right type of bankruptcy for your financial situation and the types of debts you hold.
  3. Understanding which debts are discharged and why.
  4. Understanding how creditors and debts are defined.
  5. Completing the necessary standard bankruptcy forms for the chapter you choose.
  6. If necessary, completing specialized forms unique to your case.
  7. Building a repayment plan proposal suited to your financial situation if you file for Chapter 13.
  8. Choosing the most beneficial set of exemptions to claim if you file for Chapter 7.
  9. Protect you from negative creditor action.
  10. Eliminate mistakes and chances for accidental fraud in the highly nuanced workings of bankruptcy.
  11. Work with you from start to finish on your case, no matter what obstacles you meet during your bankruptcy process.
  12. Help you understand the short and long-term consequences of filing for bankruptcy, including effects on your taxes, credit score, and life overall.

Working through a bankruptcy case with the help and protection of an attorney creates positive outcomes that will affect your life and finances for years to come. Start your case with the experience and knowledge of a Behm Law Group, Ltd. bankruptcy attorney in Pipestone, MN, today by contacting us at (507) 387-7200.

Handling a Rental Property When Filing for Bankruptcy in Windom, MN

When filing for bankruptcy, you’ll have to take all your property into consideration. Your home, car, and even expensive jewelry are part of your bankruptcy estate and will be handled according to the exemptions you can claim, the equity in your property, and any additional claims your creditors make. Whether you file for Chapter 7 liquidation bankruptcy or Chapter 13 reorganization bankruptcy, there is a possibility that you might not be able to retain all of your property in the process. With the professional guidance of Behm Law Group, Ltd. attorneys, you can find the optimal solutions to resolving property issues and protecting your property when  filing for bankruptcy in Windom, MN.

One of the biggest concerns for homeowners filing for bankruptcy is whether or not they’ll lose their home in the process. That’s where the homestead exemption comes into play, protecting most homes from liquidation during Chapter 7 bankruptcy. Because debts are restructured in a Chapter 13 case, homeowners generally don’t have to worry about losing their homes in Chapter 13 bankruptcy.

However, there are cases where a filer owns multiple rental properties in addition to one’s principle residence. The homestead exemption you can use to protect your primary residence isn’t applicable to rental properties, so it can be more difficult to keep rental properties when filing for bankruptcy.

Rental Property in Chapter 7

If you have equity on your rental property and its value is higher than the debt you owe, you probably want to hang onto that property. To try and protect your rental property from liquidation during the Chapter 7 filing process, you have to assert an exemption claim. Because you can’t use the homestead exemption, your only choices include a portion of the un-used federal homestead exemption (up to $11,850) and the federal wildcard exemption (adding another $1,250). In Minnesota people can elect to utilize either the state or the federal exemptions, so it’s possible you can protect some value in your rental property depending on its worth versus how much debt is against it. If the value of your rental property is less than the debt against, the trustee will not attempt to liquidate it because the entire value is extinguished by the debt against it.  Essentially, the creditor that holds the mortgage or other secured lien has full and complete rights to it.  Generally, you can keep making mortgage payments on the rental property outside of bankruptcy.

Rental Property in Chapter 13

In Chapter 13, your property debts are reorganized with other applicable debts into a three to five year repayment plan. This means you’ll be able to keep your rental property and continue making the monthly payments on it.  However, you can only do this if there is equity or value in the rental property above the debt you owe against it and the property generates a positive income for you.  In other words, the income you receive from the rental property must exceed the associated monthly expenses (mortgage payment, utility payments, property tax payments, insurance payments, etc.). If the rental property generates negative revenue, however, you will be required to surrender it in Chapter 13. You may also be able to find options to cram down or strip liens off to keep a rental property that generates a negative cash flow.

Find Professional Help When Filing for Bankruptcy

If you’re considering filing for bankruptcy in Windom, MN and own rental property, Behm Law Group, Ltd. can help you work to retain that property during the bankruptcy process. Contact us at (507) 387-7200 for more information about filing for bankruptcy and how our expert bankruptcy attorneys can help you.

 

 

Judgment Liens and Handling Them With a Bankruptcy Lawyer in Fairmont, MN

Filing for bankruptcy is an option available to almost every consumer and business in the US. However, despite the layman’s access to filing for bankruptcy, the fact remains that it is a complex, highly nuanced legal process. While a debt from which a judgment lien is obtained is discharged in a bankruptcy proceeding, a judgment lien can still remain after a bankruptcy is concluded and a bankruptcy filer must take certain steps to fully remove it. This responsibility is best approached with the help of a professional. Behm Law Group, Ltd. offers the counsel of an expert bankruptcy lawyer in Fairmont, MN, throughout your petition.

 

What is a Judgment Lien?

 

In a state civil court case, after a judge or jury hands down a decision, or after a court-approved settlement, a judgment is entered by the court. As part of a typical judgment, the court orders the payment of money from one person to another. But the person who owes the money (the debtor) doesn’t always pay up. A judgment lien is one way to ensure that the person who won the judgment (the creditor) gets what he or she is owed. A judgment lien gives the creditor the right to be paid a certain amount of money from proceeds from the sale of a debtor’s property.

 

In Minnesota a judgment lien can attach to any real estate a person has an ownership interest in (farm, house, condominium, etc.).  A judgment lien is automatically entered against any real estate that a debtor (the person against whom the judgment has been assessed) owns in the county in which the judgment was awarded.  If the person owns property in another county, a creditor can take a judgment and docket or file it in that county at which time it becomes a judgment lien against any real estate a debtor owns in that county, too.  A judgment lien can last up to ten (10) years and it can remain a lien on a debtor’s real estate for that entire time.  A judgment lien can also be renewed for successive ten (10) year periods.  If a judgment lien is levied against someone’s real estate, any sale of the real estate can’t be completed unless the judgment lien is paid or expunged/removed.

 

Judgment Liens and Bankruptcy

A discharge obtained through bankruptcy nullifies the debt giving rise to a judgment lien.  However, a discharge does not require a judgment creditor to take affirmative steps to remove a judgment.  In other words, a creditor is not required to go to the county in which it obtained the judgment and ask the court to remove the judgment lien from a debtor’s real estate.  Thus, even after a bankruptcy has concluded, a judgment lien becomes a nuisance lien that still clouds title to a debtor’s real estate and prevents any sale of the real estate from being consummated.

 

In order to remove a judgment lien from the real estate, a debtor must, after the bankruptcy has concluded, file an application to discharge or expunge the judgment lien with the state court in which the judgment and judgment lien were obtained in the first place.  Generally, one can only do this with regard to a judgment lien on real estate that one owns and actually occupies as one’s homestead.  Minn. Stat. §548.181 is the statute that one must use to remove or discharge a judgment from real estate that one owns.  There is a specific protocol that must be followed.  Navigating the procedure and making sure it is done correctly is extremely difficult without the help of a knowledgeable, trained professional. With the help of Behm Law Group, Ltd. and the expertise of a Behm bankruptcy lawyer in Fairmont, MN, filing for bankruptcy can be a successful experience that offers financial recovery. We can assist you with the removal of judgment liens following the completion of a bankruptcy case.  Contact us today at (507) 387-7200 today for more information.

Judgment Liens and Handling Them With a Bankruptcy Lawyer in Fairmont, MN

Filing for bankruptcy is an option available to almost every consumer and business in the US.
However, despite the layman’s access to filing for bankruptcy, the fact remains that it is a
complex, highly nuanced legal process. While a debt from which a judgment lien is obtained is
discharged in a bankruptcy proceeding, a judgment lien can still remain after a bankruptcy is
concluded and a bankruptcy filer must take certain steps to fully remove it. This responsibility is
best approached with the help of a professional. Behm Law Group, Ltd. offers the counsel of an
expert bankruptcy lawyer in Fairmont, MN, throughout your petition.

What is a Judgment Lien?

In a state civil court case, after a judge or jury hands down a decision, or after a court-approved
settlement, a judgment is entered by the court. As part of a typical judgment, the court orders the
payment of money from one person to another. But the person who owes the money (the debtor)
doesn’t always pay up. A judgment lien is one way to ensure that the person who won the
judgment (the creditor) gets what he or she is owed. A judgment lien gives the creditor the right to
be paid a certain amount of money from proceeds from the sale of a debtor’s property.

In Minnesota a judgment lien can attach to any real estate a person has an ownership interest in
(farm, house, condominium, etc.). A judgment lien is automatically entered against any real
estate that a debtor (the person against whom the judgment has been assessed) owns in the
county in which the judgment was awarded. If the person owns property in another county, a
creditor can take a judgment and docket or file it in that county at which time it becomes a
judgment lien against any real estate a debtor owns in that county, too. A judgment lien can last
up to ten (10) years and it can remain a lien on a debtor’s real estate for that entire time. A
judgment lien can also be renewed for successive ten (10) year periods. If a judgment lien is
levied against someone’s real estate, any sale of the real estate can’t be completed unless the
judgment lien is paid or expunged/removed.

Judgment Liens and Bankruptcy

A discharge obtained through bankruptcy nullifies the debt giving rise to a judgment lien.
However, a discharge does not require a judgment creditor to take affirmative steps to remove a
judgment. In other words, a creditor is not required to go to the county in which it obtained the
judgment and ask the court to remove the judgment lien from a debtor’s real estate. Thus, even
after a bankruptcy has concluded, a judgment lien becomes a nuisance lien that still clouds title to
a debtor’s real estate and prevents any sale of the real estate from being consummated.

In order to remove a judgment lien from the real estate, a debtor must, after the bankruptcy has
concluded, file an application to discharge or expunge the judgment lien with the state court in
which the judgment and judgment lien were obtained in the first place. Generally, one can only
do this with regard to a judgment lien on real estate that one owns and actually occupies as one’s
homestead. Minn. Stat. §548.181 is the statute that one must use to remove or discharge a
judgment from real estate that one owns. There is a specific protocol that must be followed.

Navigating the procedure and making sure it is done correctly is extremely difficult without the
help of a knowledgeable, trained professional. With the help of Behm Law Group, Ltd. and the
expertise of a Behm bankruptcy lawyer in Fairmont, MN, filing for bankruptcy can be a successful
experience that offers financial recovery. We can assist you with the removal of judgment liens
following the completion of a bankruptcy case. Contact us today at (507) 387-7200 today for
more information.

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.