Posted on

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.

 

Posted on

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.

Posted on

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.

Posted on

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.

Posted on

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.

Posted on

Is Debt Consolidation an Effective Option for Debt Work-Out in St. Peter, MN?

In the U.S., there are several ways that individuals can resolve debts. Debt settlement through a third-party program is often aggressively advertised as the “best” way to work out debts, but that route comes with many caveats, including significant additional fees. Other debt work-out systems include debt management plans through a credit counselor, debt consolidation, and, of course, bankruptcy. While a bankruptcy case might not be the right choice for resolving everyone’s debts, making the decision to file a petition can be one of the most effective, fastest, and longest-lasting ways to find debt relief. If you’re looking for the best kind of debt work-out in St. Peter, MN and the local regions, Behm Law Group, Ltd. can help. Our attorneys will work with you to determine if bankruptcy will be an effective option and which type of bankruptcy chapter to file. We provide guidance, support, and legal protection for all our clients from the start of their cases to the end.

Debt Work-Out

Debt work-out systems outside of bankruptcy have their uses, but they’re also heavily restricted in the debts they address, the individuals that qualify, and the debt amounts that are resolved. For example, when it comes to debt consolidation, debtors can only qualify if they meet rather strict credit score requirements.

How Consolidation Works

Debt consolidation processes take your debts and combine them into a single account. That account is then paid off slowly with your own monthly payments, or you may have the option to receive a consolidation loan. A consolidation loan is provided through a bank, credit union, or online lender. Those loans usually range between $1,000 and $100,000 and carry interest rates as high as 36%. That loan amount is used to repay your consolidated debts, and you begin to payoff that lender in single monthly payments. The amount of your consolidation loan depends on your credit. If your credit is too low, you may not be eligible for a consolidation loan at all.

Consolidation Problems

Using consolidation for debt work-out is usually only a good option for people with high credit (usually 650 or better) and specific debts (like credit card debts, mortgages, and medical bills). Debt consolidation systems are very complicated. They frequently incorporate nuanced methods of debt treatment like balance transfer cards, conversion of unsecured debts to secured debts, and other “loop-hole” processes. These methods can carry significant hidden fees and often have unexplained and unintended consequences. In addition to using complex systems with inaccessible fine print, debt consolidation programs will impact your credit in varying ways depending on the amount of debt owed, credit history, and the various types of your credit accounts.  In addition, debt consolidation programs are often funded and sponsored by various credit card companies.  Credit card companies don’t want you to file for bankruptcy relief and they often want to squeeze as much money as possible from you through debt consolidation programs.

Overall, debt consolidation is a tricky process that might leave you with more fees and headaches than the filing of a bankruptcy petition.

To learn more about using bankruptcy for debt work-out in St. Peter, MN and why it might be better than debt consolidation, please contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

Posted on

Debt Relief in Jackson, MN Through Bankruptcy While Unemployed

Due to the pandemic, the past year has been difficult for many people. During the first shutdowns in the U.S. for the spring of 2020, the unemployment rate spiked from just above 4% to a staggering 15%. Over the following year, that number slowly decreased to around 6%. While that’s much better than 15%, things are still not back to normal. If you’re among that 6% of unemployed people, you might be finding it increasingly difficult to make debt payments on time. For those struggling financially, Behm Law Group, Ltd. can provide legal advice and guidance to file for bankruptcy and permanent debt relief in Jackson, MN. Even for unemployed individuals, bankruptcy can still be a viable option for debt resolution.

The bankruptcy code does not require bankruptcy filers to be employed, even for cases that are typically considered “wage earner” bankruptcy, like Chapter 13 reorganization. However, both your past and present income will affect your eligibility for certain chapters, and there are fees involved in bankruptcy that still need to be paid even though you’re only source of income is unemployment income.

That said, it’s still completely possible for unemployed individuals to find long-term debt relief through bankruptcy. In fact, many Chapter 7 filers are unemployed or are only employed part-time.

How Unemployment Affects Bankruptcy

The main aspect of unemployment and employment that affects bankruptcy is the question of income. To qualify for Chapter 7 bankruptcy, your debt-to-income ratio needs to be lower than the state median or average income of a similarly sized household. This ratio is determined through the Means Test, which examines your income from the past six months. That means if you recently became unemployed, you might not satisfy or pass the means test and be eligible for Chapter 7, even if your income has taken a nosedive.   However, even if you don’t pass the means test you might still be able to file for Chapter 7 bankruptcy relief if your recent job loss and loss of income is sufficiently explained in your bankruptcy paperwork.

If you don’t qualify for Chapter 7 with unemployment income, you can potentially file for Chapter 13 bankruptcy relief instead. Like with Chapter 7, much in Chapter 13 bankruptcy is dependent on your income. If you’ve been unemployed for a while, your Chapter 13 plan payments may be as low as $100.00 initially.  If you get another job and your income increases, your chapter 13 plan payments could increase.

Eligibility for either chapter all depends on the length of your unemployment relative to the past six months of your income.

Affording Bankruptcy While Unemployed

Bankruptcy court filing fees and the costs of an attorney might make it seem difficult to afford to file for bankruptcy on unemployment income. For those who can’t meet those costs, remember you can always apply to have some court filing fees waived, and there are many attorneys who offer sliding-scale prices for clients who are struggling financially.

Debt Relief

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

Posted on

How Debt Settlement in Mankato, MN Works

Anyone who has faced difficulties with their finances or finds they have debts they can’t repay understands the stress and complications of that situation. The wish to resolve those issues as quickly and as effectively as possible is a natural reaction to preserve one’s quality of life. There are several options for finding debt relief available to individuals and businesses alike. While each debt resolution method has its pros and cons, some are more effective than others. Overall, bankruptcy is the fastest, most cost-effective, and the only permanent way to finding debt relief. Behm Law Group, Ltd. can help you file a strong bankruptcy case for long-term relief and financial stability. In particular, we want those in debt to understand how programs for debt settlement in Mankato, MN and the surrounding areas work and why they might not be beneficial.

Debt Settlement Process

Debt relief/debt adjustment/debt settlement programs are third-party negotiators who supposedly work with your creditors to resolve a debt for a lower amount than what you actually owe. In such programs, you’re typically required to pay the settled amount in a lump sum payment right away. Other arrangements may provide for the monthly payment of lower amounts over a number of years.

The settlement party is paid with a flat fee or on a percentage of your overall debt that they resolve. They are also sometimes paid with a percentage of the settlement amount that you pay. This means that even though you’re receiving some form of debt relief, significant additional fees can be involved to pay the debt settlement company in addition to the creditors.

While the settlement is negotiated, you’ll start to make monthly payments to the third-party program.  The settlement company will place those funds in an account. When a settlement is finalized, the creditor is paid a lump sum out of the account.

Problems With Debt Settlement Companies

The main problem with working through a third-party settlement program is the significant additional costs that are involved. The fees paid to the debt settlement company average from 15% to 35% of the original or negotiated debt. These fees are usually first paid in full before any work is done for you.  This can add up quickly, and the amount of the settlement fees is always much higher than the cost of a bankruptcy attorney and bankruptcy court filing fees.

Another major issue is that settlement providers may require you to stop making payments to creditors while a debt is negotiated. This causes your credit standing to drop with each missed payment.

Settlement programs also take four to six years to resolve a debt negotiation (versus the three to four months of a liquidation bankruptcy case), and programs only handle specific debts. Bankruptcy addresses a much broader range of debts.

Another major problem is that you are taxed on any debts that are settled for you by the debt settlement company.  For instance, if you owe Discover Card $10,000.00 and the debt settlement company settles the debt for $3,000.00, the $7,000.00 that is not paid is taxed against you as ordinary income.

Another significant negative is that a creditor with whom a debt settlement company settles a debt will sell the portion of the debt that was not paid to a third-party debt purchaser.  Thus, the term “settlement” lavishly employed by debt settlement companies is a half-truth at best and an outright lie at worst.  For instance, if you owe Discover Card $10,000.00 and the debt settlement company “settles” the debt for $3,000.00, Discover Card will sell the remaining $7,000.00 to a third-party debt purchaser for 10% to 20%.  The third-party debt purchaser will then start collection activities against you for the remaining $7,000.00.

To learn more about the benefits of bankruptcy and the problems with debt settlement in Mankato, MN, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

 

Posted on

Common Misunderstandings about the Risks of Bankruptcy in New Ulm, MN

There are several ways to find debt relief in the United States, each with varying effectiveness and cost. Debt relief programs may seem like attractive options, but in the long term, they always cost more than filing for bankruptcy, don’t relieve the stress of debt and are far worse for your overall credit profile/rating than a bankruptcy filing. A creditor will sometimes try and persuade you to do a “settlement” on a debt.  The term “settlement” is a gross misnomer and a half-truth.  While the creditor may allow you to pay less than the full amount of a debt, the creditor will sell the right to collect the remaining amount that you don’t pay to a third-party debt purchaser for 10 or 20 cents on the dollar.  The third-party debt purchaser will then start collection actions against you on that remaining balance.  Sometimes, you can try and work things out with your creditors through a so-called “debt settlement” company.  However, “debt settlement” companies are rife with fraud.  By far, the best way to quickly and permanently resolve debts is through the bankruptcy process. While many people are fearful of filing bankruptcy, the truth is that bankruptcy helps thousands of households find their way to financial balance and peace of mind each year. Behm Law Group Ltd. attorneys can protect and guide you through your case and help you understand the many misconceptions about filing bankruptcy in New Ulm, MN.

Avoiding bankruptcy mills and accepting the advice and support of a skilled bankruptcy attorney can help you find permanent relief from various kinds of debts. With bankruptcy, you can resolve debts related to credit cards, medical bills, foreclosed mortgages, car loans, personal loans, some tax debts, personal business expenses and debts, past due utility bills, overdraft lines of credit attached to your checking and savings accounts and many other types of debt.

The ideas behind the risks of bankruptcy are often inflated by third-party “debt settlement” providers, creditors and other self-interested, for-profit and credit-industry sponsored/financed parties who want you to be fearful of bankruptcy and who will profit from you choosing their questionable services over a permanent, court-enforced process. You will receive timely, expeditious, positive and permanent results by filing a bankruptcy case.  You’ll find the following prevalent myths to be false.

  1. “Filers lose all their property.” This is faulty thinking about Chapter 7 liquidation bankruptcy as Chapter 7 liquidates your non-exempt assets in exchange for the permanent discharge of your debts. While it’s true that some people can lose some property in a Chapter 7 case, it is not a common occurrence.  In the vast majority of Chapter 7 bankruptcy cases, all people lose are their debts.  Generally speaking, you’ll be able to protect all your assets (like your home and car) with the allotted bankruptcy exemptions which are quite generous.
  2. “Married spouses have to file together.” While married couples can file jointly,  it’s not a requirement for them to do so. One spouse can file as an individual and have that case handled like the bankruptcy case of any other unmarried filer.  With debts that are in both spouses’ names, however, the filing of a joint bankruptcy case is necessary for those debts to be completely handled and discharged.
  3. “Your credit will never recover.” This is a falsehood about bankruptcy that is exaggerated. Yes, your credit will take a hit, but it’s typically only around 200 points. Additionally, that drop can quickly be recovered. Many filers who spend frugally and practically after a bankruptcy end up seeing a jump in their credit scores to “good” ranges (650 – 720) within just six to eight months after the conclusion of a bankruptcy case. Plus, bankruptcy usually completely falls off your credit profile after five to six years.

One other common myth is that bankruptcy filers are not financially responsible. The reality is that people can find themselves in debt for myriad reasons which are completely beyond their control. (Learn about more bankruptcy myths here.)

Contact Behm Law Group Ltd. by calling (507) 387-7200 or emailing stephen@mankatobankruptcy.com for more information about the real benefits and risks of bankruptcy in New Ulm, MN.

 

Posted on

Unemployment, Bankruptcy, and Debt Relief in Worthington, MN

Since the beginning of 2020, the United States has gone through a crisis unknown since the 1918 influenza pandemic spread throughout thousands of communities. The coronavirus not only created a huge public health issue, but it also resulted in many social and economic problems. The economic impact of the COVID-19 pandemic happened for many reasons. The state-mandated shutdowns and overall pause of nonessential operations was a large part of that impact, but many other trickle-down effects added to the nuanced conditions of today’s current economic situation. One way to look at the ways our country has coped with the unprecedented economic changes is to examine the patterns of unemployment and bankruptcy from 2019 to 2020. If you are among the many still struggling with debt and financial instability from the past year or any time before that, Behm Law Group Ltd. can help you file a strong bankruptcy case for long-term debt relief in Worthington, MN, and the surrounding areas.

Bankruptcy is a court-enforced and court-administered process that legally provides for the discharge or the reorganization of your debts. A bankruptcy case works to provide a level of fairness to all parties involved by significantly leveling the economic playing field for bankruptcy filers.  Bankruptcy allows bankruptcy filers to not only discharge their creditors’ claims but also significantly modify the terms of payment such as reducing interest rates, reducing amounts of debt, etc.  A bankruptcy case also provides fairness to creditors because creditors are still paid but are simply paid under adjusted terms.

While some impacts of COVID-19 on our economy were predictable, others were more unexpected.

Bankruptcy 2019–2020:

Two of the most important reasons why bankruptcies decreased during the COVID-19 pandemic were the federal stimulus checks and increases in federal unemployment benefits. In December 2019, bankruptcy cases were hitting a low point of around 53,000 nationally (both business and personal). Just before the real effects of COVID-19 in the United States hit home, March 2020 bankruptcies spiked by about 10,000 to around 62,800. This kind of increase typically occurs in the beginning of a year due to many aspects, but often is most attributable to the after-effects of holiday spending. By the time the pandemic was causing national shutdowns, the U.S. government had begun to issue stimulus checks, and debt, rent, utility, and other providers/creditors were offering more lenient repayment terms. At that time (April–May 2020) bankruptcies dropped dramatically to around 38,500.

Unemployment 2019–2020:

From February 2019 to February 2020, unemployment rates hovered at around 5.7 million U.S. citizens. From March to April of 2020, that number jumped up to over 23 million. The increase was almost entirely due to stay-at-home orders, but many people also lost their jobs because their employer couldn’t sustain a temporary shutdown and had to close its business permanently. After the country began to open up again in July 2020, unemployment rates decreased rapidly to around 16.3 million.

This general overview of bankruptcy and unemployment throughout the pandemic is basic, but it provides some indication of what can happen during such a difficult financial time. If you are still facing difficulties with your finances, contact Behm Law Group Ltd. by calling (507) 387-7200 or emailing stephen@mankatobankruptcy.com for more information about bankruptcy and debt relief in Worthington, MN.