The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) and How to Declare Bankruptcy in Mankato, MN

Coping with the financial and personal hardships that come with debt can pose significant struggles for families and businesses alike. While these hardships put pressure on the lives of those involved, filing for bankruptcy is an option for Minnesota residents and business owners when the financial stress of debt becomes overwhelming. The process of declaring and filing for bankruptcy, however, can add even more difficulties to those struggling with debt. At Behm Law Group, Ltd., we are dedicated to providing expert legal advice and assistance for those considering filing for bankruptcy in Mankato, MN.

In October of 2005, a law was passed that requires any individuals declaring bankruptcy to go through credit counseling during the 180 days prior to filing. However, before the filing process can begin, the filer in question has to take the first step and see if one actually qualifies for chapter 7 bankruptcy relief. One can qualify for chapter 7 bankruptcy relief by satisfying the “means test” of 11 U.S.C. §707(b).

2005 Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) Means Test

The means test is designed to determine if an individual qualifies for filing for chapter 7 bankruptcy. The potential filer must provide pay advices, pay stubs and any other evidence of income generation for the past six months for a bankruptcy attorney to analyze and then compare with the median Minnesota income or state average income for a household of similar size to the household of the person seeking to file for chapter 7 bankruptcy relief. If the analysis proves that the filer’s income is less than the median, the filer can begin the filing process for Chapter 7. If the filer’s income is found to be greater than the median income for a household of that filer’s size in Minnesota, the filer must choose to file Chapter 13 bankruptcy.

To officially begin filing, paperwork detailing debts, income, living expenses, property, major transactions, and tax returns must be gathered and provided to a bankruptcy attorney. With our help, gathering this paperwork won’t be as daunting as it may seem.

The BAPCPA Means Test is in place to start those considering bankruptcy on the path that will best suit their financial situation. For more information about declaring bankruptcy in Mankato, MN, contact Behm Law Group, Ltd. at (507) 387-7200.

 

Large Cases of Bankruptcy and How They Relate to Filing for Bankruptcy in Mankato, MN

There are several common misconceptions about filing for bankruptcy, one being that only large companies or people with extreme wealth end up in situations that require bankruptcy filing. There is also the misconception that “regular” people only fall into bankrupt circumstances after irresponsible spending and racking up reckless debt. In reality, bankruptcy affects a diverse number of people and businesses with varying incomes. If you are struggling with your debts, Behm Law Group, Ltd. is here to help you through the steps of filing for bankruptcy in Mankato, MN.

Because bankruptcy affects people and businesses of all wealth and sizes, it’s important to look at different cases of bankruptcy. If you are struggling with your own bankruptcy, other cases may help you better understand your own situation. If you’re worried you’re falling into a bankrupt state, you may benefit from learning about other cases that are happening today.

Magnetation LLC

Minnesota-based iron ore processing company, Magnetation LLC, announced the possible shutdown of one of its three plants across the state. The company has slowly lost financial security, and without the support of another financier or a third party buyer, Magnetation LLC will have to officially enter bankruptcy court by the end of September.

Because the company filed for bankruptcy in May of 2015, they are currently working with government agencies to establish an agreement that will protect stakeholders and any employees affected by the dissolution of this company branch.

Christian Laettner

After an attempt to turn out-of-use tobacco warehouses in Durham, NC into apartments and spaces for various uses, this former Minnesota Timberwolves NBA player now owes his creditors (other financiers and project managers) around $14 million in investments and loaned project money.

The events leading up to Laettner’s situation involve a lot of money, but, monetary scale aside, they are similar to many other cases we see with our clients here in Mankato, MN.

Even though the bankruptcy situations with Magnetation and Laettner seem far from the circumstances most people find themselves in, there is a lot that can be taken away from the problems of others. If you have questions or are considering filing for Bankruptcy in the Mankato, MN, area, contact Behm Law Group, Ltd. at (507) 387-7200.

 

Handling the Impact on Your Credit Score When Filing for Bankruptcy in Mankato, MN

Filing for bankruptcy can be a saving grace and vital step in helping businesses and families get back on their feet financially. Becoming bankrupt, however, is stigmatized in many ways. A large part of that stigma comes from how bankruptcy can affect credit. The fear of damaged credit or a credit report stamped with the implications of bankruptcy is often a strong deterrent for those considering filing for bankruptcy. Our attorneys at Behm Law Group, Ltd. provide legal advice and assistance to help you through the effects that bankruptcy in Mankato, MN, can have on your credit.

A bankruptcy filing can stay on your credit report for several years after filing. While a bankruptcy filing does impact your credit score, there are other factors to consider when it comes to bankruptcy and credit. A bankruptcy filing can actually be the starting point for rehabilitating your credit. To creditors, a bankruptcy filing is more a point of demarcation on your credit file. It shows creditors that before the bankruptcy filing your debt to equity ratio was skewed negatively such that the total of your debt far exceeded the value of your assets. It shows creditors that before the bankruptcy filing, your limited income was committed to and divided among many creditors. After a bankruptcy filing, your debt equity ratio will look much more favorable because the many creditors you had will no longer be relevant. New creditors will no longer have to compete with those old creditors with regard to your ability to make payments. After a bankruptcy, creditors know that they don’t have to compete with many creditors and that you can’t file for bankruptcy relief for several years. They are, therefore, more incentivized to work with you.

Chapter 7

Filing for Chapter 7 bankruptcy will essentially discharge all of your debts that are not exempt from the process, such as tax debt or child support debt, or denied based on situational grounds, such as debts that you may have incurred fraudulently. Chapter 7 will remain on your credit report for a maximum of ten years. This may seem hopeless with regard to increasing your credit, but, as related above, you will likely actually be more attractive to future creditors.

Chapter 13

Debts discharged during the Chapter 13 bankruptcy process are shown on your credit report no differently from Chapter 7. However, under the Fair Credit Reporting Act (FCRA), your creditors must denote those claims in such a way reflecting that you are no longer responsible for them. Your creditors must not list such claims as “past due” or “delinquent” or “account in collections” or “account assigned to legal”. Rather, they must list the claims as “account included in bankruptcy” or “account discharged in bankruptcy” or other similar language. If creditors fail to list the claims appropriately, a person can commence legal action against them under the FCRA.

Dealing with how a bankruptcy can impact your credit report may seem daunting but given time bankruptcy can become an important step in recovering from debts and starting anew financially. Behm Law Group, Ltd. is here to help you every step of the way when filing for bankruptcy in Mankato, MN. Contact us at (507) 387-7200 today for more information.

 

Understanding Good and Bad Debt When Considering Bankruptcy in Mankato, MN

Our consumerist culture, in combination with the demands of supporting a household or business, offers numerous opportunities to fall into debt. Credit cards, cars, and homes are common culprits that cause debt. What we frequently see in the clients that come to Behm Law Group Ltd. for legal advice and assistance with bankruptcy is a difficulty in distinguishing between types of debt. While all debt adds stress and financial obligations to your everyday life, the difference between good debt and bad debt could determine how you file for bankruptcy in Mankato, MN.

The normal debts that people acquire throughout their lives are generally categorized as “good” or “bad” debts. These types of debts are defined in simple terms, but are more complicated in the real world than they are on paper.

Good Debt:

Generally speaking, good debts are described as investments. Mortgages, student loans, business loans, and real estate loans are common examples of investment debts that have potential to increase in value over time. The concept of spending money to make money stems from the existence of investment-based debts.

For example, a mortgage may add to your financial responsibilities for several years, but in time, the value of the mortgaged property will increase and can be resold for a significant profit. Student loan debts are considered investments based on the idea that those with a degree statistically earn a greater income than those without.

Bad Debt:

The exponential growth in the use of credit-based payments as monetary value has continually increased cases of bad debt. Credit cards and store credit are common sources of consumer debt. Just as good debts are investments, bad debts are forms of divestment, meaning that from the moment they are obtained, they will consistently decrease in value and, very possibly, diminish the overall strength of one’s financial condition.

One example of a bad debt that almost every US citizen will handle throughout their lives is an auto loan. Even without a loan, cars themselves are almost always money pits that significantly depreciate over time. However, cars are also often a necessity of life, and there are many types of auto loans that are discharged in bankruptcy.

When filing for bankruptcy in Mankato, MN, the good and bad debts eligible for discharge will vary based on several factors. For legal help during your bankruptcy filing, contact Behm Law Group Ltd. at (507) 387-7200.

 

Avoiding Mistakes When Filing for Bankruptcy in Mankato, MN Behm Law Group offers Bankruptcy Advice

Filing for bankruptcy may seem daunting and complicated, but with the right assistance and advice during the filing and discharging process, bankruptcy may be the best thing that has happened to you financially in a long time. U.S. Bankruptcy Courts don’t exist to belittle you, shame you, or leave you out to dry during the filing process. However, there are some occasions that may make it seem that way if you forego the expert legal help our attorneys at Behm Law Group, Ltd. can provide when filing for bankruptcy in Mankato MN.

There are several common, yet crucial, mistakes that debtors can make when filing for bankruptcy. Without legal assistance, you could be subject to making mistakes concerning these aspects of your financial situation during the filing process:

Settling Debt: If you have begun the filing process, you should avoid paying your unsecured creditors (creditors that do not have collateral) such as credit cards, medical debts and other debts that you do not wish to retain. These debts will be discharged in the bankruptcy. Continuing to pay them will neither improve your credit standing following the bankruptcy nor incentivize creditors to lend you credit. Paying on these debts is like “throwing good money after bad”. It will do absolutely nothing for you. Of course, you should continue to pay on secured debts (creditors that do have collateral), such as mortgage lenders and vehicle lenders, that you want to retain.

Retirement Funds: Because your creditors legally cannot touch your retirement account, you should not cash in your funds until the process is complete. You should never use your retirement money to “settle” your debts. By doing so, you are essentially wasting a financial “nest egg” that you have worked hard to establish that you can fully protect in bankruptcy.

Family Loans: Avoid paying off family loans or helping family and friends financially during or directly before the filing process. Your creditors and the bankruptcy trustee administering your bankruptcy case may bring a lawsuit against your family and friends to recover the money you paid them.

Property: Hold all your current property in your name during the bankruptcy process. DO NOT transfer property out of your name. If you do transfer assets out of your name, you will most assuredly lose the property you transferred.

Lawsuits: Because pending lawsuits or lawsuits against you will continue until your bankruptcy is filed, you should not ignore these suits. Our attorneys can help advise you on lawsuits and determine whether or not you should respond before a bankruptcy is filed.

Purchases: Making large purchases on your credit cards or cash advances in other forms is a frequent mistake made during the filing process. Wait until the process is complete to ensure you won’t still be accountable for these charges.

The professional attorneys at Behm Law Group, Ltd. are here to keep you from making these common mistakes and other important missteps when it comes to filing for bankruptcy in Mankato, MN. For more information, contact us at (507) 387-7200.

 

Debts Not Discharged Under Chapter 7 Bankruptcy in Mankato, MN

The Bankruptcy Code and the U.S. Bankruptcy Court can be very forgiving when it comes to the right debts and debtor. In the majority of cases, a debtor released from responsibility to debts (discharged from debts) is given a fresh start for building credit and a significant lightening of the demanded financial load. However, there are times when filing for bankruptcy is unadvisable given the type and circumstances of the debt in question. At Behm Law Group, our attorneys can guide and protect you when it comes to filing for bankruptcy in Mankato, MN.

For many individual filers and some businesses, Chapter 7 bankruptcy is often the most beneficial type of debt relief. Under Chapter 7, the debtor is released from all debts deemed dischargeable and the debtor’s assets (excluding allowable exemption claims such as homestead, vehicle and others) are distributed to creditors as debt repayment. In most cases, however, a person will be able to retain all of one’s property because the exemption allowances are very generous.

In some cases, filing for Chapter 7 bankruptcy is not beneficial to the debtor because the debts owed are non-dischargeable and could likely be denied for discharge.

Non-Dischargeable Debts:

Several types of debt are not recognized as dischargeable in U.S. Bankruptcy Courts. These include debts that obligate the debtor to the welfare of another person—for example alimony and child support debts or debts to the debtor’s employees. Similarly, debts for injury or death caused by alcohol consumption owed to another person are not discharged under Chapter 7. Educational debts such as student loans and several types of tax-related debts are also common types of non-dischargeable debts. However, student loans can be discharged if one is able to demonstrate “undue hardship” under 11 U.S.C. §523(a)(8). In order to do this, one must go beyond the initial bankruptcy filing and one must actually sue the student loan creditor and request the bankruptcy court to discharge the student loan debt. The burden of proof regarding “undue hardship” is on the person seeking to have the student loan debt discharged.

Denial of Discharge:

While debts that do not fall into the non-dischargeable category are approved under Chapter 7 for release from the debtor more often than not, there are times when debts are denied for discharge. These cases include those where the debtor has not kept accurate financial records, has committed a bankruptcy crime, has inaccurately explained assets or the loss thereof, or any cases where the debtor has committed fraud related to bankruptcy, assets, or debts. All that one has to do to have one’s debts discharged is to be honest and forthright with one’s bankruptcy attorney and list all of one’s assets and liabilities in one’s bankruptcy petition and related schedules.

At Behm Law Group, we make it our goal to help our clients understand any possible reasons why debts may not be discharged during the filing process under Chapter 7. With the help of our attorneys, filing for bankruptcy in Mankato, MN, doesn’t have to be an uncertain, difficult, or thankless process. For more information, contact us at (507) 387-7200 today.

 

Exempted Properties and Debts Involved with Chapter 7 Liquidation Bankruptcy in Mankato, MN

Chapter 7 bankruptcy is the most common form of bankruptcy used to address issues of bankruptcy for individuals and businesses. Almost all cases of Chapter 7 bankruptcy involve converting all of the debtor’s assets into a cash value—otherwise known as liquidity. Because Chapter 7 functions to turn a debtor’s property and assets into cash used to repay creditors, it is commonly referred to as liquidation bankruptcy. At Behm Law Group, Ltd., we offer professional guidance and legal protection in all cases of Chapter 7 liquidation bankruptcy in Mankato, MN.

Chapter 7 is often the best choice for individuals filing for bankruptcy because it provides an efficiently-governed breakdown of assets. This gives the debtor a debt-free new start while also allowing for several properties exemptions. This means that the federal court allows the debtor to withhold necessities of life—such as housing and transportation—from the bankruptcy process.

The common assets that are exempt from the Chapter 7 bankruptcy liquidation process are considered basic needs for the debtor, in terms of survival and ability to function as a contributing member of society. In the state of Minnesota, these debts include, but are not limited to:

  • Homestead
  • Household car or other means of transportation
  • Pension or retirement benefits
  • Personal property (such as clothing, appliances, furniture, food, wedding rings, and tools of trade)
  • Insurance benefits
  • Assistance and other benefits
  • Wages

While the promise of these exemptions of property from the bankruptcy process are comforting, keep in mind that Chapter 7 bankruptcy doesn’t allow for the liquidation of several kinds of common debts. Not every debt is forgiven, and there are many cases where filing for bankruptcy is not ideal. Chapter 7 does not involve the following:

  • Student loan debts
  • Debts from fraud
  • DUI and DWI debts
  • Child support debts
  • Tax debts
Chapter 7 bankruptcy is not an answer for all debt situations, but if you choose to acknowledge the exemptions for the process and file for liquidation bankruptcy, our attorneys can guide you every step of the way. We do everything in our power to make filing for bankruptcy into a beneficial situation, giving you an opportunity to start fresh.

For more information about your options with liquidation bankruptcy in Mankato, MN, contact Behm Law Group, Ltd. at (507) 387-7200, or via email at stephen@mankatobankruptcy.com today.

 

How to Recover from Filing for Bankruptcy in Worthington, MN

After you’ve filed for bankruptcy in Worthington, MN, your credit will be damaged, but it won’t ruin your financial future forever. Listed below are several tips the attorneys at Behm Law Group, Ltd. would like you to consider to help you rebuild your credit and life after bankruptcy. Remember, if you’re contemplating bankruptcy, the compassionate professionals at Behm Law Group, Ltd. can help you with your decision by providing solid answers to your questions and concerns.

  • Create a budget to help you stay on top of your finances. The attorneys at Behm Law Group, Ltd. recommend NerdWallet. Non-profit credit counseling agencies offer free basic consumer help on topics such as budgeting. Simple budgeting forms can be downloaded from the Internet, too.
  • Begin building an emergency fund, even if it’s just a small amount at first. Research by the Urban Institute shows that having as little $250 in savings for an unexpected expense can protect families from resorting to payday loans or running up credit cards, which can start a new debt spiral.
  • Cautiously apply for a credit card. Try to obtain either a secured or unsecured credit card, and make sure to repay the entire balance every month. Doing this quickly establishes a timely payment history and improves your credit. Do not fall into the trap of obtaining too much credit.
  • Repair your credit. It’s unusual for your credit report to be 100% accurate following a bankruptcy, and some of your debts may not indicate that they were discharged in your bankruptcy. Its the creditor’s responsibility to update your credit reports to show that your discharged debts have a zero balance, but you obtain the best results if you dispute incorrect items on your credit report. The three major crediting reporting agencies offer free credit reports annually.
  • Open a new bank account. Opening a new checking or savings account will demonstrate financial stability. It can also give you a fresh slate to practice good financial habits. When you open your account, talk to the banker about signing up for automatic online bill pay. This will ensure that your bills are paid on time, which is a major factor in rebuilding your credit score.

If you have questions about what your life in Worthington, MN, will look like post-bankruptcy, give Behm Law Group, Ltd. a call at (507) 387-7200. We’re standing by to assist you with all aspects of filing for bankruptcy.

 

How to Buy Back-to-School Supplies in Owatonna, MN, Without Having to Declare Bankruptcy

Parents and kids in Owatonna, MN are getting geared up for the new school year. One inevitable expense is outfitting and supplying kids with what they need to head back to the classroom. It is possible to spend wisely on supplies without going broke and facing the prospect of bankruptcy, according to the professionals at Behm Law Group, Ltd.

Here are several money-saving strategies to lessen the financial burden of getting your kids ready for school this year:

  • Determine what you really need to purchase. Check each child’s closet and make a list of only what each one truly needs to head back to school. Round up all of the office and school supplies you already own. Put them in a central location so you can make a list of what you have. Take your lists with you when you shop.
  • Stick to your lists. The teacher’s supply list at the start of the school year is daunting enough, so don’t waste money on unlisted items.
  • Set limits. Draw up a budget and make a commitment to stick to it. Set limitations with your kids, and speak with them about money-based values. Try to stay away from trendy, cheaply made merchandise.
  • Spread your spending over two or more pay periods, if possible, to help you stick to your budget.
  • Shop end-of-summer sales. Snap up discounted clothing that can be worn well into fall and next spring.
  • Host a back-to-school swap. Round up a couple of moms with kids the same gender as yours, but different ages, and host an annual clothes swap. Trade books and tools, too.
  • Hit up the Dollar Store or Dollar General for great deals on basic supplies. You’ll be surprised at what you’ll find and how much you’ll save.
  • Use coupons wisely. Scour your Sunday newspaper for coupons and search on-line coupon sites. To cut down on driving, remember that many stores offer price and coupon matching.
  • Pay with cash vs. credit cards. This allows you to keep a tight rein on your budget. Once your cash is gone, you’re done shopping.

If your back-to-school expenses and other bills seem unsurmountable and you’re thinking about filing for bankruptcy in Owatonna, MN, give Behm Law Group, Ltd. a call at (507) 387-7200 to discuss your options. We’re standing by to assist you with this very difficult decision.

 

Why It Is Wise to Hire a Bankruptcy Attorney

If you live in Marshall, MN, and are contemplating filing for bankruptcy, it makes the most sense to hire a bankruptcy attorney with Behm Law Group, Ltd. vs. doing it yourself. Filing on your own without the assistance of an attorney is a process known as “pro se” representation.

While some folks think it might save them some money by filing “pro se,” it’s actually not a wise thing to do for several reasons. They include the following:

  • A lot is at stake when you file for bankruptcy, and filing a bankruptcy petition by yourself can be a complicated and demanding process.
  • Attorneys have the experience and training necessary to give you the best advice possible for your specific bankruptcy situation.
  • Judges, trustees, and creditors’ lawyers are comfortable working with bankruptcy lawyers and aren’t always happy to be working with someone who is not familiar with the intricacies of the law. A trustee may even request that you hire an attorney if they believe that an attorney will benefit you.
  • A bankruptcy attorney looks out for your best interests at every step of the bankruptcy process and makes sure you receive the full relief to which you are entitled under bankruptcy law.
  • Bankruptcy can be an intimidating and time-consuming process. You will need to fill out many forms, research the law, and attend hearings. If you are not comfortable with any aspect of the bankruptcy process, consider hiring Behm Law Group, Ltd. We will prepare the forms, attend the hearings with you, and guide you through the complicated process.
  • An overwhelming majority of Chapter 13 cases filed without an attorney get dismissed by the court.

If you’re facing the possibility of filing for bankruptcy in Marshall, MN, it’s wise to give Behm Law Group, Ltd. a call at (507) 387-7200 to discuss your options. We’re standing by to assist you with the complexities of filing for bankruptcy!