Behm Law Group, Bankruptcy Attorneys

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

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

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

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

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

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

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

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

Plan Rejection

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

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

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

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

For most households, filing for bankruptcy without liquidating assets involves Chapter 13 bankruptcy, a process that effectively reorganizes debts and alters amounts to be repaid along with the overall repayment period. While most consumer households and individuals should opt for Chapter 13 if their goal is to retain much of their property through bankruptcy, there’s a better option for family farmers and fishermen filing for bankruptcy in Redwood Falls, MN. If you’re a farmer or fisherman struggling financially, filing for Chapter 12 reorganization bankruptcy is most likely the right choice for you. Behm Law Group, Ltd. can give you the help you need throughout your petition.

Because Chapter 12 was specifically designed to address the debts of family farmers and fishermen, it’s reasonable that it’s more beneficial to filers of that status to choose Chapter 12 over Chapter 13. The details of those benefits include the following:

1. You can have more debt than a Chapter 13 filer. In Chapter 13, filers aren’t eligible if their secured debts are greater than $1,184,200 or if their unsecured debts exceed $394,725. However, for farmers and fishermen with the much greater debts that often come with owning and operating a farm or fishing venture, the debt ceiling for Chapter 12 peaks at $4,153,150.
2. You have more wiggle room with repaying secured debts. If your secured debts are so high that repaying them will take longer than your repayment plan period, it’s possible that you will not have to repay those debts in full during the plan period. You’ll still have to repay those debts completely, but you may adjust your plan so that you make reasonable payments throughout the plan period and continue to pay those installments after the plan is completed until your debts are repaid in full. This gives you more room to breathe within your repayment plan.
3. You have more wiggle room with repayment installments. In a Chapter 12 plan farmers and fishermen are allowed to base the frequency of their payment installments around the production cycle of their crop or catch migration and population. In Chapter 13, on the other hand, the filer must make monthly payments regardless of income patterns.
4. You have more cramdown options. In Chapter 13 and Chapter 12, you have some options to “cramdown” your debts, meaning you can reduce a debt to the present value. For example, if your car was worth $5,000 at the time of the filing of your bankruptcy petition, but your debt on the car was $8,000 at that time, you can cram the debt you owe down to the $5,000. In Chapter 13, you can only use cramdowns on certain debts, but Chapter 12 allows more extensive uses of cramdowns, including home mortgages and motor vehicle loans.

Overall, Chapter 12 offers a lot more to family farmers and fishermen than Chapter 13. If you think you’re eligible to file for Chapter 12 bankruptcy in Redwood Falls, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.

Today, the food industry is largely industrialized across the country, but there are some farming and fishing families still thriving today. However, because farming and fishing are some of the most difficult trades with which to support a household and maintain a healthy business, there are also a large number of financially struggling family farmers and family fishermen. For these family businesses, bankruptcy might be the best path to take. While our attorneys often handle cases for individuals working through Chapter 7 or Chapter 13 bankruptcy, Behm Law Group, Ltd. also offers legal advice and assistance to family farmers and family fishermen filing for Chapter 12 bankruptcy in Mankato, MN.

Chapter 12 works in many similar ways to Chapter 13, but is specifically designed to serve family farmers and family fishermen rather than a household or individual. Chapter 12 filers will work with their bankruptcy trustee to establish a 3 to 5-year repayment plan for their debts, where they must pay back 100% of their priority debts and to be determined portion of their other debts. The amount a family farmer or family fisherman must repay of non-priority debts is determined by their average income received within the 6 months prior to filing for bankruptcy.

There are ways, however, to reduce the amount of your secured debts as a family farmer or family fisherman filing for Chapter 12 bankruptcy. By effectively “cramming down” secured debts, you can lower your owed debt and pay less in the long run.

Cram Down: The cram down method is a way of bringing your debts back in time. This means you can reduce certain debts (for example boat loans, business mortgages, and farm equipment debts) to the present market value of the property. This method is effective on “upside down” loans where you owe more debt than the base value of the property. If you owe $4,000 on a loan after the accumulation of missed payments and interest and the collateral for the loan is worth $2,000.00, you can reduce that debt down to the base value, and you would not have to pay more than $2,000. In Chapter 13, cram downs are limited in many ways, but in a Chapter 12 case, the court can authorize the cram reduction of almost all secured debts, including your home mortgage and car loans.

Cramming down secured debts can often give a family farmer or family fisherman the ability to meet Chapter 12repayment plan requirements. For more information about cram downs and the process of filing for Chapter 12 bankruptcy in Mankato, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.

Bankruptcy in the U.S. is designed to give debtors methods of working through their financial obligations in a way that offers more leniency and payment options when repaying accumulated debt. Whether you file for reorganization or liquidation types of bankruptcy, you’ll be given a set of options that will help solve your debt case. However beneficial bankruptcy is to the filer, the process must also be equitable to the creditors involved. Behm Law Group, Ltd. offers legal advice and assistance that will help you navigate through your petition for Chapter 7 or Chapter 13 bankruptcy in Fairmont, MN.

If you file for reorganization bankruptcy, it’s likely you’ll be filing for Chapter 13. In this case, you’ll be working with a bankruptcy trustee to establish a repayment plan. The results of this plan will allow you to reorganize how you repay your debts, changing the amount that must be repaid and the time period in which it’s repaid. Your plan can make your debts vastly more manageable given your financial situation, but it’s required to also meet the best interest of your creditors.

Whether your repayment plan is fair to your creditors or not is a status determined by the Best Interest of Creditors Test.

Best Interest of Creditors Test

In a nutshell, you must repay priority debt creditors, such as tax creditors or child support creditors, the full amount you owe. This is a standard for all Chapter 13 cases. What varies from case to case is the amount you’ll repay to your non priority unsecured creditors, such as medical debts and credit card debts. This is where the Best Interest of Creditors Test comes into play. What the test measures is how much you’re repaying to your creditors, and if that amount is fair. The bottom line is that your repayment plan must repay, at minimum, the amount that creditors would have received from your liquidated assets if you had filed for Chapter 7 instead. This in turn depends on your property values and the exemptions you can claim.

Not only does the test decide whether you’re meeting your creditors’ best interests, but it also partially determines how much you’ll pay to priority unsecured creditors in your repayment plan.

The Best Interest of Creditors Test is most effective in determining if you’re meeting the minimum requirement for amounts repaid to nonpriority unsecured creditors. It doesn’t take your disposable income into account, but that amount will be considered outside of the test to determine the maximum amount you must repay. For legal help with your repayment plan and working through filing for Chapter 13 bankruptcy in Fairmont, MN, contact Behm Law Group, Ltd.at (507) 387-7200 today.

If you file for Chapter 13 bankruptcy and reach an approved petition and repayment plan, it’s guaranteed that you must use all of your disposable monthly income to meet your monthly debt repayment requirements. Before you file your petition, however, there are approved ways to lower your monthly requirements by lowering the amount categorized as disposable income. Working with a bankruptcy attorney during this time is important to ensure your safety against accidental fraud associated with transferring incomes. Behm Law Group LTD. provides the legal advice and assistance you need throughout the process of filing for Chapter 13 bankruptcy in Redwood Falls, MN

One way to decrease your monthly payments by lowering your disposable income is by dedicating some of that income to charitable donations.

Charitable Deductions:

In order to reduce your disposable income with charitable donations, your donation expenses have to meet certain standards set by the US Bankruptcy Courts. First, the charity of your choice must be qualified under the tax code as a legitimate, government-approved religious or charitable organization. You can also donate to the government for public use of your funds, to your church, or to tax-exempt 501(c)(3) charities. Second, the donations must come from your own disposable income and not through other means under your control, such as your business or trust fund. Additionally, the donation must be monetary and the organization can’t be politically involved in legislative affairs or candidacies.

Fraudulent Transfer:

You may deduct up to 15% of your gross annual income for charitable donations to reduce the disposable income and lower monthly payment requirements in a Chapter 13 repayment plan. Any amounts over that 15% donated prior to filing for Chapter 13 bankruptcy can be considered as breaking the fraudulent transfer law. This means that your bankruptcy trustee can take back the amount over 15% from the charity you chose for those donations. You will also have to prove you’ve been making regular donations to an approved charity to have the full amount of your expenses deducted from your disposable income.

In the months leading up to your petitioning for Chapter 13 bankruptcy in Redwood Falls, MN, you can do a lot to optimize your repayment plan. With our bankruptcy attorneys advising you along the way, you can keep your petition legitimate as well as getting the most out of what Chapter 13 bankruptcy has to offer. For more information, contact Behm Law Group LTD. at (507) 387-7200.

If you’re considering filing for bankruptcy, you’ve probably started to do some research of your own and learning about your options. If you think you may qualify for Chapter 13 bankruptcy, you might have already discovered that a long road of meeting financial and legal obligations set by the U.S. Bankruptcy Courts, your bankruptcy trustee, and your creditors is ahead of you. Navigating these requirements is crucial to successfully working through a Chapter 13 petition and completing a repayment plan, but it can be a difficult process without the help of a well-versed professional. Behm Law Group, LTD. can provide that help with our experienced bankruptcy lawyers in Fairmont, MN

One stipulation you must continue to meet if you’re about to begin your repayment plan is the Best Effort requirement.

What is “Best Effort?”

Essentially, the Best Effort requirement demands that you must be able to prove you will use the entirety of your disposable income—any income you do not spend on taxes, household needs, transportation, or other debt payments—on meeting your monthly repayment plan installments. Specifically, your disposable income must be used to make payments to nonpriority unsecured creditors in your repayment plan.

Nonpriority Unsecured Debts

Your nonpriority unsecured debts (such as credit card debt, personal loans, and medical bills) may not always be paid back in full like your priority debts. The amount you pay back to your nonpriority unsecured creditors is again determined by your average income. If your income average over the six months prior to filing for bankruptcy falls below the Minnesota median income, the length of time you have to repay your nonpriority unsecured debts back can be as short as 36 months or 3 years; your creditors, accordingly, would receive lesser amounts. If your income is higher than state median, the length of time you have to repay your creditors must be 60 months or 5 years. In such a case, your creditors would receive larger amounts.

With the right guidance it’s easy to meet the Best Effort requirement and still have deduction options for your disposable income. Behm Law Group, LTD. can provide that guidance in the months leading up to your petition and throughout the process of filing for Chapter 13 bankruptcy. For more information about how our experienced bankruptcy lawyers in Fairmont, MN can give you the best legal advice and assistance with your bankruptcy case, contact us at (507) 387-7200 today.

Your disposable income plays a large part in determining your path when it comes to filing for bankruptcy as an individual. This income is taken into consideration with your debts and the value of your assets and properties. The result decides whether you qualify for Chapter 7 or Chapter 13 bankruptcy. If your results don’t pass the Means Test, you may opt to work with a bankruptcy trustee to build a repayment plan and file for Chapter 13 bankruptcy. If you’re considering filing for Chapter 13 bankruptcy in St. Peter, MN, Behm Law Group, Ltd.  can provide legal assistance with your repayment plan and your petition.

A debt repayment plan with Chapter 13 bankruptcy is designed to reorganize your standing debts while keeping things balanced and fair between you and your creditors. You can’t propose a repayment plan to your trustee and the courts, however, if you don’t prove your good faith in repaying debts in full within a five-year period.

Good Faith:

Filing your petition for Chapter 13 bankruptcy covers most of the required information, forms, and schedules for the process, but you must also provide your proposal for a repayment plan. The outline of your plan proposal describes your monthly payments towards priority debts, secured debts, and unsecured debts, and the term in which the selected amount of those debts will be repaid. This is where your “good faith” comes in.

In order for your petition to be fully-approved by U.S. Bankruptcy Courts, your bankruptcy trustee must be able to approve your good faith in using all your disposable income to meet your monthly repayment requirements.

Lacking Good Faith:

There are several reasons why your bankruptcy trustee may determine that you’re not in good faith for your repayment plan. Most of the time, if you’re lacking good faith, there will be some inconsistencies with your income, deductions, or petition. For example, if your current monthly income is subject to change during your repayment period and you do not notify the courts, your plan may be denied. If you’re found lacking in good faith, you may respond with an explanation, and your trustee may reexamine your standing.

Behm Law Group, Ltd. can help you navigate the process of determining a repayment plan and holding a good faith standing when you file your petition for Chapter 13 bankruptcy in St. Peter, MN. If you’re considering bankruptcy contact us at (507) 387-7200 today.

Making prudent use of the financial help that filing for Chapter 7 bankruptcy can provide is one of the smartest things you can do if you’re overwhelmed by accumulated debts and financial obligations. Chapter 7 was designed to help people recover from crippling debt and get back on their feet financially. The U.S. Bankruptcy Courts have to treat each case with fairness to debtors and creditors alike, so Chapter 7 works as a balanced process. Behm Law Group, Ltd. helps filers with legal advice and assistance throughout the process of filing for Chapter 7 bankruptcy in New Ulm, MN.

To keep things balanced between creditors and debtors, Chapter 7 bankruptcy works to discharge your debts while simultaneously liquidating your nonexempt assets, if any, to repay your creditors.  Most cases, however, are “no asset” cases which means that all of one’s assets are exempt and creditors don’t get paid anything.  It’s your job as a debtor to claim your own exemptions to prevent assets from being unnecessarily liquidated. The flipside to claiming exemptions, however, is that it’s possible to claim too many for your case.

Excessive Exemption Planning

Generally speaking, exemption planning—taking assets you may not be able to keep in bankruptcy and liquidating them and using the money to pay down your mortgage or purchase assets that you would be able to keep so you can maximize your exemptions—can be a tricky process. In fact, it can be considered fraudulent behavior and can be a basis for the dismissal of a bankruptcy case or a denial of all and any debt relief. That being said, there are times when exemption planning is possible when it comes to making purchases before filing for bankruptcy.

Purchasing Before Bankruptcy

Many purchases you make on credit before filing for bankruptcy can be construed as fraudulent use of credit and can render the subject credit debt non-dischargeable. For example, any debts you gather within 90 days before filing for bankruptcy that exceed $675 in total can be considered non-dischargeable. This applies to “luxury goods,” a term that covers most purchases that are not necessary to your household like televisions, furniture, trips to Hawaii or Europe. Purchases that you are allowed to acquire credit debt for within the 90-day period before filing for bankruptcy includes necessities like food, gas, rent, and auto care. These debts may still be petitioned for discharge.

Your spending during the 90-day period prior to filing for bankruptcy is flexible. If you make some bad choices, however, by “maxing out” your credit before filing for bankruptcy, many of your debts may not be discharged, and your case may even be dismissed. Behm Law Group, Ltd. can help you navigate exemption planning and purchasing before you file for bankruptcy in New Ulm, MN. For more information, contact us today at (507) 387-7200.

If you plan to file for Chapter 7 bankruptcy, having a bankruptcy lawyer is essential. In some cases, a person may have assets that he or she would not be able to retain either because the value of the assets are too high or there are no applicable bankruptcy exemptions to protect the assets.  Before filing for bankruptcy relief, you generally are allowed to rearrange your finances and property in a way that’s legal and allows you to maximize your bankruptcy exemptions to benefit you as much as possible. The more exemptions you can claim, the more of your assets you can protect from the liquidation process involved in a Chapter 7 case. The bankruptcy attorneys at Behm Law Group, Ltd. can assist you during this time and throughout the process of filing for Chapter 7 bankruptcy in Jackson, MN.

It’s possible for you to work with your attorney and convert many properties or cash itself into exempt assets without crossing the line into excessive exemption planning or fraud. The help of a bankruptcy attorney is crucial.  You first must determine the values of your assets and whether there are exemptions available that will protect them.  Also, you must determine if the value of a particular asset exceeds the allowance of the particular exemption with which you intend to protect it.

Nonexempt vs. Exempt

Generally speaking, if an asset is determined to be a basic need to the filer, it’s considered an exempt asset. U.S. Bankruptcy Courts do not want to strip filers of all their property, even if the value of those assets could be used to repay creditors for debts that are dischargeable. Homes, means of transportation, wages, and other important properties are categorized as exempt in the majority of Chapter 7 cases.

Nonexempt properties, however, are often involved in a Chapter 7 case. Many assets are considered nonexempt from the liquidation process because their value is needed for repayment in order to keep the process balanced between debtors and creditors.

Converting Assets

Spending your nonexempt assets (i.e., the money in your bank accounts) is one lawful way to make use of them for your benefit, but keep in mind you should only spend them on necessary items like food, gas, repairs to your vehicle.  You must not pay debts to friends or relatives or make gifts to friends or relatives or put assets into someone else’s name.  Also, you must remember that you will be asked by your lawyer and by the bankruptcy trustee administering your case for a thorough accounting concerning how you spent any non-exempt money and how you disposed of any non-exempt assets.  The Bankruptcy Code requires you to do this and you could be denied bankruptcy relief if you don’t do it.   Spending that money on luxury items such as expensive trips or fancy furniture or big screen televisions could also be considered excessive and could be scrutinized. Chapter 7 code also allows you to sell nonexempt properties and use the money gained to buy exempt assets (for example, selling a yacht and using that money to buy a household vehicle).

Unfortunately, it can be easy to cross the line from legitimate exemption planning and engage in conduct can be viewed as fraudulent or inappropriate. The help of our bankruptcy attorneys prior to filing for Chapter 7 bankruptcy in Jackson, MN, is the key to doing exemption planning right. For more information, contact Behm Law Group, Ltd. today at (507) 387-7200.