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Bankruptcy Options for Student Loan Debt Relief in Owatonna, MN

Bankruptcy is an effective course of action for alleviating several types of debt, including credit card debt, mortgages, car loans, and medical bills. The system of bankruptcy is designed to provide debt relief if a filer is struggling with these common financial woes, but it’s not a system necessarily meant to relieve another very common debt: student loans. In fact, at Behm Law Group, Ltd., we often counsel against filing for bankruptcy based on the goal of ridding only student debt. There are situations, however, where you can prove your circumstances demand student loan debt relief in Owatonna, MN.

In the case where you find you may be able to prove your inability to repay student loans, it’s crucial to have the legal assistance of a bankruptcy attorney. In order to obtain debt relief in a bankruptcy case for your student loans, you must be able to prove that you would suffer “undue hardship” if you were forced to repay those loans.

Undue Hardship

Undue hardship describes a situation in which you may be pushed into poverty and have minimal resources available to you for food, rent, clothes, healthcare, and transportation if you’re forced to continue paying a certain debt. In the case of repaying student loans, it’s very difficult to prove to a court that you may experience undue hardship.

You may have no income other than government support and may be able to prove you won’t be able to have a normal working life due to a disability, and yet, a court may still deny your request for student loan discharge. Without the right support during the legal navigation of student loans in bankruptcy (i.e. the help of a bankruptcy attorney,) it’s a long shot that you’ll have an argument that a bankruptcy court will approve.

How bankruptcy courts determine undue hardship for purposes of qualifying for student loan debt relief depends on where you live in the United States.  Some courts will use the Totality of Circumstances Test.  With this standard/test, a bankruptcy court can consider all aspects of your financial situation in determining whether you will be able to repay your student loan debt.  However, some courts in other areas of the United States use other tests. For example, another widely utilized test is the Brunner Test, which tests your situation against measures of poverty, the persistence of your current financial conditions, and your good faith in student loan repayment efforts. Other courts may use a test for Health Education Assistance Loans (HEAL) to determine if your student loans are unreasonably damaging your quality of life.

While you may be able to get student loan debt relief in bankruptcy, undue hardship can be difficult to prove. If you have questions concerning student loan debt relief in Owatonna, MN, contact Behm Law Group, Ltd. at (507) 387-7200 for a consultation today.

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Why You May Not Qualify for Chapter 7 Bankruptcy in Mankato, MN

If you’re struggling to meet debt payments and financial obligations with your income, you’re most likely eligible for Chapter 7 bankruptcy. The two main types of bankruptcy, reorganization and liquidation, are designed for individuals and businesses with very different financial situations. Reorganization bankruptcy (Chapter 13) is an option for those with higher incomes who want to keep their property in the process of filing. Liquidation bankruptcy (Chapter 7), however, is more suitable for those with lower incomes and debts that can be discharged in the process of filing. At Behm Law Group, Ltd., we can help you understand why you might benefit more from Chapter 7 bankruptcy in Mankato, MN, given your situation.

While the risk of loss of some property is higher in Chapter 7, Chapter 7 is generally your best option for recovering financially and getting a fresh start quickly, even with a low income. The following outlines the several reasons why you might not be eligible for Chapter 7 bankruptcy.

Income: To qualify for Chapter 7 bankruptcy, you must pass the Means Test, which determines your income level based on the median Minnesota income level of a household similar to your own. To pass this test and file for Chapter 7, your income must be lower than the Minnesota median income level for a household of your size.  Your income includes any sources of monetary gain except, generally, income tax refunds and Social Security benefits.  Income from inheritances received and retirement accounts that may have been cashed out also may sometimes be excluded from the calculation because such income sources would not constitute regular sources of income.

Repayment: Under 11 U.S.C. §707(b)(2), if your income is higher than the state median income for your household size, you might still be eligible for Chapter 7 under the condition that your income, as determined by this provision, would pay less than 25 percent of your nonpriority unsecured debts or $6,000.00, whichever is greater, or $10,000.00.

Failure to Meet Requirements: Before you can petition for Chapter 7, you must meet several requirements. First and foremost, you must attend a credit counseling course with an approved credit counseling agency within 180 days prior to filing. You must also complete certain paperwork and pay certain filing fees. Our expert attorneys can guide you through these sometimes-complicated requirements.

Previous Bankruptcy: If you filed for bankruptcy within the last 180 days and your case was dismissed for willful failure to abide by orders of the bankruptcy court, for acts of fraud, abuse, or by your own request or following the filing of a request for relief from the automatic stay by one of your creditors under 11 U.S.C. §362, you will not qualify for Chapter 7 bankruptcy.  Under 11 U.S.C. §109(g), you must wait 180 days after the dismissal of your previous case to qualify for Chapter 7 again.

Previous Discharge: If you filed for bankruptcy relief and received a discharge in Chapter 7 in the past eight years or if you filed Chapter 13 bankruptcy and received a discharge in the past six years, you will not be eligible to receive a discharge in a new case in Chapter 7 bankruptcy.

Fraud: Of course, in any bankruptcy case, your petition will be dismissed, and you will not be eligible for any form of bankruptcy if you’re found to exhibit fraudulent or abusive behavior relevant to your case.

To learn more about your eligibility and how filing for Chapter 7 bankruptcy in Mankato, MN, can give you a fresh start, contact Behm Law Group, Ltd. at (507) 387-7200 today.

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Trustee Compensation in Cases of Chapter 13 Bankruptcy in Owatonna, MN

If you are considering filing for bankruptcy, you must prepare to work with a bankruptcy trustee for the entirety of your case. Your trustee will oversee your case at each stage, acting as an administrator for legal procedures and a communicator between all parties involved. If you qualify for Chapter 7, your case will likely only last a few months. However, if Chapter 13 is your best option for filing for bankruptcy, your plan will last three to five years, and you will work with your bankruptcy trustee throughout that period. Behm Law Group, Ltd. can help you throughout the process of filing for Chapter 13 bankruptcy in Owatonna, MN, as well as provide information about the role of your trustee.

Your trustee is a government-appointed administrator for your bankruptcy case, and the trustee is compensated for his or her work in your case in a number of ways. In a Chapter 7 case, a trustee is compensated with a combination of fees and asset sales. With reorganization bankruptcy, the trustee cannot rely on asset sales, and because a Chapter 13 case lasts several years, the trustee must find compensation from other sources.

Plan Payment

The primary source of compensation for a standing trustee in a Chapter 13 case is through the repayment plan. A certain percentage of the monthly payments you make for your repayment plan go to compensate the trustee handling your case. This percentage is limited to a maximum of 10% of any plan payment amount. In certain cases, 10% of a monthly plan payment is a hefty sum; however, the trustee’s salary is currently limited to $145,000 a year, and the percentage of monthly compensation is adjusted to remain within this limitation.

The costs of operating a trustee’s office, the costs of any parties the trustee hires within your case, and any other costs incurred in your case are covered by the compensation paid to the trustee from your monthly plan payments and the plan payments from other chapter13 cases that the trustee is administering.  A trustee may have thousands of cases to administer.

Operating Budgets

At the start of your case and throughout the period of your Chapter 13 repayment plan, your trustee must file operating budget proposals to the Office of the United States Trustee. These proposals give budget information that includes all costs incurred during not only your repayment plan period but also the repayment plan periods of other cases the trustee may be administering. When the trustee’s operating budget is approved, the trustee is given permission to take a percentage of your monthly payments that will serve as total trustee compensation. This percentage may change if the budget changes throughout your 3 to 5 year-long plan.

If you are considering filing for Chapter 13 bankruptcy in Owatonna, MN, and would like to learn more about the process and the roles of your trustee and attorney, contact Behm Law Group, Ltd. at (507) 387-7200 today.

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Handling Medical Bills During Chapter 13 Bankruptcy in St. Peter, MN

The individuals that file for bankruptcy in the U.S. often choose this option to relieve several kinds of accumulated debts. Most consumers hold the five common types of debt handled in a bankruptcy case, including credit card debt, mortgage debt, car loans, tax debt, and medical bills. Those struggling with the financial obligation of repaying these debts may be overwhelmed with the cost of those payments in addition to the demands of necessary living expenses. The restructuring of your debts when you file for reorganization bankruptcy might be your answer if you’re having difficulties meeting loan payments. Behm Law Group, Ltd. offers legal advice and assistance throughout your case when you file for Chapter 13 bankruptcy in St. Peter, MN.

While medical bills are often one of the main reasons those with accumulated debts file for bankruptcy, they’re also one of the most effectively-treated types of debt in bankruptcy, even in a Chapter 13 case.

Medical Expenses and Debt

Because medical bills are often unexpected and expensive financial obligations, they can be the tipping point for those on the brink of filing for bankruptcy. In fact, many attribute medical bills as a primary factor for bankruptcy filings in the U.S. The good news is that even if you don’t qualify for Chapter 7 bankruptcy, your medical bills can still be effectively alleviated with Chapter 13 bankruptcy.

Chapter 13 and Medical Bills

When you file for Chapter 13 bankruptcy, your debts are divided into two basic categories. Debts involving assets that serve as collateral are considered secured debts, and you either have to repay these debts in your repayment plan or surrender the assets that serve as collateral or security for those debts (for example, your mortgage and your car loans). Debts that do not have any assets that serve as security or collateral are considered unsecured debts.

Unless you pledged property as collateral regarding the payment of a medical expense, your medical bills are considered unsecured debts, and they’ll be handled just like your credit card debt, unsecured personal loans, and all other unsecured debts. After your chapter 13 bankruptcy plan is concluded, the remaining balances of your medical debts will be fully discharged.  How your medical bills are handled in your Chapter 13 case varies depending on your situation, but because bankruptcy is designed to restore your financial wellbeing, the result will help you back onto your feet.

If you feel overwhelmed in debts and financial obligation, yet maintain a steady income, filing for Chapter 13 bankruptcy in St. Peter, MN might be the right choice for you. Contact Behm Law Group, Ltd. at (507) 387-7200 today for more information about how bankruptcy can help you.

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Filing for Bankruptcy in Luverne, MN, Before or During the Holiday Season

The holiday season is a time spent with family and friends, giving gifts, and attending festive gatherings. It’s also a time when the entire country greatly increases its spending. The pressure of spending more money during this time can place undue stress on those struggling with debt or going through a bankruptcy proceeding. However, the holiday season is actually the best time to file for bankruptcy. Behm Law Group, Ltd.  offers legal advice and assistance if you’re considering filing for bankruptcy in Luverne, MN, this holiday season.

It may seem counterintuitive and in un-holiday-like spirits to file for bankruptcy during this time of cheer and abundance, but because of the timeline involved, filing before December 31st may be your best option.

There are several reasons why you may benefit from filing for bankruptcy before December 31st, and some are directly linked to what happens during the holidays. For example:

  1. Christmas or year-end bonuses give you an overall increase in your income. These bonuses are considered verified parts of your total income, and they are subject to scrutiny in your bankruptcy case.
  2. Gifts as cash or check are also added into your gross income, even though they are personal non-employment related transactions. These gifts from family and friends can be considered as income in your bankruptcy case.

This change in your income comes into play when you complete the Means Test. To qualify for Chapter 7 liquidation bankruptcy, you must satisfy the Means Test, meaning your income must be lower than the state median for a similar household size. The slight increase in your income during the holiday season might be the difference between filing for Chapter 7 and being forced into Chapter 13.

The timeline for the bankruptcy Means Test takes into account the last six months of your income. However, the six-month period prior does not end directly on the date you file for bankruptcy relief. Instead, if you file your petition on or before December 31st, the six-month period ends at the end of November. This means that the income as calculated for the preceding 6 months (June – November) would be less for purposes of completing the Means Test, giving you a better chance of qualifying for Chapter 7 bankruptcy.  If you were to file bankruptcy after December 31st, all of the income you would receive in December from bonuses, profit sharing, commissions or gifts would be included in the 6 month look-back period (July – December).  Your income could be artificially inflated by these sources such that you would not satisfy the Means Test and you would have to file a chapter 13 bankruptcy.

If you’re considering filing for bankruptcy in Luverne, MN, the date you file may affect your petition. For more information about bankruptcy and the Means Test, contact Behm Law Group, Ltd. at (507) 387-7200 today.

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Understanding Fraudulent Behavior When Filing for Bankruptcy in Windom, MN

Bankruptcy relief is a very powerful remedy.  Quite literally, with a few exceptions, all of your legal, contractual obligations to pay debts are discharged and nullified.  Creditors can never pursue you for collection on those debts.  If you do everything that is required by the bankruptcy code and the associated bankruptcy rules, the debt relief you receive is a certainty.  When you choose to file for bankruptcy relief, no one comes to your house to see what you have and take inventory of your assets.  However, the benefit of bankruptcy relief is only for the “honest but unfortunate debtor”.  In other words, you must be completely forthright and honest in disclosing and listing all of your assets and all of your creditors. You’ll be required to review your bankruptcy petition and related schedules with your bankruptcy attorney and you will be required to sign off on them under oath and subject to penalty of perjury.  One way a bankruptcy case can be rejected is if one intentionally fails to list all of one’s assets and creditors.  Another way a bankruptcy case can be rejected is if one is sloppy and negligent in preparing and reviewing one’s bankruptcy petition and schedules.  Mistakes and errors in one’s sworn bankruptcy petition as a result of sloppiness or inattentiveness to necessary details can be often construed as an intentional failure to list one’s assets and creditors.  If one intentionally fails to list one’s assets and creditors or if mistakes are made due to one’s sloppiness in preparing a bankruptcy petition, one could be accused of bankruptcy fraud and the bankruptcy court could completely deny one’s bankruptcy relief.  If the supposed fraud is serious enough, one could even be prosecuted, fined and incarcerated.  Behm Law Group, Ltd.  offers expert legal advice and assistance to help you avoid conduct or mistakes that could be construed as fraudulent behavior when you file for bankruptcy in Windom, MN.

With the help of an experienced bankruptcy attorney, it’s much less likely for someone filing for Chapter 7 or Chapter 13 bankruptcy to commit unintentional fraud. When you choose to complete your bankruptcy petition without professional assistance, your chances of making serious mistakes—an occurrence that can come in the form of providing inaccurate information on your bankruptcy forms and schedules, failing to attend required meetings/hearings, failing to undergo credit counseling prior to filing, or several other rare circumstances—are increased.

In addition to the several reasons you can accidentally commit fraudulent behavior on your bankruptcy petition, there are many ways one can commit willful bankruptcy fraud.

Willful Fraud

If you file a bankruptcy petition with clear fraudulent intentions, our attorneys will decline to work with you. For example, if your situation reveals that you’ve committed any of the following actions, we will not represent you:

  • Created false documents
  • Failed to list all assets
  • Withheld or destroyed documents relevant to your case
  • Hid a property transfer, including personal gifts of property that may be involved in your bankruptcy case
  • Bribed or paid-off a creditor, lender, or other party to hide information pertinent to your case

In more common circumstances, filers who willfully commit fraudulent behavior may have done the following:

  • Provided inaccurate income and expense information in a Chapter 7 or Chapter 13 case or prior to filing for bankruptcy relief or when submitting credit applications to creditors from whom one may have sought a loan
  • Purchased various items, such using credit cards to engage in gambling activities, not identified as “necessities” prior to filing for bankruptcy.
  • Writing personal or business checks while planning to file for bankruptcy in a short period (i.e. writing a bad check)

If you have engaged in any of these or like activities, you must fully disclose every detail to your bankruptcy attorney before you elect to file for bankruptcy relief.  Such conduct could be a basis for a finding of bankruptcy fraud.  Indeed, bankruptcy may not even be an appropriate remedy for you to pursue.  If you’d like to discuss filing for bankruptcy in Windom, MN, and take full advantage of the debt relief benefits provided by the bankruptcy code, contact Behm Law Group, Ltd. at (507) 387-7200 today.

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Exemption Basics in Chapter 7 and Chapter 13 Bankruptcy in Pipestone, MN

Whether you file for liquidation bankruptcy (Chapter 7) or reorganization bankruptcy (Chapter 13), a bankruptcy estate – a legal entity that is separate and distinct from you, the bankruptcy filer – will be created by operation of the bankruptcy code.  All of your property will essentially be dumped into the bankruptcy estate and, for a time, the bankruptcy estate will actually own the property.  However, Congress did not want people to emerge from the bankruptcy process completely destitute and with no ability to reorganize their financial situation.  While there is a risk that one may lose some assets when one files for bankruptcy relief, such a situation is the exception rather than rule.  Most people go through bankruptcy and retain all of their assets.  Congress allocated various value allotments called “bankruptcy exemptions” that people can assert and absorb most or all of the property back out of the bankruptcy estate.  Depending on your situation and the exemptions you claim, Behm Law Group, Ltd. can help you understand how your exemptions work and what role they play when you file for bankruptcy in Pipestone, MN.

 

When exemptions come into play during your bankruptcy case, you may use them to protect your value interest or equitable interest in your assets from liquidation.  There is a common misunderstanding that one gets to keep a car or a house, etc. in bankruptcy.  It is much more accurate to say that one gets to protect or keep an equitable interest in an asset.  For instance, if you own a home worth $200,000 and the mortgage loan is $150,000, your equitable interest is $50,000.  It is this $50,000 that you would protect with the applicable bankruptcy exemption.  The applicable bankruptcy exemption would not make the underlying mortgage go away and you would still have to pay it or the mortgage lender could initiate foreclosure proceedings against your house.  Every individual filer has access to the bankruptcy exemptions in both Chapter 7 and Chapter 13 cases.  As indicated above, the policy goal of bankruptcy is rehabilitative and the intent behind the bankruptcy code is not to leave a bankruptcy filer completely destitute.  Rather, the intent is to allow a person some property with which to reorganize one’s financial situation and move forward free of debt entanglement (other than those debts one actually wants to retain).

 

In Minnesota, a bankruptcy filer can choose either the exemptions provided under Minnesota state law or the exemptions provided under the federal bankruptcy code.  Whether one elects one or the other depends largely on how much equity or value one has in one’s homestead.  Again, equity is the value of an asset in excess of the debt owed on that asset.  For instance, presume again that one owns a home worth $200,000 and that one owes $150,000 on the subject mortgage.  One, therefore, has $50,000 equity.  One would protect this equity with one’s homestead exemption.  The homestead exemption under the Minnesota state exemptions is $390,000 for a homestead that is located in a city/town and $975,000 for a rural homestead or farm.  The homestead exemption under the federal bankruptcy code is $23,675.  In this example, given the $50,000 equity figure, one would want to use the exemptions provided under Minnesota state law where one could protect the full $50,000.  If one were to choose the exemptions provided under the bankruptcy code, one could protect only $23,675 and the bankruptcy trustee administering one’s case could sell the house, pay off the $150,000 mortgage and pay the bankruptcy filer the exemption claim of $23,675 and use the rest to pay one’s creditors.

 

The analysis regarding one’s property and the applicable bankruptcy exemptions needed to protect it can be highly nuanced and exceedingly detailed and whether one chooses the exemptions provided under Minnesota state law or those provided under the federal bankruptcy code depends on one’s unique circumstances.  For more information about how exemptions can benefit your situation when you file for bankruptcy in Pipestone, MN, contact Behm Law Group, Ltd. at (507) 387-7200.

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Understanding GAL Fees When Filing for Bankruptcy in Mankato, MN

Just like the rest of the individuals in the U.S., those considering bankruptcy are often juggling many life situations. From divorce to custody battles, many of these situations involve legal procedures and can be difficult to reconcile in the face of filing for bankruptcy. If you’re considering filing for bankruptcy in Mankato, MN, Behm Law Group, Ltd. offers legal counsel to help you balance your life outside of the bankruptcy process.

One common situation many of our clients find themselves working through before or during their bankruptcy petition is divorce. If you’re working through a divorce or are recently divorced, there are a number of ways it may affect your bankruptcy case.

If a state court has appointed a Guardian Ad Litem (GAL) during your divorce, you may have to pay for that obligation throughout your bankruptcy case. There are some circumstances, however, where GAL fees can be discharged which means that you would not have to continue paying them.

What is a GAL?

In cases of divorce when a legal dispute over the custody of children arises between spouses, the court will appoint a GAL to look out for the best interests of the children. The GAL investigates the parents and the relationships the children have with each of the parents. The GAL uses this investigation to recommend to the court which parent should have primary custody. The parents are responsible for paying the fees for the GAL.

Discharge of GAL Fees

In many cases, GAL fees are considered domestic support obligations, and, like alimony and child support, they sometimes cannot be discharged during Chapter 7 or Chapter 13 bankruptcy cases. Nevertheless, like all other domestic support obligations in bankruptcy, there are some times where GAL fees can be fully or partially discharged.  If you and your ex-spouse are jointly liable, you may be able to discharge a portion or all of the fees owed if the right to collect the fees has been assigned or sold to a third-party collection agency or debt purchaser.

While your chances for GAL fee discharge may be limited, our bankruptcy attorneys will work with you to obtain the broadest debt relief possible.  For more information about the assistance we provide regarding the filing of bankruptcy in Mankato, MN, contact Behm Law Group, Ltd. at (507) 3087-7200 today.

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Case Dismissal With or Without Prejudice When Filing for Bankruptcy in Windom, MN

In the U.S., bankruptcy is an option for individual consumers and small businesses alike. Despite the access that all parties have to the bankruptcy code, today’s bankruptcy laws have many precautions to prevent filers from taking advantage of the system. Whether you commit fraudulent behavior purposefully or accidentally during your case doesn’t matter to the court when it comes to a case dismissal. Avoiding difficulties during your case can be as simple as taking advantage of the services a trained bankruptcy lawyer provides. At Behm Law Group, Ltd., we offer expert legal advice and we can be of assistance to you when you file for bankruptcy in Pipestone, MN.

The differences between mistakes and fraud are not always considered in the outcome if the court decides to dismiss your bankruptcy case, but there are still two standing descriptions of how your case can be dismissed: “with prejudice” and “without prejudice.”

Dismissal with Prejudice

If you’ve displayed willfully fraudulent behavior or purposefully disobeyed court orders, your case may be dismissed with prejudice. Your case could also be dismissed and you would be prohibited from filing for bankruptcy relief again for 180 days if you requested a dismissal of your bankruptcy case after a creditor filed for relief from the automatic stay.  Learn more about dismissal with prejudice here.

Dismissal without Prejudice

While your case is still dismissed, you land yourself in a slightly better situation if it’s dismissed without prejudice. The biggest difference between dismissal with prejudice versus dismissal without prejudice is that you can file a bankruptcy case again immediately if your previous bankruptcy case was dismissed without prejudice. However, there may be limitations set on the automatic stay when you choose to file for bankruptcy relief again.

You may have your case dismissed without prejudice if you made a mistake on your petition such as a missing or incorrect form, missing pay stubs and other supporting documents, not paying court fees, and not attending a credit counseling course or other mandatory meetings. You can also have your case dismissed without prejudice if you stop making payments on a Chapter 13 repayment plan or if you’re not eligible for any form of bankruptcy.

Because filing for bankruptcy is such a complex legal process, it’s generally in your best interests to make use of the services qualified legal professionals offer. For the help our experienced attorneys provide when you file for bankruptcy in Pipestone, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.

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Stripping Secured Liens on Property During Chapter 13 Bankruptcy in Waseca, MN

While Chapter 7 bankruptcy is designed to help individuals and small businesses with low incomes and dischargeable debts, Chapter 13 is more beneficial to those who may have higher incomes yet still struggle with financial obligations. Because in most cases you cannot qualify for Chapter 7 bankruptcy with an income higher than the Minnesota median income level, Chapter 13 can be your saving grace for relieving debt and restructuring your finances in a manner that is suited to your income. If you’re considering filing for Chapter 13 bankruptcy in Waseca, MN, Behm Law Group, Ltd. can offer legal advice and assistance throughout the process.

The process of debt reorganization that takes place during a Chapter 13 case requires the examination of your different debts to determine how they can be handled. One aspect of your debts and your property that is analyzed is the subject of liens your creditors may have on your house, vehicle or other property.  Creditors with such liens have debts that are secured or collateralized by your property.  If you don’t pay the creditors, they can take their collateral, sell it and use the sale proceeds to retire the debts you owe them.

If your creditors have a secured liens on your property, you’ll have to continue repaying those debts directly to those creditors during your Chapter 13 repayment plan. However, there are some ways you can strip secured liens from the property serving as collateral, thereby turning them into unsecured debts. In most Chapter 13 repayment plans, only small percentages of unsecured debts are paid back.

Strippable Liens

 If there is a “junior” lien on an asset you own, you may remove that lien and turn the secured debt into unsecured debt.  A common example of a junior lien is a second or third mortgage on your house.  For example, if you own a house that has a market value of $150,000.00 and there is a first mortgage with Creditor A in the amount of $155,000.00, a second mortgage with Creditor B in the amount of $25,000.00 and a third mortgage with Creditor C in the amount of $10,000.00, you have total mortgage debt in the amount of $190,000.00 against an asset that is worth $150,000.00.  The house is collateral for all three mortgages.  However, the mortgages with Creditor B and Creditor Care junior liens to the mortgage held by Creditor A.  They are lower in priority with regard to foreclosure rights or collection rights to the property.  The mortgages with Creditor B and Creditor C are wholly unsecured mortgages because the entire market value of the house is less than the amount of the mortgage held by Creditor A.  If Creditor A were to foreclose its mortgage on the house, Creditor B and Creditor C would get nothing because the entire foreclosure sale proceeds would be extinguished through payment on the mortgage held by Creditor A.

When you have wholly unsecured junior mortgages or junior liens on your house, such liens can be stripped off of your house through the Chapter 13 bankruptcy process.  When a junior lien is stripped, the subject mortgage debt, is treated as an unsecured debt.  It is no different than a credit card debt or a medical debt.  This means that you do not have to fully repay the debt.  It will be completely discharged when your chapter 13 bankruptcy is concluded.

Understanding when you can and cannot strip a junior lien can be difficult without the guidance of a qualified legal professional. Take advantage of the expert counsel our bankruptcy attorneys provide for your bankruptcy case. Contact Behm Law Group, Ltd. at (507) 387-7200 today for more information about filing for Chapter 13 bankruptcy in Waseca, MN.