Posted on

How the CARES Act Affects Mortgage Forbearances for Those in a Chapter 13 Bankruptcy

Since the beginning of 2020, and for the foreseeable future, everyone in the United States and across the world is dealing with some serious difficulties in the face of COVID-19. One of the most prominent issues many in the United States are struggling with is a lack of income due to shelter-in-place orders and nonessential business shutdowns. Combined with layoffs and other factors, the situation is worse for those who struggled with finances even before the outbreak of the virus. These people are having to take actions to protect themselves and they are working with creditors, banks, and other loan providers to come up with a sound financial plan.

 

The CARES Act was put into place this past March to provide relief to U.S. citizens and businesses through various means. For many, one of the most helpful parts of the CARES Act is the allowance of a mortgage forbearance for up to six months. However, for those working through a Chapter 13 repayment plan, the CARES Act may affect a mortgage forbearance differently than for other individuals. If you are considering filing a Chapter 13 bankruptcy in Waseca, MN, or the surrounding area during this time, Behm Law Group Ltd. can help you understand how the CARES Act could change a mortgage forbearance and other aspects of your finances.

 

For those not in a Chapter 13 bankruptcy, the CARES Act allows individuals to request a forbearance on their mortgage lasting up to six months. There may also be an option to delay making payments on mortgages through forbearance of an additional six months. Requesting this forbearance for those in a Chapter 13 bankruptcy, however, becomes a bit more complicated.

 

For any changes in a Chapter 13 repayment plan, including a mortgage forbearance, all parties involved must be notified. While requesting a mortgage forbearance on the bankruptcy filer’s end is almost the same as for individuals outside of a bankruptcy, the passing of information among the loan services, trustee, and bankruptcy attorney can be complicated. Because the COVID-19 pandemic is an unprecedented situation, the bankruptcy code doesn’t have in-place guidelines to handle issues related to it. Consequently, the reporting of mortgage forbearance requests to parties involved in a Chapter 13 bankruptcy depends on a local district bankruptcy court’s regulations.

 

To properly provide a temporary mortgage forbearance notification in a chapter 13 bankruptcy, the National Association of Chapter 13 Trustees has established a few basic ways mortgage lenders can provide forbearance information to parties involved in a bankruptcy proceeding.

 

  1. General notice: Mortgage lenders can file a general notice with the bankruptcy court outlining the forbearance terms in the court docket for a particular bankruptcy case.
  2. Claims register: Mortgage lenders can also file a claim on the claims register, which is typically more directly linked to the chapter 13 trustee’s system.
  3. Mail a letter: Mortgage lenders can send a physical letter to the bankruptcy filer, the chapter 13 trustee and all interested parties detailing the mortgage forbearance terms.
  4. Notice of payment change: Finally, mortgage lenders can file a notice of payment modification in the bankruptcy court claims register for a particular bankruptcy case.

 

All of these options have their advantages and disadvantages, depending on the locality. Mortgage lenders should be working through whichever process is best for each bankruptcy judicial district.

 

To learn more about mortgage forbearance in a Chapter 13 bankruptcy in Waseca, MN, contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com today.

Posted on

When and Why You Should Redeem Property in Chapter 7 Bankruptcy

If you’re struggling with a low income and looming debts, it may be time to start thinking about taking positive actions for relief that keeps your finances stabilized in the long term. One of the most effective resources available to you for debt relief is bankruptcy. Specifically, if you’re facing a severe imbalance between debt and income, you’ll likely benefit most from a liquidation type of bankruptcy that discharges your debts. The U.S. bankruptcy code outlines Chapter 7 as a liquidation bankruptcy for individuals and businesses alike. Behm Law Group, Ltd. attorneys have helped many clients file successful cases in Chapter 7 bankruptcy and receive effective debt relief.

 

Chapter 7 bankruptcy, like all other types of bankruptcy, is still a process that must remain fair to debtors and creditors alike. This means that, though the filer will have their debts discharged, they also could lose some of their non-exempt assets to a liquidation process that returns a monetary value to creditors. Even if they’re not repaid in full on the debts you owe, creditors will sometimes not be left empty handed.  However in the vast majority of cases all of a filer’s assets can be protected from liquidation with the bankruptcy exemptions (such as the homestead or motor vehicle exemption) provided under the bankruptcy code or provided by state law.

 

While exemptions are the primary method of protecting assets, there are some other ways to save your property. One less common way to keep your property is through redemption.

 

Why to redeem: Typically speaking, you will only benefit from redeeming a property in Chapter 7 bankruptcy if you owe substantially more debt on the property than the actual value of the asset. For example, if your car is not protected by the motor vehicle exemption and it’s currently worth $2,000 but you still owe a debt of $5,000 on the loan, you can redeem that property by paying the $2,000 value of the car to the creditor.

 

When to redeem: You can only redeem an asset if certain requirements are met:

 

  1. The property is tangible, but the asset cannot be real estate or business property.
  2. The property is collateral for a secured debt.
  3. The bankruptcy trustee abandons the property.
  4. You are able to repay the value of the property in one lump sum.

 

For the most part, those who redeem property use it for vehicles because they are products that depreciate quickly in comparison with the large amounts of the debts that remain on them. Other common properties redeemed in a Chapter 7 case are household appliances, furniture, antiques, and luxury goods.

 

With our guidance, you can build a strong case for Chapter 7 bankruptcy and determine the best course of action for exemptions, redemption, and other aspects of the process. To learn more about filing, contact Behm Law Group, Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com today.

 

Posted on

4 Most Common Types of Bankruptcy Fraud

In the United States today, bankruptcy law has many rules that serve to prevent fraudulent cases. Despite these rules, there are times when trustees catch mistakes or intentional abuse, which results in a case being dismissed, the denial of debt relief or the filing of criminal charges.  With the exception of a filer intentionally committing fraud, the chances of one engaging in fraudulent conduct are low.  The guidance and advice of a bankruptcy attorney will ensure the filing of a clean, strong case where there would be less of a chance for mistakes which could be interpreted as fraudulent conduct. If you are considering filing for bankruptcy in Redwood Falls, MN, or the surrounding area, Behm Law Group Ltd. can help you understand what can be interpreted as fraudulent conduct and how to avoid it in your Chapter 7 or Chapter 13 bankruptcy filing.

 

As an individual filer, you have two primary options for bankruptcy: liquidation or reorganization. Chapter 7 liquidation bankruptcy works to discharge your debts in exchange for the sale of your non-exempt assets. Chapter 13 reorganization works to structure your debts into a manageable repayment plan lasting from a three- to five-year period. There are various nuances in the types of fraud between the two bankruptcy options, but in general, four kinds of fraudulent actions make up the most common causes of case dismissal and possible bases for legal action, including the filing of criminal charges, against you.

 

  • Intentional falsification of forms: Whatever chapter you file for, you will be required to submit a large number of forms, documents, and other paperwork detailing your financial history and current situation. False information or the intentional failure to provide any part of these documents can be considered fraud and result in a case dismissal. If you intentionally falsify information, you may even be charged with perjury, which could result in criminal charges being filed against you.
  • Asset hiding: One common type of bankruptcy fraud in Chapter 7 cases is asset hiding. Because some filers can lose assets in liquidation during a Chapter 7 case, they can be tempted to hide assets. While it’s possible that some filers may get away with this, you will be denied debt relief if the trustee discovers that even a small asset of low value has been hidden.
  • Multiple filings: You will be committing fraud if you file multiple cases with different information or in different jurisdictions either at the same time or within unacceptable periods of time between cases. You must adhere to court-regulated timelines between cases and provide requested information, or your case will be dismissed.
  • Bribes: Bribery of bankruptcy trustees is rare but it has happened.  The few who have at first gotten away with it are often caught later. Any bribery on your behalf will result in a dismissal of your case. Depending on the circumstances, there may be even more severe consequences for having offered someone a bribe.

 

If your case is dismissed for any reason, you may have to wait up to 180 days until you can file again. The easiest and most assured way to avoid any case dismissal or other issues with your case’s success is to work with a skilled and knowledgeable bankruptcy attorney.

 

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

Posted on

What Current Big Businesses Bankruptcies Mean for Individuals Already Seeking Debt Relief

The continued COVID-19 crisis is still showing the impact it’s having on the global economy. More and more large companies, local businesses, and nonprofit organizations will struggle to make ends meet, and those that cannot may find debt relief in bankruptcy. With the cases of Neiman Marcus and J.Crew, we’re seeing the first of many large business bankruptcies that are an almost direct result of the coronavirus pandemic and shelter-in-place orders.

 

There are many signals that big business bankruptcies send to individual consumers, including the fact that we’re entering a recession. An economic recession often includes increases in individual debts. If you’re struggling with worsening financial circumstances, Behm Law Group, Ltd. can help you join others who are finding debt relief in Mankato, MN through bankruptcy.

 

While big business bankruptcies might not affect you directly, they’re a signal of a changing economy. This often means that you may be impacted in other ways. If you haven’t already seen harder financial times due to the pandemic and national crisis shut down, these big business bankruptcies might be a sign of worse times to come:

 

  • Art Van Furniture filed for reorganization bankruptcy on March 8th. In April, that reorganization was converted to a liquidation case which will require the closure of Art Van as a whole.
  • Bar Louie shuttered almost half of its locations in January after struggling with early COVID-19 shutdowns.
  • CMX Cinemas filed to reorganize its debts on April 25th, shutting down all 41 locations in the meantime.
  • Frontier Communications filed a $10 billion debt reorganization plan on April 14th. It’s one of the largest telecom companies in America.
  • J.Crew filed on May 4th for a reorganization plan of $1.7 billion in debt. 181 J.Crew stores, 140 J.Crew-owned Madewell brand stores, and 170 factory stores are currently closed but will open after COVID-19 restrictions are lifted.
  • Pier 1 filed reorganization bankruptcy on February 17th with almost 1,000 stores. The company’s stock has declined steadily since 2013.
  • Rubie’s Costume Company is the largest costume supplier in the world. The company filed for bankruptcy on April 30th.

 

Other large oil companies and retailers have also begun the process to file for reorganization or liquidation bankruptcy. The big takeaway from these large business bankruptcies for individual consumers is a wide view of how the economy is changing as a result of the coronavirus pandemic.

 

Individuals with growing debts should know that they’re not alone. If you’re considering filing bankruptcy for debt relief in Mankato, MN, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

Posted on

Understanding the Means Test Eligibility for Chapter 7 Bankruptcy

In times of financial difficulty there are many options for individual consumers to find relief from the hardship of debt. One of the most effective methods of debt relief is the process of bankruptcy. Filing for bankruptcy provides a government organized relief system that offers long-term results. The most common types of debt, such as credit card debt, medical debt and mortgages, can be treated and discharged in bankruptcy. If you’re considering filing for bankruptcy relief, Behm Law Group, Ltd. can provide guidance and protection in Chapter 13 and Chapter 7 bankruptcy in St. Peter, MN.

Both Chapter 13 and Chapter 7 bankruptcy offer debt relief in different formats. With Chapter 13, your debts will be worked into a repayment plan lasting three to five years where the terms of payment can be much more lenient and beneficial. In Chapter 7 bankruptcy, your debts will be discharged in exchange for the collection and sale of any non-exempt assets by the chapter 7 bankruptcy trustee. However, the vast majority of chapter 7 cases are “no asset” cases where there are no non-exempt assets that are collected and sold by the chapter 7 trustee and where the only things that are lost are filers’ debts. This means Chapter 7 is ideal for most filers’ situations, but without proper vetting, some might be able to abuse this type of bankruptcy. To prevent bankruptcy abuse, the court applies a method for the examination of the financial conditions of filers called the Means Test.

The Means Test works in two steps to determine if your income-to-debt ratio merits eligibility for Chapter 7 bankruptcy. Put simply, if your disposable income is equal to or lower than the state median disposable income of a similar sized household, you qualify for Chapter 7 bankruptcy relief.

• The Means Test calculates your current household disposable income. If your initial income, without taking debts into account, is lower than the state median disposable income, you qualify for Chapter 7 and can continue to file.

• If the Means Test calculates that your disposable income is higher than the state median disposable income, other steps must be performed in the examination of your financial situation. To complete this calculation, you must complete a significantly broader range of paperwork. This paperwork determines your disposable income after all reasonable and necessary living expenses are accounted for. The types and allowed amounts of these expenses (such as food, gas, and other necessities) are set forth in the bankruptcy code itself and are used to determine your disposable income. If your disposable income is equal to or higher than the median disposable income for a household of similar size, you would not be eligible for Chapter 7 bankruptcy.

If you can’t qualify for Chapter 7 bankruptcy relief after going through the Means Test, you still will most likely be eligible for Chapter 13 bankruptcy relief. If your disposable income is determined to be higher than the state median disposable income for a similar sized household, your Chapter 13 repayment plan will be scheduled for a five-year period. If your disposable income is lower than the state median disposable income as determined by the Means Test and you still choose to file for Chapter 13 bankruptcy relief, your repayment plan will be set for a three-year period.

To learn more about how the Means Test will decide the course of your Chapter 13 or Chapter 7 bankruptcy in St. Peter, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today or stephen@mankatobankruptcy.com.

Posted on

Increased Rates of Small Business Bankruptcy in Coming Months

The effects of the coronavirus pandemic on the global economy have been rapidly and frighteningly apparent. With stay-at-home orders and nonessential operation shutdowns now in place, many businesses have experienced layoffs, requested extensions on payments, and filed for government aid. Despite the large-scale federal stimulus package distributed after the CARES (Coronavirus Aid, Relief, and Economic Security) Act, hundreds of businesses of all shapes and sizes are still struggling. In the coming months, many companies will find themselves in dire financial conditions with no sign of improvement through an economic upturn. If you own a small business and are struggling even with the help of federal and state stimulus loans, filing for bankruptcy can help. With the advice and protection of Behm Law Group Ltd., you can file for small business bankruptcy in Jackson, MN, and receive relief from past and present debts.

 

Though the impact on the economy will affect everyone, the projection of a sharp increase in small business bankruptcies in the next year will disproportionately change the financial standings for a few industries.

 

Restaurants: The shutdown of nonessential businesses has had a severe impact on the food industry and restaurants in particular. The majority of all restaurants have shut down completely, while a few others are getting by via curbside and delivery services. Family-owned restaurants are having an especially difficult time, and hundreds will file for bankruptcy relief before the pandemic ends.

 

Luxury Stores: Boutiques, gift shops, and other luxury retailers are also having a hard time getting through the recession caused by the pandemic. Consumers dramatically limit spending on luxury goods when budgets get tight. That decrease in spending may last a long time, as past recessions have shown us, and for luxury retail business owners, bankruptcy may be the only way to survive.

 

Independent Oil Operations: Large oil and fossil fuel processors may have a good chance of getting through this time of extreme travel bans, but smaller independent companies may not survive. Oil costs are the lowest they’ve been in the last 10 years and demand continues to decrease. For owners of smaller oil processors, filing for bankruptcy may be the best way to protect themselves and their creditors.

 

Small Airlines: Despite multiple sources of federal support, small airports and airlines may have a hard time getting through the recession caused by the pandemic. With unsaturated airways and restrictions on air travel, most independent or privatized local airline companies have shut down completely. Increases in travel won’t pick up for some time, and it will be an uphill battle to return to pre-pandemic operations.

 

If you own a small business and are struggling to make ends meet during the coronavirus pandemic and its resulting recession, bankruptcy might be the right choice for you. To learn more about filing for bankruptcy in Jackson, MN, contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com.

Posted on

Working through COVID-19-Related Delays, Cancellations, and Court Closings with a Bankruptcy Attorney

During this time of a global health crisis, everyone is dealing with shutdowns of nonessential businesses, government organizations, and nonprofit services. Unfortunately, the COVID-19 pandemic has also effectively forced the shutdown of most court operations in Minnesota. So, for example, if you are working through a civil case, contesting tickets and other civil infractions, or filing for bankruptcy, you will most likely have to adapt to some new court stipulations until the spread of the virus and infection rates decrease enough to merit the reopening of courts for normal operations. For those working through dire financial times that require filing for bankruptcy relief, the shutdown of businesses and loss of primary income can put them in an even more difficult financial footing. If you are struggling with a COVID-19-related case issue or are looking to file for bankruptcy, you can benefit from the guidance and advice of a Behm Law Group Ltd. expert bankruptcy attorney in New Ulm, MN.

Although the majority of shutdown statuses for nonessential operations are a day-to-day condition that may be extended or shortened with little notice, some rules currently outline the bankruptcy court and other legal processes.

Court Timeline from March to April

1. On March 13, the President declared a national emergency.
2. On March 27, the President signed the CARES (Coronavirus Aid, Relief, and Economic Security) Act into law.
3. On March 29, the U.S. Court District of Minnesota declared the CARES Act will affect court actions generally in the coming future.
4. From March 30 to April 10, general orders No. 5 through No. 8 adjusted and outlined various ways COVID-19 will affect and change the court operations, including delays, cancellations, rescheduling, remote hearings, and closings.
5. On April 15, the court released general order No. 9, which delayed the majority of civil hearings, including bankruptcy court hearings, until after May 17.

While the court is officially “closed” for in-person bankruptcy hearings until after May 17, you do not need to wait until then to file for bankruptcy relief and any presently pending bankruptcy cases can be continued. In fact, you can file a petition with relative ease electronically through the court website. Additionally, you can work with a bankruptcy attorney via phone and remote communications to build a case that may be stronger and easier to file than an electronic non-bankruptcy case.

The issues you will most likely run into if you cannot wait to file for bankruptcy relief until the national emergency is lifted are any requirements that involve in-person contact with an attorney and the bankruptcy trustee. These requirements may include completing the credit counseling course, attending the meeting of the creditors, and any meetings with your attorney or trustee. To handle these potential issues, the majority of attorneys, creditors, trustees, and court representatives are offering remote meeting services through online conferencing programs.

If you are struggling with the financial hardships of the current pandemic, filing for bankruptcy is still an option even though the physical court is closed. To learn more about filing and working with a bankruptcy attorney in New Ulm, MN, during this time, contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com.

Posted on

Debt Assistance in a Major Recession

Despite the $2.2 trillion stimulus package of the CARES (Coronavirus Aid, Relief, and Economic Security) Act in March 2020, the impacts the novel coronavirus is having on the local, national, and global economies will most likely continue, potentially causing a recession that may result in the same severities as the 2008 Great Recession. In fact, some studies show the economic downtown due to COVID-19 may become a full-blown depression. Despite the dire financial reports and record rise in unemployment rates, individuals and their communities can implement many methods to weather difficult financial times, no matter how widespread the fallout. If you’re already experiencing the effects of the current economic downturn, consider the many options for debt assistance in Owatonna, MN, and the surrounding area, including filing for bankruptcy. With the help of Behm Law Group Ltd., you can use the bankruptcy process for long-term, effective debt relief during this time of crisis.

 

The projected recession will affect millions of U.S. citizens and businesses for an unforeseeable amount of time. Because of this uncertainty, many people will have difficulties meeting debt payments on time and they may accumulate delinquencies. Some options always available, such as debt settlement, loan consolidation, and debt workout, require direct communication with creditors or include the involvement of third-party agencies. In addition, the CARES Act provides several other options for debt assistance, including loan extensions, and payments deferments and modifications. Likewise, some private lenders are providing assistance programs and case-by-case work outs of debt.

 

While all of these non-bankruptcy debt assistance options vary in effectiveness, presuming you find a trustworthy third-party who will work with you in good faith instead of one of the many bad actors who simply want to make money off of you and cut and run, as the months wear on, you may need to do more for sustained and permanent debt relief in the long term. For many people, this will be the filing of a bankruptcy petition.

 

Bankruptcy is one of the longest used debt assistance options during times of recession and depression in the United States. In the 2008 recession, over 4 million non-business bankruptcy cases resolved individual debts in the time it took to turn the economy around (between 2008-2010). The history of bankruptcy successes during times of economic recession is a sign of hope for the future.

 

Bankruptcy is an effective tool whether you file to resolve a large portion of credit card debt and medical bills as a direct result of the COVID-19 crisis, or if you need to restructure your mortgage and other secured debts into a manageable repayment plan. During this current health and financial crisis, the majority of debt increases will be medical bills and credit card debts, both of which are dischargeable in bankruptcy. Other common debts taken on in a recession, such as tax debts and car loans, can also be resolved with the bankruptcy process and payment terms that are more favorable to you can be established.

 

To learn more about using bankruptcy as a form of debt assistance in Owatonna, MN,

during a recession, contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com today.

Posted on

How the 2020 CARES Act Affects Individual Consumer Bankruptcy

In March of 2020, the impact of the COVID-19 pandemic forced stay-at-home orders in most states, temporary closures of many businesses, and financial turmoil for many U.S. citizens. Unemployment rates soared over 4% nationally in March, and many more will continue to need government unemployment support until they can return to work.

If you’re one of the 22 million+ individuals who filed for unemployment due to the effects of the novel coronavirus crisis, you may still be struggling to meet debt payments even if your unemployment application was accepted. Fortunately, the 2020 CARES Act (Coronavirus Aid, Relief, and Economic Security Act) offers many forms of support, including several impacts on bankruptcy as a form of debt relief. If you’re filing for bankruptcy in Worthington, MN, Behm Law Group, Ltd. can provide guidance and protection during this difficult time.

When it comes to direct impacts on the bankruptcy code, the CARES Act has several effects that are currently in place:

• Monthly Income: In order to determine eligibility and the various economic circumstances of a bankruptcy filer, the court needs information about a filer’s current monthly income. However, many filers have an altered income during this time of national crisis due to the support of the CARES $2.2 trillion stimulus package. Most citizens will receive a stimulus check up to $1,200 in addition to other state and federal payouts. These government financial aid payments are NOT included in your monthly income and will not prevent you from qualifying for bankruptcy based on that income.

• Disposable Income: In addition to eliminating government payments related to COVID-19 and the CARES package, these amounts will not be included as disposable income in your bankruptcy case. This means those filing for, or currently in, a Chapter 13 repayment plan will not have to dedicate stimulus checks or other CARES payments to repaying creditors.

• Chapter 13 Modifications: For those who are already working through Chapter 13 repayment plans, there are some options for plan modifications based on changes to their financial circumstances caused by the COVID-19 pandemic. For both direct and indirect impacts of the COVID-19 crisis, Chapter 13 filers can request plan extensions up to seven years as well as other various plan modifications.

• Creditor Claims: In a typical bankruptcy case, creditors will file a claim on the debt owed to them and on any property involved regarding that loan. While the CARES Act doesn’t modify creditor claims in a new petition or a current bankruptcy case, it does allow filers to request payment deferments and cure defaults on liens. These conflicts will likely be resolved on a case-by-case basis during this time.

If you’re considering filing for bankruptcy in Worthington, MN and want to know more about how the CARES Act may affect that process, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

Posted on

Comparing Debt Management Options

Despite many best efforts from national and local governments, banks, and other financial support providers, the global economy is struggling in the current recession caused by COVID-19. If you’re seeing the effects of this recession, you are not alone. Unemployment funds provide some support, but for many, that income doesn’t fill every budget need. Those who are finding it difficult to meet monthly debt payments have several options available to them. With the help of Behm Law Group Ltd., you can learn how bankruptcy and other options of debt management in Mankato, MN, are valuable tools you can use to your advantage during times of financial stress.

 

While filing for bankruptcy may be one of the most legally dramatic options available to you in comparison with many other methods of debt management, it may also be the most effective because it is permanent and binding. Bankruptcy helps thousands of U.S. citizens and businesses recover from moderate to severe debt each year. If you file for bankruptcy, you will either have:

 

  • Your debts discharged in exchange for the liquidation of non-exempt assets, or
  • Your debts reorganized into a three to five-year repayment plan suited to your income and providing more favorable payment terms.

 

Both of these bankruptcy options are effective in their own ways, depending on the situation of the filer. If you aren’t ready to file for bankruptcy, or if it doesn’t make sense for your debts, there are other ways you can manage your debts and find relief. Some common methods include:

 

Loan modifications

Unlike many other ways of working out debts with your lender, loan modifications are a permanent change to debt terms. If you are able to work out a loan modification with your creditor, there will be one or more requirements altered in your payment plan. Your creditor may allow an interest rate reduction or convert a variable rate to a fixed rate. A creditor might also forbear a portion of the principal amount. This means that amount will be set aside before the monthly payment rate is calculated, which lowers the per-payment rate, but does not reduce the loan total.

Non-bankruptcy repayment plans

If you have been unable to make a debt payment for some time, you may be able to work out a repayment plan with your lender for the delinquent amount you owe. This repayment plan will likely spread the amount you owe from past payments evenly over future payments. Typical repayment plans only span three to six months, however.  Lenders very rarely extend payment plans beyond three to six months.

Forbearance agreements

Forbearance agreements are similar to both loan modifications and repayment plans, but they typically occur before you are delinquent on a loan. You can request a reduction or pause on payments for a short time and work out a way to repay the amount you owe from that time.

 

All these options of debt management in Mankato, MN, are short-term. If the recession continues, and you still cannot meet debt payments, bankruptcy is always an available and permanent option. To learn more about bankruptcy, contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com.