Judgment Creditors and Your Assets with Chapter 7 Bankruptcy in Mankato, MN

If your debts and financial obligations put you in a position where you may qualify for Chapter 7 bankruptcy, it’s important to consider that option before one or more of your creditors place a judgment against you in court. If you stall in meeting debts payments but refuse to use bankruptcy options to recover from heavy financial obligations, your creditors have options to take matters to court. At Behm Law Group, Ltd., we encourage you to use the system set in place by the United States Congress to your advantage and file for Chapter 7 bankruptcy in Mankato, MN, if you qualify before your debt obligations lead to a more drastic situation.

Bankruptcy is a complex system of laws in place designed to protect debtors from being unable to resurface from drowning debts. However, that system is also designed to protect creditors, and it offers them several ways of regaining debts owed to them from debtors who do not or cannot meet scheduled payments. One of those options is by acting as a judgment creditor to use the courts approval in regaining what is owed to them.

What is a judgment creditor?  

If your creditor files a successful lawsuit against you and receives a money judgment, that creditor becomes a judgment creditor. Creditors cannot place judgment against secured debts, but any unsecured debts and nonpriority debts are susceptible to a judgment creditor. That title allows a creditor to find information about your assets and offers them more collection techniques than a normal creditor. A judgment creditor can forcibly take up to 25% of your net wages, collect from your bank account and other deposits, repossess certain items such as motor vehicles, and place liens against your properties and assets.

How do they gain information about your assets?

If your creditor has kept records of your debt to them over time, it can often be simple for them to find out what assets and properties you hold. Loan applications to your creditor, for example, give information about your name, address, employer, and certain asset information. The DMV can also provide information to judgment creditors about your registered vehicles including boats, cars, and recreational vehicles. Any real estate you own can also be easily searched on public online records.

If you’re struggling with multiple debts, it may be just a matter of time before your creditors file judgments against you. Filing for bankruptcy before then might save time and money and reduce the stress of legal action taken against you. For more information and to find out if you qualify for Chapter 7 bankruptcy in Mankato, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.

The Rise of Consumer Bankruptcy in Owatonna, MN, During the Summer

Bankruptcy in the U.S. has a number of seasonal patterns that have existed for years. These patterns show an increase or decrease in the rates of bankruptcy for consumer households and businesses depending on the status of the economy and certain other events—for example, tax season sees an annual increase in bankruptcy cases during April. For the times of year when bankruptcy becomes more likely an option for individuals and businesses, Behm Law group, Ltd. can help. Our experienced bankruptcy attorneys provide legal advice and assistance to those considering filing for bankruptcy in Owatonna, MN.

In comparison with the last few years, bankruptcy rates have shown an unusual increase in filings during June and July of 2017. The numbers in record showed around a 16% increase in bankruptcy cases from the same time the previous year. These additional cases include both consumer and business bankruptcies.

Though there is no exact pinpoint cause of this abnormal increase in bankruptcy rates, there are several economic conditions that have accumulated against individuals and businesses. These circumstances have pushed those considering bankruptcy into deeper and deeper financial struggle.

From dipping storefront stability due to an ever-growing online shopping market affecting businesses, to changing interest rates and debt treatment affecting most consumers, there is a wide range of aspects to take into account when understanding why bankruptcy is growing.

Although it seems dangerous for so many US businesses and households to rely on bankruptcy relief all at once, it remains a viable option for those struggling with debts and difficult financial obligations. With the help of Behm Law Group, Ltd. attorneys, small businesses and individuals can benefit from choosing to file for Chapter 7 liquidation or Chapter 13 reorganization bankruptcy.

Long-Term Benefits of Bankruptcy

  • Debt relief is the main benefit from filing for bankruptcy. If your debts are treated with Chapter 7, there are several debts you will not have to pay back, and if your debts are treated with Chapter 13, you’ll have a chance to restructure your repayments into a manageable plan in which you pay only small parts of your debts.
  • Credit relief is also a viable long-term option for those with completed bankruptcy cases. Although your credit will not reflect positive changes immediately, you can begin to rebuild your credit over time without the negative impact of accumulated debts.
  • An overall fresh start is possible with bankruptcy, and despite the disadvantages that bankruptcy may pose, the immediate and long-term advantages outweigh the economic damages that may affect you.

If you’re considering filing for bankruptcy in Owatonna, MN, this summer, or in the near future, our attorneys can be key in helping you put together a successful case. For more information, contact Behm Law Group, Ltd. at (507) 387-7200 today.

Benefits of Filing for Chapter 13 Bankruptcy in Marshall, MN, Over Chapter 11 Bankruptcy for Small Businesses

At Behm Law Group, Ltd., we work with individuals and small businesses filing for bankruptcy. Our experienced bankruptcy attorneys specialize in providing legal advice and assistance for Chapter 13, Chapter 7, and Chapter 12 bankruptcy. For small businesses struggling with debts and difficult financial obligations, bankruptcy might be a beneficial option. Behm Law Group, Ltd. can help local small businesses eligible to file for debt reorganization with Chapter 13 in Marshall, MN.

For any small business wrestling with financial problems, bankruptcy offers four options:

  • Chapter 12, which works as a system of debt reorganization but is only applicable to family farmers and fishermen
  • Chapter 7, which works as a system of debt discharge and asset liquidation
  • Chapter 11, which works as a system of debt reorganization and for which most businesses are eligible
  • Chapter 13, which works as a system of debt reorganization as well, but for which most businesses do not qualify

For most small businesses looking to restructure their debts, Chapter 11 is a common and viable option. However, if your small business qualifies for Chapter 13, it may be more effective to file for that form of debt reorganization instead of Chapter 11 for several reasons.

Why Chapter 13?

Chapter 13 works as a bankruptcy plan for individuals with regular income that own and operate their business with sole ownership. If your situation matches the requirements for Chapter 13 business bankruptcy, you can file a petition for yourself. This is beneficial because Chapter 13 acts more quickly than Chapter 11. For small businesses struggling with meeting current debt payments, using Chapter 13 allows them to immediately restructure those debt payments in a new repayment plan. The commitment period for repaying those debts cannot be longer than five years with a Chapter 13 plan. Debts must be restructured to fit in that time period, meaning the amount to be repaid will often be less than the amount in a Chapter 11 plan. There’s also a greater range in types of debts that can be discharged in a Chapter 13 plan than in a Chapter 11 plan.

 If you’re struggling with accumulated debts and financial obligations for your small business, filing for reorganization bankruptcy is often a helpful option. To find out more information about how to qualify for Chapter 13 bankruptcy in Marshall, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.

When Things Aren’t Straightforward During a Petition for Bankruptcy in Luverne, MN

Preparing for bankruptcy requires a significant amount of paperwork for the filer. The forms, schedules, and other paperwork involved in a bankruptcy petition are necessary to determine how your case will be handled. Filling out any of this information about your financial situation incorrectly can drastically impact how well a bankruptcy case can go. Behm Law Group, Ltd. provides important legal advice and assistance for those struggling financially. If you’re considering filing for bankruptcy in Luverne, MN, our bankruptcy lawyers might be your key to a successful case.

When you file for bankruptcy, you must list all of your debts in your bankruptcy paperwork. This includes mortgage debts, vehicle loans, tax debts, student loans, old utility bills, debts to friends and relatives, among others.  These claims of debt are often straightforward for individual consumer bankruptcy cases, but in some cases, claims can be more complicated. If your debts depend on several past actions or disagreements, they may fall into the categories of contingent, unliquidated, or disputed. 

Contingent Claims: When the amount of your claim depends on a pending event or decision, it is considered contingent. Cosigners on secured loans often face contingent claims when filing for bankruptcy because the principal signer is responsible for the debt until that signer defaults their claim.

Unliquidated Claims: In cases of unliquidated debts, a claim exists on paper, but its amount has yet to be determined. This often includes claims involved in pending legal cases such as lawsuits and insurance claims. Debts owed to your lawyer involved in pending cases are also considered unliquidated claims.

Disputed Claims: Whenever you and your creditor disagree on the amount or even the existence of a debt, it is a disputed claim. This can include personal debts, mortgages, and car loans, but it can also include tax debts in dispute with the IRS.

Finalized claims can be resolved during your bankruptcy case, but the end result depends on a number different aspects of your financial situation. For example, liens, creditor decisions, and the determination of pending events will all affect how your claims are decided.

For more information about how your claims will be handled during your case, contact Behm Law Group, Ltd. at (507) 387-7200 today. Our experienced lawyers can be the key to helping you prepare for bankruptcy in Luverne, MN.

Understanding Unsecured Debt and How It’s Treated During Bankruptcy in Windom, MN

In most cases of consumer bankruptcy, the debts accumulated will be partially made up of unsecured debts. Whether this means the filer has a large amount of credit card debt or simply a significant amount of personal loans, if you’re struggling with your debts, unsecured or otherwise, bankruptcy might be the right option for you. Behm Law Group, Ltd. can help you understand how your unsecured and secured debts are treated differently when you file for bankruptcy in Windom, MN.

Unsecured debts are treated differently in both Chapter 7 bankruptcy and Chapter 13 bankruptcy. The type of bankruptcy case you file under will decide the outcome of how unsecured debts change the way your bankruptcy case is handled.

What is Unsecured Debt?

There are many kinds of debt that fall into the category of unsecured debt. The most common of these is credit card debt, but several other types of debt many people encounter in life are also considered unsecured. The fundamental definition of unsecured debt is any debt that doesn’t use a tangible property as collateral. Any debt that involves a property, such as a home or a motor vehicle, is considered secured debt and is treated differently in both Chapter 7 and Chapter 13 cases.

Some other examples of unsecured debt include:

  • student loans
  • utility bill debts
  • income tax debts
  • personal loans not involving property
  • medical bills
  • pending court judgments
  • and, of course, credit debts in all forms

How are Unsecured Debts Treated?

In a Chapter 7 case, your unsecured debts will most likely be entirely discharged. There are, however, exceptions to this. For example, student loans are not subject to the general discharge granted in Chapter 7 or Chapter 13 cases.  In order to get student loans discharged, one must start an actual lawsuit against the student loan creditors and ask the bankruptcy court to specifically discharge the student loans. In a Chapter 13 case, the way your unsecured debts are paid in your chapter 13 repayment plan and how much of those debts are paid depends on the amount of disposable income you have.

If you’re considering bankruptcy because of your accumulated unsecured debts, contact Behm Law Group, Ltd. for legal advice and assistance. For more information about filing for bankruptcy in Windom, MN, contact us today at (507) 387-7200.

When and Why a Business Might Be Subject to Involuntary Bankruptcy in Pipestone, MN

In the majority of situations, a bankruptcy case is a voluntary legal process. However, Congress put provisions in the bankruptcy code so that it would be a fair process for both the filer and creditors involved in a case. While most cases of bankruptcy are set into motion by the choice of the filer because of accumulated debts and difficulty in meeting financial obligations, there are times when creditors can force a bankruptcy case upon the debtor. If you are facing involuntary bankruptcy in Pipestone, MN, Behm Law Group, Ltd. can help you through the process with legal advice and assistance.

Involuntary bankruptcy occurs very rarely, but it’s legal for creditors to file bankruptcy proceedings against their debtors. In most situations, involuntary bankruptcy is forced on businesses, but on some occasions, involuntary bankruptcy can be filed against an individual.

When Involuntary Bankruptcy Occurs

The bankruptcy code includes provisions that protect creditors against debtors who may refuse to pay their debts despite having viable assets which could be used to pay creditors. If a debtor isn’t paying debts to their creditors but has assets that could be used to repay creditors, it’s possible for creditors to file an involuntary bankruptcy against that debtor. Small businesses find themselves forced into involuntary bankruptcy more often because businesses typically have more assets than individuals.

If you own a small business and aren’t paying your debts but own a large amount of assets, your creditors can, sometimes, legally force you into bankruptcy. Because most individuals have significantly fewer assets compared to businesses, filing an involuntary bankruptcy is often unhelpful for creditors because the possible return to the creditors would be far less than the cost of forcing an individual into bankruptcy.

How It Works

If your creditors know you have assets but are refusing to pay your debts, they can file a petition to the bankruptcy court against you, requesting forced bankruptcy action.  Usually, three creditors must be required to do this.  If an involuntary bankruptcy is filed against you and if you don’t respond within 20 days, the bankruptcy court will allow creditors to go forward with the involuntary bankruptcy action. If you do respond, you’ll have a hearing and a chance to defend your situation. If you’re forced into involuntary bankruptcy, the process after that will be similar to a voluntary bankruptcy case.

If your creditors have threatened or have begun the process of petitioning your involuntary bankruptcy in Pipestone, MN, Behm Law Group, Ltd. can help. For more information about our bankruptcy lawyers and your case, contact us at (507) 387-7200 today.

The Good and Bad of Taxes After Debt Forgiveness in Mankato, MN

Whether you’re on your first, second, or third mortgage, debt gathered on your home over time is often a large factor in your bankruptcy case and how you are affected after your case is finished. If you’re considering filing for Chapter 7 or Chapter 13 bankruptcy, or you’re in the process of filing, it’s important to also think about what happens to your financial situation after your case is complete. Behm Law Group, Ltd. can help you prepare for what comes ahead when you experience debt forgiveness in Mankato, MN.

When your bankruptcy case is finished and you’ve had a mortgage debt cancelled, forgiven, or reduced, there are a number of ways it can affect you when tax season comes around.

The Bad Stuff

Your mortgage debt can be forgiven in a few ways. For example, you may have restructured your mortgage or modified the payments with your mortgage lender. Unfortunately, if your mortgage debt is forgiven before you file for bankruptcy relief, you still may have to pay taxes on such forgiven mortgage debt because mortgage debt that has been cancelled or forgiven may be considered income. That means you may be paying income tax on the amount you “gained” from debt forgiveness.

The Good Stuff

 Though the default for forgiven debts in your taxes is to treat them as income, there are some ways you can get out of paying that income tax. In 2007, Congress established an act that allows those with forgiven debts to avoid paying high income taxes. The two catches, however, with The Mortgage Forgiveness Debt Relief Act of 2007 are that it only covers debts gained in 2014 or earlier, and it only covers up to $2 million of a forgiven debt.

 The Mortgage Forgiveness Debt Relief Act of 2007

To qualify for getting out of paying income tax on some or all of your forgiven mortgage debt under the 2007 debt relief act, your situation must meet the following stipulations:

  1. Your mortgage debt was forgiven within 2007 to 2014 (calendar years).
  2. Your forgiven debt was principally used to buy or modify your home (not a home you rent to others nor a vacation home).
  3. Your debt was cancelled, forgiven, or reduced because of a change with your lender, or it was cancelled through foreclosure.
  4. None of the money gained in a refinanced mortgage was used outside of home improvement (no outside purchases or bills).

Mortgage debts that qualify for the debt relief act of 2007 can have up to $2 million taken out of the income tax bracket. For many, this means their entire forgiven mortgage will be excluded from their taxes, making the Mortgage Forgiveness Debt Relief Act of 2007 one of the saving graces for those who have filed for bankruptcy.

For more information about debt forgiveness in Mankato, MN, and how it affects your bankruptcy and taxes, contact Behm Law Group, Ltd. at (507) 387-7200.

Doubling Exemptions With Chapter 7 and Chapter 13 Bankruptcy In Windom, MN

Many of the Chapter 13 and Chapter 7 cases we work with are either individuals or households filing for bankruptcy. For those struggling financially with debts accumulated over the years, bankruptcy is often a beneficial option. When it comes to a family in need of bankruptcy help, it can actually be a good thing for married couples to own joint property. Owning property with your spouse plays a big role in a household’s ability to double exemptions. Behm Law Group, Ltd. provides expert legal advice and assistance to help a household work with exemptions and petitioning for bankruptcy in Windom, MN.

Exemptions

Exemptions are allotted amounts that depend on variables like federal or state regulations and the total of a debt. You may apply exemptions to certain properties during the bankruptcy process to prevent some or all of the value of those properties to be used for debt repayment.

Using your exemptions during a Chapter 7 case can significantly increase the amount of your property you may keep. In Chapter 13, more exemptions equal less paid back to unsecured creditors during your repayment plan.

 Doubling

If you’re married, you might have the option of filing for joint bankruptcy with your spouse. A joint case, however, is only applicable if you have debts that are in both of your names, meaning you jointly owe a debt such as jointly obligated on a house mortgage. If you and your spouse both have your names on the assets that would be subject to the bankruptcy process, you can then double your exemptions on those joint assets.

Doubling your exemptions in a joint case means you and your spouse are each able to claim the amount you would claim as an individual filer. In Minnesota, filers are able to choose between federal exemptions and state exemptions, depending on their debt amounts and abilities to double an exemption.

For example: The Minnesota Motor Vehicle Exemption allows up to $4,600 of an for people who own motor vehicles. If you and your spouse are both listed on the title of a vehicle worth $9,200, you both have an ownership interest in and to that vehicle.  In order to protect and keep it in a bankruptcy proceeding each of you could assert your independent $4,600 exemptions and stack them together ($4,600 x 2 = $9,200) and protect the entire $9,200 value of the vehicle.

If you and your spouse are considering filing for bankruptcy in Windom, MN, keep in mind that you can jointly file and, if you both own the subject property/assets, double or stack your bankruptcy exemptions. For more information about your options with joint bankruptcy, contact Behm Law Group, Ltd. at (507) 387-7200.

Selling in Foreclosure and Automatic Stay in Chapter 7 Bankruptcy in Pipestone, MN

Owning a home with a mortgage is a major expense, and often, mortgage debts and foreclosure play a large part in filing for Chapter 7 bankruptcy. If you own a home and are having difficulty meeting mortgage payments, choosing to file might be the best course of action to recover from financial harm. Behm Law Group, Ltd. provides legal assistance to homeowners filing for Chapter 7 bankruptcy in Pipestone, MN.

If you’re facing foreclosure on your home, Chapter 7 bankruptcy can actually turn your troubles concerning mortgage debt around. However, that result all depends on a few things.

  1. Your home equity and Homestead Exemption: The method of Chapter 7 bankruptcy is to liquidate assets to repay your creditors and discharge debts. This process is much more complex in practice. In fact there are several steps in determining which properties can be liquidated and which debts can be discharged. Your home equity and the home exemption amount you can claim decide how your mortgage and home will be treated in Chapter 7.
  2. Your bankruptcy trustee’s commission: In cases where your home qualifies for liquidation in a Chapter 7 case, your trustee is incentivized with a commission from the sale. Starting with the difference of the sale against the debt owed, your trustee will take 25% on the first $5,000 made, 10% on the next $50,000, and 5% on the remainder below $1 million.
  3. How long Automatic Stay lasts: When you enter into the bankruptcy process, the court issues an automatic stay, which immediately prevents your creditors from collecting. If your home is in foreclosure, your debts will still be placed under the automatic stay for some or all of the time it takes to process your case. If your creditors press the court to lift automatic stay, you may be faced with continuing to make payments to them even while you’re in the process of filing for bankruptcy. However, if the automatic stay lasts for a month or two, you can still save a significant amount from keeping those monthly mortgage payments.
  4. If you will keep your home: Whether or not you will keep your home depends on the exemption you can claim and your unprotected equity. If your home is not in the situation to provoke liquidation, you can keep your home after bankruptcy, and if you negotiate terms with your lender before filing, you can change payments on your mortgage. If your equity and exemption amount trigger a sale, selling in foreclosure can also be beneficial because your mortgage debt will be discharged and you may gain tax advantages.

 *Determining your unprotected equity can be done with the following equation:

(Market Value of Home) – (Homestead Exemption) – (Trustee Commission) – (Cost of Selling the Home) – (Mortgage Debt) – (All Non-Mortgage Liens on the Home) = (Your Unprotected Equity)

For more information about how foreclosure affects your mortgage and home status during Chapter 7 bankruptcy in Pipestone, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.

When and Why Your Plan Might Be Rejected for Chapter 13 Bankruptcy in Waseca, MN

Bankruptcy is one of those things in life, like so many other legal processes, that’s easier said than done. It’s a complex process with many opportunities for misstep, yet little room for error. If you’re considering filing for bankruptcy with a high income and a desire to keep many of your assets, Chapter 13 is your best option. However, because the process is so nuanced, there are many ways things could go wrong. Behm Law Group, Ltd. provides the help you need to successfully file for Chapter 13 bankruptcy in Waseca, MN.

A major part of filing for Chapter 13 bankruptcy involves creating a repayment plan that your bankruptcy trustee will approve. This can be a difficult task, and without the help of a knowledgeable legal aide, your plan might be rejected for any number of reasons.

Plan Rejection

Your bankruptcy trustee will—in no uncertain circumstances—reject your Chapter 13 repayment plan if any of the following points are true to your situation:

  1. You don’t have a high enough income to continue meeting your monthly repayment installments.
  2. Your plan period isn’t the correct length to match your income. If your income is lower than the Minnesota median, you’ll have a three year plan. If your income is higher than the Minnesota median, you’ll have a five year plan.
  3. Your plan doesn’t include complete payments to debts you’re required to pay back, such as your priority debts.
  4. Your plan doesn’t include the dedication of all your disposable income to your unsecured creditors.
  5. Your plan doesn’t pass the Best Interest of Creditors test.
  6. Your plan isn’t considered in Good Faith by your trustee or the courts.
  7. You haven’t given all of the documents that decide your debt repayment requirements.
  8. You’ve missed payments on a previously-approved plan.

If your plan is rejected, you’ll have the opportunity to fix your errors and file again, or you can attempt to negotiate the reasons for rejection with your trustee. Of course, if you choose to work with the experienced bankruptcy attorneys at Behm Law Group, Ltd., it’s highly unlikely your plan will be rejected.

For more information about rejected plans and filing for Chapter 13 bankruptcy in Waseca, MN, contact us at (507) 387-7200 today.