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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.

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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.

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Potential Risks of Bankruptcy When Using a Software Program

Many people use online tax software programs to file their taxes each year. These software programs are suitable in a pinch for a wide majority of people with standard sources of income, single-home families, spouses joint filing, and many others. However, these programs may not be effective when used to calculate tax returns for self-employed individuals or filers with complicated incomes.

 

Just as these tax programs aren’t perfect for everyone, online bankruptcy filing software programs can be a risky option if you plan to file without the help of a bankruptcy attorney. Improper filing can add to the risks of a bankruptcy and make a serious situation much worse, including the permanent/irreversible loss of your property. When you employ the expert services of Behm Law Group, Ltd. instead of using an online bankruptcy software filing program in Fairmont, MN, you can avoid these potentially disastrous risks.

 

Bankruptcy software programs are offered through some online providers, ranging in cost. These programs can be very dangerous for those with simple financial circumstances filing for Chapter 7 and especially for those filing for Chapter 13 or have more complicated circumstances.

 

The two most common misconceptions about bankruptcy filing software are that it’s cheaper, and that the program will be easier and will do most of the work for the filer.

 

While bankruptcy software may be less expensive upfront than hiring an attorney, that doesn’t mean it will save you money. In fact, filers using online bankruptcy filing software may lose a significant amount of money in the form of some debts not being discharged and property being lost. For many filers, typical bankruptcy software might not be able to predict all the debts that can be discharged in a Chapter 7. Debts like medical bills, credit debt, or some tax debts might be exempted from the discharge process, and you’ll still be obligated to pay them.

 

It’s a huge misunderstanding to believe that even the best bankruptcy filing software will do the lion’s share of work or will be easier than working with an experienced legal representative. Bankruptcy software programs still require you to complete all the necessary petition paperwork, generate a repayment plan proposal if you’re filing Chapter 13, enter proof of completion of both pre-bankruptcy and post-petition requirements, and overall organize and enter all the information needed to complete a case. A bankruptcy program will simply run calculations and give that information to the bankruptcy court.

 

In a nutshell, online bankruptcy software programs are poor middlemen between the filer and the bankruptcy court. They can’t offer anything close to the in-depth, reliable support system and skilled professionalism of a trained bankruptcy attorney. In addition, bankruptcy software programs may miscalculate your dischargeable debts, cause the loss of property you could otherwise exempt and keep, and may even cause your case to be dismissed due to inaccurate calculations or lack of information.

 

To learn more about filing with an attorney and the potential risks of online bankruptcy programs compared to the benefits of having an experienced bankruptcy attorney in Fairmont, MN, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

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Getting Through a Recession as a Small Business Owner with Debt Relief

There is no denying the impact the COVID-19 outbreak is having on the worldwide economy. As we all reel around a difficult financial time in this recession, many small business owners are asking how they can work through the devastating effects on the economy and come out on the other side as a still functioning operation. Many businesses may have even gone through the 2008 recession and found that there are some tricks to staying solvent. One option that’s always available to sole proprietorships and partnerships is debt relief through Chapter 13 bankruptcy. If you are struggling to meet debt payments in Pipestone, MN, during this time, Behm Law Group Ltd. can help you work through a Chapter 13 reorganization case to receive long-term debt relief that will likely support you to the end of this recession.

Even though we are at the beginning of what will likely be a long recession, it’s not too early to think about your options for debt relief, especially if you already have a difficult time meeting monthly financial requirements. While there are ways to protect your income and business operations during this time—protecting cash flow, limiting purchases, restricting your budget, and formatting marketing plans around the crisis—these actions are sometimes not enough. Many industries will be significantly impacted by the effects of the COVID-19 shutdowns, and amid such long-term desperation, filing for bankruptcy can be a rational, intelligent choice.

Chapter 13 bankruptcy can be filed if you or you and your business partner are personally responsible for business debts. This is often the case with small businesses because the cost of becoming incorporated typically outweighs the protection it provides. When you file for Chapter 13, your business debts and personal debts will be included together in a repayment plan lasting three to five years. This repayment plan will be overseen by a chapter 13 trustee and organized to fit your current financial situation.

If you are personally liable for your business debts, the only way you can keep that business running through a bankruptcy is to file Chapter 13. This process requires you to repay your priority and secured debts under adjusted terms that are more favorable to you.  Also, your unsecured debts will generally not receive any interest and will typically only be paid a percentage of what you owed when your case was filed. While some might consider filing for bankruptcy to be a dramatic decision, the fact is that Chapter 13 bankruptcy helped thousands of small businesses weather the 2008 recession and emerge with their businesses still intact. Thanks to the help of Chapter 13 repayment plans, small businesses can work through this difficult time just as successfully as in the 2008 recession.

You don’t have to be one of the many small businesses that will sadly have to close doors within the next few years due to the financial stress of the coronavirus. Resolve your debts with Behm Law Group Ltd. today. Contact us at (507) 387-7200 or stephen@mankatobankruptcy.com for more information about Chapter 13 debt relief in Pipestone, MN.

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Finding Business Debt Relief in the Aftermath of the COVID-19 Outbreak

Bankruptcy is not for everyone and anyone who practices bankruptcy law responsibly and ethically will not try to “sell” someone on the process.  It is appropriately viewed as a last resort.  It is not something to be afraid of but it needs to be approached with a degree of healthy respect.  There is, however, no denying the significant impact the COVID-19 outbreak is having on global, national, and local economies. With the dramatic rise and fall in demand of various goods and services, the temporary closure of many operations, travel bans, trade constriction, and the detriment of the virus itself, the economy may be looking at numbers even worse than the housing crisis of 2008.

Many economic experts projected from the beginning of March that businesses of all shapes and sizes would be impacted by the damages wrought during the COVID-19 outbreak. If you are a local business, you may not be alone if you’re considering filing bankruptcy to find debt relief. With the help of Behm Law Group, Ltd., you can find protection and long-term debt relief in Waseca, MN through Chapter 7 or Chapter 13 bankruptcy.

Whether you file for Chapter 7 or Chapter 13 will depend on several things. First, only sole proprietors or partnership companies in which the owners are personally responsible for business debt may file for Chapter 13 reorganization bankruptcy. The process of Chapter 13 bankruptcy restructures business and personal debts together into a manageable repayment plan lasting a three- to five-year period depending on your debt and income. If you qualify for Chapter 13, you can maintain business operations and slowly repay your debts on terms that are more favorable to you.

If you don’t qualify for Chapter 13 or if you can accept that your business may have to be closed down, you have the option to file for Chapter 7 bankruptcy.  This process will liquidate your non-exempt assets in exchange for the discharge of debts. While you might not be able to keep your business running, you will likely be able to protect and retain things like your home and car and other necessary assets from liquidation.  In chapter 7 bankruptcy, the exemptions allowing you to protect and retain assets are quite generous.  In the vast majority of cases, people are able to keep all of their assets and the only things that they lose are their debts.

A comprehensive outlining of what is happening to the economy throughout the COVID-19 outbreak was done by the Center for Strategic & International Studies (CSIS). This informational article describes the impact COVID-19 has had through the very beginnings of the global outbreak on the economy including the drop in exports out of China, the fall of tourism, the demand for sanitary products, and much more. If you’re seeing an impact on your business operations due to the coronavirus and trickle-down global effects, you’re walking a fine line with practically every other business in the world. Relief from that impact can be found in bankruptcy.

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

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Chapter 12 Bankruptcy for Farmers Affected by COVID-19 Shutdowns

As we continue to move through the devastation of the novel coronavirus outbreak, more and more public gatherings and store fronts are closing down operations. While there are many business owners severely affected by this outbreak, farmers and fishers might be looking at even more long-term negative effects than any type of retail operations.

The COVID-19 outbreak has led to countless farmers’ markets, outdoor year-round markets, local groceries, and many other food sale outlets to be shut down. These closings are creating a serious deficit in family-owned farmer and fisher incomes. If you are struggling with these shutdowns as a family farmer or fisher, Behm Law Group Ltd. can help you find debt relief through Chapter 12 bankruptcy in Windom, MN.

Chapter 12 bankruptcy is a chapter of the bankruptcy code that is specifically designed for family-owned farming and fishing operations that are struggling to make debt payments from month to month. If at least 50% of your annual income is sourced from your farming/fishing operation, you can qualify for Chapter 12 bankruptcy relief.

As a reorganization type bankruptcy, Chapter 12 works to structure your debts into a manageable repayment plan that is suited to your income and through which the debts in your farming or fishing operations can be paid back under terms that are much more favorable to you than the loan terms you may have now. While maintaining fair treatment to your creditors, you can repay your debts under the supervision of a trustee with pre-determined monthly payments during a three- to five-year period.

With prices of farm goods already tipping many farmers and fishers to the point of dipping into their savings, the new blow that COVID-19 outbreaks have had on the global economy and the shutdown of many public markets puts local agriculturalists in a precarious position. Without a clear idea of how commerce will continue to move forward into the growing season, many farmers are unsure of how to plan for the coming months. If coronavirus shutdowns and bans against public gatherings continue in some areas, farmers and fishers may have to file for Chapter 12 bankruptcy relief or find other sources of income.

The additional uncertainty farmers have with the upcoming presidential election only adds more pressure to an already stressful situation. If you are a local farmer or fisher, and you find that your debts are piling up with no clear idea of how they will be resolved, you can turn to the relief provided in a Chapter 12 bankruptcy. Those filing for Chapter 12 are not alone, and many other farmers or fishers have found long-term debt relief through the process. Chapter 12 bankruptcy can provide the long-term relief that farmers and fishers need to constructively address overwhelming debt and stabilize their businesses.

If you are considering filing for Chapter 12 bankruptcy in Windom, MN, we can help. Contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com for more information.

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Chapter 12 Bankruptcy for Farmers Affected by COVID-19 Shutdowns

As we continue to move through the devastation of the novel coronavirus outbreak, more and more public gatherings and store fronts are closing down operations. While there are many business owners severely affected by this outbreak, farmers and fishers might be looking at even more long-term negative effects than any type of retail operations.

 

The COVID-19 outbreak has led to countless farmers’ markets, outdoor year-round markets, local groceries, and many other food sale outlets to be shut down. These closings are creating a serious deficit in family-owned farmer and fisher incomes. If you are struggling with these shutdowns as a family farmer or fisher, Behm Law Group Ltd. can help you find debt relief through Chapter 12 bankruptcy in Windom, MN.

 

Chapter 12 bankruptcy is a chapter of the bankruptcy code that is specifically designed for family-owned farming and fishing operations that are struggling to make debt payments from month to month. If at least 50% of your annual income is sourced from your farming/fishing operation, you can qualify for Chapter 12 bankruptcy relief.

 

As a reorganization type bankruptcy, Chapter 12 works to structure your debts into a manageable repayment plan that is suited to your income and through which the debts in your farming or fishing operations can be paid back under terms that are much more favorable to you than the loan terms you may have now. While maintaining fair treatment to your creditors, you can repay your debts under the supervision of a trustee with pre-determined monthly payments during a three- to five-year period.

 

With prices of farm goods already tipping many farmers and fishers to the point of dipping into their savings, the new blow that COVID-19 outbreaks have had on the global economy and the shutdown of many public markets puts local agriculturalists in a precarious position. Without a clear idea of how commerce will continue to move forward into the growing season, many farmers are unsure of how to plan for the coming months. If coronavirus shutdowns and bans against public gatherings continue in some areas, farmers and fishers may have to file for Chapter 12 bankruptcy relief or find other sources of income.

 

The additional uncertainty farmers have with the upcoming presidential election only adds more pressure to an already stressful situation. If you are a local farmer or fisher, and you find that your debts are piling up with no clear idea of how they will be resolved, you can turn to the relief provided in a Chapter 12 bankruptcy. Those filing for Chapter 12 are not alone, and many other farmers or fishers have found long-term debt relief through the process. Chapter 12 bankruptcy can provide the long-term relief that farmers and fishers need to constructively address overwhelming debt and stabilize their businesses.

 

If you are considering filing for Chapter 12 bankruptcy in Windom, MN, we can help. Contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com for more information.

 

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Understanding Why Some Tax Debts Are Excluded from Discharge in Bankruptcy

After tax season has come and gone, people with lingering tax debts may be wondering how to cope with repayment or they are searching for a source of relief from that debt. If you’re looking for relief from other debts on top of tax debts, you may be able to find positive, long-term relief through Chapter 7 bankruptcy. In many cases, income tax debts can be discharged if they are at least three years old and those tax debts have been assessed as being due and payable for at least two years. However, some types of tax debt cannot be discharged through the bankruptcy process. Depending on your tax debts, you may or may not be able to have them discharged in a Chapter 7 bankruptcy. With the help of Behm Law Group Ltd., you can determine if filing for chapter 7 bankruptcy in Mankato, MN, is right for you.

 

Chapter 7 bankruptcy works to discharge debts in exchange for the sale of non-exempt assets. Non-exempt assets are assets whose values exceed the applicable protective exemption amounts provided by the bankruptcy code.  However, tax debts can be complex and how they are treated in bankruptcy can be nuanced.

 

Generally speaking, the conditions for a tax debt to be discharged in bankruptcy are stringent. First, it must be an income tax type of debt.  Second, the debt must be at least three years old, and you must have filed the return for the tax year giving rise to the tax debt at least two years ago. Also, the tax debt must have been assessed (acknowledged as due and payable) by the taxing authority for at least 240 days before you file bankruptcy, and there must be no evidence that you have engaged in fraud or willful tax evasion. If the income tax debt meets these conditions, it can be considered hardship and proof that you were unable to pay that debt for reasons outside of your control and such tax debt can be discharged in a chapter 7 bankruptcy case.

 

Tax debts that are excluded from the bankruptcy process are typically non-dischargeable for good reason. Most of these debts directly impact another person, organization, business, or other third party.

 

With a few exceptions, the tax debts that will typically survive a chapter 7 bankruptcy case include:

 

  1. Property taxes: These affect your city, state, and federal government in many ways. Because property taxes typically impact a local government, they can have significant influences on housing costs, licensing, and other property requirements if they are left unpaid.  Usually, when a city or county is owed property taxes the city or county will be entitled to assert a secured lien against any subject real estate for the amount of the delinquent property tax debt.    For instance, if you owe $10,000.00 to a city for property taxes, the city will assert a secured lien against your home in the amount of $10,000.00.  Such liens are essentially like other secured liens, such as liens on motor vehicles.  In a chapter 7 bankruptcy proceeding, you could technically be relieved of such property tax debt but you would also have to surrender your house.  For example, presume that you own a house that is worth $100,000.00 and that there is a $90,000.00 secured mortgage on the home.  Presume further, that you are delinquent with property tax debt to the city in the amount of $10,000.00 and that the city has asserted a tax lien for that amount.  If you were to file for chapter 7 bankruptcy relief, both the $90,000.00 mortgage and the $10,000.00 property tax lien would be considered secured debts secured by the value of your home.  In a chapter 7 case, both the mortgage lender and the city would only have recourse/relief for such debts against the value of the house.  You could walk away from personal liability for those debts going forward but you also would have to accept that you would have to surrender or lose the home.
  2. Third-party taxes: These include taxes paid to trust fund parties such as FICA and Medicare. It also includes sales taxes paid to the debtor by customers.
  3. Tax liens: Some tax debts can be secured by a tax lien asserted by the Internal Revenue Service or the Minnesota Department of Revenue.  In this case, the lien filed by the taxing authority essentially becomes secured by pretty much everything you own, including 401(k) plans, IRA’s, checking/savings account deposits, furniture and appliances, etc.
  4. Employment taxes: These includes excise taxes and custom duties, depending on time periods.
  5. Tax return errors: If you were erroneously refunded more than you should have on a tax return, you owe that back as a debt to whatever government entity paid it to you. This can significantly affect local governments if you do not repay it.

 

If you are planning on filing for chapter 7 liquidation bankruptcy in Mankato, MN, and want to know how it will affect your tax debt, contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com.

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How Legal Aid Offices Can Offer Bankruptcy Assistance

If you’re struggling with a heavy debt load or an income that doesn’t make ends meet every month, you aren’t alone. Many individuals like you can find debt relief and can resolve troublesome financial issues for the long term with the help of bankruptcy. The two main chapters of bankruptcy, Chapter 7 and Chapter 13, offer debt relief options in the form of debt discharge in exchange for asset liquidation of non-exempt assets or as a reorganization of debts into a repayment plan. To determine if filing bankruptcy is the right choice for you, and to decide which chapter you should file under, Behm Law Group Ltd. offers expert legal guidance and comprehensive bankruptcy assistance in Redwood Falls, MN.

 

Bankruptcy is a highly complex and nuanced legal process that can be very difficult to navigate without the right knowledge and tools. Because of this, filing for bankruptcy with the support of an attorney is the best possible option for any filer. However, many filers have difficulty finding the money to hire a lawyer and they, sometimes, must find their own way through the filing process. In the scenario of helping to find an attorney who may agree to accept lower attorney’s fees, one of the best resources you can use is your local legal aid office.

 

Legal aid offices provide public, and sometimes free, legal information and support services. You can find a legal aid office/legal clinic near you through the American Legal Services Corporation. Legal aid offices are set up as a nonprofit, being largely donation- and volunteer-based programs. Participating lawyers and other legal professionals, as well as counselors and social workers, establish a system that can provide protection in some ways for those unable to completely afford legal representation, but primarily the organization operates as a resource of legal information.

 

If you plan to file for bankruptcy and you’re having trouble finding the money to hire an experienced bankruptcy attorney, you can turn to a local legal aid office for some direction.  Because bankruptcy can be a highly nuanced and complicated process, most legal aid offices do not have attorneys who handle bankruptcy cases.  However, many private attorneys may be affiliated with a legal aid office.  Attorneys who are affiliated with legal aid offices may agree to accept lower fee amounts for people who seek assistance through the legal aid office.  In order to possibly qualify for lower fees, you may have to undergo a screening process with the legal aid office and with an affiliated bankruptcy attorney.  In order to obtain assistance with the attorney’s fees, you really must, in good faith, not have any other options.  If you receive tax refunds or have a relative who can financially assist you, or have a life insurance policy or a 401(k) plan that you can borrow against, you typically will not qualify for lower bankruptcy attorneys’ fees through the legal aid office.  Generally, all of the basic information you’ll need to file a bankruptcy case can be available through the legal aid office, including information about:

 

  1. Pre-bankruptcy requirements
  2. Documents included in your petition
  3. How to find and fill out all the necessary paperwork
  4. How to pay and/or waive bankruptcy fees
  5. What debts you can have discharged or reorganized
  6. What assets you can protect from liquidation
  7. Post-petition requirements
  8. Overall court process

 

Certain more unusual or complex information may also be available, but you may find it difficult to know what to ask for that will be relevant to your specific situation.

 

If you are able to afford legal representation, it is generally recommended that you do so. Legal aid offices cannot always give information that will be helpful in the face of changes in your case. Each bankruptcy case is unique, and certain circumstances may cause unforeseen difficulties after you file a petition. Additionally, legal aid offices cannot protect you from creditor judgments or other obstacles that may arise throughout your case, whereas such assistance is available with the help of an experienced bankruptcy attorney.

 

To learn more about legal aid offices and bankruptcy assistance in Redwood Falls, MN, contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com.

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Part 3: Costs of Filing for and Hiring Bankruptcy Assistance

In the previous Parts 1 and 2 of this blog, we covered what bankruptcy fees you will be required to pay if you file, and what an attorney may cost as well as why it costs this much. In Part 3, the final section, we cover ways for you to pay those costs and what you can do if you are truly unable to pay certain required costs. If you are considering filing for bankruptcy, you need to understand the fees you’ll have to cover and what the full cost of a bankruptcy case of any chapter may be. Behm Law Group Ltd. provides expert bankruptcy assistance in New Ulm, MN, and the surrounding area.

 

While there are many costs involved in the bankruptcy process, and we understand that attorney fees can seem daunting, there are many ways of covering those costs.

 

How to Pay

If you can, you’re certainly able to pay bankruptcy fees and attorney costs with one lump sum. However, some people are not able to pay the fees and costs in full and all at once. This makes perfect sense since they are in dire financial circumstances that are requiring them to file for bankruptcy debt relief in the first place. For those who cannot afford the fees and attorney costs up front, there are other ways to pay.

 

  1. Payment plan: If you are filing for Chapter 7 bankruptcy, you can generally set up a payment plan for the attorney’s fees and court costs. An installment plan can be established as long as your fees are paid in full before your petition is filed and in a minimum of four installments.  Any bankruptcy attorney who is decent and worth hiring will not agree to file your bankruptcy case and then agree to accept monthly payments from you.  Such an arrangement is highly irresponsible and unethical because the same attorney helping you through your bankruptcy would become one of your creditors.  Also, any credible attorney worth hiring would not expect you to ask a friend or relative to sign a personal guarantee for the payment of your attorney’s fees and costs.  Such an arrangement is also highly unethical and extremely inappropriate because it allows the attorney to legally pursue the friend or relative if you fail to pay.  Such an arrangement essentially allows the friend or relative to be drawn into your financial vortex of misery and that is simply not right.
  2. Waivers: For the bankruptcy court filing fee, you can request a waiver of the requirement to pay it. To qualify for a waiver, your income must be 150% under the federal poverty line and you must not be able to pay the court filing fee in an installment plan.  However, bankruptcy courts are generally extremely reluctant to grant such waivers because the bankruptcy court filing fees help fund the entire bankruptcy system from bankruptcy judges to bankruptcy court law clerks to bankruptcy court staff and more.
  3. Pro bono: Attorney costs can be high for those who are unable to meet the basic bankruptcy fees, but there are some lawyers who occasionally set aside time in their schedules to offer legal aid for free to those who truly cannot pay the attorney’s fees and costs themselves or are unable to rely upon other resources such as friends and relatives.
  4. Legal aid: Government legal aid is offered nationally for individuals who cannot afford an attorney. While these legal aid offices provide guidance and important information, not all of them will offer bankruptcy filing assistance.
  5. Friends and family: When all else fails, most filers can turn to their loved ones for financial support. Keep in mind that family debts must be disclosed in your bankruptcy if there is a legal contract or other official documentation or even if there is a non-written expectation that you should pay them back.
  6. Borrowing from a 401(k), IRA or Life Insurance Policy:  Sometimes people can borrow against their retirement plans or cash value life insurance policies to acquire the necessary funds to pay their bankruptcy attorney’s fees and bankruptcy court filing costs.
  7. Employer Provided Legal Insurance Plans:  As part of a benefits package for their employees, some employers offer legal insurance plans such as ARAG Legal Insurance.  Typically, legal insurance plans will pay up to $2,000.00 towards bankruptcy attorney’s fees.  However, you must still pay the bankruptcy court filing fee of $335.00 for a chapter 7 case or $310.00 for a chapter 13 case.

 

Some filers also sell some of their possessions that will be exempt from the bankruptcy process, such as electronics, antiques, furniture, jewelry, and so on in order to pay for their attorney’s fees and bankruptcy court filing costs.

 

Filing for bankruptcy should be the opposite of a financially crippling experience. Because of that, there are many ways to pay the required fees and to get legal aid. To learn more about receiving bankruptcy assistance in New Ulm, MN, contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com.