The Truth About Credit Counseling and Why Help From a Bankruptcy Attorney in Mankato, MN, is Still Important

Before you file for bankruptcy in Minnesota, you are required to undergo a credit counseling course through a course provided that has been approved by the Office of United States Trustee. This is a government mandate that is designed to help American citizens who have had financial struggles severe enough to force them to choose filing for bankruptcy. Despite the benefits that credit counseling can provide, it’s also important to contact a firm that can help you during the bankruptcy process. Behm Law Group can provide expert legal advice and assistance as bankruptcy attorneys in Mankato, MN.

 

In many cases, approved credit counselors provide advice that helps a person or business about to file for bankruptcy feel capable enough to get back on their feet after the bankruptcy process is complete. However, some credit counselors may actually work to your disadvantage.

 

Requirements to File

Whether you own a small business that has had trouble meeting loan, mortgage, and expense payments, or if you’re simply an individual struggling with the financial difficulties of everyday life, you must go through the same requirement of credit counseling to file for bankruptcy. If you don’t undergo credit counseling course, your bankruptcy case could be dismissed with no refund of the standard fee you must pay to file a bankruptcy petition.

 

What’s Wrong With Credit Counselors?

Though a credit counseling course is mandatory, there are several things you should be aware of before you enter the counseling process. In many cases, credit counselors might not be trying to help you as much as you think. In fact, there are a great number of credit counselors paid or managed by credit card companies. These are different than the credit counseling agencies approved by the Office of the United States Trustee through which you must take a credit counseling course. These counselors may charge hidden fees and increase your debts, damaging your credit further and providing you with illegitimate credit counseling. These tricks—even scams—that some credit counselors use can easily be avoided by making the right choice in counseling service.

 

So how can we help? As bankruptcy attorneys, it’s our job to be well-versed in the signs of a bad credit counselor and to know the bankruptcy process. We can help you find a counselor right for you and continue helping you throughout the entire process of filing for bankruptcy.

 

If you’re unsure whether you will need a bankruptcy attorney in Mankato, MN, just remember that we can help you far beyond the abilities of any credit counselor. Contact Behm Law Group at (507) 387-7200 for a consultation today.

Foreclosure Proceedings with Chapter 7 and Chapter 13 Bankruptcy in Mankato, MN

In the majority of cases, filing for bankruptcy puts Minnesota residents and businesses back on their feet by erasing or significantly lessening much of their financial burden. In terms of mortgage debts and foreclosure, filing for bankruptcy will almost always alter the conditions of your mortgage debts to some degree. At Behm Law Group, Ltd., our attorneys are dedicated to assisting you in all aspects of bankruptcy in Mankato, MN, including fighting foreclosure and liquidating or apportioning your mortgage debt.

 

The two common types of bankruptcy, Chapter 7 and Chapter 13, are designed to handle cases of mortgage debt. In both cases, an automatic stay will be in place preventing creditors from collecting debts or harassing you during the filing process. An automatic stay is in place for a limited time period, however, and completing the bankruptcy process is vital to stopping foreclosure and alleviating your mortgage debts. Each type of bankruptcy filing treats the issue of foreclosure in different ways.

 

Chapter 7:

Chapter 7, or Liquidation Bankruptcy, is a process that will discharge all debts that qualify. This means your mortgage and all other debts that are not considered non-dischargeable under 11 U.S.C. §523 from the process will be eliminated. If you are behind on your home mortgage payments and you want to keep your home, filing for a Chapter 7 bankruptcy is probably not your best choice because there is no mechanism allowing you to “cure” or pay back your mortgage delinquency over a period of time.  A chapter 7 bankruptcy proceeding will delay a foreclosure by only about 90 to 120 days while the automatic stay injunctive provisions of 11 U.S.C. §362 are in effect.   While the automatic stay will prevent or stop a foreclosure, the relief is only temporary.  Generally speaking, after the chapter 7 case is concluded in 90 to 120 days the automatic stay terminates and a creditor can restart or initiate foreclosure proceedings at that time.

 

 

Chapter 13:

A Chapter 13 simple bankruptcy is labeled “reorganization bankruptcy” but it really is more aptly referred to as “partial re-payment bankruptcy”.  In a chapter 13, you draft a chapter 13 plan of reorganization in which you specify a particular payment that fits your income and expenses which you pay for a set period of time – usually 36 to 60 months.  In a chapter 13 bankruptcy, you can “cure” or pay back your mortgage delinquency over the 36 to 60 months.  After your case is filed, you must still make the regular monthly mortgage payments going forward but the delinquency itself would be paid out of the payments you make through the chapter 13 plan.  For instance, assume your regular mortgage payment is $1,000.00 a month and that you are $10,000.00 delinquent.  Further assume that your monthly chapter 13 plan payment is $500.00.  After you file for bankruptcy relief, you would still need to pay your $1,000.00 regular mortgage payment.  However, the $10,000.00 delinquency would be spread over the 36 to 60 month time of your chapter 13 plan.  If your plan was a 36 month plan, roughly $277.77 of the aforementioned $500.00 chapter 13 plan payment would go towards the payoff of the $10,000.00 pre-bankruptcy mortgage delinquency ($10,000.00 / 36 months = $277.77).  If your chapter 13 plan was a 60 month plan, roughly $166.66 of the aforementioned $500.00 chapter 13 plan payment would go towards the payoff of the $10,000.00 pre-bankruptcy mortgage delinquency ($10,000.00 / 60 months = $166.66).  You must be able to meet this repayment plan to keep your home and stop the foreclosure process.   When the plan is completed, your mortgage debt will be fully cured.

 

There are many legitimate reasons why Minnesota residents fall into debt and find foreclosure looming over them. Call Behm Law Group, Ltd. at (507) 387-7200 today and find out how we can help you stop foreclosure with bankruptcy in Mankato, MN.

Liens, Automatic Stays, and Set-Offs: Understanding Terminology Involved with Bankruptcy in Mankato, MN

For many in precarious financial situations, the option of filing for bankruptcy seems to be only found down a long and complicated road of legal red tape and confusing fine print. At Behm Law Group, Ltd., we understand that it’s entirely normal for people and small businesses without a dedicated legal department to be unfamiliar with the intricacies and terminology involved in the process of bankruptcy in the U.S. If you’re considering filing for bankruptcy in Mankato, MN, the attorneys at Behm Law Group, Ltd. are dedicated to providing information and legal assistance throughout the process.

 

If you’ve been wondering whether bankruptcy is the answer to your situation, you may have found yourself skimming online information about bankruptcy and encountered some terms that are unfamiliar to the jargon of everyday life. Some common terms used when discussing bankruptcy proceedings include:

 

Liens

Creditors can hold a lien over your property before and during your bankruptcy process. Essentially, a lien is a type of interest that secures your repayment of the debt you owe. Liens are most often used when speaking about mortgage debts and, in some cases, allow the lien holder to seize and sell your mortgaged property in the event of your inability to meet debt payments. During the bankruptcy process, there are options that allow you to forestall property seizure even if your creditors have a lien on your home or business.

 

Automatic Stay

During the filing process, U.S. Bankruptcy Courts can enforce an automatic stay on your creditors. In the event that an automatic stay is enacted, your creditors will be legally bound to halt their collection actions against you. When you petition for bankruptcy, your creditors are immediately put under automatic stay, protecting you against judicial proceedings, property seizure, lien enforcement, and the potential of a debt set-off.

 

Set-Off

In some bankruptcy cases, the debtor and the creditor owe money respectively to each other.  With a checking account, for instance, a bank owes you the money in your checking account and must pay it to you on demand.  Perhaps in you owe a debt to that same bank on a vehicle loan.  If you are late paying your vehicle loan with that bank, the bank can offset what it owes you in your checking account against what you owe it on the vehicle loan.  Instead of paying you what is in your checking account, the bank can offset what is in your checking account against what you owe it on the vehicle loan.

 

The many legal terms used in bankruptcy lingo are foreign to most people. We are here to help when it comes filing for bankruptcy in Mankato, MN. For more information, contact Behm Law Group, Ltd. at (507) 387-7200.

Home Equity, Homestead Exemptions, and Keeping Your Home When Filing for Chapter 7 Bankruptcy in Mankato, MN

In the U.S., there is often a negative shadow cast across the idea of going bankrupt. While the fear of struggling with extreme financial difficulties and being unable to pay back various debts is quite justified, bankruptcy is still stigmatized as the worst possible outcome. In reality, much of the anxiety about how bankruptcy will affect one’s life is either over-exaggeration or myth. Behm Law Group, Ltd. will help you by revealing the distinctions between reality and fallacy during the process of filing for bankruptcy in Mankato, MN.

 

One common misconception around the bankruptcy process is that the individual filer will lose everything, including their home. In fact, even under Chapter 7 liquidation bankruptcy, there are conditions that allow the filer to keep their home.

 

Home Equity

Your home or property can only be liquidated during the Chapter 7 bankruptcy process if it has equity. Home equity essentially means that the value of your property is higher than the value of your mortgage on that property. If you have a home valued at $300,000, and your mortgage is $200,000, you have $100,000 in equity, and a bankruptcy trustee could, theoretically, sell the home to pay off the mortgage debt you owe.

 

If you have no equity (your mortgage value is greater than your property value), your trustee will abandon the property and it will not be liquidated to pay debts.

 

Homestead Exemption

Even if you have home equity, there is still a way to keep your home with the Minnesota homestead exemption. If your homestead exemption can cover the value of your home equity (Minnesota allows exemptions up to $390,000 for homes in cities), you may protect the equity in your home and keep your home in the liquidation bankruptcy process.

 

Continued Payments

Although your mortgage creditor cannot target you as an individual during the bankruptcy process, payments must still be made to repay the debt on your mortgage. If you are able to continue payments on your mortgage during and after a Chapter 7 filing, your mortgage creditor will not take your home from you and the equity in your home will be preserved and protected for your benefit.

 

If you are balking at filing for bankruptcy because you fear you may lose your home, know that you will be able to protect the equity in your home with the Minnesota homestead exemption. For more information about filing for bankruptcy in Mankato, MN, contact Behm Law Group, Ltd. at (507) 387-7200.

Guilt, Blame, and Shame: The Real Reasons Why Most People File for Bankruptcy in Mankato, MN

The accumulation of debts is a widely varied process that can occur over the course of years or in an instant. Those struggling with overwhelming debts for whatever reason often experience situational guilt or shame. Creditors will frequently add to this negative mindset, placing the blame solely on the debtor and gaining an advantage over them by emphasizing their guilt. At Behm Law Group, we’re here to tell you that the guilt and shame you may be feeling about your debts is unwarranted, despite the blame-game your creditors play. If you are considering filing for bankruptcy in Mankato, MN, were here to help, starting with lifting the pressure on your conscience and beginning to think critically about the situation.

While your creditors would have you believe that your debts are all your fault and shame you into feeling guilty enough to place repaying them ahead of your health and your family, these claims are often baseless. In fact, the vast majority of debts leading to bankruptcy are due to unavoidable or unexpected circumstances.

Job loss is one of the most common reasons our clients have found the need to file for bankruptcy. Lay-offs and a poor job market make optimal conditions for people of all income brackets to gain debts.

Medical bills are a necessary debt for anyone who needs medical care to stay healthy and capable of caring for their families. Unfortunately, even those with insurance can land in a pit of soaring medical expenses.

Divorce rates grow each year and the emotional upset alone can be enough to damage the health and security of a household. The debts from lawyer fees, spousal lawsuits, and general divorce expenses can send anyone down a spiraling path to bankruptcy.

Credit misuse is a common occurrence for people of all ages and financial backgrounds. With late fees, interest rates, and general credit card misuse, credit debt can multiply right beneath your nose.

Accumulated expenses from a variety of sources can quickly land you in a world of debt. These expenses are often unexpected and unavoidable, such as home damage after a natural disaster or costs related to a brokendown car.

You may be in a rough financial situation, but know that the blame does not rest on your shoulders alone. If you are considering filing for bankruptcy in Mankato, MN, contact Behm Law Group for a consultation at (507) 387-7200.

 

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.