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Navigating the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 and Qualifying for Bankruptcy With the Help of a Bankruptcy Attorney in Fairmont, MN

Since the mid-80s, the commercial world has changed considerably as digital consumerism streamlined the way we spend money in the US. To address issues with these unprecedented technological advances, the US government had to respond with new laws. When it comes to US bankruptcy, the Bankruptcy Code was amended in 2005 to protect consumers and eliminate several forms of perceived bankruptcy abuse. The skilled bankruptcy attorneys at Behm Law Group, Ltd. have practiced since long before 2005, and with our experience, we can help you navigate the process of filing for bankruptcy in Fairmont, MN.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) considerably changed the process of filing for bankruptcy relief.

BAPCPA and what came with it:

The most notable changes that came with the addition of the BAPCPA were the standards set in place to qualify for Chapter 7 bankruptcy. Prior to the BAPCPA, consumers with any income could qualify for Chapter 7 liquidation bankruptcy. Because of the rapidly fluctuating economy and credit payment systems, a lot of bankruptcy abuse came to light during the 80s, 90s, and early 2000s. In 2005, the BAPCPA established the Means Test, which prevented filers with net disposable incomes higher than the state median income from qualifying for Chapter 7. Other major changes made with the BAPCPA include lengthened waiting periods between bankruptcy petitions and the requirement of a credit counseling course that all people must take in order to qualify for bankruptcy relief. Find out more about the changes made with the BAPCPA here.

How it affects Chapter 7:  

Because the BAPCPA established stricter requirements with the Means Test, waiting periods, and more, it made it much more difficult to qualify for Chapter 7 bankruptcy. If the courts find that a case is abusive to Chapter 7 code, the case will be dismissed or converted into another type of bankruptcy. The BAPCPA also limited the use of the automatic stay provisions of 11 U.S.C. Sec. 362 in most cases, the types of debts discharged, the types of liens a bankruptcy filer could avoid, homestead exemptions, and other exemptions bankruptcy filers could claim.

How it affects Chapter 13:

By making it more difficult to qualify for Chapter 7, the BAPCPA forced more bankruptcy filers to enter the process of filing for Chapter 13 bankruptcy. Expenses for the administration of a repayment plan under Chapter 13 are deducted in the Means Test and credit counseling is also required for Chapter 13 bankruptcy filers under the BAPCPA. The most significant change for debt reorganization was the increase in the amount of debt required to be repaid with Chapter 13.

Overall, the BAPCPA of 2005 significantly changed bankruptcy code. This act and many others have made today’s standards for bankruptcy more difficult to process without the help of a professional. Behm Law Group, Ltd. can help you work through bankruptcy with a skilled, experienced bankruptcy attorney in Fairmont, MN. Contact us at (507) 387-7200 for more information.

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Why the Small British Car Company Zenos Went Bankrupt and Why It Matters for Small Business Bankruptcy in St. Peter, MN

In today’s technology-rich digital age, small businesses have more expenses than ever before. While these expenses all open up incredible marketing and product design outlets for small businesses, the increase in number and variety of expenses also leads to an increase in the potential for going into debt. If you own a small business that’s deep in debt, Behm Law Group, Ltd. can help you file for bankruptcy in St. Peter, MN.

Because the commercial system of today’s world has grown so complex, it’s inevitable that many businesses struggle and fall into debt. For example, the sports car company Zenos—a tiny enterprise by the standards of the auto industry—recently declared bankruptcy. After losing a major investor and having several orders for their new model of the E10 cancelled in the US, Zenos was left with debts racked up from product building and marketing expenses.

Quality Product: Despite the technologically-sound craftsmanship of the Zenos E10 models, cars widely considered to be potential rivals of Alfa Romeo, Mazda, and even Lotus cars of similar caliber, the company continued to lose money after the release of their newest models. Of course, this is just one of hundreds of examples of popular companies with great products falling off the industrial map, proving time and time again that a quality product doesn’t get your business off the ground and running forever. What it really comes down to is money, and a substantial amount of money for small businesses comes from investors.

Investors: In the case of Zenos sports cars, the company gathered a loyal cult following of fans of unique cars who appreciated the well-crafted Zenos products. Unfortunately, while a cult following is often the sign of an innovative product, it also frequently can’t support a company as whole. When the small batch of investors that Zenos largely relied upon could no longer support their investment, the company quickly lost money, and the straw that broke the camel’s back came when U.S. orders were cancelled.

Even small businesses here in Minnesota can recognize the importance of investors going hand in hand with a quality product to support all of the necessary expenses.  

Debt Payment: Zenos is on the market for new investors, and if the company can find one, they will be able to start a debt repayment plan under UK bankruptcy codes. However, without proper cash flow, Zenos—just like any other bankrupt small business—will have to liquidate its assets in order to discharge debts.

If your small business is struggling financially with no possibility of meeting debt payment requirements, Behm Law Group, Ltd. can help you work through filing for bankruptcy in St. Peter, MN. Contact us today at (507) 387-7200 for more information.

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The Top 3 Mistakes Made on the Minnesota Means Test When Filing for Bankruptcy in Jackson, MN

Chapter 7 bankruptcy can be incredibly beneficial for those who are struggling with credit card debt, unmanageable mortgages, and most other forms of accumulated debt. Financially, Chapter 7 discharges the majority of your debt and liquidates your non-exempt assets in order to pay your creditors. While these may seem like drastic measures, Chapter 7 bankruptcy can effectively reset your financial standings, giving you the best restart you could expect. Behm Law Group, Ltd. understands that debt can come from many different sources, and if you need to file for bankruptcy in Jackson, MN, we’re on your side for legal advice and assistance throughout the process.

When you file for bankruptcy as an individual, the most common options you can choose between are Chapter 13 (debt reorganization) and Chapter 7 (debt/discharge/asset liquidation). To those with a low income or with no way of continuing to pay their debts even with a debt reorganization plan in place, Chapter 7 is the most attractive and viable option. To qualify for Chapter 7, however, you must pass the state Means Test with a disposable income lower than the median income of an equivalent Minnesota household.

Without legal support and advice like the help Behm attorneys can provide, the Means Test can prove difficult, nuanced, and complex. Even those with a low income have failed to qualify for Chapter 7 bankruptcy after making these common mistakes on the Means Test:

  1. Many people list child support on their Means Test that they are supposed to receive but do not for one reason or another, and this can completely change the test results. The same goes for those who list child support they are supposed to pay but do not. You should only list what you receive and what you pay.
  2. Household sizes are frequently listed inaccurately on Means Tests, and this can change the recorded outcome of who depends on your disposable income, altering the results of your test overall. Your household size is most frequently determined by who is legally dependent on your disposable income (e.g. minors or disabled dependents).
  3. Often accidentally, Chapter 7 filers list an incorrect income. This in itself can render you ineligible. To even be considered for the outcome of the Means Test, your recorded income MUST match your actual income. Dates, exact numbers, recorded paychecks, and all sources of income should be detailed as exactly as possible.

There are many other mistakes found on Means Test reported across the country, and those who are considering filing for Chapter 7 bankruptcy can gain a lot from professional assistance. Behm Law Group, Ltd. is here to help. Contact us at (507) 387-7200 for more information about filing for bankruptcy in Jackson, MN.

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How to Qualify for Chapter 7 Bankruptcy in Redwood Falls, MN, With a High Disposable Income

Whether you’ve become overwhelmed with credit card debt, accumulated debts over the years that outweigh your income, or struggled financially for any other reason, filing for bankruptcy might be your best course of action. For most individuals, Chapter 7 bankruptcy is a popular option because it alleviates a large amount of debt and makes rebuilding credit possible for even the poorest scores. However, qualifying for Chapter 7 requires passing the Means Test, and if you have an income higher than the median Minnesota income for a household similar to yours, you may not qualify. Behm Law Group, Ltd. attorneys can help you determine if it’s possible to qualify for Chapter 7 bankruptcy in Redwood Falls, MN, even with your high income.

Despite how black and white the pass/fail system of the Means Test may seem, it is possible to find gray area when it comes to qualifying for Chapter 7 bankruptcy with a high disposable income. The Means Test is designed to weigh all the aspects of your financial situation, and as long as everything is documented correctly, it’s possible to qualify for Chapter 7 with a high income if your situation meets one or more of the following standards:

  • Your number of financial dependents is high enough to overbalance your income. More dependents to support means more money spent out of your income.
  • You owe child support, back taxes, overdue payments on car loans, attorney fees, mortgage, or other property.
  • Your car or mortgage payments are high and prevent your income from being high enough to work with a debt repayment plan through Chapter 13.
  • The majority of your debts are business related, not consumer related. This can include business and personal income tax debts, personal loans for business, and credit card debts accumulated from purchasing for your business.
  • You are currently on active duty or have been active within the previous 540 days for the National Guard or other military reserve.

These standards act to balance out your income with your financial obligations and debts. Even with a high income, aspects of your financial situation may mean that the money you earn is outweighed by the money you spend.

For more information about the Means Test and filing for bankruptcy in Redwood Falls, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.

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How to Know if You Quality for Chapter 7 Bankruptcy in New Ulm, MN

If you’re struggling with debt, filing for bankruptcy might be a great option to help you get back on your feet and recover financially. For most individuals—and even for some small businesses—filing for Chapter 7 bankruptcy is the most attractive option for alleviating debt and rebuilding credit. Not everyone, however, will qualify for Chapter 7, irrespective of how overwhelming the debts may be. Behm Law Group, Ltd’s bankruptcy attorneys can help you throughout the bankruptcy process and determine whether you qualify for Chapter 7 bankruptcy in New Ulm, MN.

Chapter 7, or liquidation bankruptcy, is a type of bankruptcy that is designed to discharge all your qualifying debts and liquidate your non-exempt assets to pay some dividend your creditors.  The bankruptcy code provides very generous bankruptcy exemptions which allow you to retain your property.  In most cases, the bankruptcy exemptions will be sufficient to allow you to retain all of your property.  Sometimes, the value of the property you own may exceed your allowable bankruptcy exemptions in which case the bankruptcy trustee administering your case would be required to liquidate or sell the non-exempt assets and divide the proceeds among your creditors.  In order to file for chapter 7 bankruptcy relief, you must first qualify by passing the Minnesota Means Test.

Means Test

The Means Test is an evaluation of your disposable income. By comparing your average monthly income during the six-months prior to the month in which you file for bankruptcy with the median income or state average income for a household of your size, the courts will decide whether your income is low enough for you to qualify for Chapter 7. To put it simply, if your income is lower than the state median or state average income for a household of your size, you qualify for Chapter 7. If your income is equal to or higher than the state median or state average income for a household of your size, you still must complete the Means Test in full, and the courts will decide if you qualify based on the balancing of your expenses and income.

Even if you qualify for Chapter 7 bankruptcy after taking the Means Test, there are some other aspects of liquidation bankruptcy to consider:

  • Only certain debts are discharged during the Chapter 7 process, while other debts, such as some tax debts, child support debts and criminal fines, are not subject to discharge and you must continue paying them after your case is concluded. If you have more debts that are non-dischargeable than those that are discharged, Chapter 7 may not be the best type of bankruptcy for your financial situation.
  • When you enter the process of Chapter 7 bankruptcy, your non-exempt assets will be liquidated by the bankruptcy trustee to pay a dividend your creditors, just as your debts are discharged to alleviate your financial burdens.

Chapter 7 may be the perfect choice to get you back on your feet. On the other hand, Chapter 13 or other financial actions might be a better option for your situation. Find out more about the paths that lie ahead of you, and contact Behm Law Group, Ltd. at (507) 387-7200 for more information about bankruptcy in New Ulm, MN.

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Priority, Secured, and Unsecured Claims and How These Types of Debts are Treated With Bankruptcy in Mankato, MN

If you find yourself in a position where filing for bankruptcy is the most logical course of action for you and your family or for your business, you will also find that you have creditors to who will fall into different categories and that creditors in the different categories have different rights.  When you think of creditors in bankruptcy, you should think of them being listed in their different categories as on a totem pole.  Behm Law Group, Ltd. provides legal assistance to help you throughout the process of filing for bankruptcy in Mankato, MN, and to protect and direct you in the face of your creditors.

When you file for bankruptcy, your creditors must file proofs of claim with the bankruptcy court to show, as a matter of public record, the type or category of debt that you have with each of them and how much you owe to each of them. These claims can fall into the following three categories.

Secured Claims: These claims should be viewed at the top of the totem pole.  When your creditor has a lien on your property (or a security interest), they can file a secured claim. Mortgages and car loans are common examples of debts with security interests attached. If you default on these types of debts, your creditors can enforce their liens and reclaim the property (i.e. house, vehicle, washer/dryer) securing their liens. Chapter 7 filers must specify in a bankruptcy form called the “Statement of Intention” whether they want to surrender property/collateral to a creditor or continue making debt payments and retain the property/collateral. Chapter 13 filers can continue paying off the debt secured by the property/collateral with their established repayment plan and in some cases even eliminate the lien their creditors have on that property/collateral.

Priority Claims: These claims should be viewed in the middle of the totem pole.  Where unsecured claims are on dischargeable debts with no secured collateral, priority claims are non-dischargeable debts with no secured collateral. “Non-dischargeble” means that they are not subject to being wiped away or discharged.  These debts are unsecured debts but they are debts that Congress, for certain public policy reasons, determined should not be subject to discharge.  For example, child support debts, some tax debts, and criminal fines are generally not subject to discharge in a Chapter 7 case. Creditors to whom you owe these types of debts file priority claims when you file for bankruptcy relief. Because these debts are not discharged, you must keep paying them even if you file for Chapter 7, and they must be completely repaid with your chapter 13 repayment plan if you file for Chapter 13. Creditors with priority claims will be repaid before those holding unsecured claims, but after those with secured claims.

Unsecured Claims: These claims should be viewed at the bottom of the totem pole as they have a lower priority than secured claims and priority claims.  These claims are only applicable to debts with no secured collateral. Most frequently, these debts include medical bills, personal loans, and credit card debt and are almost always discharged with a Chapter 7 case. With Chapter 13 cases, your non-exempt assets and your disposable income determine the repayment plans for these debts. Creditors with unsecured claims are often paid last and paid least.

If you are considering filing for bankruptcy in Mankato, MN, and you would like to learn more about how Behm Law Group, Ltd. can help you throughout the process, contact us today at (507) 387-7200.

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Scams, Frauds, and Traps in the Path of Those Searching for Debt Relief in Worthington, MN

Credit repair, debt relief, debt consolidation, and debt erasure are all tempting ideas to those seeking reprise from their financial struggles. Unfortunately, most of the offers that you see advertisements for or receive by phone, email, and mail are fraudulent. The rise in credit card debt over the last 20 years in combination with several dips in the economy from 2001 onward has significantly increased scammers’ prospects of taking advantage of those in debt. If you are struggling financially, Behm Law Group Ltd. provides legal support for bankruptcy proceedings and information about debt relief in Worthington, MN.

Promises to repair credit debt or erase bad credit are frequent claims of scammers in the world of debt and bankruptcy. While these scams and frauds are dangerous situations to fall into, there are some situations where legal and legitimate debt relief is possible.

Recognizing Fraud 

Because the majority of companies or organizations promising credit repair and debt erasure are fraudulent, there are often clear signs of the traps these scammers want you to fall into. The most obvious signs of fraud include:

  1. Withholding information about your legal rights or failing to provide legalized, clear-cut terms
  2. Requiring an upfront fee or an initial payment before services are provided
  3. Pushing you to dispute your credit report in entirety
  4. Encouraging you to take on a new credit identity

What these scammers do is illegal, and taking part in any of their proceedings may leave you subject to indictment and force you into legal proceedings for debt fraud. Find out more details about credit repair fraud and companies offering illegal services here.

 Legal Debt Relief

Bankruptcy is almost always an option for those struggling with unmanageable credit card debt or debts accumulated from a variety of sources. Behm Law Group Ltd. can help you throughout the process of filing for bankruptcy, but even throughout bankruptcy proceedings, there are ways to begin improving your credit slowly but surely. Approved credit counselors can help you understand how your debt was accumulated and how to avoid such situations in the future.

If you’re worried about your financial situation and have been tempted by the calls about credit repair and debt erasure, contact Behm Law Group Ltd. today at (507) 387-7200 for information about bankruptcy and debt relief in Worthington, MN.

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What to Expect from a Meeting of Creditors when Filing for Bankruptcy in Owatonna, MN

Filing a bankruptcy petition often seems intimidating to our clients because of the many steps and requirements involved in the process. While it’s true that bankruptcy proceedings in the U.S. have several requirements, forms, schedules, and a mishmash other legal formalities, filing for bankruptcy doesn’t have to be insurmountable. At Behm Law Group, Ltd., we offer legal advice and assistance for those considering filing for bankruptcy in Owatonna, MN.

Among the many requirements demanded of filers are the preemptive measures U.S. Bankruptcy Courts take to ensure a debtor has a valid petition and will not be rejected for debt discharge or debt reorganization. Some of these measures are also designed to educate debtors on their financial situations and are required in the hopes that a filer will be better equipped to survive financially after the bankruptcy process is complete.

Mandatory credit counseling is one such requirement, as well as the meeting of creditors—also known as a 341 hearing.

 

Meeting of Creditors for Chapter 7 Petitions

If you’ve chosen to file for Chapter 7 (liquidation) bankruptcy, you will attend a meeting of creditors between 21 and 40 days after filing your petition. While a Chapter 7 trustee will orchestrate this meeting of creditors, there will not be a judge present. The meeting essentially serves to verify the accuracy of the representations made in your bankruptcy petition.  It also serves to provide the bankruptcy trustee and, perhaps, some of your creditors to ask you questions about the representations made in your bankruptcy petition and about your assets.  In most cases your creditors will not be present, but there are instances where some or all of your creditors may attend and ask you questions.

 

Meeting of Creditors for Chapter 13 Petitions

In Chapter 13 cases, the meeting of creditors is more likely to be referred to as a 341 hearing (although it is not an official court hearing). The 341 hearing will take place between 21 and 50 days after your petition for Chapter 13 (reorganization) bankruptcy is filed. Just as with a Chapter 7 meeting of creditors, there will be a trustee and, perhaps, some of your creditors in attendance, but no judge will be present. This purpose of a 341 hearing is to determine your past and present financial and tax situations, including expenses, exemptions, income, and asset values.

Our attorneys at Behm Law Group, Ltd. are well equipped to help you get through the process of a meeting of creditors. If you have questions about what to bring to your meeting of creditors and how to organize your financial history, contact us at (507) 387-7200 for more information about filing for bankruptcy in Owatonna, MN.

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Major Bankruptcy Acts in the U.S. During the Twentieth Century and Their Significance for Bankruptcy in Marshall, MN, Today

Bankruptcy laws have changed significantly since the early twentieth century, and even since the mid to late 1900s, amendments and jurisdictions have altered how bankruptcy cases in the U.S. are processed. To an individual or small business unfamiliar with the bankruptcy system, the information involved in bankruptcy laws can seem complicated, tedious, and even confusing. To unravel the complexities of the bankruptcy code, Behm Law Group, Ltd. offers legal advice and assistance for those considering filing for bankruptcy in Marshall, MN.

In the past century, there have been several major changes to the U.S. bankruptcy system. Among these legislations, three main acts deserve recognition:

  • The Bankruptcy Act of 1938, or the Chandler Act, gives individuals and businesses the agency they have today for voluntarily filing bankruptcy petitions. This act opened filing to a wider range of debtors and made it easier and more appealing to file for bankruptcy. The basis of the act was to make it beneficial to file for debt reorganization overseen by a court-appointed trustee.
  • The Bankruptcy Reform Act of 1978, or the Bankruptcy Code, significantly changed the bankruptcy system. Not only did it replace the Bankruptcy Act of 1898, it also established much of today’s Title 11 standards, changed the structure of U.S. Bankruptcy Courts, forbid employment discrimination against those whom have filed for bankruptcy, and served to regulate the majority of bankruptcy cases filed under Chapter 7 and Chapter 13.
  • Bankruptcy Amendments and Federal Judgeship Act of 1984 was established to alter the 1978 Act and amend any flaws. This legislation is still considered the most permanent and major act affecting the U.S. bankruptcy system and allows for the direct application of all current amendments that relate to any bankruptcy case in question. The act of 1984 also affected how changes are made to the system in accordance with social, economic, and technological growth (credit cards, etc).

While these three acts are all major in U.S. bankruptcy history, there are still many other amendments involved in Title 11 bankruptcy cases, including numerous changes made between 1984 and today, particularly the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. For more information about filing for bankruptcy in Marshall, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.

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Dallas’s Threat of Bankruptcy and How Municipal Cases of Bankruptcy Can Force Government Employees to File for Bankruptcy in Mankato, MN

In late November, reports covering the delicate financial situation of Dallas, TX, began to appear in several publications, including the New York Times. The possibility of Dallas filing for municipal bankruptcy has forced many individuals and small businesses tied into the city budget on the defense. Though Dallas is far from south-central Minnesota, its municipal bankruptcy case serves as a predictive tale for how the financial failure of a city’s government affects its employees. At Behm Law Group Ltd., we provide legal advice and assistance for government workers and other individuals filing for bankruptcy in Mankato, MN.

The 385 square miles of Dallas has experienced the fastest economic growth in the past 50 years out any of the 13 largest cities in the US. Unfortunately, that rapid expansion has caught up with the city budget, and Dallas will likely be filing for municipal bankruptcy in the new year. This situation will affect almost all government employees, including pension-earning police officers and firefighters.

The Dallas budget is estimated around $3 billion, and the city government is currently in need of an emergency bailout of roughly one third of the total annual budget. The problem stems largely from a retirement plan put into place in 1993 for police officers and firefighters. The plan offered the city’s public safety officials the opportunity to delay the standard retirement at age 50 and work for a few more years in exchange for a substantial bonus to their pension.

However, the idea that there would be a 5% employment growth each year with a 9% annual return on the new employees fell through, leaving the promised pensions with no support system. Twenty-three years later and this lack of financial balance left the city at a loss. Hints that public safety retirees would no longer be allowed to withdraw their pensions in large amounts caused a scare that pushed the withdrawal of around $220 million from the pension accounts.

This imbalanced pension system, in combination with several over-budget public projects, landed Dallas in the precarious financial situation the city government now faces. Dallas Mayor Michael Rawlings is now forced to consider filing for municipal bankruptcy to request a federal bailout.

The Dallas situation has been reflected on a smaller scale in several cities across the US, largely due to the city promising government retirees more than they can afford. Not only does the municipal debt affect those retirees, it also affects every other government employee and all entities associated with the government budget. Read more about the Dallas case here, here, and here. Contact Behm Law Group Ltd. at (507) 387-7200 for more information about your own financial situation as a government employee and for guidance on how to take steps to file for bankruptcy in Mankato, MN.