Author: mlt

Dealing with debts you can’t consistently pay off each month can be one of the most stressful situations for individuals and households to face. Whether you’ve accrued debt from your mortgage, car loan, and credit cards, or had unexpected medical expenses, job losses, and other circumstances, those financial obligations can seriously compromise your quality of life. There are ways to deal with debts outside of routine repayment, including debt relief programs, consolidation, and other types of settlement. These options might be workable for very few people in certain situations.  More often than not, however, they are very risky, slow, costly, and ineffective and will only postpone an eventual bankruptcy filing.  In fact, filing for individual consumer bankruptcy may be the most direct and reliable and permanent way to resolve debts through a government-sanctioned process. Additionally, if you are facing creditors who are threatening actions like foreclosing on your home or wage garnishment, filing for bankruptcy can quickly put a halt to those dangers. Behm Law Group, Ltd. can help you determine if filing for Chapter 7 bankruptcy in Mankato, MN and the local region is the right choice for your financial circumstances. Our attorneys will support and guide you every step of the way to find permanent debt relief through the filing of a bankruptcy case.

Chapter 7 Bankrupcty

If you are behind on debt payments, utility bills, and even medical expenses, creditors can garnish your wages by filing a lawsuit and getting a money judgment in court. Some creditors, like those to whom you owe student loans, taxes, or child support, can even garnish wages and levy on your bank accounts without court action. Generally, there are limits to how much creditors can garnish. State law regulates garnishment activities for judgment creditors, student loan collectors, tax authorities, and child support collectors.

Chapter 7 Bankruptcy helps with Debts

Through Chapter 7 bankruptcy, debts like credit card bills, medical debts, mortgages, car loans, personal loans and many other debts can all be permanently discharged. Filing for bankruptcy will also give you the benefit of the automatic stay. The automatic stay injunctive mandates of 11 U.S.C. §362 prevent your creditors from engaging in collection activities while your bankruptcy case is being processed. This means that you won’t have to continue making debt payments, that the foreclosure proceedings on your house will be stopped, and any wage garnishment activities will cease.

A general exception to the automatic stay is child support collection activity. If your child support creditors are garnishing your wages, they will generally be allowed to continue even after your bankruptcy case is filed when the automatic stay is in effect.  Secured creditors – creditors who have debts that are secured by some of your property (mortgage lenders, vehicle lenders, etc.) — can request the lifting of the automatic stay  if they believe that the property securing their debts will either greatly depreciate in value or be severely damaged during the bankruptcy process.  However, the court will only grant the request after conducting a formal hearing and only if a creditor can show “good cause”.

Summary

Filing for bankruptcy is the quickest and most effective way to stop wage garnishments and other creditor actions, but it might not be the right choice for everyone. To learn more about Chapter 7 bankruptcy in Mankato, MN and whether your overall financial condition will benefit from the process, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

If you’re facing debt you can’t repay, you might have considered some debt resolution options like one on one settlements with your creditors, a relief program, or debt consolidation. These options can be effective in relieving your debts in a few ways but none is as quick, reliable, efficient and permanent as a bankruptcy case. Filing for bankruptcy might seem like a last resort choice, but it’s actually a highly effective process that helps thousands of households find permanent financial stability in the U.S. annually. For individual consumers or spouses filing jointly, there are mainly two kinds of bankruptcy cases that can be used to handle debts. The most common type is Chapter 7 bankruptcy, which discharges your debts in exchange for the liquidation of your non-exempt assets. If your debt-to-income ratio does not pass the requirements set by the bankruptcy Means Test (if your household income is higher than the Minnesota median or average income for a similarly-sized household), you can file a Chapter 13 case instead. Chapter 13 works to reorganize your debts into a manageable repayment plan. Behm Law Group, Ltd. offers legal guidance and protection for anyone working through Chapter 13 bankruptcy in Redwood Falls, MN and the surrounding area.

Chapter 13 Bankruptcy

A Chapter 13 repayment plan lasts three to five years, a period that’s determined by your income. Secured debts like mortgages, car loans, and other debts tied to properties or liens are repaid in full under adjusted and more favorable terms.  Also, priority debts like child support, alimony, criminal fines and penalties and tax debts are fully paid over three to five years with no interest.  Your unsecured debts like credit card debts, medical bills, bounced checks, old utility bills, past due rent and personal loans, will be only partially paid anywhere from 0-50% and, generally, they will not be paid with interest.  The amount that is paid to the unsecured creditors included in your plan will be dictated by your disposable income (income not necessary to cover your reasonable and necessary monthly living expenses), the length of your chapter 13 plan and the best interests of your creditors.

Disposable Income

In any chapter 13 bankruptcy case, you and your bankruptcy lawyer prepare a monthly budget.  The budget will address all your ordinary monthly living expenses, such as food, mortgage payments, vehicle loan payments, children’s tuition expenses, gasoline for your vehicle, vehicle insurance, homeowners’ insurance, home repairs, recreational expenses, charitable contributions and many other expenses.  However, in chapter 13 you are not allowed to utilize/practice the same budgetary habits that you employed before and which may have helped cause your financial problems.  Your claimed monthly living expenses are viewed through and limited by the “reasonable and necessary” test.  In other words, your living expenses must be reasonable and they must be necessary for you and your family to live comfortably without causing undo prejudice to your creditors.  For instance, living expenses such as food, mortgage payments, vehicle loan payments would be reasonable and necessary.  Expenses such as monthly motorcycle payments, payments for boats, snowmobiles, motor homes and other non-essential luxuries would not be reasonable and necessary. Any remaining income after your reasonable and necessary living expenses are paid is considered “disposable,” and you are required to use that income to repay unsecured creditors in your Chapter 13 plan every month. In this way your income determines the amount your unsecured creditors will receive.  If your income changes during your repayment period, you and your attorney may need to make plan adjustments to either increase or decrease your plan payments.

Best Interests of Creditors

The other aspect of your financial circumstances that will determine the overall amount your unsecured creditors receive is “the best interests of the creditors” test.  With every chapter 13 case, the attorney must conduct a “liquidation analysis” of your financial situation.  Essentially, the attorney must look at your case from the perspective of a hypothetical chapter 7 case filing.  The attorney must determine the total value of all your property.  The attorney must determine how much of that property you would be able to protect with the available bankruptcy exemptions.  And, the attorney must figure out how much of your property would be non-exempt or surrendered in a chapter 7 proceeding.  For instance, presume $10,000 worth of property would be non-exempt or surrendered in a hypothetical chapter 7 case.  To satisfy the “best interests of the creditors” test in a chapter 13 case, your unsecured creditors would have to receive at least $10,000 over the three-to five-year chapter 13 plan repayment period.

If this test is not satisfied, a chapter 13 repayment plan can not be approved by the bankruptcy court and the chapter 13 case will be dismissed.

If you’re filing for Chapter 13 bankruptcy in Redwood Falls, MN or the local region, contact Behm Law Group, Ltd. today at (507) 387-7200 or email stephen@mankatobankruptcy.com for more information.

Individual consumer bankruptcy cases can resolve most types of common debt for filers, including credit card debts, medical bills, mortgages, old utility bills, bounced checks, personal loans and car loans, among others. Many people are wary of resorting to bankruptcy because of the negative hit you can take to your credit when you file. The truth is, the damage to your credit can vary from a mild decrease to about a 200-point loss, depending on how high your score is before you file. If you are in the position of needing to file for bankruptcy, it’s likely that the impact on your credit score will be greatly outweighed by the benefits of the permanent discharge of your debts.  You may find that your credit profile is quite resilient.  While a bankruptcy can generally remain on your credit profile for several years, your credit score may return to the upper 600’s or even lower 700’s within twelve to eighteen months.  In addition, you will be a very attractive credit risk to many lenders due to the “Pinocchio Effect”.  Essentially, new potential lenders will see that all or most of your previous debts were discharged in the bankruptcy proceeding.  They may conclude that they no longer must compete with those pre-existing creditors to get paid by you.  To them, like in the Pinocchio story, you will have very few “strings” tying you to previous debts.  Further, they will see that you will not be able to file for bankruptcy relief again for several years.  In short, if you fail to pay them they will have several years to pursue collection remedies against you and there will be nothing that you could do about it. That is why some people file for Chapter 7 bankruptcy.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is the most common kind of individual consumer bankruptcy filed in the U.S. The process of this kind of bankruptcy works to liquidate your non-exempt assets (properties) in exchange for the permanent discharge of your debts. With the guidance and legal support of Behm Law Group, Ltd., you can work through a Chapter 7 bankruptcy in Fairmont, MN and the surrounding area successfully.

Injunctive Mandates

When you file for Chapter 7 bankruptcy, the automatic stay injunctive mandates of 11 U.S.C. §362 are immediately put into place and most of your creditors are prevented from taking further collection actions against you until your bankruptcy case has concluded.  When your case has concluded the automatic stay mandates of 11 U.S.C. §362 become a collective permanent bar, under 11 U.S.C. §524, against most of your creditors from collecting on the debts that you listed in your bankruptcy case.  However, after your case has concluded certain creditors that you may have wanted to keep and certain creditors whose debts were excepted from the chapter 7 discharge will be permitted to interface with you again regarding payment of their claims.

What Debts are Discharged

Debts that would typically not be discharged because they are excepted from the general discharge provisions, as per 11 U.S.C. § 523 (Exceptions to Discharge), include so-called priority debts such as some tax debts, child support debts, debts related to alimony, debts related to criminal fines, debts related to personal injuries you may have caused while intoxicated and other non-priority debts such as student loans.  Therefore, creditors such as the Internal Revenue Service and the State of Minnesota could continue collection actions against you when your case has concluded.  Other creditors who have claims that you wanted to retain and for which you may have executed a reaffirmation agreement, also would be able to contact you regarding the ongoing payment of their claims.  Such creditors would include your mortgage lender, vehicle lender, etc. Creditors whose claims were discharged in the chapter 7 proceeding, however, will be barred from contacting you under 11 U.S.C. § 524.  They will be permanently prevented from taking legal action to collect on the discharged debts.  If they attempted to take legal action against you or pursue other activities to collect the debts, you could sue them and they could be punitively sanctioned quite severely by the bankruptcy court.

Chapter 7 Discharge Violations

There are times when creditors may violate the discharge order and pursue collection activities on the debts that were discharged in your bankruptcy case. Some examples of discharge violations could include:

• A creditor sells your debt to a debt buyer and that debt buyer contacts you to demand payment
• Your credit report still lists the discharged debt as “past due” or “delinquent”
• Some of your property is repossessed
• A creditor that may have either foreclosed on your house or repossessed your vehicle continues to pursue you for any remaining debt following the re-sale of the foreclosed home or repossessed vehicle

Essentially, any creditor action on a discharged debt is a violation of the discharge order. What’s important to understand is which of these actions are illegal violations and which are categorized as a mistake or a lack of knowledge. For example, if a debt buyer is sold your discharged debt but wasn’t notified of the bankruptcy discharge, the bankruptcy court may consider their effort to collect as an innocent mistake due to lack of knowledge.

If you are considering filing for Chapter 7 bankruptcy in Fairmont, MN or the local region, contact Behm Law Group, Ltd. today at (507) 387-7200 or email stephen@mankatobankruptcy.com for more information about the legal effects and benefits of the discharge order and the handling of different ebts.

Every year, the cost of living, retail prices, and many other aspects of our economy and lives change slightly. The same is true for the bankruptcy requirements and the bankruptcy code because the way bankruptcy works from case to case reflects household debts and household incomes. If you are considering filing for bankruptcy, you may qualify for Chapter 7 if you pass the Means Test. Chapter 7 bankruptcy is the most commonly filed individual consumer case, and it provides the most direct relief by completely discharging most debts in a very short period of time. Behm Law Group, Ltd. can help you determine if you’ll qualify for Chapter 7 or if you would benefit more from a Chapter 13 reorganization bankruptcy case. Our attorneys provide legal guidance and protection throughout your case, helping you find long-lasting debt relief in Worthington, MN and the local region.

Debt Relief

The Means Test is a bankruptcy code mathematical formula that determines your debt-to-income ratio. If your debt-to-income ratio is lower than the state average or median for a similarly-sized household, you will qualify for debt relief through Chapter 7 bankruptcy. Because the Means Test deals with debt and income levels, the numbers used for various household sizes change over time.

Since May of 2021, the Means Test numbers for household sizes in Minnesota are as follows:

Size of Household Monthly Income Annual Income
1     $5,214.50              $62,574.00
2    $6,873.58             $82,483.00
3    $8472.42              $101,669.00
4    $10,009.17          $120,110.00
5    $10,759.17           $129,110.00
6    $11,509.17            $138,110.00
7    $12,259.17            $147,110.00
8    $13,009.17           $156,110.00
9    $13,759.17            $165,110.00
10 $14,509.17            $174,110.00

These income amounts are calculated as gross income, so the actual conclusion of the Means Test doesn’t come until after your debts and other expenses are subtracted from these gross income amounts. If you have children, own a home and a car, are married, or have other common life expenses that are shared among many filers, it’s likely you will be more able to qualify and file for Chapter 7 bankruptcy even if your income is on the higher end.

Means Test

Due to lower costs of living and fewer expenses, single filers or households of just two people typically have a harder time passing the Means Test. If you fail the Means Test, you’ll still be able to file a Chapter 13 case. Chapter 13 reorganizes your debts into a manageable three (3) to five (5) year repayment plan that is tailored to your monthly income and your monthly reasonable and necessary living expenses. Your unsecured creditors are only partially paid – usually anywhere from 10% to 30% (depending on the level of your monthly household income) — and your secured debts are usually repaid under more favorable terms than you had before your bankruptcy case was filed.

To learn more about the Means Test and using individual consumer bankruptcy for permanent debt relief in Worthington, MN, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

There are many ways to resolve debts that you would otherwise never be able to repay, but the fastest and permanent way is through bankruptcy. Depending on the type of bankruptcy you file, your case could be processed as quickly as three to four months. In comparison, debt relief programs can take up to two to four years to handle your case, are rarely successful, and, in the few cases that are successful, can greatly increase the costs and the amount of time it takes to repay your debts by up to five years. Individuals can file a Chapter 7 case, which permanently discharges debts in exchange for the  liquidation of non-exempt assets, or a Chapter 13 case, which reorganizes debts into a manageable repayment plan lasting three to five years where you pay only a portion of your debts at no interest, late penalties or fees.  If you’re considering filing for Chapter 13 or Chapter 7 bankruptcy in Owatonna, MN or the surrounding area, Behm Law Group, Ltd. can provide comprehensive legal support and protection throughout your case.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is the most common kind of individual consumer case. However, it does require filers to pass the Means Test in order to qualify. The Means Test measures your debt-to-income ratio. If that ratio is lower than the state median or average income for a similarly sized household, you’ll be eligible for a Chapter 7 case.

Steps in Chapter 7 Filing

There are many steps to a Chapter 7 case, including pre-bankruptcy requirements, paperwork, and the meeting of creditors, but when the necessary, sensible and understandable steps are completed, the bankruptcy court will grant a permanent discharge of most of your debts.

Discharge of Debts

Once the bankruptcy court approves the discharge of your debts, the bankruptcy court will issue a discharge order and a “discharge letter” will be mailed to your creditors and to you, officially and permanently ending your legal responsibility to repay all discharged debts. This order will wipe out all qualifying debts, including credit card, utility, medical, and personal debts. The discharge letter/order is typically sent 60 days after your meeting of creditors.

Exemption Claims

If you have properly asserted exemption claims regarding your property, your case will be fully closed and you will be able to move past your bankruptcy and move forward to a better and brighter future with much less stress.  In the majority of cases, people can assert exemption claims as to all their property items.  In most cases, people do not lose any property.

Trustee Final Report

Your case is closed when the trustee files their final report. This report and the final decree of the court usually closes your case for good.  However, bankruptcy cases can be reopened for various reasons.  For instance, if a creditor you listed in your bankruptcy case is still bothering you for repayment of its debt, you can reopen your bankruptcy case to initiate a lawsuit against that creditor and ask the bankruptcy court to punitively sanction the creditor.  Also, if you forgot about an asset and did not disclose the asset in your initial bankruptcy paperwork, you could reopen your bankruptcy case to amend your bankruptcy schedules to list the asset.

Summary

To learn more about filing for Chapter 7 bankruptcy in Owatonna, MN and how cases are finalized, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.