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Categorizing Creditors When You File for Bankruptcy in Owatonna, MN

Almost all U.S. citizens hold one or more forms of debt in their day-to-day financial obligations. This includes anything from mortgages to credit card debts, and most individuals find ways to work those debts into their budgets. If you’ve found yourself struggling to do this, however, you might consider bankruptcy. If you choose to file for bankruptcy, Behm Law Group, Ltd. offers legal support to help you navigate through the process when you file for bankruptcy in Owatonna, MN.

If you have debts, the individuals, companies, or organizations that loaned you those debts are your creditors. Even with personal loans from family members or employers or friends, the lenders are considered your creditors until those debts are fully repaid. When you file for bankruptcy, the status of your creditors is determined based on the type of debts you owe to them.

This categorization of creditors can impact how your debts are repaid in bankruptcy. For a Chapter 7 bankruptcy, this means one creditor may not collect a higher return over another creditor. In a Chapter 13 plan, this categorization of creditors determines the percentage of debt you will repay throughout your repayment period.

These are the types of creditors involved in a bankruptcy case: 

  1. Secured: Any debt that involves a tangible property (i.e. mortgages or car loans) is considered secured, and the lenders of those debts are secured by that property, even in the event of a bankruptcy filing. Chapter 7 secured creditors will take back any collateral that secures their claims. In a Chapter 13 repayment plan, the secured creditors are generally repaid the present value, plus reasonable interest, of the assets securing their claims.
  2. Unsecured: Virtually every other type of debt not involving a property is an unsecured debt, and the creditors of those debts are also unsecured in repayment if you file for bankruptcy. For example, credit card debts, personal loans not involving property, medical bills, and certain older tax debts are all unsecured. The creditors of these debts will often only receive small partial repayments in a Chapter 13 plan and, often, will not receive any payment in a chapter 7 bankruptcy case.
  3. Priority: Priority creditors are, in fact, unsecured creditors much like credit cards or medical debts. However, for certain public policy reasons, the drafters of the bankruptcy code wanted to make it much more difficult to discharge or get rid of these debts.  Some examples of priority creditors are unpaid employees of the debtor, spouses with unpaid child support or alimony, or children of the debtor with certain unpaid obligations, tax debts, and criminal court fines and restitution awards.

These creditors are involved in most bankruptcy cases. Behm Law Group, Ltd. offers protection and counsel throughout your case. Contact us at (507) 387-7200 today for more information about filing for bankruptcy in Owatonna, MN.

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Details on the Credit Counseling Requirement for bankruptcy in Marshall, MN

If you’re struggling to meet your financial obligations month-to-month, filing for bankruptcy is a real option. There’s often a vibe of foreboding around the idea of having to file for bankruptcy relief, but while it may not be what one wants to do (no one ever actually wants to file for bankruptcy relief), it can provide a way out of a bad place. The process of bankruptcy was designed to get debtors back on their feet – to give them a “fresh start” – and to provide fair treatment to creditors by means of debt reconstructing or asset liquidation. No matter what type of chapter of bankruptcy relief you file for, Behm Law Group, Ltd. provides legal advice and assistance with bankruptcy in Marshall, MN.

With every bankruptcy case comes a wide variety of requirements, including the requirement of each filer to undergo credit counseling within 180 days before one even files a bankruptcy petition. The credit counseling requirement has been in place in bankruptcy law since the passing of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005 and all filers are required to take a credit counseling course in order to obtain bankruptcy relief.

Purpose

When the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) was passed in 2005, it was the sense of Congress that people had been filing for bankruptcy relief flippantly without seriously considering the possible complications in the process and without having any idea as to the possible effects on their credit rating profiles.  Congress basically thought that it was too easy for people to incur a bunch of debt and then file for bankruptcy relief to get out of paying it.  Congress intended the credit counseling requirement not only to provide people with insights as to the various options/alternatives to bankruptcy relief but also to provide guidance on proper budgeting techniques.   The requirement applies to all debtors, not just those who owe banks and credit card companies. Another purpose for the credit counseling requirement is to determine whether your financial situation warrants a bankruptcy filing and whether someone will actually benefit from the process.

Counseling Agencies

Court-approved credit counseling agencies are your safest option to fulfill the counseling requirement. These agencies provide all necessary information and course material at reasonable fees. The fee can be based on a sliding scale that is determined by your household income. This means that if you prove your income is 150% below the poverty line for a Minnesota household of similar size, court-approved agencies must waive the cost.

If you plan to file for bankruptcy, be prepared to undergo a credit counseling course with an approved agency. With our help, finding an agency that is right for you will be easy. Contact Behm Law Group, Ltd. today at (507) 387-7200 and find the help you need before you file for bankruptcy in Marshall, MN.

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Understanding the Predischarge Debtor Education Requirement for Bankruptcy in Luverne, MN

Whether you file for liquidation or debt reorganization bankruptcy, it’s likely that one or more of your debts will be discharged in the process. Discharging debts in Chapter 7 serves to simultaneously relieve debtors of unmanageable financial hardship and allow fair treatment of creditors despite a lack of full repayment. In a Chapter 13 case, certain debts can be discharged through a repayment plan. Foreseeing which debts will be discharged can be difficult, and organizing your case without the help of a professional may change that outcome. Behm Law Group, Ltd. offers legal advice and assistance if you choose to file for bankruptcy in Luverne, MN.

In addition to the many requirements involved in bankruptcy cases, filers who will have debts discharged must undergo predischarge debtor education before the bankruptcy process can be completed and before the bankruptcy court can issue a discharge order.

Predischarge Education

The predischarge debtor education requirement was established with the purpose of advising those who’ve fallen into debt and filed for bankruptcy on how to better manage their finances. This course is different from the credit counseling requirement which debtors must undergo prior to filing a bankruptcy petition. Instead, debtors must go through a predischarge education course after their petition is filed but before they’re granted a discharge on any debts.

The financial management education course must be provided by a court-approved agency within a forty-five day period after the meeting of the creditors. The course lasts around two hours and covers materials that teach debtors how to improve their financial situation after bankruptcy. Topics include effective budgeting practices, handling taxes sensibly, and other court-required material.

You’ll certify your fulfillment of the predischarge debtor education requirement with bankruptcy Form 423, and if you file a joint bankruptcy petition, you and your spouse must both take the course. Additionally, the agencies that provide the necessary predischarge debtor education course don’t have to follow the same non-profit regulations as credit counseling providers. This means you may have to pay a fee to take the required course.

If you’re contemplating filing for bankruptcy, it’s important to consider fees for requirements like predischarge debtor education and other milestones in your case before you begin. Behm Law Group, Ltd. offers assistance at every step whether you file for Chapter 7 or Chapter 13 bankruptcy in Luverne, MN. Contact us at (507) 387-7200 today for more information.

 

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Repayment Plan Periods and Their Role in Chapter 13 Bankruptcy in Pipestone, MN

As an individual consumer, you have two options if you choose to file for bankruptcy. You can—if your income fits the requirements of the Means Test—file for Chapter 7 bankruptcy and have many of your debts discharged in the process. However, if you do not pass the Means Test, your second option is to file for Chapter 13 bankruptcy. In this case, your debts are restructured into a new payment plan that better suits your financial situation. Because the process of Chapter 7 liquidates most nonexempt property and because it can be difficult to pass the Means Test, many debtors opt to file for Chapter 13. If you plan to file for bankruptcy in Pipestone, MN, Behm Law Group, Ltd. can help you navigate the complexities of a Chapter 13 or Chapter 7 case.

Because the conditions of each filer are unique, each Chapter 13 case is different in its own way. These differences depend largely on the types of debts a filer owes. These debts determine how a repayment plan will be structured. Another aspect of the filer’s situation that determines the repayment plan is one’s income.

Income plays a key role in determining the length of time a repayment plan period will last. In Chapter 13 bankruptcy, repayment plans can last three to five years.

Three-Year Plan

Simply put, if your monthly income when you file your bankruptcy petition is lower than the median income of a Minnesota household the same size as yours, your Chapter 13 repayment plan can last either three years or up to five years. While one would most likely choose the three-year time period because one would complete one’s plan, get one’s discharge and exit bankruptcy sooner, one could voluntarily choose a time period longer than three years, but not longer than five years, if one needs a longer time period to pay off tax debts or mortgage delinquency debt.  Chapter 13 bankruptcy is designed to keep people with low incomes from continuing the same financial struggles they faced before filing for bankruptcy.

Five-Year Plan

If a three-year plan is based on income lower than the state median, the opposite determines a five-year plan. When your current monthly income is higher than the median income of a similar Minnesota household, your Chapter 13 repayment plan must be five years. The five year commitment period is mandatory.  This plan period was designed by the drafters of the bankruptcy code as a compromise regarding the debts of a higher-earning filer and the fair treatment of creditors.  The rationale is that higher-earning debtors should have the ability to pay proportionately more to their creditors than lower-earning debtors.  Additionally, the rationale is that higher-earning debtors probably incurred higher levels of debt prior to a bankruptcy filing and, therefore, they should be compelled to pay more back to their creditors.

Current Monthly Income

Your current monthly income includes all income from your wages or salary and it also includes all other sources like pensions, annuities, and tax returns. Additionally, it’s based on the income of the most current month, which may vary from your average income over the past 12 months. This means that if your income changes significantly while you are in bankruptcy, your three-year plan could be extended if you experience an income increase or your five-year plan period could possibly be shortened if you experience an income decrease.

For more information about repayment plans and filing for Chapter 13 bankruptcy in Pipestone, MN, contact Behm Law Group, Ltd. today at (507) 387-7200.

 

 

 

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Risks of Filing for Bankruptcy Without a Bankruptcy Attorney in Waseca, MN

If you’re struggling to meet loan payments and bills alongside daily living expenses, bankruptcy is an option for individuals, business owners, and corporations alike. Designed to liquidate assets, discharge debts, reorganize expenses, and generally give the filer a fresh start while maintaining the fair treatment of creditors, bankruptcy in the U.S. is a process that can fix a lot more than most realize. As American citizens, our freedoms extend to self-representation in all courts of law, including the U.S. Bankruptcy Courts. Utilizing the counsel and support of Behm Law Group, Ltd.’s bankruptcy attorneys in Waseca, MN when filing for bankruptcy, however, can protect you from the potentially costly errors you may make through self-representation.

Representing yourself and filing your own bankruptcy petition is an option, but it can mean you’ll be taking many risks. At the very least, it can be difficult to reach optimal results in your bankruptcy case without the help of a trained professional.

Filing your own bankruptcy petition means you risk case dismissal or court prejudice and forgo the protection of an experienced bankruptcy attorney.

Mistakes When Filing for Bankruptcy:

Mistakes on the required paperwork are the most common reasons a case is dismissed. Gathering the necessary information about household or business income sources, debts, loans, assets, properties, and expenses can be a difficult process. Bankruptcy attorneys have the knowledge, experience, and resources to put together a flawless petition with no room for inaccuracies. Self-representation, on the other hand, offers countless opportunities for small mistakes that may lead to case dismissal. Misrepresentation of finances can appear as fraudulent and can provide a basis for the court to reject your bankruptcy petition.

Protection When Filing for Bankruptcy:

One of the roles of a bankruptcy attorney is to provide legal protection for clients. Business or individual, all filers may be experiencing aggressive collection action from lenders. The automatic stay in a bankruptcy case halts collection action for a period of time, but some creditors may petition the bankruptcy court for the lifting or termination of the automatic stay for certain debts. If approved, those creditors can collect or repossess collateral. A bankruptcy attorney can protect a client from harassment and aggressive actions by creditors, collection agencies, debt collectors, and any other lenders before the automatic stay is lifted.

Above all, a bankruptcy attorney offers expertise, experience, knowledge, and legal protection. Forfeiting your right to attorney protection and guidance may result in a less than successful bankruptcy case.

We’ll take a critical part in creating a positive outcome for your case from beginning to end. Relieve the stress of managing your own bankruptcy case and eliminate risks of failure. Contact Behm Law Group, Ltd. today at (507) 387-7200 for more information about working with an expert bankruptcy attorney in Waseca, MN.

 

 

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Limitations of the Automatic Stay When You File for Bankruptcy in Windom, MN

Whether you file for Chapter 7 liquidation bankruptcy or Chapter 13 debt reorganization bankruptcy, you benefit from the immediate action of the automatic stay as soon as your bankruptcy petition is filed. The automatic stay is a wonderful tool designed to prevent creditors from collecting on debts that may be discharged or restructured during the bankruptcy process. It also prevents collections and blocks harassment from your creditors during the period of your bankruptcy case. If you’re struggling financially, the short-term effects of the automatic stay and the long-term effects of bankruptcy as a whole might be a viable option for recovery. Behm Law Group, Ltd. offers legal advice and assistance when you file for bankruptcy in Windom, MN.

The automatic stay provides a wide range of advantages (link to blog post “The Power of Automatic Stay When You File Bankruptcy in Fairmont, MN”) along with its ability to prevent your creditors from collecting debt payments during the stay period. In addition to the many ways the automatic stay can help you, however, there are some things it cannot do, including:

1. Halting certain lawsuits.

Lawsuits that affect minors (i.e. children of the parties involved) are protected against most financial proceedings, including bankruptcy. For example, the automatic stay cannot stop a lawsuit that involves paternity or child custody tests, nor can it stop a lawsuit that attempts to modify, collect, or confirm child support payments.

2. Halting certain tax requirements.

The automatic stay can’t alter or prevent IRS tax audits or issues regarding tax deficiency. Additionally, the automatic stay cannot prevent the IRS from demanding your tax returns and demanding payment for taxes owed.

3. Halting wage garnishment for pension loan repayment.

If you took out a loan from your retirement pension, the automatic stay doesn’t stop the garnishment of your income (including wages, salary, commissions, bonuses, and any other sources of income) for the repayment of that loan. This is the only condition where the automatic stay is not effective in preventing wage garnishment.

4. Halting criminal sentence proceedings.

If you’re in the process of undergoing criminal proceedings involving debt, or otherwise, the automatic stay is only able to impact the conditions of your sentence that involve debt repayment. The automatic stay does not change the parts of your sentence that involve community service, therapy, jail time, or other requirements.

Despite the many advantages of the automatic stay, these situations remain unchanged during the stay period when you file for bankruptcy. Additionally, if you’ve filed for bankruptcy the previous year, the automatic stay period will end after 30 days, unless you can prove the need for an extension.

If you’re considering filing for bankruptcy in Windom, MN, and want to learn more about how the automatic stay can apply to your situation, contact Behm Law Group, Ltd., at (507) 387-7200 today for more information.

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The Power of Automatic Stay When You File Bankruptcy in Fairmont, MN

Most Americans over 30 have around $150,000 in various debts including mortgages, car loans, credit cards, medical bills, taxes, and other accumulated debts. This debt can often begin to cripple the quality of life for individuals and families who cannot maintain regular debt payments and still meet standards for necessary expenses. If your financial obligations become overwhelming, the advice of a bankruptcy lawyer can set you on the right path to debt relief and a fresh beginning. Behm Law Group, Ltd. offers legal support from start to finish when you file for bankruptcy in Fairmont, MN.

When you declare bankruptcy, the automatic stay is immediately set in motion. The automatic stay prevents your creditors from collecting debt payments, harassing you over missed payments, or filing lawsuits against you. It works, essentially, to prevent your creditors from doing anything to collect their debts.

In many cases, automatic stay has the power to alter your financial situation in several ways. This includes:

  1. Halting garnishment of your wages from all parties until the stay is lifted. This prevents any garnishment from all your sources of income including salaries, wages, pensions, commissions, bonuses, and retirement funds.
  2. Halting an eviction process until the stay is lifted. Your landlord cannot evict you based on failure to pay rent during the period of your automatic stay. If your landlord obtained a court order against you for eviction or wrongful possession before you filed for bankruptcy, however, the automatic stay does not stall the process. Additionally, in the case where you’re in poor favor with your landlord for misuse of property, going against lease terms, endangering other tenants, or selling illegal items on the property, the court will side with your landlord, and the automatic stay will only be in effect for a short time.
  3. Halting a foreclosure until the stay is lifted or bankruptcy discharges your mortgage or establishes a new payment plan. If you are delinquent with your mortgage payments and you plan to keep your house, you could pay those past due mortgage payments back in a chapter 13 plan and cure or bring current your mortgage obligation. If you want to simply surrender your house and discharge your mortgage debt, Chapter 7 will allow you to do that. The mortgage creditor would foreclose on your house and any debt you owe on the house would be discharged.
  4. Halting utility shut-off until the stay is lifted. For at least 20 days from the start of your bankruptcy petition the automatic stay prevents your water, gas, and electricity providers from shutting off your utilities. This period could be extended throughout your bankruptcy case during the winter months.

For more information about the legal assistance Behm Law Group, Ltd. can provide when you file for bankruptcy in Fairmont, MN, contact us at (507) 387-7200 today.

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Debt Punishment of the Past Compared to Today’s Bankruptcy in St. Peter, MN

For as long as the concept of trade has been around, so has the concept of debt. Today, debtors have a wide range of options to recover from financial difficulties. Filing for bankruptcy is one of the most viable options for debt recovery we have as US citizens. Bankruptcy is designed to handle a filer’s debts in a process that provides fair treatment of creditors’ claims and results in a manageable situation for the filer. At Behm Law Group, Ltd., we have seen the system of bankruptcy in St. Peter, MN, prove its worth time and time again with each successful financial recovery our clients make.

We provide legal support with Chapter 7, 12, and 13 bankruptcies for community members and businesses in Mankato, MN, and the surrounding Southern Minnesota area, and we stand by the value of a successful bankruptcy case in helping our clients recover.

While the system of bankruptcy is a great option today, the debtors of the past didn’t have things so easy. In fact, there has been a wide range of harsh punishments for debtors throughout history.

A few of the most notorious punishments for debtors in history include:

  • Debt Slavery Laws: Up until 326 BCE, “debt slavery” in Rome and Greece was a common practice. Because there was no option for bankruptcy, debtors would instead pledge their labor as a security interest on loans. Creditors could take advantage of this security pledge and keep debtors in a slave-like internment until they could repay their debts. Slave bondage could even be passed from parent to child.
  • Death Penalty: Under the reign of Genghis Khan, debtors were given even fewer choices if they could not repay their loans. While they had the option to declare a form of relief akin to bankruptcy, after the third declaration, they were sentenced to death.
  • Medieval Penalties: Colloquially known as the Dark Ages, the medieval times have a reputation for hard conditions and harsh punishments. Debt punishments were no exception and included anything from flogging and branding to execution.
  • Imprisonment: Today, debts are not often associated with prison. Even fraudulent behavior in a bankruptcy case will most likely result in no harsher penalty than the dismissal of that case or the denial of debt relief. In Victorian England, however, failure to pay debts was punished with prison sentences or with exile to the British Empire’s “prison island” of Australia.

Debtors in today’s legal system can rest easy and know that they have many options to settle financial woes through the system of bankruptcy. Whether you qualify for Chapter 7 liquidation or Chapters 12 and 13 reorganization, the process of bankruptcy can turn the tides of unmanageable debt.

Contact Behm Law Group, Ltd. at (507) 387-7200 for expert support and legal counsel from beginning to end when you choose to file for bankruptcy in St. Peter, MN.

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Getting Through the Holidays During Chapter 13 Bankruptcy in Redwood Falls, MN

From October to January, national spending on holiday decorations, parties, and gifts increases by an average of $500 to $1,000 per person. This extra spending during the holidays is a luxury that many consumers may take for granted. Families living below the poverty line often struggle to make ends meet during the holiday season more than any other time of year, and households working through Chapter 13 bankruptcy have fairly strict options for spending during the holidays. If you’re considering filing for bankruptcy in Redwood Falls, MN, or if you’re working through a Chapter 13 repayment plan during the holiday season, Behm Law Group, Ltd. can help.

Chapter 13 bankruptcy is designed to restructure your debts into a manageable repayment plan, and it can be a highly effective process for resolving debts without crippling the debtor. When it comes to extra spending, however, the budget of a Chapter 13 plan can make things difficult.

Spending Limits

The problem with a Chapter 13 repayment plan during the holiday season is the limitation on disposable income. When you propose a repayment plan to the U.S. Bankruptcy Court, you disclose all of your debts, expenses, and income.

Your income is broken into categories of discretionary and disposable. The income you would normally spend during the holidays is a part of your disposable income, but during a Chapter 13 repayment period, most of that income must be used to repay your unsecured creditors.

Repayment plans last three to five years, and despite the rise in national spending during the holidays, your budget must be built around the requirements of your plan. Your budget in a chapter 13 case will have some cushion such that you will be able to use some of your disposable income to purchase gifts, etc. during the Holiday Season.  However, during a chapter 13 case there’s naturally going be to less room for spending money on gifts, decorations, or any other holiday luxuries than would be the case if one were not in a bankruptcy proceeding.  Most of your disposable income still must be applied to the benefit of your unsecured creditors.

Ways to Spend

There are some options that make it possible for your household to have holiday spending money during a Chapter 13 plan:

  • You can modify your repayment plan for a month or two and use the excess money on holiday festivities
  • You can borrow certain amounts from your 401(k) and resolve to replace that amount when your repayment plan period ends
  • When you receive your tax refund, your trustee will take most of that income since it’s considered disposable income, but will often leave a decent part of it for you to save or spend. If you plan ahead, this saved money can be used during the holidays

While these options may not be advisable during any other time of the year, it might be worth having holiday cheer to take advantage of these options.

If you’re considering filing for Chapter 13 bankruptcy in Redwood Falls, MN, Behm Law Group, Ltd. can help you throughout the process and offer legal advice and support for spending options during the holidays. Contact us at (507) 387-7200 today for more information.

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Filing for Bankruptcy in Mankato, MN, with an Income of $100,000

Bankruptcy in the U.S. is designed to help those struggling to meet their financial obligations and debt payments each month. Because bankruptcy is generally linked with extreme financial circumstances, it’s a process that’s often associated with low incomes and financial destitution. There are many cases, however, when an individual has a high income yet still qualifies for bankruptcy. Even if you have a steady, high income, bankruptcy might still be the right option for you. Behm Law Group, Ltd. offers legal advice and counsel to those considering filing for bankruptcy in Mankato, MN.

Many reasons exist why an individual consumer in the American economy might have accumulated debts they are unable to handle. Credit cards, mortgages, car loans, and medical bills are the most common causes of debt that can lead to a bankrupt household, even with a high income supporting that household.

The median income in 2017 was approximately $60,000 a year, but with the financial pressure of debts, bills, and everyday expenses, many households that earn median or higher incomes struggle to make ends meet.

A recent NPR story interviewed several households across the country. Each household in this story had an income higher than the national median, yet each still faced financial difficulties. The balances of the household debts and incomes were close, and many had higher debt-to-income ratios than families who get by just fine on incomes lower than the national median.

Because of this debt-to-income ratio, each of these households could benefit from filing for bankruptcy and receiving debt relief in the form of liquidation (Chapter 7) or debt reorganization (Chapter 13).

Chapter 7 With a High Income

It’s possible for households with an income higher than the state median to qualify for Chapter 7 bankruptcy. Most households that qualify will often have incomes lower than the median, which allows them to automatically pass the Means Test. However, you can still sometimes pass this test if your total monthly household income is less than your total monthly household living expenses.

Chapter 13 With a High Income

If you don’t pass the Means Test, you may still file for Chapter 13 bankruptcy. If you file for Chapter 13 bankruptcy your debts will be restructured, and you’ll only be required to repay a fraction of your overall total debt.

Even if you have a high income, you may still benefit from filing for Chapter 7 or Chapter 13 bankruptcy. Contact Behm Law Group, Ltd. today at (507) 387-7200 for more information about filing for bankruptcy in Mankato, MN.