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Key Factors that Affect the Repayment Plan Structure of Bankruptcy in Windom, MN

Today, Chapter 7 is the most common form of bankruptcy for both individuals and businesses. Because the Chapter 7 process is only available to those with income-to-debt ratios lower than the Minnesota median, bankruptcy is often associated with unemployment or even financial ruin. However, bankruptcy is an option to people and businesses with a wide range of incomes and debts in the form of debt restructuring—Chapter 13 bankruptcy. Behm Law Group, Ltd. offers legal advice and guidance to help you decide which type of bankruptcy in Windom, MN, would be the most beneficial to your current financial situation.

 

If you have a stable job and your debts weigh heavily enough for you to consider bankruptcy, chances are you’ll gain the most out of a Chapter 13 case. Chapter 13 bankruptcy works to structure your debts into a 3 to 5-year repayment plan that’s suited to your income. The process is designed to give your creditors as much of a return on your debt as possible without crippling your finances or severely damaging your quality of life.

 

In a Chapter 13 repayment plan, your debts are broken down into several categories based on the priority claim those creditors have on repayment. First, secured creditors are generally the creditors with property secured through a promissory note and security agreement such as mortgages, car loans, or any other debt concerning a physical property. These creditors can be repaid in different ways during your Chapter 13 plan period. In some cases, you will continue to pay these creditors directly rather than through your bankruptcy plan.  For instance, if you have a mortgage with Wells Fargo and you are current with the mortgage payments, you would continue to pay that debt directly to Wells Fargo.  However, if you are delinquent with your mortgage payments, you can pay the mortgage delinquency back to Wells Fargo throughout the 36 to 60 months of your chapter 13 plan rather than all at once.  Of course, you would still have to continue making your regular monthly mortgage payments to Wells Fargo but the delinquency owed before your case was filed would be paid back by the chapter 13 trustee with the payments you make through your chapter 13 plan.  Second, priority debts involved in the bankruptcy process (bankruptcy fees, for example) must also be paid in full.

 

You’ll also be required to repay certain debts in full regardless of any type of plan period, income, or bankruptcy you file for. These commonly include child support and alimony, most tax debts, and debts from personal injury or death you caused while operating a vehicle while intoxicated.

 

The rest of your debts will be considered unsecured or nonpriority debts, and these may be paid at a determined portion from 0% to 100%. The amount you’ll be required to repay to unsecured creditors in your Chapter 13 plan varies based on your disposable income, the exemptions you can claim, and the minimum amount those creditors would receive if your assets were liquidated in a Chapter 7 bankruptcy.

 

Overall, the amount you repay all your creditors, including priority, secured, and unsecured, depends on several financial components. Your debts and other claims you owe that factor into a Chapter 13 plan include:

 

  1. Mortgage owed and arrears
  2. Other home loans and arrears
  3. Car loans owed and loan arrears
  4. Personal property loans
  5. Debts on other property loans
  6. Alimony and child support
  7. Priority tax debts
  8. Other priority debts
  9. Death or personal injury claims against you
  10. Administrative bankruptcy fees
  11. Attorney fees

 

Some debts, like medical bills and credit card debt, may even be discharged in a Chapter 13 bankruptcy repayment plan. For more information about creditors, repayment plans, and filing for Chapter 13 bankruptcy in Windom, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.

 

 

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Breakdown of Payments to Unsecured Creditors for Chapter 13 Bankruptcy in Pipestone, MN

When you file for bankruptcy, the people or organizations you owe money to are broken down into several different types of creditors. Generally, these creditors are considered as priority, secured, and unsecured. Within these categories, there is a simple hierarchy: priority creditors are repaid in full, secured creditors are paid the value of their collateral after exemptions are taken into account or the collateral is surrendered back to them, and unsecured creditors are paid with varying amounts depending on your case. While these creditors are considered similarly in both Chapter 7 or Chapter 13 bankruptcy, the outcomes of their repayments are different. Behm Law Group, Ltd. offers expert counsel and support when you file for Chapter 13 bankruptcy in Pipestone, MN, to help you navigate through your creditors and case.

 

For most Chapter 7 cases, the creditors are treated based upon which debts can be discharged and which exemptions can be claimed. In a Chapter 13 bankruptcy, however, the creditors must be treated differently based on the types of debts and the significance of those agreements.

 

When a Chapter 13 case is filed, the end goal is to restructure the filer’s debts into an appropriate repayment plan. This plan provides for the full repayment of priority debts and the payment of the value of secured debts, but often offers the filer the benefit of partial repayment of unsecured debts. The creditors of unsecured debts are written into the repayment plan in two fundamental ways.

 

  1. The first basic requirement for the treatment of unsecured creditors in a Chapter 13 bankruptcy repayment plan is that they will be paid at least as much as they would if the filer had filed a Chapter 7 bankruptcy.
  2. Secondly, the filer must pay all disposable income – surplus income left over after reasonable and necessary living expenses are paid – to their unsecured creditors throughout the duration of their three to five-year repayment plan. This income amount may fluctuate throughout the plan period, and the chapter 13 plan must be updated to reflect these income changes.

 

The repayment plan period for any Chapter 13 bankruptcy case depends on the filer’s income. If your income is less than the Minnesota median of a household similar to your own, your plan will last three years. If your income is higher than the median, you must file a five-year plan. The amount you repay your unsecured creditors will also depend on how long your plan lasts. For example, if you owe an unsecured creditor $5,000 and your disposable income adds up to $100 a month, you will repay 72% of that debt in a three-year plan or repay 100% of that debt in a five-year plan. In some cases, you will repay 0% of an unsecured debt when you file for Chapter 13 bankruptcy.

 

What you repay your unsecured creditors in Chapter 13 will vary greatly depending on your income and your additional debt payments and expenses. For most filers, these debts will be alleviated at least in part. For more information about your unsecured creditors and filing for Chapter 13 bankruptcy in Pipestone, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.

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What Happens When Retirees File for Bankruptcy in Redwood Falls, MN

Financial difficulties can occur for any number of reasons at any time in one’s life, but with the accumulation of debt into retirement and a decrease in income, retirees are increasingly becoming more likely to file for bankruptcy. Several studies have shown that in the past twenty years, the percentage of 65 or older bankruptcy filers has increased by more than 5%, and many of these petitions outlined medical debt as the primary financial burden of senior citizens. Debts gathered over a lifetime, a drop-in income after retirement, and the issue of medical bills with increased risks of health problems in advanced age all add up to severe financial struggles for many retirees across the country. Behm Law Group, Ltd. serves to protect you throughout the filing of your bankruptcy petition and help you understand what happens when retirees file for bankruptcy in Redwood Falls, MN.

 

The common concern for retirees and senior citizens who file for bankruptcy is how it will affect their retirement funds. Fortunately, most types of retirement accounts are protected from asset liquidation in Chapter 7 bankruptcy and the amount in your fund will not affect your repayment plan in Chapter 13 bankruptcy. Protected accounts include 401(k), 403(b), 457(b), and Keogh plans. The majority of other profit-sharing or benefit plans are also protected. Funds saved in an IRA, SIMPLE IRA, SEP IRA, or Roth IRA are protected from bankruptcy with a set exemption limit. The amount you can exempt from the bankruptcy process changes as the cost of living changes.

 

Another concern for seniors and retirees filing for bankruptcy is whether their Social Security will be involved in the process or not. Social Security is protected from wage garnishments along with disability income, but when that income is deposited into your bank account, it can sometimes be subject to garnishment. However, banks are required to know if federal benefits are in your account before they can take garnishing action, and even then, a two-month value of your Social Security and other benefits are protected.

 

If you are struggling to make ends meet in retirement and face looming medical bills or other debt, bankruptcy can be a valuable option. The majority of your retirement income is protected by federal law, and your retirement funds will most likely be completely protected in the process. With the help of a Behm Law Group, Ltd. attorney, you can free yourself from medical debt, credit card debt, utility debt, property debt, personal loans and more when you file for bankruptcy.

 

Live your retirement in peace and take full advantage of your freedom free from financial stress. Contact Behm Law Group, Ltd. today at (507) 387-7200 to learn more about whether filing for bankruptcy in Redwood Falls, MN, is right for you and start your petition today.

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How Discharge Plays a Part When You File for Bankruptcy in Mankato, MN, More than Once

The purpose of the U.S. bankruptcy system is to relieve individuals and businesses from debts and protect creditors from severe losses. In a nutshell, this process is built to be balanced and fair for all parties involved. This also means that the nature of the bankruptcy system prevents filers or creditors from abusing the benefits that are offered through court regulations. Behm Law Group, Ltd. offers the legal advice and assistance you need to get the most out of filing for bankruptcy in Mankato, MN, while sticking to the nuanced rules and requirements of the court.

 

One of the sticking points for the bankruptcy court is when filers appear to be taking advantage of the system with multiple filings. It’s not unacceptable to file for bankruptcy more than once in your life, but when, why, and how you file multiple bankruptcy petitions depends on certain timelines and the failure to abide by those timelines can affect the outcome of your case.

 

To file a successful case and be eligible for a bankruptcy discharge, it’s important to understand the timeframe stipulations for each type of bankruptcy:

  1. Chapter 7 cases have to be filed eight years apart for one to be eligible for a discharge. This period starts on the date you file your most recent bankruptcy petition. For instance, if you filed for chapter 7 bankruptcy relief on January 2, 2011, you would need to wait until January 3, 2019 to file chapter 7 bankruptcy in order to qualify for another chapter 7 bankruptcy discharge.
  2. Chapter 13 cases can be filed much sooner. The period required to pass before you can re-file for Chapter 13 bankruptcy is only two years from the date you file your most recent petition. This means that you could potentially stay within a debt-restructuring bankruptcy plan interminably. Chapter 13 bankruptcy cases must last at least 3 years (they can last up to 5 years,) so you could file a chapter 13 bankruptcy case, get a discharge in 3 years and then file chapter 13 right away again.  For instance, if you filed for chapter 13 bankruptcy on January 2, 2015, your case would have concluded in January 2018 but you would have qualified to file for chapter 13 bankruptcy relief again as of January 3, 2017.

 

Because you can file for either Chapter 7 or Chapter 13 bankruptcy, you may experience multiple filings of each type. In these cases, the timeframes depend on which case came first:

  1. If you file for Chapter 7 first, you will face a waiting time of four years before you can file for Chapter 13, starting with your Chapter 7 petition date. For instance, if you filed for chapter 7 bankruptcy on January 2, 2015 and received a chapter 7 discharge, you would not be able to file a chapter 13 bankruptcy and qualify for a chapter 13 discharge until January 3, 2019.
  2. If you file for Chapter 13 first, you will generally have a waiting time of six years before you can file for Chapter 7 and qualify for a chapter 7 discharge. However, if you’ve fully repaid your unsecured creditors during your Chapter 13 repayment period, you may be able shorten the waiting time with permission from the court. You can also file within a shorter period if your chapter 13 case was in filed good faith, you represented your best effort in the payment plan, and you paid at least 70% of allowed unsecured claims.

 

If you’re considering filing for bankruptcy, we can help whether it’s your first time or not. Contact Behm Law Group, Ltd. at (507) 387-7200 for more information about our counsel and support for bankruptcy in Mankato, MN.

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Handling Debt Sale When Filing for Bankruptcy in Worthington, MN

When an individual or business fails to meet debt obligations without excuse, they may start to experience more aggressive collection actions from creditors. If you have been struggling to make your debt payments for several months, filing for bankruptcy might be the best option to end creditor harassment and get a fresh financial start. Behm Law Group, Ltd. provides the legal support you need when filing for bankruptcy in Worthington, MN and get optimal results in your case.

 

Generally speaking, when  filing for bankruptcy you’re immediately protected by the automatic stay for the period of time it takes to resolve your case. This means the creditors of the debts that will be handled in your case can’t perform any collection actions. However, things can get complicated when one of your creditors sells one of your debts while you’re filing for bankruptcy or in bankruptcy.

 

A creditor may choose to sell a debt to another creditor at any time, even while you’re in the middle of a bankruptcy case. A creditor might choose to sell the debt if they don’t want to wait for your bankruptcy case to be completed to see if it will get paid anything by the trustee administering your case. By selling your debt, they will receive a small immediate sum, and the buyer of the debt will stand in the place of the original creditor.

 

How does this affect filing for bankruptcy?

 

In most cases, the sale of a debt doesn’t affect your bankruptcy case. Whether you owe a debt to the original creditor or to a debt buyer, you still owe the same amount for that debt. From your perspective, it will be handled in bankruptcy as if there was never a sale. However, the original creditor or the debt buyer must notify the bankruptcy court of the sale so that the party in charge of the debt can receive payments in the event that you file for a Chapter 13 bankruptcy and are scheduled for a three to five-year repayment plan.

 

A debt sale may affect you if the debt in question is discharged or scheduled to be discharged. Because the selling of a debt included in a bankruptcy is an act that is in violation of either the automatic stay injunctive provisions of 11 U.S.C. §362 or the discharge injunctive provisions of 11 U.S.C. §524, you may need to take action if this occurs. For example, presume you have filed for Chapter 7 bankruptcy and your credit card debt was discharged in the process. Presume further that, soon after, you’re contacted by a creditor who claims they bought one of your debts and is attempting to collect payments. In this case, you should provide the creditor with a copy of the Notice of Bankruptcy Filing that was issued by the bankruptcy court when your case was commenced.  If your bankruptcy case has been concluded, you should provide the creditor with a copy of the Discharge Order that the court issued.  If the creditor continues to harass you and continues collection activities, you may be forced to contact your bankruptcy lawyer and sue the creditor in bankruptcy court.

 

The sale of a debt will often not concern you as a filer and is simply business between creditors. To learn more about this process and to receive legal support when filing for bankruptcy in Worthington, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.

 

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Understanding Assignment and Bankruptcy in Mankato, MN

Businesses struggling with unmanageable debts have a range of options for debt relief at their hands. While debt consolidation and debt management plans are popular options that’ll keep a debtor’s overall credit in good standings, there are often situations when these debt relief options only act a bandage instead of a true healing process. When you’re unable to pay your debts and don’t have any way of increasing your income in the next few years, filing for bankruptcy is your best option. Behm Law Group, Ltd. offers the legal advice and assistance you need to successfully file for bankruptcy in Mankato, MN.

 

Bankruptcy is designed to help both debtors and creditors out of a sticky situation, but some creditors may try to dissuade you from filing for Chapter 7 bankruptcy and instead liquidate your business outside of court with an assignment process.

 

ABC

 

Assignment for the benefit of creditors (ABC) is an option for business debtors to privately sell assets and return the value of those sales to creditors. When creditors are awarded these sales, they’ll release debtors from payment obligations. This option might be a way to avoid attorney fees and court proceedings, but the process overall is more beneficial to your creditors than to you.

 

Why is Bankruptcy Better?

 

Filing for bankruptcy, despite its effect on your credit, is a better option for business debtors than ABC for a number of reasons:

  1. In bankruptcy, creditors are forced to allow asset liquidation for all dischargeable debts, but in an ABC, they can choose to forgo approval of discharge on debts higher than the secured collateral value. For example, if you owe $5,000 on an auto loan, but the car is only worth $4,500, the creditor would not have to discharge the debt in an ABC.
  2. Unincorporated businesses are not protected during an ABC against creditors seizing the business owners’ personal assets. This means you could be forced to liquidate your personal car or other property in an ABC. In bankruptcy, however, the debts and the assets of incorporated and unincorporated businesses are generally not involved with the liquidation of one’s personal property.
  3. Personal collateral guarantees and other forms of personal security interests on business debts are not removed in an ABC as they would be in bankruptcy. This means if your property was used to secure a loan, creditors can force you to liquidate that property even if it’s not connected to your business in other ways. Bankruptcy allows for exemptions to prevent you from losing your property even if it’s tied to your business debt.

 

ABCs have their benefits, but most of those benefits inure to your creditors. Filing a bankruptcy is the most effective way to remove debt with minimized liability to you and your property. To learn more about the advantages of filing for bankruptcy in Mankato, MN and to find out how we can help, contact Behm Law Group, Ltd. at (507) 387-7200 today.

 

 

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Handling a Rental Property When Filing for Bankruptcy in Windom, MN

When filing for bankruptcy, you’ll have to take all your property into consideration. Your home, car, and even expensive jewelry are part of your bankruptcy estate and will be handled according to the exemptions you can claim, the equity in your property, and any additional claims your creditors make. Whether you file for Chapter 7 liquidation bankruptcy or Chapter 13 reorganization bankruptcy, there is a possibility that you might not be able to retain all of your property in the process. With the professional guidance of Behm Law Group, Ltd. attorneys, you can find the optimal solutions to resolving property issues and protecting your property when  filing for bankruptcy in Windom, MN.

One of the biggest concerns for homeowners filing for bankruptcy is whether or not they’ll lose their home in the process. That’s where the homestead exemption comes into play, protecting most homes from liquidation during Chapter 7 bankruptcy. Because debts are restructured in a Chapter 13 case, homeowners generally don’t have to worry about losing their homes in Chapter 13 bankruptcy.

However, there are cases where a filer owns multiple rental properties in addition to one’s principle residence. The homestead exemption you can use to protect your primary residence isn’t applicable to rental properties, so it can be more difficult to keep rental properties when filing for bankruptcy.

Rental Property in Chapter 7

If you have equity on your rental property and its value is higher than the debt you owe, you probably want to hang onto that property. To try and protect your rental property from liquidation during the Chapter 7 filing process, you have to assert an exemption claim. Because you can’t use the homestead exemption, your only choices include a portion of the un-used federal homestead exemption (up to $11,850) and the federal wildcard exemption (adding another $1,250). In Minnesota people can elect to utilize either the state or the federal exemptions, so it’s possible you can protect some value in your rental property depending on its worth versus how much debt is against it. If the value of your rental property is less than the debt against, the trustee will not attempt to liquidate it because the entire value is extinguished by the debt against it.  Essentially, the creditor that holds the mortgage or other secured lien has full and complete rights to it.  Generally, you can keep making mortgage payments on the rental property outside of bankruptcy.

Rental Property in Chapter 13

In Chapter 13, your property debts are reorganized with other applicable debts into a three to five year repayment plan. This means you’ll be able to keep your rental property and continue making the monthly payments on it.  However, you can only do this if there is equity or value in the rental property above the debt you owe against it and the property generates a positive income for you.  In other words, the income you receive from the rental property must exceed the associated monthly expenses (mortgage payment, utility payments, property tax payments, insurance payments, etc.). If the rental property generates negative revenue, however, you will be required to surrender it in Chapter 13. You may also be able to find options to cram down or strip liens off to keep a rental property that generates a negative cash flow.

Find Professional Help When Filing for Bankruptcy

If you’re considering filing for bankruptcy in Windom, MN and own rental property, Behm Law Group, Ltd. can help you work to retain that property during the bankruptcy process. Contact us at (507) 387-7200 for more information about filing for bankruptcy and how our expert bankruptcy attorneys can help you.

 

 

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Judgment Liens and Handling Them With a Bankruptcy Lawyer in Fairmont, MN

Filing for bankruptcy is an option available to almost every consumer and business in the US. However, despite the layman’s access to filing for bankruptcy, the fact remains that it is a complex, highly nuanced legal process. While a debt from which a judgment lien is obtained is discharged in a bankruptcy proceeding, a judgment lien can still remain after a bankruptcy is concluded and a bankruptcy filer must take certain steps to fully remove it. This responsibility is best approached with the help of a professional. Behm Law Group, Ltd. offers the counsel of an expert bankruptcy lawyer in Fairmont, MN, throughout your petition.

 

What is a Judgment Lien?

 

In a state civil court case, after a judge or jury hands down a decision, or after a court-approved settlement, a judgment is entered by the court. As part of a typical judgment, the court orders the payment of money from one person to another. But the person who owes the money (the debtor) doesn’t always pay up. A judgment lien is one way to ensure that the person who won the judgment (the creditor) gets what he or she is owed. A judgment lien gives the creditor the right to be paid a certain amount of money from proceeds from the sale of a debtor’s property.

 

In Minnesota a judgment lien can attach to any real estate a person has an ownership interest in (farm, house, condominium, etc.).  A judgment lien is automatically entered against any real estate that a debtor (the person against whom the judgment has been assessed) owns in the county in which the judgment was awarded.  If the person owns property in another county, a creditor can take a judgment and docket or file it in that county at which time it becomes a judgment lien against any real estate a debtor owns in that county, too.  A judgment lien can last up to ten (10) years and it can remain a lien on a debtor’s real estate for that entire time.  A judgment lien can also be renewed for successive ten (10) year periods.  If a judgment lien is levied against someone’s real estate, any sale of the real estate can’t be completed unless the judgment lien is paid or expunged/removed.

 

Judgment Liens and Bankruptcy

A discharge obtained through bankruptcy nullifies the debt giving rise to a judgment lien.  However, a discharge does not require a judgment creditor to take affirmative steps to remove a judgment.  In other words, a creditor is not required to go to the county in which it obtained the judgment and ask the court to remove the judgment lien from a debtor’s real estate.  Thus, even after a bankruptcy has concluded, a judgment lien becomes a nuisance lien that still clouds title to a debtor’s real estate and prevents any sale of the real estate from being consummated.

 

In order to remove a judgment lien from the real estate, a debtor must, after the bankruptcy has concluded, file an application to discharge or expunge the judgment lien with the state court in which the judgment and judgment lien were obtained in the first place.  Generally, one can only do this with regard to a judgment lien on real estate that one owns and actually occupies as one’s homestead.  Minn. Stat. §548.181 is the statute that one must use to remove or discharge a judgment from real estate that one owns.  There is a specific protocol that must be followed.  Navigating the procedure and making sure it is done correctly is extremely difficult without the help of a knowledgeable, trained professional. With the help of Behm Law Group, Ltd. and the expertise of a Behm bankruptcy lawyer in Fairmont, MN, filing for bankruptcy can be a successful experience that offers financial recovery. We can assist you with the removal of judgment liens following the completion of a bankruptcy case.  Contact us today at (507) 387-7200 today for more information.

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Understanding Bad Faith Cases When Filing for Bankruptcy in New Ulm, MN

If you are considering filing for bankruptcy, there are a number of ways you can prepare your financial situation before you file a bankruptcy petition that can help your case and bring about the best results for you. Many of these preparation techniques are acceptable methods for improving the possible outcome of your bankruptcy case—for example, choosing a certain time to file or avoiding certain financial obligations. However, there are instances when certain actions done before filing for bankruptcy or during a bankruptcy case can result in the dismissal of your case on the grounds of “bad faith.” Behm Law Group, Ltd. offers legal advice and assistance to help prevent a potential bad faith bankruptcy case when you’re filing for bankruptcy in New Ulm, MN.

While there are legitimate means of preparing for filing for bankruptcy or altering your finances to your advantage before you file a bankruptcy case, some such techniques could be considered bankruptcy “red flags” and prompt your bankruptcy trustee to determine that your case has been filed in bad faith. When you file for Chapter 7 or Chapter 13 bankruptcy, you must meet the “good faith” requirement in order to proceed. If there are aspects of your case that suggest you may be trying to take advantage of the bankruptcy system, your bankruptcy trustee or even one of your creditors could view your case as having been filed in bad faith and could ask the bankruptcy court to dismiss your case.

Examples of common actions or circumstances that could be construed as bad faith include:

  1. The filer hid certain assets, like keeping cash in a coffee jar or in a safe in one’s home, and did not disclose the cash in one’s bankruptcy petition.
  2. The filer has little to no cash flow and is not registered as being unemployed with the government (this could alert a trustee to think that there is hidden income somewhere – the trustee could conclude that you are working for cash only and not disclosing it).
  3. The filer had a job change during the bankruptcy period or recently prior to filing for bankruptcy and did not reveal an income increase to the trustee.
  4. The filer made one or more large luxury purchases prior to filing for bankruptcy (vacation expenses, electronics, and jewelry are common examples).

Another common occurrence that may lead to a dismissal for bad faith is an attempted conversion from a Chapter 13 case to a Chapter 7 case.

Chapter 7 Conversion When Filing for Bankruptcy

If a filer is in a Chapter 13 repayment plan, one may attempt to convert that case to a Chapter 7 case if one can no longer pay the monthly Chapter 13 plan payments. This can occur if the filer had a job change, experienced a temporary period where one was unemployed, or incurred unexpected large expenses. However, if the filer begins to convert a case to Chapter 7 and one’s situation improves during that time (for example, one gets a better paying job, or a family member gives one a large sum of money through inheritance or otherwise), one’s case could be dismissed for bad faith.  In short, it would be seen that one would be inappropriately trying to convert to a chapter 7 case – essentially indicating that one does not have the financial ability to make any payments to one’s creditors – from a chapter 13 case.  Given the receipt of a large sum of money from a relative or given a higher paying job, the trustee and the bankruptcy court would conclude that one would have the ability to continue making payments to one’s creditors and should, therefore, be required to stay in a chapter 13 case.

There are other examples of why your case may be dismissed for bad faith, and you can learn about all the additional circumstances that may lead to bad faith in the American Bankruptcy Institute Journal.

Find out more about filing for bankruptcy in New Ulm, MN with the help of Behm Law Group, Ltd. and contact us today at (507) 387-7200.

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Possible Plan Outcomes with Chapter 12 Bankruptcy in Jackson, MN

The seasons of winter and spring in Minnesota are the most difficult times for farmers who support their households with income from agricultural sources. In fact, it’s a time when bankruptcies filed by family farmers spike across the country. In 1987, Chapter 12 bankruptcy was added to the bankruptcy code to help family farmers recover from extreme financial difficulties through the process of debt restructuring and debt consolidation. Behm Law Group, Ltd. offers legal advice and assistance for farmers who are considering filing for Chapter 12 bankruptcy in Jackson, MN.

The process of Chapter 12 bankruptcy is similar to that of Chapter 13 reorganization bankruptcy, but offers specific benefits tailored to fit the financial circumstances of a family farming household. The process of Chapter 12 takes a filer’s debts and restructures them to create a new payment plan that can last 3 to 5 years. This plan requires a full repayment of priority unsecured debts, such as tax debts, and, generally, a specific percentage (0%-100%) repayment of all other debts.

The outcome of a Chapter 12 bankruptcy case can be decided in one of five ways:

  1. Converted: If your household income is low enough to pass the Means Test and you have either failed to propose a repayment plan or your proposed plan was not confirmed by the bankruptcy court, you can have your case converted to a Chapter 7 liquidation case.

 

  1. Confirmed without discharge: If your repayment plan proposal is accepted, your plan will be confirmed or approved by the bankruptcy court. Depending on the amounts you owe and the types of debts you have, you may not actually receive a discharge of your debts and you may only need the assistance of a chapter 12 bankruptcy proceeding to simply restructure or consolidate your debts.

 

  1. Confirmed with discharge: The most common outcome for approved Chapter 12 cases includes a repayment plan that is confirmed by the bankruptcy court and provides for the restructuring or consolidation of some debts and for the discharge or other debts. Debts that are often discharged in a Chapter 12 bankruptcy include medical bills and credit card debts. This is the optimal outcome of a Chapter 12 case.

 

  1. Dismissed before confirmation: If your Chapter 12 case is filed in bad faith, or if you have engaged in other fraudulent behavior either before or after your case is filed, your bankruptcy case could be dismissed before you begin the chapter 12 plan confirmation process.

 

  1. Dismissed after filing: If you engage in fraudulent behavior within the 3 to 5-year repayment plan period, your plan can be dismissed, even after you successfully get the bankruptcy court to approve or confirm your chapter 12 plan. This can result from a number of different circumstances, for example, if you hide additional income or attempt to convert your case to Chapter 7 in bad faith.

 

If you’re a local family farmer and struggling to meet debt payments and daily financial obligations, Chapter 12 bankruptcy might be a way to recover. Contact Behm Law Group, Ltd. at (507) 387-7200 today for more information about filing for Chapter 12 bankruptcy in Jackson, MN.