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

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

Stop Creditor Collection

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

Emergency Bankruptcy

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

Time Limits

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

Bankruptcy Lawyer

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

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

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Objections to Debt Discharge with Liquidation Bankruptcy in Owatonna, MN

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

Chapter 7 Liquidation Bankruptcy

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

Creditor

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

Types of Objections to Discharge

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

Liquidation Bankruptcy

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

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

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

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

Debt Relief

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

Undue Hardship

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

Threshold for  Undue Hardship

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

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

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

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

Adversary Proceedings

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

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

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

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

Bankruptcy Code

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

Commonly Claimed Exemptions

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

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

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

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Categorizing Debt Claims for Liquidation Bankruptcy in Pipestone, MN

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

Bankruptcy Attorney

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

Liquidation Bankruptcy

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

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

 

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

 

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

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

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Famous Bankruptcy Frauds and Finding Permanent Debt Relief in Windom, MN

If you are facing debts you can’t repay, there are several options for individuals and businesses alike to permanently resolve those financial burdens. In many cases, filing for bankruptcy can be the most effective choice for people with common kinds of debt. For individuals, Chapter 7 and Chapter 13 are both very effective depending on the types of debt you hold, your income, and your ordinary, monthly living expenses. Behm Law Group, Ltd. attorneys offer expert legal advice and protection for individual consumers and businesses filing for Chapter 7, 12, and 13. We can work with you to determine if filing for bankruptcy will be the best way to find permanent debt relief in Windom, MN and the surrounding areas.

Bankruptcy Fraud

Since the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) was established in 2005, committing bankruptcy fraud has become more difficult. Three of the most famous cases of celebrity bankruptcy fraud after the BAPCPA was enacted were cases of tax evasion and asset hiding. Both illegal actions are common ways of using the bankruptcy process to deceptively protect assets while trying to obtain permanent debt relief.

Three famous cases attempted since the BAPCPA was passed in 2005 include:

  1. Lenny Dykstra: In 2008, retired MLB center fielder Lenny Dykstra filed a Chapter 11 bankruptcy case. His petition listed less than $50,000 in assets and $10 million to $50 million in debt liabilities. He was quickly found to have hidden and sold more than $400,000 in assets. He entered a plea deal in 2009 and was sentenced to six months in a federal prison, 500 hours of community service, and a restitution fee of $200,000.
  2. Joe and Teresa Guidice: In 2009, “The Real Housewives of New Jersey” star Teresa Guidice and her husband Joe Guidice filed bankruptcy. They reported over $10 million in debt and a liquidation auction was scheduled. They withdrew their petition before that date in 2010. In 2013, they were charged with conspiracy to commit wire, mail, and bankruptcy fraud, largely due to their failure to file tax returns for five years and their failure to report Teresa’s earnings from the housewives show. Teresa served 11 months in prison, and Joe completed his 41-month sentence in 2019. He is currently held in an ICE detention center awaiting deportation because he never acquired U.S. citizenship.
  3. Abby Lee Miller: Dance studio owner Abby Lee Miller (whose studio was featured in the reality show “Dance Moms”) filed a Chapter 11 case in 2010. She was quickly charged with bankruptcy fraud after assets she had hidden were discovered. Her charges also included perjury in court. Miller was sentenced to one year in federal prison, two years supervision after release, a $40,000 fine, and a $120,000 restitution fee.

Debt Relief

All these cases of fraud are extreme examples, but they exemplify some of the most common methods of asset hiding, tax evasion, and falsification of forms. To learn more about using bankruptcy for legal permanent debt relief in Windom, MN, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

 

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Filing Bankruptcy in Mankato, MN: When You are Personally Liable for Business Debt

When a business files a bankruptcy case, it’s generally processed without holding the owners, members, or shareholders personally responsible for business debt. However, there are several scenarios when business owners can be held liable for business debts. Typically, this depends on the type of business, whether it’s a limited liability corporation (LLC), sole proprietorship, partnership, nonprofit, or other form of incorporated company. If you are filing bankruptcy in Mankato, MN and the surrounding areas for your business or your personal debts, Behm Law Group, Ltd. can help you put together a strong petition that will provide long-term, effective debt relief. Our attorneys work with clients filing for personal/business Chapter 7 bankruptcy or personal Chapter 13 or 12 bankruptcy.

Chapter 7

Companies of any type can use Chapter 7 to liquidate their business assets in exchange for the discharge of business debts. This type of bankruptcy, while available to multiple types of businesses, can sometimes force the closure of all company operations. Chapter 11, 12, and 13 are all reorganization bankruptcies that usually allow companies to continue operating while they repay their debts under different and adjusted terms that are much more beneficial. Who can file which chapter does, however, depend on the type of ownership and the type of company involved.

Chapter 13

Chapter 13 is generally a non-business bankruptcy, but filers who own sole proprietorship businesses can use this reorganization process to resolve their personal and business debts together in one case.

Chapter 12

Chapter 12 bankruptcy is also a non-business bankruptcy, similar to Chapter 13, but it is intended solely for family farmers and fishers that make at least 50% or more of their income from farming and fishing operations. Filers that qualify for Chapter 12 use it to resolve their personal and business debts together.

Chapter 11

Chapter 11 is usually reserved for businesses where the businesses propose chapter 11 plans of reorganization and reorganize their debts under markedly adjusted terms.  Through this process, businesses can impair many rights that their creditors hold outside of bankruptcy.  Most of the time, business owners, members, or shareholders will not be responsible for business debts in a Chapter 11 case. There are some exceptions to this rule, such as:

  1. A personal guarantee was made in the loan contract. This is often done for corporate credit cards and other unsecured business loans where there is no collateral involved. A personal guarantee clause can be included in loan/credit applications that makes business owners personally liable for business debts.
  2. If employers didn’t pay employee withholding taxes. If you fail to pay so-called trust taxes withheld from employee paychecks, such as FICA, etc., you will be personally liable if your business is unable to pay the taxes.
  3. The court has pierced the corporate veil of your corporation. If your creditors want to hold you responsible for business debts because of serious business mismanagement or fraudulent activity and the court agrees, you and any shareholders of company stock may be personally liable for the debts of the business.

Bankruptcy

Aside from these specific exceptions, you may not be responsible for business debts in a bankruptcy unless you are a sole proprietor or partner of the company involved.

To learn more about filing bankruptcy in Mankato, MN and how you may be responsible for certain business debts, contact Behm Law Group Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

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Piercing the Corporate Veil and Chapter 7 Bankruptcy in Waseca, MN

Bankruptcy is one of several ways for individuals and businesses in the United States to resolve debts they can’t repay. While there are different chapters of bankruptcy that follow some general processes and rules, there are also complicated aspects and nuanced conditions that change from case to case. When it comes to business bankruptcy, the question of who is liable for the business debts is a key point of the case. That liability is determined by the way a business is organized for tax, revenue, and general legal purposes. If you are considering using Chapter 13 or Chapter 7 bankruptcy in Waseca, MN, to resolve your business debts, Behm Law Group Ltd. can help you build a strong case for long-term debt relief and financial balance.

Bankruptcy

In filing for bankruptcy, the way that your business is established determines whether or not you’re responsible for its debts. When a business is set up as a sole proprietorship or partnership, for example, the owners of the business are personally responsible for their company’s debts. If a business is set up as a limited liability company (LLC) or corporation, on the other hand, the owners, members, or shareholders are generally not personally responsible for the company’s debts.  Some lenders, however, will require the owner of a company to sign a personal guarantee for the company’s debts.

While business owners often establish their company as an LLC or corporation in order to not be held personally responsible for business debts, there is one exception where they can be held liable. A court process called “piercing the corporate veil” can render owners, members, or shareholders of an LLC or corporation personally liable for business debt.

To pierce the corporate veil of your company, your creditors need to file a lawsuit. If the court sides with your creditors, you, any other owners, members, or shareholders of your company’s stock may be forced to repay the business debt or include it in a personal bankruptcy case. If you aren’t filing for bankruptcy, your creditors can pull from your home, bank accounts, investments, wages, or other assets to repay the debt owed.

Chapter 7 Bankruptcy

If you are filing for bankruptcy, and the court pierces the corporate veil, your business debts are included in the same way your personal debts are. In a Chapter 7 bankruptcy case, your business debts will likely be included in the discharge process, but if they are secured to an asset, that property will also likely be repossessed and liquidated by the creditor to repay the debt. In a Chapter 13 case, business debts will be included for payment in your repayment plan.

Generally speaking, piercing the corporate veil in court is very rare. The process will only be approved if your company acted recklessly or fraudulently in its borrowing practices or business dealings, if your creditors were unjustly left with unpaid funds, or if there isn’t an actual separation between your finances and your company’s finances.

To learn more about how business debts are handled in a Chapter 13 or Chapter 7 bankruptcy in Waseca, MN, or the surrounding areas, contact Behm Law Group Ltd. by calling (507) 387-7200 or emailing stephen@mankatobankruptcy.com.

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Long-term Credit Repair after Bankruptcy in Fairmont, MN

If you’ve been thinking about credit repair and resolving your debts with a bankruptcy case, you might be aware of the potential damage it could do to your credit. While it’s true that a bankruptcy case will likely lower your credit score and temporarily prevent you from qualifying for mortgages and some other loans for a few years after your case is completed, those things are far out-weighed by the benefits of filing.

Credit Repair

Despite the immediate impact on your credit score, the effects of a bankruptcy case will be a steady process of credit repair, budget simplification and long-term financial stability/rehabilitation. Behm Law Group Ltd. attorneys work with clients filing for Chapter 7, 13, or 12 bankruptcy from start to finish. With our professional guidance, you can find permanent debt relief through bankruptcy and begin your own process of credit repair and financial rehabilitation in Fairmont, MN, and the surrounding areas.

While a bankruptcy case will definitely have an impact on your credit score, the extent of that effect varies greatly. How much your score might drop almost entirely depends on the condition of your credit before filing.

Impacts on Credit

  1. Good–Excellent (690–850): If your score is in the good-excellent range, you’ll take the biggest hit when you file for bankruptcy. Most scores will drop into the fair–bad range, typically by around 200 points.
  2. Fair (630–689): Even with a fair credit score, you’ll probably still take a hit. Those with a fair score will drop into the bad range, but usually not by more than 150 points.
  3. Bad (300–629): Those with bad credit will see the smallest change in credit points after filing for bankruptcy. If your score is very poor, it might not drop at all with the filing of your case, and if it’s on the higher end of the range, you’ll likely see small changes, usually by under 100 points.

The other aspect of a bankruptcy case that will determine how much your credit score drops is the type of chapter you file. Chapter 7 liquidation bankruptcy will generally cause greater drops in credit because it may “look worse” to lenders. This is because your creditors in a Chapter 7 bankruptcy case almost always receive far less than what they’re owed.  In most Chapter 7 cases, most creditors receive nothing.

Chapter 13 bankruptcy, on the other hand, can result in the full repayment, under adjusted terms, of secured debts and the partial repayment of unsecured debts. Through your repayment plan, most creditors are repaid at least some of what they’re owed, making it “look better” to potential lenders. Consequently, a Chapter 13 case may have a lower impact on your credit.

Even considering these details, bankruptcy is still a highly effective option for credit repair and financial rehabilitation for many filers. Bankruptcy permanently relieves debts and opens the door for filers to begin comprehensive work to repair their credit and stabilize their finances.

To learn more about bankruptcy and credit repair in Fairmont, MN, contact Behm Law Group Ltd. by calling (507) 387-7200 or emailing stephen@mankatobankruptcy.com.

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Planning Your Case and Getting Bankruptcy Assistance in Redwood Falls, MN

If you are facing debt you know you won’t be able to repay, filing for bankruptcy could be the most effective option for permanently resolving your financial issues. While filing for bankruptcy might seem scary, it’s actually a government-administered process that provides long-term, effective debt relief for thousands of households and businesses each year. There are several types of bankruptcy that handle debt in different ways. Chapter 7 liquidation bankruptcy is the most common format for an individual consumer case. In this process, the filer’s non-exempt assets are liquidated in exchange for the discharge of several kinds of secured and unsecured debts. For filers who don’t qualify for liquidation bankruptcy because their debt-to-income ratio is too high, Chapter 13 reorganization bankruptcy is another option for debt resolution. This process restructures debts into a three- to five-year repayment plan suited to the filer’s income. The adjusted payment terms are much more favorable than outside of bankruptcy.  No matter what kind of chapter you file, Behm Law Group, Ltd. can provide legal guidance and complete bankruptcy assistance in Redwood Falls, MN and the surrounding areas.

Behm attorneys can help you determine if bankruptcy will be the best choice for resolving your financial situation. If it’s the best course of action, we can help you start the planning process for your petition with expert bankruptcy assistance.

Before you file your petition, keep in mind several financial practices you can implement to get the most out of your case and to protect yourself from the consequences of fraud:

Financial Practices

  • Upcoming bills: Depending on the case details, bankruptcy will most likely eliminate any utility debts.  However, any utility debt you incur after your bankruptcy case is filed will be considered “new debt” that will not be included for discharge in the bankruptcy process. This is also true with several other debts including medical and credit card debt.
  • Fund transfers: When you file for bankruptcy, your financial transactions will be examined by your bankruptcy attorney and by the trustee assigned to administer your bankruptcy case. All your income, debts, assets, and accounts are examined, particularly your financial transactions for the six months prior to your bankruptcy filing.  Before you file your petition, avoid any unnecessary transfers between credit cards. That is, do not pay off one credit card with another credit card that may have a slightly lower interest rate.  If you engage in such a transaction, make sure that it’s reported in your petition. Also, transfers of any assets to other people can appear as fraudulent conduct if it seems like you’re moving assets to prevent the trustee from possibly liquidating them.
  • Reasonable spending: Other actions that may look like attempts at bankruptcy fraud are certain spending patterns. If you charge excessively on a credit card right before filing a petition, such as taking a trip to Europe, it might look like you’re abusing the bankruptcy process to purposefully have that debt discharged. The same is true for purchasing luxury items and engaging in any other extravagant spending. Instead, be as frugal as you can while still trying to meet your living expenses.

Bankruptcy Assistance

To learn more about planning before filing your petition and getting the permanent bankruptcy assistance in Redwood Falls, MN you need, please contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.