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Actions to Consider Before Filing a Chapter 7 Bankruptcy Case

The process of Chapter 7 bankruptcy works to liquidate the filer’s non-exempt assets, distribute the value to creditors, and provide a discharge of debts to the filer. In 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act established stricter regulations for Chapter 7 cases. These regulations were intended to make it more difficult to commit bankruptcy fraud without repercussions when filing a Chapter 7 case.

Qualifying for Chapter 7 bankruptcy today means passing the Means Test, completing pre-bankruptcy requirements, and filing a bankruptcy petition that accurately represents your financial situation. With the help of Behm Law Group, Ltd., you can build a strong, successful case for Chapter 7 bankruptcy in Redwood Falls, MN and the surrounding area.

When you file for Chapter 7 bankruptcy, the bankruptcy trustee assigned to your case will review your financial records, both to cross-check the representations made on your bankruptcy documents and to determine if you qualify for bankruptcy relief. Because some of your financial records will be under review and because bankruptcy debt relief is intended to benefit only an honest and forthright filer, there are several actions to avoid before you file for Chapter 7 bankruptcy:

  • Favoring a creditor: Choosing to pay more to one creditor over another is considered a “preferential transfer”.  It could result in the trustee suing that creditor, recovering what you paid the creditor and evenly splitting that amount between all of your creditors. Generally, you want to show that you have acted with fairness to all of your creditors and that you have done everything you can do to repay your debts in an ordinary fashion.
  • Transferring assets: If you transfer any asset out of your name to someone else before filing for bankruptcy relief and then don’t disclose that transfer in your bankruptcy paperwork you will be deemed to have committed a “fraudulent transfer”, even if you made the transfer without any bad intent. While such a “fraudulent transfer” generally won’t be considered a criminal act in most cases, it could result in the denial of a bankruptcy discharge and the trustee could sue the person you transferred the asset to in order to undo the “fraudulent transfer” and recover the asset.
  • Credit card purchases: Credit card debt is included in your bankruptcy case, and is almost always fully discharged in a Chapter 7 bankruptcy. If you are using your credit card for anything not considered a necessity (food, gas, etc.) before filing, however, you could be deemed to be acting with fraudulent intent by purposefully adding to the debts you know will be discharged. A good example of this would be charging a vacation to Europe or Hawaii on a credit card and then filing for bankruptcy relief a month later.  Under such a scenario, the credit card company could sue you in bankruptcy court and ask the bankruptcy court to except or exclude the debt from the discharge granted to you at the end of your case.
  • Receive future payments: If you are aware that you will receive future payments while your case is still open, you will have to report those future payments and such future payments could be seized by the chapter 7 trustee and used to pay your creditors.  A good example of this is if someone passes away within 180 days of the filing of your bankruptcy case and you inherit money or property.   If this happens you must report it to the bankruptcy trustee and to your attorney.  If you fail to report it, the trustee could ask the bankruptcy court to revoke or deny any debt relief that you would otherwise receive.
  • Sue someone: If you have the right to sue someone for personal injury or property damage, (vehicle accident, someone else’s tree falling on your house etc.) you will have to disclose any such claims in your bankruptcy petition.  Sometimes, the trustee will assist you and your attorney in resolving the claims.  Sometimes, any settlement proceeds will be able to be fully protected/retained.  Sometimes, some of the settlement proceeds will have to go to the trustee for the benefit of your creditors.  If you have the right to sue someone, it is essential that you disclose this to your bankruptcy attorney before   your bankruptcy case is filed so that you and your attorney can determine how to properly disclose and prosecute the claim and protect as much of the resulting settlement proceeds as possible.

To learn more about filing for Chapter 7 bankruptcy in Redwood Falls, MN, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

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Things to Consider as a Retiree Filing for Chapter 7 Bankruptcy

Financial struggles can happen at any age, whether you’re in your 20s living paycheck to paycheck at an entry level job or a senior citizen surviving on a retirement fund. No matter your age, chapter 7 bankruptcy is the only form of permanent, reliable and court enforceable debt relief available.

Filing for bankruptcy can turn around an individual’s life at any age and help them maintain long-term financial stability debt free. If you’re considering filing for bankruptcy as a retiree, there are several things to take into account that might affect you differently than a similarly situated younger person. At Behm Law Group, Ltd. we provide expert legal guidance and protection throughout the process of filing for Chapter 7 bankruptcy in Jackson, MN and the surrounding area.

Chapter 7 bankruptcy is called “liquidation bankruptcy”. Quite simply, a filer’s non-exempt assets are liquidated or sold by a chapter 7 trustee and the proceeds are used to make some sort of payment to one’s creditors. The vast majority of one’s debts are completely discharged in 90 to 120 days. However, in the vast majority of cases, the bankruptcy exemptions provided by the bankruptcy code are quite generous and are more than sufficient to protect all of a person’s property and the only things a person loses are one’s debts.

If you plan to file for Chapter 7 bankruptcy as a retiree, there are some things to consider before you file a bankruptcy petition that are specific to your age and situation:

• Retirement funds: In Chapter 7 bankruptcy cases, retirement funds are exempt from the liquidation process. The bankruptcy exemptions protect 401(k) and 403(b) accounts, as well as profit sharing accounts and certain other types of IRAs and retirement funds from liquidation. However, if you’re living off income from those accounts as a retiree, keep in mind that you might not qualify for Chapter 7 bankruptcy if the monthly retirement income causes your income to exceed the state median income for a household of your size. Fortunately, other income from Social Security benefits, veterans’ disability assistance and COVID-19 relief/stimulus will not affect whether you qualify for chapter 7 bankruptcy relief.
• Home equity: Most retirees have paid off their mortgages and fully own their homes. This means they have built up a significant amount of home equity or value. If you do have a lot of equity in your home and plan to use that value to support you financially in the coming years, under the Minnesota state bankruptcy exemptions, you will be able to protect that value or equity up to $420,000 if your homestead is not used for agricultural purposes or up to $1,050,000 if your homestead is used for agricultural purposes.
• Medical bills: The majority of senior citizens and even younger retirees face health issues as the years pass. Because of this, it’s common for medical bill debt to become a significant factor in the decision to file for Chapter 7 bankruptcy. If you have severe medical debt, filing for Chapter 7 bankruptcy is the most effective way to find relief from medical bills and other unsecured debts. In fact, medical debt is sometimes the only reason retirees file Chapter 7 bankruptcy.

To learn more about filing for Chapter 7 bankruptcy in Jackson, MN as a retiree, contact Behm Law Group, Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com.

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Basics of Each Different Bankruptcy Chapter

At Behm Law Group, Ltd., we provide comprehensive legal guidance and protection for individual consumers filing for Chapter 7 or Chapter 13 bankruptcy, and for family farmers and fishers filing for Chapter 12 bankruptcy. If you’re considering filing for bankruptcy, our attorneys can help you determine which chapter will be the most effective for handling your current financial circumstances.

 

Each chapter is designed to help individuals in many different situations get out of debt that they wouldn’t have otherwise been able to repay. While we work with only those three chapters (7, 12, and 13) of bankruptcy in Mankato, MN and the surrounding area, there are other types of bankruptcy available to individuals and businesses.

 

The six general bankruptcy chapters in U.S. bankruptcy law include:

 

  • Chapter 7: Available to individuals and businesses alike, Chapter 7 bankruptcy is the most commonly filed chapter. It works to liquidate or sell the filer’s non-exempt assets, distribute the proceeds among the filer’s creditors, and discharge the majority of the filer’s debts. Chapter 7 is also called liquidation or straight bankruptcy. The bankruptcy exemptions under Minnesota state law and the bankruptcy code that are used to protect one’s property are very generous, however.  In the vast majority of cases, no property is liquidated or sold at all and all that one loses are one’s debts.
  • Chapter 9: This bankruptcy chapter is an option only available to municipalities such as cities, school districts, or counties. In 2013, Detroit, MI used Chapter 9 to file the largest municipal bankruptcy case in U.S. history, with debt load estimated at $18 to $20 billion. The process of Chapter 9 bankruptcy works to protect the filer from creditors while the filer restructures their debts to much more favorable repayment terms.
  • Chapter 11: Like Chapter 9, Chapter 11 also protects the filer from creditors as they reorganize their debts. Chapter 11 is a process only offered to businesses that are not sole proprietorships and individuals, such as doctors, lawyers, famous actors, corporate CEOs, etc. who have total debts that exceed the debt limitations of Chapter 12 and Chapter 13 bankruptcy or who have incomes that far exceed the state median/average income for a household of their similar size. The goal of Chapter 11 is to help a business or an individual restructure their debts under more favorable repayment terms in a Chapter 11 repayment plan while they maintain operations. Some of the most recent large Chapter 11 cases include J.C. Penny, Hertz, and Neiman Marcus.
  • Chapter 12: For filers that generate the majority of their annual income from family owned farming or fishing operations, Chapter 12 is a debt restructuring option. The restructured debts are put into a Chapter 12 plan lasting three to five years. This chapter is reserved for family farmers and fishers largely because their income is received seasonally.
  • Chapter 13: The second most common individual consumer chapter filed is Chapter 13. This process works to restructure the filer’s debts into a manageable repayment plan that lasts a three to five-years. Some secured creditors (creditors with collateral or security such as vehicle lenders) are paid in full under more favorable repayment terms and some unsecured creditors (creditors who don’t have security or collateral such as credit card debts, medical debts, etc.) are repaid only partially with no interest and have their claims completely discharged. Chapter 13 is also called reorganization, restructuring, debt repayment, or wage-earner bankruptcy.
  • Chapter 15: Finally, Chapter 15 bankruptcy is relatively rare, but still necessary. Added to the bankruptcy code in 2005, Chapter 15 bankruptcy handles filers with foreign debts and/or foreign assets. Chapter 15 overall works to negotiate a case with foreign courts and foreign bankruptcy/insolvency laws.

 

To learn more about our work with Chapter 7, 12 and 13 bankruptcies in Mankato, MN and the local region, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

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Leniencies with 401(k) and Other Retirement Funds in Chapter 13 Bankruptcy

Everyone wants to save money for the future, whether putting away $10 per paycheck, or contributing thousands of dollars to a 401(k) or other retirement plans. For many, however, those financial goals might be difficult to maintain. If you’re struggling to meet monthly bills and other debt payments, it might be time to consider filing for bankruptcy. The process of bankruptcy has benefited thousands during trying economic times. Despite the misconception that bankruptcy is a choice that will either leave you homeless or with crippling credit, it’s actually a highly effective long-term debt relief solution. At Behm Law Group Ltd., our expert attorneys are here to help. We provide guidance and legal protection for those filing for Chapter 7 or Chapter 12 or Chapter 13 bankruptcy in New Ulm, MN, and the surrounding region.

 

While Chapter 7 bankruptcy is an option for those with household incomes lower than the state median/average income for their household size, Chapter 13 bankruptcy is a process better suited for financial circumstances with steady incomes. Also called “wage-earner bankruptcy,” Chapter 13 bankruptcy reorganizes the filer’s debts into a three-year to five-year manageable repayment plan suited to his or her income. Only portions of unsecured debts (debts without collateral) are paid at no interest and secured debts (debts with collateral such as vehicle loans) are repaid under terms that are more favorable over a three- to five-year period. All disposable income (income not necessary for your reasonable and necessary monthly living expenses) is used to make monthly plan payments, and the filer’s remaining discretionary income is used for living expenses like food, gas, utilities, and home maintenance and many other things.

 

While the chapter 13 bankruptcy trustee is required to review your reasonable and necessary living expenses, there is also considerable flexibility that allows you to contribute some of your income towards certain items such as saving up to travel for the holidays and making monthly contributions to retirement plans.

 

Discretionary Income and Retirement

Strictly speaking, making contributions to retirement funds/plans does not constitute a reasonable and necessary living expense such as purchasing food, making vehicle or mortgage payments, etc.  However, provided someone has made contributions to a 401(k) or some other retirement account before filing for bankruptcy, the bankruptcy code allows one to continue making such contributions.  There is a sound public policy behind this.  Quite simply, the drafters of the bankruptcy code wanted to encourage people to save for themselves and build a financial reserve or “nest egg” that could be relied upon later and which would help prevent the need to file for bankruptcy relief again.  Indeed, for older filers near retirement age, such contributions can be considered necessary because they will soon be living off that income.  If you are currently enrolled in a voluntary or non-voluntary contribution plan through your employer or if you are repaying a retirement account loan, those obligations will be worked into your case and will continue normally.

 

Filing for Chapter 13 bankruptcy in New Ulm, MN, or the surrounding area doesn’t mean that you will lose the ability to save something for yourself during that three- to five-year repayment period. Contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com to learn more details about Chapter 13 repayment bankruptcy.

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Why the Help of a Bankruptcy Attorney is Important for 2021 Bankruptcies

The difficulties of the coronavirus pandemic and a changing economy are still affecting all American citizens, and those effects come with significant financial struggles for many. The initial boost of stimulus checks, federal additions to state unemployment benefits, and room for accommodation on debt payments helped many stay out of bankruptcy throughout much of 2020. Without those benefits, pressure for unemployed households, business owners, and even those with steady incomes is projected to create a surge in bankruptcies in 2021.

 

While it’s possible to file for bankruptcy relief without legal protection and guidance, it’s always beneficial to take advantage of the skills and expertise of a bankruptcy attorney. With Behm Law Group, Ltd., you can expect comprehensive protection and expert advice with a Behm bankruptcy attorney in Worthington, MN and the surrounding areas.

 

Behm Law Group, Ltd. is the only law firm in south central and southwestern Minnesota practicing in bankruptcy cases exclusively. Behm bankruptcy attorneys will work with you from the start to the finish of your case, guiding you through the highly nuanced bankruptcy legal process. We work with individual consumers, business owners, and family farmers filing for Chapter 7, Chapter 13, or Chapter 12 bankruptcy.

 

Filing for bankruptcy, even when there isn’t a global pandemic going on, can be difficult. The bankruptcy code can be complicated and the process of filing is nuanced, requiring filers to meet strict specifications and requirements. If you’re thinking about filing for bankruptcy relief, it’s highly recommended that you seek out the advice of a trained bankruptcy attorney.

 

This coming year, however, might make the bankruptcy process even more difficult and intricate due to added laws regarding COVID-19 and care packages. The question of how different incomes are treated in any bankruptcy will involve additional income sources established in response to the coronavirus, such as potential future stimulus checks and additional state and federal unemployment income.

 

Household conditions directly impacted by the pandemic will also be taken into consideration when a bankruptcy case is filed. This may include how medical debts are treated or whether filers’ health conditions caused by COVID-19 infections could be handled as a disability or as an undue hardship.

 

With 2021 starting a new presidential term as well, it’s difficult to predict how bankruptcy law might change in the near future. The slightest changes could affect how a case is handled and may even prevent a filer from qualifying for bankruptcy relief. At Behm Law Group, Ltd., we expect 2021 to have extremely high bankruptcy rates and we expect that there may be many changes to the bankruptcy code, making it more crucial than ever to seek the help of an experienced bankruptcy attorney.

 

To learn more about our services as a law firm and to locate an experienced bankruptcy attorney in Worthington, MN, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

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Refinancing with Today’s Low Mortgage Rates Might Offer Debt Relief

In the midst of a global pandemic and a rocky political climate, there’s so much negative news that we are exposed to every day. However, one of the positives of the end of 2020 and the beginning of 2021 is that mortgage interest rates are extremely low, and the housing market is booming. If you’re a homeowner, you know how much pressure there is to meet monthly mortgage payments along with all of your other pressing financial obligations. For homeowners struggling to meet mortgage payments or other debt requirements, taking advantage of favorable current mortgage interest rates by refinancing your home mortgage may be the ticket to staying out of bankruptcy. If you are considering filing for bankruptcy relief during this uncertain time, Behm Law Group Ltd. can help you navigate the legal process and receive long-term, effective debt relief in Marshall, MN, and the surrounding area.

 

Those who have steady incomes but are finding it difficult to meet their monthly financial requirements may be considering Chapter 13 bankruptcy to reorganize their debts into a manageable repayment plan.  Homeowners with steady incomes are also most likely to benefit from refinancing their home mortgages. A refinance with current interest rates could save homeowners several hundreds of dollars with each payment. The resulting savings could be significant enough such that the money saved could effectively be put into paying off several other debts that might otherwise force a homeowner into filing for bankruptcy relief.

 

Approximate Mankato mortgage rates as of November 2020 for a $250,000 loan

Loan type Rate Points APR Monthly payment
15-year fixed loan 2.1% 0.56 2.4% $1,300
20-year fixed loan 2.5% 0.84 2.7% $1,060
30-year fixed loan 2.6% 0.75 2.8% $800
5/1 ARM variable loan 2.4% 0.89 2.7% $780
7/1 ARM variable loan 2.5% 0.76 2.7% $790
10/1 ARM variable loan 2.6% 0.76 2.8% $800

 

For a conventional loan, refinancing may cost around $3,000 to $4,000, but that cost would be wrapped into your refinanced mortgage, so it won’t typically impact the amount of cash you have on hand at the time of the refinance. The only common factors that might prevent qualification are a low FICO score due to missed mortgage payments, too many debts, other than your mortgage, with high balances or low self-employment income from this year.

 

While saving $100 to $300 a month on a refinanced mortgage might not seem like a large amount, it’s a significant enough of an amount that many homeowners may use to repay other debts and financial obligations that they might not otherwise be able to pay. Those minor monthly adjustments can be key in preventing the stress and budget shortfalls that can lead one into having to file for Chapter 13 bankruptcy relief.

 

Chapter 13 or Chapter 7 bankruptcy can be highly helpful options for those struggling financially who are unable to refinance their mortgages and are unable to make other helpful budgetary adjustments. To learn more about finding debt relief through bankruptcy in Marshall, MN, and the surrounding region, contact Behm Law Group Ltd. at (507) 387-7200 or email stephen@mankatobankruptcy.com.

 

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Part Three: Utility Bills and Debt Relief This Winter

This is the third and final part of a blog series covering frequently asked questions regarding utility bills and bankruptcy. Because the coldest months of the year are just beginning, it’s important to keep gas, water, and other utilities running to protect your household or business from frozen pipes and interrupted hot water sources.

When you’re unable to pay monthly utility bills, you risk service shut off when debts accumulate. Filing for bankruptcy relief can stop service shut offs and discharge utility debts permanently. If you are considering filing for bankruptcy, Behm Law Group, Ltd. can help you through the process and find effective, permanent debt relief in Owatonna, MN and the surrounding area.

These are a few more of the most commonly asked questions about utility bills in bankruptcy.

Is my cable considered a utility? How can I stop it from possibly being shut off?

While cable television is not technically a utility, it’s still a service that will be shut off when you default on your monthly bill payments. Fortunately, cable bill debts can also be included in your bankruptcy and can be permanently discharged. If you list your cable debt amount, the automatic stay injunctive provisions of 11 U.S.C. §362 will apply to your cable provider and to all of your other utility providers, and your cable television debt will be discharged with all of your other unsecured utility debts.

My provider is asking for a large security deposit to reconnect my service. Can the bankruptcy court help me pay it?

One form of adequate assurance (see part two to learn about adequate assurance) your utility provider might require from you in order to continue service is a security deposit amount that is too much for you to pay. If you filed for bankruptcy protection, the bankruptcy court will be able to help. When you cannot come to an agreement with your utility creditor about the security deposit amount, you can request the bankruptcy court to reduce the security deposit to an amount that you can afford to pay.

I’ve paid my bills on time for a year now. Can I get my security deposit back?

If you filed for bankruptcy relief, provided a security deposit as an assurance, and then paid your bills on time for the twelve-month period after your bankruptcy was concluded, you may be eligible for the return of the security deposit. Reach out to your utility provider for more information about the possible return of your security deposit and how that process might work.

To learn more about the treatment of utility debts, unsecured or secured debts, and the process of obtaining permanent debt relief by filing bankruptcy in Owatonna, MN, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

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Part Two: Utility Bills and Debt Relief This Winter

This is the second part of a blog series covering frequently asked questions concerning utility bill debts and bankruptcy. The first part can be found here. Utility debts occur when you miss monthly utility payments for any period of time. As an unsecured debt (a debt that does not have collateral – secured by any property), it is always fully discharged in an individual consumer bankruptcy case. Because of that, bankruptcy is one of the best options for finding relief from utility bill debt and other unsecured debts like credit card balances and medical bills. At Behm Law Group Ltd., our attorneys are dedicated to helping households work through Chapter 7 or Chapter 12 or Chapter 13 bankruptcy cases to receive permanent, effective debt relief in Mankato, MN, and the surrounding communities.

While filing for bankruptcy relief will be denoted on your credit profile for a limited period of time (usually 5 to 7 years), the benefits almost always outweigh the potential negatives because your debts will be fully discharged in bankruptcy. Utility bill debts are debts that are handled in bankruptcy, and if you owe those debts, filing for bankruptcy can also stop your utility services from being shut off and keep creditors from harassing you. These are some of the more frequently asked questions about how utility debts are handled in bankruptcy.

When is filing for bankruptcy not enough to prevent service shut off?

Although the automatic stay injunctive mandates of 11 U.S.C. §362 are immediately imposed upon all creditors when you file your bankruptcy petition, there are still some steps that you must take to stop possible utility service shut off. In your petition paperwork, make sure your utility bill debts are listed in the correct section. Listing those unpaid bills as debts will allow the bankruptcy court to notify your utility providers of your bankruptcy filing and prevent service shut-off. Within 20 days of filing, you must also show your utility provider that you will be able to pay your utility bills that are incurred and come due after the date that your bankruptcy petition is filed. This proof is called “adequate assurance.”

What is “adequate assurance?”

Adequate assurance is a good faith measure of proof to your provider that you will be able to pay your future utility bills. This proof can be offered in several different forms, including letters of credit provided by a lender, security deposits (much like a damage deposit with a landlord if you’re renting an apartment), certificates of deposit, prepayment, surety bonds, or another type agreed on by you and your utility provider.

What happens if my provider doesn’t accept my offer of adequate assurance?

If you and your provider don’t agree on a form of adequate assurance, you can request the bankruptcy court to order your provider to accept that assurance. The bankruptcy judge may also order you to modify the form or amount of the assurance deposit.

Utility bill debts are stressful, especially when service shut-off is a threat during the colder months. If you’re struggling financially, contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com for more information about bankruptcy and debt relief in Mankato, MN.

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Part One: Utility Bills and Debt Relief This Winter

With the coldest months of the year just beginning, many family households that are in debt are wondering how the cold will affect their access to steady utility service. This blog is one part of a series covering frequently asked questions about utilities and debt relief through filing for bankruptcy in Minnesota. If your debts are significantly compromising your quality of life or if you are simply unable to pay your debts, you’ll likely be able to find permanent debt relief by filing for bankruptcy. Chapter 7 bankruptcy is the most commonly filed type of bankruptcy, and it works to liquidate your non-exempt assets in exchange for the discharge of your debts, meaning that your legal contractual obligations to pay your debts are nullified. With the help of Behm Law Group Ltd. attorneys, you can work through a Chapter 7 case and receive permanent, effective debt relief in Luverne, MN.

 

For those already struggling to make debt payments, utility bills can fall lower and lower on the priority list of bill paying. When utility debts start to stack up, you run the risk of service shut-off and/or potential creditor harassment. Filing for bankruptcy will most likely solve such problems. The following FAQs cover some points about how utility debts are handled in bankruptcy.

 

Can filing for bankruptcy stop my utilities from being shut off?

Typically, yes. When you file for bankruptcy relief, the automatic stay injunctive mandates of 11 U.S.C. § 362 go into effect against your creditors. This means your utility creditors will not be able to collect on the utility debts you owe, and they will not be allowed to deny you services, as long as you continue making your current utility payments that come due after the date you filed for bankruptcy relief.  All utility debt that you owe the utility provider as of the date that your case is filed will be discharged.  However, under 11 U.S.C. § 366, a utility provider may require a reasonable deposit from you within 20 days after your bankruptcy is filed in order to continue providing utility services.

 

Since I filed for bankruptcy, why did my utilities still get shut off?

While there are some rare cases when the automatic stay would not apply, you should immediately see the positive effects of the automatic stay on all creditor collection activities. If you’ve filed your petition and your utilities do get shut off, you should immediately contact your attorney.   Typically, your attorney will provide proof of your bankruptcy filing to the utility provider and the utility provider will reinstate your utility services.  Under 11 U.S.C. § 366, however, you will have to work with your attorney to provide a reasonable deposit to the utility provider within 20 days in order to have the utility services continued.

 

How are utility bill debts treated in bankruptcy?

Utility bill debts are unsecured debts and the amounts you owe the utility providers on the date that your bankruptcy case is filed will be discharged.  In Chapter 7 bankruptcy, unsecured creditors sometimes receive payments from the Chapter 7 trustee if the trustee is able to transact/sell non-exempt assets (assets you are not able to protect in Chapter 7 bankruptcy with your bankruptcy exemptions).  However, in most Chapter 7 bankruptcy cases, the bankruptcy exemptions are more than adequate to protect all of a person’s assets and unsecured creditors, including utility providers, get paid nothing. Along with credit card debt and medical bills, utility debts are fully dissolved in Chapter 7 bankruptcy. If the majority of your debts are unsecured, Chapter 7 bankruptcy is the quickest, most effective debt relief tool.

 

To learn more about debt relief in Luverne, MN, through bankruptcy, contact Behm Law Group Ltd. at (507) 387-7200 or email stephen@mankatobankruptcy.com.

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How to Enjoy the Holidays While Working Through a Chapter 13 Bankruptcy

During the holidays, many households struggle with the financial expectations of gifts, decorations, and fancy foods. If you are one of the many individuals having a hard time meeting debt payments, it may be time to take action for permanent debt relief.

 

While there are options for debt relief outside of bankruptcy, such as debt settlement or debt consolidation these options are rife with fraud and full of bad actors who are only interested in taking your money, have no legal authority to make your creditors do anything and will not provide permanent debt relief.  At Behm Law Group, Ltd., we can guide you through the process of filing for Chapter 7 or Chapter 13 bankruptcy in Pipestone, MN and the surrounding area to receive immediate, effective and permanent debt relief.

 

Those who are already in the process of working through a three to five-year long Chapter 13 bankruptcy repayment plan can still enjoy the Holiday Season as they would any other year outside of the bankruptcy process. While it’s true that some income must be paid to the chapter 13 trustee to meet monthly repayment plan requirements, one can still purchase gifts for friends and relatives, spend money entertaining friends and relatives and plan and take trips to visit friends and relatives as one would normally do outside of the bankruptcy process.

 

Discretionary Income

When you enter into a Chapter 13 bankruptcy repayment plan, your income will be broken into disposable and discretionary categories. Your disposable income is what’s left after all reasonable and necessary living expenses are paid. Utility bills, food, gas, taxes, and all other household financial needs are considered reasonable and necessary living expenses that you can use any amount of your discretionary income to pay. What’s left of your income after reasonable and necessary living expenses are paid is called disposable income. For the full period of your Chapter 13 bankruptcy, your disposable income will be used to make your chapter 13 plan payments to the chapter 13 trustee and the chapter 13 trustee will divide those monthly payments among your unsecured creditors.  Christmas presents, decorations, and luxury foods are all things that you can use your discretionary income to purchase during the Holiday Season. Being in a Chapter 13 bankruptcy simply means that you and your attorney and the chapter 13 trustee will draft a monthly budget to help you spend your discretionary income more efficiently to cover your reasonable and necessary living expenses, including recreational expenses and charitable contributions.

 

Budgeting

Even with your disposable income being used to repay unsecured creditors through your chapter 13 plan, you can still enjoy the Holiday Season as you always have enjoyed it. One significant resource you can rely upon is part of your yearly income tax refunds. Although your yearly tax refunds technically constitute disposable income that should be used to repay unsecured creditors, the chapter 13 trustee will only require you to pay over a portion of your yearly tax refunds and permit you to use the rest as you wish. You could also request an adjustment to your repayment plan for the months during the Holiday Season.  Most chapter 13 trustees will allow a temporary change in your plan.

 

If you are facing serious debt problems this year, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com to learn more about filing for Chapter 7 or Chapter 13 bankruptcy in Pipestone, MN.