Posted on

Adversary Proceedings vs. Contested Matters for Debt Relief

Each year, thousands of U.S. households struggle with debt, and while a very few will eventually find ways to overcome that debt, most people will not. For those who know they will be unable to repay their debts, filing for bankruptcy is an effective option to resolve their debts permanently and without the threat of wage garnishment, creditor harassment, and foreclosure. Filing bankruptcy to discharge your debts provides a government-sanctioned process that provides permanent debt relief that is enforceable by law. At Behm Law Group Ltd., we help clients work through Chapter 7, Chapter 12 and Chapter 13 bankruptcy filings to find effective, long-lasting debt relief in Mankato, MN, and the surrounding area.

 

No matter what chapter you file, bankruptcy can be a detailed and nuanced process that requires the sharing of your current financial information with a third party. Your petition will need to include all of your debts— even ones that you want to keep—your income sources, your properties, and virtually all other aspects of your financial situation. The bankruptcy petition that you complete with your attorney is something that you sign under oath.  You make the representations in your bankruptcy petition subject to penalty of perjury.  Creditors rely on the accuracy of those representations.  The trustee administering your bankruptcy case relies on the accuracy of those representations. The bankruptcy court itself relies upon the accuracy of those representations.  Bankruptcy is an “on your honor” proceeding.  When you file bankruptcy, no one comes knocking on your door and invading your residence to see what you own.  However, it is vital and incumbent upon you and your attorney to make a good faith and detailed review of your financial circumstances and to make sure that the bankruptcy petition is completed as accurately as possible.  The willful failure to correctly complete your bankruptcy paperwork may result a dismissal of your case, at best.  At worst, the making of an intentionally false statement, concealing property or obtaining money or property by fraud in connection with a bankruptcy case can result in fines up to $250,000.00, or imprisonment for up to 20 years, or both.

 

The reason the court needs such detailed information is to:

  1. determine if you qualify for bankruptcy;
  2. correctly evaluate how to handle your case;
  3. work through each debt with respect to how creditors will be repaid or discharged; and
  4. avoid difficulties like contested matters and adversary proceedings.

 

In your particular case, there may be issues brought to the court from the trustee, bankruptcy judge, or one of the creditors involved. These issues could be presented either as contested matters or as adversary proceedings. Both will extend the duration of your case and both can cost you more money the longer they are left unresolved.

 

Adversary Procedures

These contests are lawsuits within a bankruptcy case typically brought to the court by creditors who want to have a discharge of a particular debt revoked, denied or otherwise objected to, creditors who are hoping to recover money or property from parties other than the bankruptcy filer, or creditors who wish to stop some other court action related to your case. Although it’s related to your case, an adversary proceeding is a separate and distinct matter.

 

Contested Matters

Contested matters are similar to adversary proceedings, but they are not proceedings that are distinct and separate from your case. Creditors or other parties can bring contested matters in a case by filing a motion that requires the court to make a ruling based on a particular matter. Contested matters are often resolved more quickly than the resolution of adversary proceedings, but they will still extend the duration of your case and you still likely will have to pay your lawyer more money to assist you in resolving them.  The court will usually consider lifting the automatic stay, objecting to a creditor’s proof of claim, or objecting to a proposed chapter 13 repayment plan as contested matters.

 

 

To learn more about adversary procedures, contested matters, and how bankruptcy can provide permanent debt relief in Mankato, MN, and the surrounding region, call Behm Law Group Ltd. at (507) 387-7200 or email stephen@mankatobankruptcy.com.

Posted on

The Meaning of Debt Discharge in Chapter 7 Bankruptcy

Common law bankruptcy was established centuries ago to handle debtors that couldn’t repay their debts. In a successful economy, the best way to handle debts that can’t be paid by the borrower is with a bankruptcy system that stabilizes that debt load, returning consumers to the trade of goods and services while remaining fair to creditors with some form of repayment. Today, that foundational system is still in place with modern bankruptcy law. Contemporary bankruptcy systems can be highly complex, and because of this, it is highly recommended bankruptcy filers take advantage of the guidance an attorney can provide. At Behm Law Group, Ltd., our expert attorneys can help you work through a Chapter 13, Chapter 12 or Chapter 7 bankruptcy in New Ulm, MN or the surrounding areas.

 

The U.S. bankruptcy code offers relief for the debtor and, sometimes, provides a return of some payment to creditors in two general ways: liquidation and discharge or reorganization and repayment. Chapter 13 and Chapter 11 were developed for individual and business debtors respectively to offer a restructuring of debts into a repayment plan that fits the filer’s income. Creditors are repaid but under different repayment terms that are more beneficial to the bankruptcy filer.

 

Chapter 7 bankruptcy, on the other hand, is reserved for filers who don’t have disposable income every month – surplus income after necessary living expenses are paid – and wouldn’t be able to work through a chapter 13 repayment plan.  Chapter 7 bankruptcy is also intended for those whose household incomes are below the state median income for a household of their size. Instead, Chapter 7 bankruptcy provides debt discharge by liquidating the filer’s non-exempt assets and providing that value to creditors. Filers will no longer be legally, contractually responsible in any way for a debt once it’s officially discharged by the court.  In the vast majority of chapter 7 bankruptcy cases, however, people are able to retain all of their property and all they lose are their debts.

 

When does discharge happen?

Discharge happens at the end of your Chapter 7 bankruptcy case, but only after you’ve met court requirements including:

 

  1. filing all the necessary paperwork and schedules with your bankruptcy petition
  2. given the court a correct and accurate documentation detailing your finances
  3. paid the bankruptcy court filing fee
  4. attended the meeting of creditors with the trustee
  5. attended court-approved credit counseling and financial management courses

 

When you’ve met these requirements, the court will issue an order of discharge. While this order discharges your legal responsibility to pay your debts, the issuance of the discharge order doesn’t always mean that your case will be closed right away.  Sometimes, a bankruptcy case must remain open to allow the bankruptcy trustee to sell non-exempt assets (assets that you can’t retain) and disburse the resulting sale proceeds among your creditors. Additionally, in the event an adversary proceeding was filed, your case will remain open until the adversary proceeding has concluded.

 

The discharge order discharging your debts will be issued by the bankruptcy court about three to four months after your bankruptcy case is filed. The discharge order won’t list each debt that is discharged, but instead provides general information about the debts that are discharged and the debts that you may still have to pay, such as tax debts, child support debts, debts related to alimony, some student loans, etc.

 

Keep in mind that the court can revoke or deny a discharge if you are untruthful or did not correctly file your paperwork. To get the most out of your debt discharge and file a successful and accurate case for Chapter 7 bankruptcy in New Ulm, MN, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

Posted on

Four Main Types of Fraud According to the Bankruptcy Code in Worthington, MN

Like any legal proceeding, bankruptcy is a big step to take in your life, and if you’re considering filing, you should prepare to be completely frank with your bankruptcy attorney about your financial circumstances/problems and you should prepare to collect paperwork that substantiates the assets you own and the debts you owe.  Due diligence and a careful review of your financial troubles and of how those troubles came about are big components that come into play with every case.  Unfortunately, there is a lot of irresponsible advertising misinforming people that bankruptcy is “easy”, “simple” and consists of “just a bunch of forms” that you fill out.  It is important to understand that the papers you complete and file are legal pleadings.  When you sign and file them with the bankruptcy court, you make representations in those pleadings under oath and subject to penalty of perjury.  Many parties rely upon the accuracy of those representations.

 

Even though it’s a big step to take, bankruptcy is undeniably helpful for thousands of households every year. It may be the best choice for your financial wellbeing as it will provide long-term debt relief and stability.  While bankruptcy is nothing to be afraid of, one must have due respect the for the process and certain rules and procedures must be observed and done correctly to get you through it with as little disruption to your life as possible.

 

The two main types of bankruptcy available to individual consumers are Chapter 7 liquidation bankruptcy and Chapter 13 reorganization bankruptcy. They are each designed to treat debt specific to each filer’s income, types of property, and types of debt.

 

At Behm Law Group, Ltd., we offer services to people seeking to file for Chapter 7, Chapter 12 and 13 bankruptcy relief. Our attorneys can guide you through the process of preparing and filing your case and they can help you understand how to do it correctly in Worthington, MN.

 

No matter what type of bankruptcy chapter you file, you will be required to provide documentation of your financial circumstances and you will have to do certain things, including completing a credit counseling course, before your case is filed. If you work with Behm attorneys, you can be sure your petition will be correctly filed and you will receive hands-on guidance on what to do so that your case is properly prepared.

 

Filing without the help of a trained professional comes with significant risks.  Without the assistance of an attorney, you could fail to list assets, fail to list creditors or engage in other conduct that could be perceived as fraudulent.  The permanent financial benefits of bankruptcy are intended for individuals who are honest and forthright.  It is important to understand that even simple mistakes could be perceived as fraudulent conduct.

 

There are four main ways a filer could commit bankruptcy fraud. Some of those actions could be accidental, but the court could still view them as fraudulent and could dismiss your bankruptcy case. In addition, you could be federally prosecuted for bankruptcy fraud.   The penalties for making a false statement, concealing property, or obtaining money or property by fraud in connection with a bankruptcy case can result in fines of up to $250,000, or imprisonment for up to 20 years, or both.

 

The four most common ways bankruptcy fraud is committed are as follows:

 

  1. The filer might try to bribe a bankruptcy trustee. This is generally the most obvious type of fraudulent behavior but it is also very rare.
  2. The filer might hide property to keep it from being liquidated or included in a case. This is the most common fraudulent action. One may even engage in this type of fraud accidentally if a filer fails to fully understand the asset-listing section of the bankruptcy petition paperwork.
  3. The filer might file fake, inaccurate, or incomplete forms in their petition. Again, this may happen accidentally without the guidance of an attorney during the process of constructing a bankruptcy case. However, even though it may be unintentional, this may be deemed as perjury depending on the circumstances.
  4. The filer might file multiple cases in an unlawful time frame using false information. Filers must wait a minimum of eight years between Chapter 7 cases, and a minimum of two years between Chapter 13 cases.

 

Mistakes and accidents that can be perceived as unintentional fraud are easily avoidable with the expert knowledge and legal counsel of a bankruptcy attorney. Contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com for information on filing and bankruptcy code in Worthington, MN.

Posted on

Review of Bankruptcy in 2020

The year 2020 was a blockbuster one for disaster, with a global pandemic and a contentious U.S. presidential election, respectively, as the opening and closing credits. For many Americans, the biggest impact was the financial changes they had to face due to COVID-19’s effect on the U.S. economy. Despite the small boost the Coronavirus Aid, Relief, and Economic Security (CARES) Act provided in early 2020 and the short span of federally increased unemployment checks, many households are still struggling to make ends meet due to coronavirus-related circumstances. If you’re among the thousands who are finding it impossible to make financial ends meet, bankruptcy is still available to debtors even in times when some courts may be closed for in-person cases. Those considering filing for bankruptcy in Owatonna, MN, and the surrounding areas can find guidance and protection from Behm Law Group Ltd. attorneys.

 

As we move into 2021, we can look back and see how the pandemic and government actions to support citizens impacted bankruptcy statistics. We can also predict how cases may increase or decrease depending on how stimulus bills and other support systems are enacted this year.

 

Some Basic 2020 Statistics*

*Cited from a GlobeNewswire report published January 21, 2021.

 

  1. The total number of 2020 bankruptcies cases across all chapters was 529,068. This is the lowest case rate in the United States since 1986.
  2. Chapter 11 business bankruptcy cases reached 7,128—a 29% increase from 2019.
  3. Chapter 13 individual consumer cases reached 147,144—a 46% decrease from 2019.
  4. Chapter 7 individual consumer cases reached 348,42—a 22% decrease from 2019.
  5. The 2020 CARES act released in March totaled $2.2 trillion, sending $1,200 per adult and $500 per child to households making under $75,000 a year.
  6. The second 2020 stimulus act released in December totaled $900 billion, sending $600 per person in households making under $75,000 a year.
  7. In 2021, the U.S. Congress may approve President Joe Biden’s proposed stimulus act totaling $1.9 trillion, sending an additional $1,400 per person in households making under $75,000 a year.

 

The balance between government-issued stimulus checks and increased unemployment benefits most likely played a role in helping people facing daunting financial circumstances. For many U.S. citizens struggling with debts, the stimulus checks gave temporary stability during difficult times. That stability may continue through some of 2021 if more stimulus support is provided through Biden’s proposed plan. However, if the current situation continues the way it is and the coronavirus dangers aren’t relieved, the economy will have a hard time recovering back to pre-COVID conditions. This may mean an increase in bankruptcy cases this year.

 

The distribution of vaccines to prevent coronavirus and time will be major factors in considering our country’s future economic health. If you’re struggling now, it could be the best time to file for bankruptcy in Owatonna, MN, and the surrounding communities. To learn more about the process, call Behm Law Group Ltd. at (507) 387-7200 or email stephen@mankatobankruptcy.com.

 

 

Posted on

Credit Repair and Getting Loans After Bankruptcy

Even if you’re facing severe financial difficulties, the social stigma around filing for bankruptcy can get in the way of making decisions that will positively affect your circumstances in the long term. But, getting past the negative social ideas around filing for bankruptcy might be the best choice you can make for your household’s financial health and overall quality of life.

 

The debt relief that bankruptcy provides alleviates the burden of unpaid bills and loans, prevents creditor harassment, stops foreclosure, and eliminates wage garnishment. Despite the truth that bankruptcy will damage your credit score temporarily, once your case is closed, you can start with a fresh financial slate where a lowered credit score might not even matter.

 

If you’re considering filing for bankruptcy, Behm Law Group, Ltd. can guide you through the process and help you begin your path to credit repair in Marshall, MN and the surrounding areas.

 

Though its damage to your credit score is far outweighed by its benefits, filers should keep in mind their standing after their case is closed. Filers with good credit scores will experience a significant drop after filing for bankruptcy, but those with a poor score will only see minor changes. Even though your score drops when you file, the post-bankruptcy period is an ideal time for effective credit repair.

 

In addition to having an opportune moment for credit repair, filers will most likely still be able to get loans of necessity after their case is closed despite a score drop. Credit card loans are often the easiest lines to open after filing, but other important loans like mortgages and car loans are also possible.

 

Credit Cards: Credit card companies will jump to offer you lines of credit if they know you’ve just finished a bankruptcy case. Because you won’t be allowed to file another case any time soon, they know you won’t be able to discharge any debts you rack up on their cards. Those who have just filed for bankruptcy should be wary of extreme interest rates, high annual fees, and potential hidden charges.

 

Auto Loans: Even if you have a large dent in your credit score after filing, you’ll probably still be able to get a reasonable car loan. However, most of these loans will come with poor loan terms and excessive interest rates. Autocreditexpress.com is a service available that helps you determine if you’re eligible for better car loans other than those offered by “bottom feeder” creditors.

 

Mortgages: For the most part, you’ll have to wait two to four years after your bankruptcy case is closed to be eligible for conventional mortgages. FHA loans might be available to those still in their Chapter 13 bankruptcy repayment period or to those two years after their Chapter 7 case is closed. While these are minimum periods, many filers will have to wait longer to get a mortgage depending on the lender and their current finances.

 

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

Posted on

3 Factors to Consider When Using Bankruptcy for Business Debt Relief

For individual consumers and businesses alike, bankruptcy is always an option that can help restructure, dissolve, and generally treat debts that filers wouldn’t be able to repay. The process of bankruptcy is designed with fairness to both the filers and creditors, but also serves to support economies from local municipalities to the national economic system. At Behm Law Group Ltd., we provide services for Chapter 7, 13, and 12 cases, guiding filers through the complex process of each step in their case and providing legal protection against creditor harassment and abuse. While we primarily work with individuals filing for Chapter 7 liquidation bankruptcy and Chapter 13 reorganization bankruptcy, we also guide small businesses using bankruptcy for long-term debt relief in Luverne, MN, and the surrounding areas.

 

Chapter 7 bankruptcy is the most commonly filed case for individuals and businesses. It functions to liquidate non-exempt assets in exchange for the permanent discharge of debt. Business owners who file Chapter 7 can have only their business debts or both their business and personal debts handled in the case, depending on how their business is structured and depending whether both the business and they themselves, personally, are contractually liable on the debts.  Sometimes a business will close following the completion of a business chapter 7 case.  Many times, a business will continue operating after a business chapter 7 case has concluded but the business will operate with a lot less debt.  Sole proprietorship businesses can also file for Chapter 13 bankruptcy and have personal and business debts rolled into one case. This chapter works to reorganize debts into a manageable repayment plan lasting three to five years. Business operations can continue during a Chapter 13 case as long as the business finances fit into the case requirements.

 

If you plan to use any type of bankruptcy for business debt relief, it’s important to take these three major factors into consideration:

 

  1. Is your business currently profiting? If your business is still making money, filing for bankruptcy might not be the right choice. For example, if you’re facing a temporary hard time, incurring more debt to help you through the difficult period that you would be able to repay when your business situation is more stable is probably a better choice than bankruptcy. Filing for bankruptcy is the right choice when your business is consistently losing money with no end in sight.
  2. What’s the asset-to-debt ratio? Every business has assets, whether that includes real estate, equipment, or stock holdings. If the value of your assets exceeds the total debt your business owes to its creditors, bankruptcy might not be the best option. Rather, it may behoove you to engage the services of a lawyer to help you construct various non-bankruptcy work-out arrangements with your creditors.
  3. Who is liable for the business debt? If you own a sole proprietorship, you are personally responsible for business debts. In this case, you can use Chapter 13 to restructure both business and personal debts into one manageable three to five year repayment plan, but this may only be effective if you are also struggling with personal finances. If you don’t file for bankruptcy relief and you’re personally responsible for business debts, the business creditors can use legal action to pursue your personal assets.

 

To learn more about bankruptcy and business debt relief in Luverne, MN, and the local region, contact Behm Law Group Ltd. by calling (507) 387-7200 or email stephen@mankatobankruptcy.com.

Posted on

Chapter 12 Bankruptcy Cases in the Midwest Peak in 2019 and 2020

Of the eight American Midwest states, over 127 million acres are made up of agricultural land that, just twelve years ago, generated a market value of over $80 billion annually. That value steadily declined from 2013 to today. Meanwhile, farm bankruptcies climbed to their greatest peak since the 2009 economic crash, with total Midwest cases reaching 595 in the 2019 calendar year.

 

That total reflects a rapidly changing agricultural economy for all farmers, but especially for dairy farmers in the past five years and now for farmers facing COVID-19 restrictions. If you are a family farmer or fisher struggling to make ends meet, Behm Law Group, Ltd. can help you file a successful Chapter 12 bankruptcy case in Pipestone, MN and the surrounding area to reorganize your debts and help you continue your farming operations for the long-term.

 

The Chapter 12 bankruptcy is a process exclusive to family farmers and fishers who generate at least 50% of their annual gross income through agricultural or fishing operations. Chapter 12 is designed to help farmers and fishers resolve debt through a manageable repayment plan lasting three to five years while maintaining fairness to the creditors involved. The goal of Chapter 12 bankruptcy is to provide long-term debt relief – a reorganization of one’s agricultural-related debts under adjusted and more favorable loan terms – for American agricultural operations and allow them to continue successfully under those adjusted terms even after a bankruptcy case has concluded.

 

Dairy Farmers

A complex combination of trade wars, pricing systems, and a general market shift away from some types of dairy products (replacing milk, cheese, yogurt, and other dairy products with a variety of dairy-free alternatives) have all coalesced to create a decline in the overall dairy economy. Hundreds of Midwest farmers have been forced to shift large-scale operations from dairy to the meat industry. Operations like Wylymar Farms in Wisconsin and Jones County Farm in Iowa have rapidly converted dairy farms with hundreds of milk cows into meat farms to stay afloat. In 2018 alone, almost 3,000 dairy farms converted, filed for Chapter 12 bankruptcy, or closed down operations altogether. Farmers filing for Chapter 12 bankruptcy in the Pipestone, MN region and local Southern Minnesota areas can find expert counsel and guidance from Behm Law Group, Ltd. attorneys to help them regain control of their finances and stabilize their farming operations.

 

COVID Struggles

Economic struggles from the past five years aside, farmers and fishers face almost daily updates and challenges regarding COVID-19 related regulations, restrictions, and codes that make it more difficult than ever to maintain steady operations. While the distribution of vaccines promises to offer better conditions in the near future, farms will likely have longer recovery periods from a year of COVID struggles, much of which took place during peak growing, harvesting, and selling seasons. Numbers concerning the effects of the pandemic and 2020 restrictions are still trickling in, and the total financial impact for farmers and fishers after the economic assistance from the various stimulus relief packages has been extinguished will not be known for several months.

 

To learn more about filing for Chapter 12 bankruptcy in Pipestone, MN for long-term debt relief, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

Posted on

Understanding the Debt Settlement Process of “Mega” Bankruptcies

In the United States, different types of bankruptcy processes are available to a wide range of filers, from individual consumers filing Chapter 7 bankruptcies to large corporations filing complex Chapter 11 cases.

 

At Behm Law Group Ltd., we primarily work with individuals filing for Chapter 7 liquidation or Chapter 13 reorganization bankruptcy, but we also provide filing services and legal protection to local businesses qualifying for either Chapter 7 or Chapter 13, and we provide Chapter 12 bankruptcy services for family farmers and fishers in the southern Minnesota region. Outside of small business and individual bankruptcy, other types of businesses like LLCs, corporations, and partnerships will typically utilize Chapter 11 bankruptcy to handle large debt loads and complex financial situations. While we don’t provide services for Chapter 11 debt settlement in Mankato, MN, and the region, at Behm Law Group Ltd., we still think clients need to understand the role that all types of bankruptcy play in the U.S. economy.

 

One significant segment of the total annual bankruptcy cases filed in the United States is comprised of “mega” bankruptcies. Typically, Chapter 11 “mega” bankruptcy cases address either the debt loads of numerous affiliated and closely intertwined businesses which are consolidated into a single “mega” bankruptcy case or the large-scale debts of a single massive business entity.

 

What Makes a Bankruptcy “Mega?”

To fit into the category of “mega bankruptcy,” a business must have either $1 million or more in debt or have over 1,000 creditors involved. Business entities who file “mega” cases can also have relatively large debt loads that may be under $1 million or have under 1,000 creditors involved, but have a significant degree of public involvement, interest and investment. Some of the most famous mega cases include the bankruptcy cases of Lehman Brothers in 2008 (involving over $691 billion), General Motors in 2009 (involving over $82 billion), and Washington Mutual in 2008 (involving over $327 billion). Many of the recent retail store bankruptcies that have been filed in the United States, including JCPenney, Toys“R”Us, and Sears, have also been handled as mega cases.

 

How are Mega Cases Handled?

Because of the massive sizes of many businesses involved in mega cases, the outcomes of such cases can have rippling economic effects that the majority of other business and individual cases do not. Bankruptcy courts must monitor these potential effects and handle the cases accordingly to eliminate any negative large-scale economic impacts as much as possible. This usually means mega cases are handled with a much higher degree of involvement and scrutiny by bankruptcy court judges. Bankruptcy judges will often employ Omnibus hearings to allow the parties to review and generally “clean up” or “pre-package” a case before allowing it to proceed through the full court process. Omnibus hearings are pre-trial hearings through which the parties to the bankruptcy gather records and financial documents, and then outline the overall situations of the bankruptcy filer and the creditors involved.  Such Omnibus hearings help alleviate the overall administrative stress “mega” bankruptcy cases can place on the court and court staff and provide a more direct and expeditious way to handle the complexities of such cases.

 

To learn more about how our attorneys can help you use bankruptcy for debt settlement in Mankato, MN, contact Behm Law Group Ltd. by calling at (507) 387-7200 or emailing stephen@mankatobankruptcy.com.

Posted on

Filing for Bankruptcy Has Ups and Downs

For those who haven’t been able to meet debt payments on time for several months and suspect they may never be able to fully repay their debts, bankruptcy is always an option. Bankruptcy was designed to support consumers and businesses that can’t repay debts. It’s a failsafe support system that benefits filers, creditors, and the economy overall.

While bankruptcy helps thousands of Americans each year climb out of debt and find long-term financial stability, it’s not just a bailout, and it has its ups and downs just like any other legal process. However, in the majority of cases, the good vastly outweighs the bad. At Behm Law Group, Ltd., we help clients work through the process of filing for bankruptcy in Windom, MN and the local region. In fact, we’re the only law firm in South Central and Southwestern Minnesota that works exclusively with bankruptcy cases.

While the benefits typically outweigh the detriments, it is important to be aware of how bankruptcy can affect you overall.

The Good

Bankruptcy provides direct and permanent debt relief for many types of debts. When you file, the court will also place an immediate automatic stay on your creditors. They will not be able to collect debts or harass you in any way. You will also most likely be able to protect all of your property from liquidation with the many generous bankruptcy exemptions that are allowed in a typical case. You will find that you may have an increase in credit card solicitations/offers and more access to banking opportunities after your case is concluded. Additionally, negative credit marks against you from missed debt payments will be wiped from your credit record. Overall, bankruptcy can give you a completely clean financial state.

The Bad

Filing for bankruptcy can be reflected on your credit profile usually for 5 to 7 years.  Sometimes, after a bankruptcy is concluded, one must wait 2 to 3 years to get approved for a mortgage loan.  Sometimes, one will experience slightly higher interest rates on vehicle loans.  Also, you generally can’t qualify for Chapter 7 liquidation bankruptcy if your income is higher than the state average or median income for a household of your size.  However, this doesn’t mean that you won’t be able to file for Chapter 13 reorganization bankruptcy. Also, some debts, such as student loans, are more difficult to discharge in any kind of bankruptcy and some debts, like most tax debts, child support debts and alimony, are generally not discharged at all. In a Chapter 7 case, you can lose some property if the value of that property exceeds your bankruptcy exemption allowances.  Also, if you have co-signers on a loan, the creditors could pursue them for collection on the debt.  Finally, bankruptcy can be costly when court fees and attorney costs are added together.  While there is no set fee for a bankruptcy case and while the fee one winds up paying depends on how complicated the case is, the typical range is between $1,500.00 and $3,000.00.  However, having to pay an attorney $1,500.00 to $3,000.00 is generally preferable to having to continue paying on thousands of dollars of credit card debt, medical debt and other debts.

If you’re unsure whether filing for bankruptcy in Windom, MN and the surrounding communities is the right choice for your financial situation, contact Behm Law Group, Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com today. Our attorneys can help determine which type of bankruptcy you qualify for and whether filing bankruptcy is even in your best interests.

 

Posted on

How Bankruptcy Code Handles Common Sole Proprietorships

There are several types of business ownership in the United States, from large corporations to sole proprietorships. When it comes to the bankruptcy code, each type of business is handled in a specific way. For almost every type of business, the owner’s debts are separated from the business bankruptcy case. However, because sole proprietorships are owned by one person or jointly by spouses, the business debts and personal debts are rolled into one bankruptcy case. If you own a sole proprietorship and are considering filing for bankruptcy, Behm Law Group Ltd. can help you navigate your case when facing the complex bankruptcy code in Waseca, MN, and the surrounding area.

Many types of businesses are commonly owned as sole proprietorships, typically they include:

  • Bookkeepers and financial planners
  • House cleaners
  • Landscapers
  • Home healthcare providers
  • Caterers
  • Hair stylists
  • Computer repair providers
  • Freelance writers
  • Tutors
  • Electricians

Of course, in addition to these common ones, there are many other types of businesses that can be run as sole proprietorships, and they will also have their debts as well as their owners’ personal debts included in a bankruptcy case. Those people who own a sole proprietorship and cannot repay their debts generally have two options for bankruptcy: Chapter 7 or Chapter 13.

Chapter 7 bankruptcy works to liquidate both business and personal non-exempt assets in exchange for the discharge of business and personal debts. Filers can claim exemptions to protect their assets from liquidation, including exemptions of a homestead, a motor vehicle, tools of the trade, and a wild card exemption that can be applied to miscellaneous property. In any Chapter 7 case, unsecured debts, like credit card debts, medical debts, debts to suppliers of material/products will be discharged in full. With secured debts (debts secured/guaranteed by collateral such as vehicle loans and mortgage loans), creditors can sometimes claim/take their collateral or a filer will simply agree to surrender the collateral back to them.  Any debt that remains after the collateral is liquidated or sold will be discharged.  For instance, if you owe $5,000.00 on a vehicle loan and the vehicle serving as collateral is worth only $1,000.00, the creditor could not pursue you for the $4,000.00 difference after it liquidated or sold the vehicle.   Sole proprietorship business owners who have filed for Chapter 7 can often protect most or all of their business equipment/machinery with their bankruptcy exemptions and can resume operating their businesses with considerably less debt.

Chapter 13 bankruptcy is a debt reorganization process. Business and personal debts are restructured into a repayment plan suited to the person’s income and lasting three to five years. While you work through your plan, you can continue to run your business, and you will even have some options to relegate funds for new equipment or repairs on facilities or tools that are necessary to continue normal business operations.

Whether you file for Chapter 7 or Chapter 13 bankruptcy as a sole proprietorship, be prepared for your business debts and your personal debts to both be included in your case. To learn more about filing for bankruptcy and the bankruptcy code in Waseca, MN, call Behm Law Group Ltd. at (507) 387-7200 or email stephen@mankatobankruptcy.com.