How Chapter 20 Happens with Bankruptcy Code in Redwood Falls, MN

The two main types of individual consumer bankruptcy are Chapters 7 and 13. Chapter 7 is a liquidation process that liquidates your non-exempt assets in exchange for the discharge of your debts. You are allowed to claim exemptions to protect certain properties, such as your home and car and other property.  In fact, in most chapter 7 cases, people only lose their debts and they don’t lose any property.  Chapter 13 is a reorganization bankruptcy that restructures your debts into a manageable repayment plan suited to your monthly income and your reasonable and necessary living expenses which lasts three to five years. Your unsecured debts, like credit card bills and medical expenses, will be discharged 0-100%, but your secured debt could be included in your chapter 13 plan for payment under adjusted terms that are more favorable to you. At Behm Law Group Ltd., our attorneys help you navigate the process of filing for Chapter 7 or 13 bankruptcy. Another filing that can occur is informally referred to as Chapter 20 bankruptcy. Let’s talk about what this actually means for the bankruptcy code in Redwood Falls, MN.  To be clear, Chapter 20 is not a separate and distinct chapter of the bankruptcy code like Chapter 7 and Chapter 13.  Rather the informal term “Chapter 20” simply refers to a situation where a person first files for Chapter 7 bankruptcy relief and then files for Chapter 13 bankruptcy relief after the Chapter 7 bankruptcy case has ended.

Bankruptcy Code

Chapter 7 bankruptcy has strict eligibility requirements that were written into the U.S. bankruptcy code through the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). In addition to several other changes, the BAPCPA established the Means Test requirement, which measures your debt-to-income ratio.

To qualify for Chapter 7, your household income needs to be at or lower than the state median or average income for a similar sized household. If your income is higher than that median, there may be a basis for you to still file for Chapter 7 but it is more likely that you would have to file for Chapter 13 bankruptcy relief instead.

Chapter 20 bankruptcy happens when individuals file for Chapter 7, discharge all their unsecured debts, like credit cards, medical debts, etc., end their case, and then immediately file for Chapter 13 bankruptcy to cure or pay back a delinquency on the mortgage for their house.   The Chapter 20 bankruptcy can have several benefits, but sometimes the bankruptcy court will not approve these cases if it determines that people are using them to game or take advantage of the bankruptcy system.

Benefits of Chapter 20 Bankruptcy

Chapter 20 can help you work through the repayment of priority debts, such as tax debts and child support debts, that were not discharged in your chapter 7 bankruptcy case.  So, presume that you had $20,000 of tax debt that was not discharged in your chapter 7 bankruptcy case.  After your chapter 7 case ended, you could file a chapter 13 case and pay that tax debt through a chapter 13 plan over 36 to 60 months.  The filing of a chapter 13 case after a chapter 7 case has concluded, can have benefits for your secured debts such as vehicle loans or mortgage debts.  For instance, presume that there is a vehicle loan of $10,000 and that there is an interest rate of 15%.  If you retained that debt by reaffirming it in your chapter 7 case, you could conceivably file a subsequent chapter 13 bankruptcy case and payoff the $10,000 at a lower interest rate over 36 to 60 months.  If you’ve filed for Chapter 7 relief to discharge unsecured debts before filing a chapter 13 bankruptcy, all your monthly payments in the chapter 13 case would be dedicated to paying only secured and priority debts.

The potential disadvantages of a Chapter 20 bankruptcy is that it could lead to accusations of bad faith and it does not allow you to use lien stripping to strip off wholly unsecured mortgages from your homestead.

To learn more about Chapter 20 as well as about the bankruptcy code in Redwood Falls, MN, contact Behm Law Group Ltd. by calling (507) 387-7200 or emailing

Bankruptcy vs. Forbearance: Mortgage and Debt Work-Out in St. Peter, MN

After the COVID-19 shutdowns and the peak of the pandemic, many individuals and small businesses faced financial difficulties. If you have debts you know you can’t repay, you’re not alone. There are many ways to work out that debt, from settlement to bankruptcy. For households with high unsecured debts, like credit card bills and medical expenses, in addition to common secured debts, like a mortgage and car loan, filing for bankruptcy will most likely be the best solution for long-term debt relief and financial stability. If you’re considering filing for bankruptcy for debt work-out in St. Peter, MN and the surrounding areas, Behm Law Group, Ltd. offers legal protection, guidance, and support throughout your case.

Debt Relief

We provide legal services for individual consumer cases through Chapter 7, 12, and 13, as well as small business Chapter 7 and Chapter 13 cases. Filing for bankruptcy can help resolve multiple debts, including your mortgage. About 45% of consumers in the U.S. have mortgage debt. Mortgages, along with credit card debt and student loans, are one of the most common types of debt included in bankruptcy.

Debt Work-out

If you use bankruptcy for debt work-out, your mortgage and home could be handled one of three ways:

  1. Any pre-bankruptcy filing delinquency you have on your mortgage could be included in the reorganization of your debts into a three- to five-year repayment plan through Chapter 13. You will keep your home and end up repaying your reorganized mortgage in full after the repayment plan ends.
  2. If you want, your mortgage debt may be discharged and the mortgage lender could foreclose on your home in a Chapter 7 bankruptcy. After your case concludes, you may have to eventually vacate the home, but you will no longer be responsible for the mortgage debt.
  3. Your mortgage may be retained in Chapter 7 and you can keep your home from the chapter 7 trustee and from liquidation by protecting the equity (value that exceeds the amount of debt you owe) you have in the home with the Homestead Exemption. In Minnesota, this exemption applies to homes with equity or net value of $420,000 or less for houses in urban areas and $1,050,000 less for homesteads used primarily for agricultural purposes.  You could sell your house, payoff the underlying mortgages and retain any remaining sale proceeds.  This is somewhat common in Chapter 7 cases.


If the only debt you can’t meet monthly payments for is your mortgage, you might want to consider a forbearance (example) with your mortgage lender rather than a bankruptcy. A forbearance allows you to pause payments or make lower payments temporarily. This can be beneficial for a short time and prevents foreclosure, but you will still have to pay property taxes, make up the additional amounts later, pay a forbearance fee, and the interest amounts due may increase.

If you have debts in addition to your mortgage, filing for bankruptcy will resolve them together. To learn more about bankruptcy debt work-out in St. Peter, MN, contact Behm Law Group, Ltd. today at (507) 387-7200 or


Reaffirmation Agreements and Chapter 7 Bankruptcy in Jackson, MN for Individuals

At Behm Law Group, Ltd., we’ve worked with clients in all kinds of situations filing for Chapter 7, 12, and 13 bankruptcies. The process of Chapter 7 is called “liquidation bankruptcy”.  Essentially, people who file for chapter 7 bankruptcy relief have their non-exempt properties sold and the value is distributed to their creditors. The debts tied to or secured by vehicles and houses and other assets are discharged.  However, in such cases, the properties tied to or secured by those debts are generally not retained by the person filing for bankruptcy relief.   Unsecured debts (credit card debt and medical bills, for example) are also discharged. Filers can also use bankruptcy exemptions to protect the properties they want to keep from liquidation. If you are considering filing for Chapter 7 bankruptcy in Jackson, MN or the surrounding areas, Behm attorneys can protect and guide you throughout the process.

Chapter 7 Bankruptcy

In addition to its impact on the filer’s credit, one of the main reasons people balk at filing a bankruptcy case to resolve their debt is the fear of losing property. The truth is that most filers lose very little property if they qualify for a Chapter 7 bankruptcy in the first place.  Losing property in chapter 7 bankruptcy is generally not something that happens in every case.  In fact, in most cases, all people lose are their debts.  The bankruptcy exemptions that people can claim to protect their important assets such as homes, cars, appliances, and tools of their trade, and other things are quite generous.


It is important to note, however, that bankruptcy exemptions only protect equity that someone has in an asset or property.  Bankruptcy exemptions do not eliminate secured mortgages or validly perfected vehicle liens.  There may be an asset that you have that is secured by or subject to a mortgage or lien that you want to continue working with the creditor to retain.  You may have equity or value in that asset that exceeds the debt against it.  In chapter 7 bankruptcy, people retain such debts by signing a reaffirmation agreement.  A reaffirmation agreement is a legal document that you and the subject creditor sign that recites and memorializes the terms and conditions of the original mortgage loan or vehicle loan that you negotiated with the subject creditor.  It is entirely voluntary on your part and on the creditor’s part.  No one can force you to do a reaffirmation agreement.

Presume, for instance, that you own a house that is worth $300,000.  Presume further that you owe your mortgage lender $200,000 and that you, therefore, have $100,000 worth of equity or value in the house.  You would protect the $100,000 equity or value with your homestead exemption.   The exemption you claim, however, does not make the $200,000 mortgage go away.  If you want to retain the house and the $100,000 equity or value that you have in the house, you must still pay the underlying mortgage.  To do this, you and your attorney would sign a reaffirmation agreement concerning the $200,000 mortgage with the subject creditor.  After your bankruptcy concluded, that mortgage debt would survive and your relationship with the creditor would essentially be the same as it was before you filed bankruptcy.  As long as you made your mortgage payments after the conclusion of your case, the creditor would continue sending you monthly billing statements and it would continue allowing you online account privileges.  The creditor also would continue reporting your timely mortgage payments to the three big credit reporting agencies:  Equifax, Experian and Transunion.  This would help rehabilitate and restore your credit profile.

 Court Approval

Once you’ve negotiated the reaffirmation with your creditor, the bankruptcy court must approve it.  To approve a reaffirmation agreement the court looks at various factors such as whether the terms are fair to all involved parties. The court also looks at the value of your property, your income, changes to your expenses, the monthly debt payment requirement, your on-time payment history, and whether you’re current with your mortgage payments. In most cases, the bankruptcy court will approve a reaffirmation agreement unless the terms are obviously unfair to one of the parties involved.

While most reaffirmation agreements are approved by the bankruptcy court the reaffirmation process is not routine and it can become complicated, both during creditor negotiations and with respect to the review by the court. It is essential that you have an experienced lawyer assist you with a reaffirmation agreement in your Chapter 7 bankruptcy in Jackson, MN or the neighboring regions. Contact Behm Law Group, Ltd. today at (507) 387-7200 or to get started with expert guidance in your case.

Review of the Recent Changes to the Bankruptcy Code in New Ulm, MN

In the past few years, a lot has changed for bankruptcy law. Even before the coronavirus pandemic rocked the world, Congress had put some significant changes in bankruptcy law into effect. In response to COVID-19, more changes had to be quickly put into place. Since the worst of the pandemic is hopefully behind us, there may be even more interesting additions and adjustments to how the bankruptcy code in New Ulm, MN and the rest of the country is handled. For those considering filing a petition now, Behm Law Group, Ltd. attorneys can guide and protect you from start to finish in a Chapter 7, 13, or 12 case. We work primarily with individuals filing for liquidation or reorganization bankruptcy, but we’ve also helped small businesses file for liquidation and reorganization bankruptcy in the local region. There are many benefits to hiring a bankruptcy lawyer to work on your case, including the prevention of dismissals, potential audits, appeals, delays, statutes of limitations, creditor violations, judgments, navigating the ever-changing bankruptcy laws, and much more.

Bankruptcy Code

Since 2019, there have been some significant adjustments to the bankruptcy code. Some were put into place to improve our system, while others were in direct response to the COVID-19 pandemic and the subsequent lockdowns. The two most significant changes that have been enacted include:


  1. SBRA in 2019: The Small Business Reorganization Act was signed into law in February of 2019. This law lowered the debt amount required to file Chapter 11 business reorganization bankruptcy. Unless a small business is owned as a sole proprietorship or partnership, Chapter 11 is the only option for bankruptcy reorganization. By lowering the debt requirements, many smaller businesses could reorganize instead of having to possibly shut down by having to file a Chapter 7 liquidation bankruptcy. This law created a subchapter of Chapter 11 allowing businesses with under $2,725,625 in debt to file a faster and easier reorganization case.


  1. CARES in 2020: In response to the economic shutdown of coronavirus, the Coronavirus Aid, Relief, and Economic Security Act was enacted in March of 2020. With regard to the bankruptcy code, the CARES Act expanded the faster and easier subchapter of the SBRA Chapter 11 bankruptcy debt limit to $7,500,000 for one year (this expired in March of 2021). It also allowed some Chapter 13 repayment plans to extend up to 7 years (rather than the usual 3-5 years). All stimulus income from the other provisions of the CARES Act is exempt from bankruptcy liquidation.

In addition to the changes made when these laws were put into place, there are potential adjustments in the code that have been introduced and others that might be on the horizon. For example, the Student Borrower Bankruptcy Relief Act (SBBRA) might allow student loans to be discharged more easily in bankruptcy. Changes to Chapter 12 bankruptcy might be coming too.

To learn more about changes to the bankruptcy code in New Ulm, MN contact Behm Law Group, Ltd. today at (507) 387-7200 or


Debt Work-Out in Worthington, MN: Bankruptcy is Not a Last Resort

A recent 2021 study revealed that American household debts reached $14.6 trillion. With over 80% of the country holding debt of some kind, you might feel less alone if you hold debt of your own. This doesn’t make dealing with the stress of debt any easier, though. While money can’t buy happiness, it’s undeniable that financial stability relieves a household from significant stress. For thousands of U.S. citizens annually, bankruptcy is a source of permanent debt relief from many kinds of creditors. Despite this, bankruptcy is still often regarded as a last-resort option. In reality, bankruptcy is an effective tool that’s unjustly stigmatized because of perceived social implications and its impact on filers’ credit. At Behm Law Group, Ltd., we’ve worked with clients in all different kinds of financial circumstances using bankruptcy as a permanent debt work-out in Worthington, MN and the surrounding area.

Debt Work-Out

The best way to use bankruptcy as a debt work-out tool is to stop looking at it as a last-resort option. Viewing bankruptcy as a last hope prevents you from seeing how much the benefits of filing outweigh the impact that it could have on your credit score. While it’s true that your credit will be affected and you likely won’t qualify for certain loans for a period of time after your case is concluded, bankruptcy has many other benefits and it resolves debt quickly and permanently.  To most creditors, a bankruptcy represents a point in time.  Before the filing date, one’s financial life is chaotic and disorganized.  After a bankruptcy has concluded, one’s financial life is much more stable, better organized and simplified.  After a bankruptcy has concluded, you are a very attractive credit risk to creditors irrespective of the fact that a bankruptcy filing is on your credit profile.  Creditors know that your financial circumstances are simplified and they know that they won’t have to compete with so many other creditors to get paid.  They also know that you won’t be able to file bankruptcy again for many years.  They figure that if you don’t pay them they will have a very long time to garnish your wages or levy on your bank accounts and there won’t be a thing that you will be able to do about it.


There are three main reasons why viewing bankruptcy as a last resort might do more harm than good:

  1. Bankruptcy is often a better debt resolution system than other options. Because bankruptcy is stigmatized socially and creditors sometimes want their borrowers to avoid the process so they won’t lose money, other debt relief alternatives are pushed more frequently. Debt resolution options like settlement, consolidation, adjustment, and relief programs market themselves as a way to avoid bankruptcy and fix your debt. However, people always end up spending more money and more time with such programs and they almost never get their debts permanently resolved.  Even with attorney fees, bankruptcy is always cheaper and faster than other non-bankruptcy options.
  2. You could lose years of income. With high interest rates, credit cards and other loans can suck away years of your income while you spend time repaying a debt. If you’re not able to pay off or materially reduce a debt in a timely fashion, the odds are that you will never fully repay that debt. Using bankruptcy sooner to discharge unsecured loans like credit cards and medical bills will save you significant time, money, and stress.
  3. Bankruptcy is almost always not the filer’s fault. Bad things happen to good people. Bankruptcy is a way to permanently resolve those bad things. Most filers had debts that were out of their control. This often includes unexpected medical expenses, divorce, job loss, car accidents, and other unfortunate life events.

If you stop seeing bankruptcy as a last resort option, you can see how it will benefit you to use it as a debt work-out in Worthington, MN. For more information about filing, contact us today at (507) 387-7200 or


Why You Should Rely on a Bankruptcy Lawyer in Mankato, MN for a Skeletal or Emergency Bankruptcy

If you’re facing debt you know you can’t repay and it’s so severe it significantly damages your standard of living, you might find permanent relief with a bankruptcy filing. When you file for any type of individual consumer bankruptcy, your creditors will have the automatic stay preventing them from collecting on your debts.  For the time that your bankruptcy case is pending, the automatic stay is maintained. This means that bankruptcy can be one of the most effective ways to prevent foreclosures, utility shut-offs, wage garnishments, evictions, and other consequences of having delinquent debts. For individual consumer bankruptcy, the timeline can be as short as a few months or as long as five years. It all depends on what chapter you file for and your own financial situation. With the help of a Behm Law Group, Ltd. bankruptcy lawyer in Mankato, MN and the surrounding areas, you can build a strong case for your bankruptcy and find long-term debt relief.

Stop Creditor Collection

If you’re in a situation where you need to stop creditor collection or foreclosure activities immediately and you can’t wait through the typical time it takes to prepare a complete bankruptcy petition, you can file something called a “skeletal” or emergency bankruptcy. This kind of filing goes through the online court system just like a normal bankruptcy filing and it often only takes a few minutes. An online skeletal petition will immediately prevent your creditors from taking further collection actions because the automatic stay injunctive mandates of 11 U.S.C. § 362 will be immediately imposed against them.

Emergency Bankruptcy

A skeletal or emergency bankruptcy petition is not a different kind of bankruptcy.  Rather it is only the very first part of the bankruptcy pleadings you must file and it is incomplete.    A skeletal or emergency bankruptcy petition consists of the basic bankruptcy petition (which includes personal identity information, the chapter you’re filing, and general information), the names, addresses, and contact information for all your creditors, a certificate of your completion of credit counseling, and your B121 form.  A skeletal bankruptcy will also require payment of the bankruptcy fee or the request of a waiver.

Time Limits

After your skeletal or emergency petition is filed, the bankruptcy court will issue an order giving you fourteen (14) days to file the remaining fifty-plus pages of your bankruptcy petition paperwork.  If the remaining paperwork is not filed within fourteen (14) days, your bankruptcy case will be dismissed.  The automatic stay will also be terminated and your creditors will be able to resume collection activities against you.  However, the bankruptcy court will grant an extension of the fourteen (14) day period upon your timely request.

Bankruptcy Lawyer

Filing any case without the help of a bankruptcy lawyer can be difficult due to the nuances and complexities of the bankruptcy code and the rigorous paperwork requirements. Because the process of filing a skeletal or emergency bankruptcy is subject to strict timelines, it can be even more challenging to file without professional assistance.

When you work with a Behm Law Group, Ltd. bankruptcy lawyer in Mankato, MN and the neighboring areas for your skeletal/emergency or regular case, you can count on our guidance and protection to take you from start to finish of your bankruptcy. Contact us today at (507) 387-7200 or to learn more.

Objections to Debt Discharge with Liquidation Bankruptcy in Owatonna, MN

If your income is lower than the Minnesota state median or average income, either due to a low-paying job or a level of expenses that outpaces your income, you may qualify for Chapter 7 bankruptcy. This is the most common type of bankruptcy that individual consumers file in the U.S. Its purpose is to wipe out the majority of debts that filers would have to repay. This often includes credit card debts, medical bills, old utility bills, bounced checks, past due rent, personal loans, pay day loans and other debts. Debts that are secured to a property, such as your home or car, will be discharged if that property is repossessed or foreclosed and you do not wish to retain the property. If you’re considering filing for Chapter 7 liquidation bankruptcy in Owatonna, MN, Behm Law Group, Ltd. can help with legal protection and guidance. Our support will play a significant role in getting the most out of the debt discharge awarded to you in the bankruptcy process and protecting your property with the available bankruptcy exemptions. We can also help you work around any creditor objections to discharge that might arise.

Chapter 7 Liquidation Bankruptcy

In Chapter 7 liquidation bankruptcy, the trustee will liquidate (sell or auction) your non-exempt property and divide the sale proceeds among your unsecured creditors.  Where your property is collateral for a loan, such as a vehicle loan or a home mortgage, the vehicle lender or mortgage lender would be able to sell the vehicle or house and retire as much of the subject debt as possible.  Any debt that is remaining is discharged.  Unsecured debts, such as credit cards, medical bills, etc., are discharged as well. You can prevent the liquidation of most or all your property with the available bankruptcy exemptions.  In most cases, the available bankruptcy exemptions are more than enough to protect all your property. Learn more about exemptions.


If a debt is scheduled to be discharged, the creditor for that debt might object to the discharge if it believes that you incurred the debt through fraud or misrepresentation.  Typically, a creditor will not object to the discharge of a debt unless it’s clear that someone has acted in obvious and excessive bad faith.  The creditor bears the burden of proof to show why a debt should not be discharged.

Types of Objections to Discharge

  • The debtor owes a debt because of malicious damage. For example, if a renter damaged their apartment purposefully before moving out and owed a debt for repairs to their landlord.
  • Excessive charges on a line of credit that were made 90 days prior to filing a bankruptcy case or large cash advances that were taken within 70 days of filing.
  • Debts related to damages or death caused while operating a vehicle under the influence of alcohol or drugs.
  • They committed some fraudulent action, such as perjury, destroying property or documents, lying to the trustee, or failing to obey a court order.

Liquidation Bankruptcy

Creditors can objection to the discharge of a debt in two ways: filing a motion or filing an adversary proceeding. When creditors file a motion to object discharge, they must do so within 60 days of the meeting of creditors. Adversary proceedings work more like an actual lawsuit and also must be filed within 60 days of the meeting of creditors.

To learn more about Chapter 7 bankruptcy in Owatonna, MN and filing, contact Behm Law Group, Ltd. today at (507) 387-7200 or

Undue Hardship and Federal Student Loan Debt Relief in Marshall, MN

There are many debts that can be discharged through a bankruptcy case. Most commonly for individual consumers, credit card debt, medical bills, mortgages, old utility bills, bounced checks, and car loans, and others can be discharged. However, there are debts that are considered priority debts, and these are generally not subject to debt relief in the bankruptcy process.

Debt Relief

Child support, alimony, most tax debts, personal injury claims caused by intoxication, criminal fines and penalties and several other debts are priority debts that are generally not subject to discharge in a bankruptcy case. While student loans are not priority debts, until very recently, the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) made it very difficult to discharge student loans through bankruptcy. In 2019, a new bill was introduced in the House of Representatives that, if passed, may make it much easier to discharge student loan debts in bankruptcy. This bill, the Student Borrower Bankruptcy Relief Act (SBBRA) would remove the 2005 BAPCPA restrictions. Until then, receiving debt relief in Marshall, MN for student loans will be difficult. If you’re considering filing for bankruptcy, Behm Law Group, Ltd. can help you work through all debts that could be discharged in your case.

Undue Hardship

Until the SBBRA passes, bankruptcy filers will only be able to discharge their federal student loan debts in their bankruptcy case if they are able to prove “undue hardship.” This requires you to actually sue the student loan lender by filing an adversary proceeding in which you request the court to discharge the student loans on the basis of undue hardship .  It is your burden to prove or demonstrate factors substantiating undue hardship to the bankruptcy court.

Threshold for  Undue Hardship

In Minnesota, the threshold to prove undue hardship  is more favorable/lenient than in other parts of the country.  The bankruptcy court may review the totality of your financial circumstances to determine if it would be an undue hardship for you to pay the student loans.  To demonstrate undue hardship and possibly have your federal student loan debts discharged in your bankruptcy case, you may need to demonstrate, among other things, the following:

  • You have participated in an income contingent repayment program or other repayment options presented to you by the student loan lender but those options have not been successful.
  • You have reached the top of your earning potential in the job market in your area and there is little possibility for you to increase your income either in your current job or by changing your employment.
  • You’ve made good faith efforts to repay the student loan prior to filing for bankruptcy.
  • You are older and close to retirement and there is no realistic chance that you could fully repay the student loan before you reach retirement age.
  • Retaining the student loan debt would make it extremely difficult for you to pay your reasonable and necessary monthly living expenses.
  • You have some physical or mental impairment that negatively impacts your ability to remain employed or find alternate employment that would provide you with an increased income.

If the court finds evidence that all these conditions are present, it may allow you to include your federal student loans for discharge in your case. If they are included for discharge in an individual consumer case, they could be handled as follows:

  • They may be discharged in full. This is most likely when undue hardship is demonstrated in a Chapter 7 liquidation case.
  • They may be discharged partially. You would still be required to repay the part of your student loans that are not discharged.
  • They may not be discharged at all.  However, they may be restructured under  lower interest rates and other more lenient terms. This outcome is most likely when undue hardship is demonstrated in a Chapter 13 reorganization case.

Adversary Proceedings

In any adversary proceeding you file to prove undue hardship your creditors will have a chance to fight the case. If you plan to attempt to prove undue hardship for federal student loan debt relief, it’s crucial to have the protection of a highly experienced bankruptcy attorney.

To learn more about finding debt relief in Marshall, MN, contact Behm Law Group, Ltd. today at (507) 387-7200 or

The Most Common Exemptions Allowed Through Bankruptcy Code in Luverne, MN

When you file for Chapter 7 bankruptcy as an individual, some of your non-exempt assets may be liquidated in exchange for a discharge of your debts. While this is always a possibility, in most chapter 7 bankruptcy cases people don’t lose anything other than their debts.  This is because part of filing for individual consumer bankruptcy relief is taking advantage of various generous bankruptcy exemptions provided either under the federal bankruptcy code or under state law to protect your property.  Exemptions are allotted value amounts that can be used to protect the equity or value you have in your property.

Bankruptcy Code

In Minnesota, filers can choose either the Minnesota state exemptions or the federal bankruptcy code exemptions, but they aren’t allowed to mix and match between the two. For some filers, Minnesota exemptions might be more beneficial than the federal exemptions and vice versa. If you’re considering filing any kind of individual consumer petition, Behm Law Group Ltd. can help you navigate the nuances of the bankruptcy code in Luverne, MN, and the local area to build a strong case. Our attorneys provide legal protection and aid so you can effectively find long-term debt relief through bankruptcy.

Commonly Claimed Exemptions

There are many ways individual asset exemptions can apply in a chapter 7 liquidation process, but the most commonly claimed exemptions include:

  • Homestead: The homestead exemption protects your primary place of residence. Currently, the exemption amount in Minnesota is a maximum value of $420,000 for non-agricultural land. Agricultural land of up to 160 acres can be exempted up to $1,050,000 if it’s being used for farming purposes.  A rental property, such as an apartment building that you may own, can also be exempted if you are using part of it as your primary place of residence.  Under the federal bankruptcy exemptions, a person is allowed $25,000 to protect one’s primary place of residence.  If two married people file for bankruptcy relief, and provided they both are listed as owners of the homestead, each one would be able to claim $25,000 for a total of $50,000.
  • Motor vehicle: For vehicles that are the primary household car, such as one you use to drive to work or drive your children to school, you can exempt $4,600 per person. You can also exempt up to $46,000 if that vehicle has been adapted to accommodate disabilities. Under the federal bankruptcy exemptions, a person is allowed $5,000 to protect the value in a vehicle.
  • Personal property: Additional personal items like clothing, furniture, appliances, and food can be exempted in varying amounts. In Minnesota, for example, you can exempt appliances and furniture up to $10,350 and wedding rings up to $2,817. Under the federal bankruptcy exemptions, each person is allowed $13,400 to protect one’s personal property and $1,700 for one’s jewelry.
  • Tools of the trade: Farm equipment and other “tools of the trade” can also be exempted given your occupation. If a certain portion of your income is from your trade, the court wants you to protect the necessary tools from liquidation so you can continue using them to make a living. For farm equipment, Minnesota allows $13,000 to be exempted and $11,500 for any other non-farm tools of the trade. Under the federal bankruptcy exemptions, a person is only allowed $2,525 to protect one’s tools of the trade.
  • Wages: If you file for bankruptcy, some of your wages may be at risk of liquidation. For unpaid wages, the State of Minnesota exemptions allow you to protect 75% or 40 times the federal hourly minimum wage. Your wages will be exempted up to three times those amounts (whichever is greater).
  • Wildcard (federal): The Minnesota state exemptions don’t offer a wildcard exemption provision, but if you claim federal exemptions, you could be allowed $13,900 for a wildcard exemption that you could use to protect any asset. That amount may be dependent on what you choose to apply the exemption to. Learn more here.

To learn more about the bankruptcy code in Luverne, MN, and about filing a bankruptcy case, contact Behm Law Group Ltd. by calling (507) 387-7200 or by emailing

Categorizing Debt Claims for Liquidation Bankruptcy in Pipestone, MN

Several types of bankruptcy are available to individuals and businesses. For individual consumers, Chapter 13 and Chapter 7 are both potential options. Chapter 13 works to reorganize debts into a three-to-five-year repayment plan suited to your income and reasonable and necessary monthly living expenses. Chapter 7, on the other hand, is a liquidation bankruptcy where non-exempt assets are sold/liquidated in exchange for the discharge of debts. This latter chapter is the most common form of bankruptcy for individual and small business bankruptcy filers.

Bankruptcy Attorney

If you are considering filing for bankruptcy through either chapter, you need to be aware of the level of detail that will be required in your petition. The bankruptcy court will require your bankruptcy attorney to review documentation concerning your income, assets, debts, and other particulars of your financial situation. Because of the strict documentation requirements that are necessary to adequately and completely draft a bankruptcy petition, we recommend getting help from a professional. Behm Law Group Ltd. attorneys provide legal guidance, protection, and support throughout reorganization and liquidation bankruptcy in Pipestone, MN, and the surrounding areas.

Liquidation Bankruptcy

When you file for any kind of bankruptcy, your debts will be classified and treated differently depending on their status as secured, unsecured, or priority. For liquidation Chapter 7 bankruptcy, these different debts are handled in the following ways:

  1. Secured debts are secured to a property, such as a home or car. Debts that are secured to an asset can be discharged in liquidation bankruptcy.  The secured creditor can take and sell its collateral and apply the sale proceeds against the debt you owe.  If the sale proceeds are insufficient to pay off all the debt, the unpaid balance is discharged and you are not responsible for paying it.  Alternatively, many people want to retain their house or their car and they want to retain the debts that are secured by those assets.  In many cases, people will reaffirm the debts with the secured creditors by entering into a reaffirmation agreement.  A reaffirmation agreement is a document that memorializes the terms and conditions of the original mortgage or vehicle loan.  By signing it, a filer agrees to continue being liable on those debts after a bankruptcy case has concluded.  Essentially, a filer can preferentially treat those secured debts and exempt them out of the bankruptcy process.  Any equity or value that a filer has above the debt against a house or a car is protected from one’s creditors by asserting one of the many exemptions that are provided under state or federal law.  Exemptions are allowed in varying amounts. The exemptions also change over time as market values fluctuate (some current important exemptions for Minnesota).


  1. Unsecured debts are not tied to or secured by a property. Some of the most common unsecured debts include credit cards, medical bills, overdue utility bills bounced checks, and personal loans. In chapter 7 liquidation bankruptcy, these debts are completely discharged. However, there are unsecured debts that are considered priority, and these are treated differently than general unsecured debts.


  1. Priority debts are usually excepted from a chapter 7 discharge. General Common priority debts include alimony, child support, tax debt, criminal fines and penalties and debts for personal injury caused through intoxication and wrongful death claims.  Like all debts, they must be disclosed or listed in a bankruptcy.  There are some nuanced exceptions to the general rule that priority debts are not discharged.   One exception for instance is 1040-type tax debt that is dated/ old.  For instance, presume that you owe $5,000.00 for the 2010 tax year because your employer did not withhold enough out of your paychecks.  Presume further that you duly filed your 2010 state and federal tax returns by April 15, 2011.  Presume still further that you filed for chapter 7 bankruptcy relief on August 21, 2021.  This sort of dated/old tax debt would very possibly be discharged in your chapter 7 bankruptcy case.

In every bankruptcy case, all debts are handled in complex ways that vary depending on the situation. However, overall, the secured, unsecured, and priority debts will likely be addressed as previously described. To learn more about filing for chapter 13 reorganization or chapter 7 liquidation bankruptcy in Pipestone, MN, and the local region for long-term debt relief, contact Behm Law Group Ltd. by calling (507) 387-7200 or by emailing