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.

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.

How Case Issues are Handled in Court When Filing for Bankruptcy in New Ulm, MN

Individual consumers and businesses that are unable to meet monthly payments on loans and other debts for several months have few options for relief and recovery from these financial struggles. For many, debt relief outside of legal action doesn’t solve financial problems or reverse unwise decisions long-term. If you’re finding it impossible to make payments on your debts, filing for bankruptcy might be your best option.  Behm Law Group, Ltd. offers the professional legal advice you need to navigate complicated courts systems and the process of filing for bankruptcy in New Ulm, MN.

 

A critical responsibility of bankruptcy attorneys is to hold a deep knowledge of the legal intricacies of bankruptcy and an astute understanding of how the bankruptcy court works. Because Behm attorneys are trained and experienced in bankruptcy law, we can provide our clients insight into the court system and guidance when petitioning for bankruptcy.

 

The Bankruptcy Court

 

The bankruptcy court is a federal court, but it operates separately from other federal courts such as district courts or administrative law courts. This means that, while bankruptcy law is a federal concern, there are various aspects of state law that come into question when a bankruptcy case is filed. These “state vs federal” regulations in bankruptcy vary from state to state, but the majority concern the core issues of a case.

 

Core Issues when Filing for Bankruptcy

When you file for bankruptcy, you can choose from two primary ways the court system has established for handling your debts. You can file for liquidation (commonly Chapter 7 bankruptcy for both individuals and businesses), or debt reorganization (Chapter 13 bankruptcy for individuals and a mixed bag of Chapters 11, 12, and 13 for businesses, farmers and fishing businesses). The core issues involved in all types of bankruptcy cases include the major factors that determine the outcome of your case including income, debt value, property value, exemption amounts, types of debts, reorganization plans, creditors, and any other circumstances that directly affect your bankruptcy case.

 

Federal vs. State

 

For most of these core issues, federal law determines how your case is handled depending on which type of bankruptcy you choose. However, a few issues are resolved differently by the state, most notably exemptions. Additionally, non-bankruptcy issues that indirectly affect a bankruptcy case can be resolved by a district judge if the parties involved don’t accept the initial decision of the bankruptcy judge on the matter.

 

If you’re wondering whether filing for bankruptcy is right for you, a consultation with Behm Law Group, Ltd. Behm Law Group, Ltd. can help you make the best decision for your financial situation. Our attorneys can guide you through the process of filing for bankruptcy in New Ulm, MN and provide our knowledge of the inner workings of bankruptcy court. For more information about filing for bankruptcy and the counsel we offer, contact us at (507) 387-7200 today.

 

 

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.

 

 

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.

 

 

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.

How a New Job Affects Chapter 7 Bankruptcy in Mankato, MN

If you’ve been struggling with extreme financial difficulties, bankruptcy is a way to find relief and recovery. If you have a low income or are unemployed, Chapter 7 bankruptcy is designed to help your situation. For individuals, Chapter 7 is the most common type of bankruptcy. It’s applicable to most situations for unemployed filers, low income filers, and high debt filers. Behm Law Group, Ltd. provides expert counsel if you’re considering Chapter 7 bankruptcy in Mankato, MN.

The most important thing to be aware of when filing for bankruptcy is that honesty counts in every aspect of your case. The U.S. Bankruptcy Courts and bankruptcy trustees are highly experienced and trained in examining bankruptcy cases and detecting mistakes and fraudulent behavior. With the guidance of a bankruptcy attorney, you can more effectively lay out your financial circumstances establishing your need for Chapter 7 relief.

Qualifying for Chapter 7 bankruptcy requires you to pass the Means Test to determine if your income is too low to make debt repayments possible. If you pass this test, your income is either lower than the state median income of a similar household size or the total amount of your debt is exceedingly high.

After you’ve passed the Means Test and qualified for Chapter 7 bankruptcy relief, you’ll begin to work through the process of discharging certain debts, exempting certain properties, and figuring out the details of your bankruptcy estate. In most cases, a filer’s job status doesn’t change during the bankruptcy process. However, there are some times during the pendency of a case when some filers have employment or other income changes.

New Income

If you have a change in employment during the pendency of your bankruptcy case, it’s likely that your income will change as well. If this happens, the best thing to do is to immediately notify your attorney. This change in income may significantly alter your case.  New income can affect your case in several ways:

  1. Your case can be converted to a Chapter 13 bankruptcy case, and you could enter a restructured debt repayment plan that could last three to five years.
  2. If you receive income from lawsuit settlements, lottery winnings, divorce settlements or if you inherit any money or property within 180 days after your case is filed, such income could be used by the bankruptcy trustee administering your case to pay your creditors.
  3. Your case may be dismissed because of your lack of disclosure of any income changes or for other fraudulent behavior.

Other sources causing an income change are also taken into account in a Chapter 7 case, and you should be open and honest about all alterations to your financial situation. For more information about filing for Chapter 7 bankruptcy in Mankato, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.

Major Bankruptcy Acts in the U.S. During the Twentieth Century and Their Significance for Bankruptcy in Marshall, MN, Today

Bankruptcy laws have changed significantly since the early twentieth century, and even since the mid to late 1900s, amendments and jurisdictions have altered how bankruptcy cases in the U.S. are processed. To an individual or small business unfamiliar with the bankruptcy system, the information involved in bankruptcy laws can seem complicated, tedious, and even confusing. To unravel the complexities of the bankruptcy code, Behm Law Group, Ltd. offers legal advice and assistance for those considering filing for bankruptcy in Marshall, MN.

In the past century, there have been several major changes to the U.S. bankruptcy system. Among these legislations, three main acts deserve recognition:

  • The Bankruptcy Act of 1938, or the Chandler Act, gives individuals and businesses the agency they have today for voluntarily filing bankruptcy petitions. This act opened filing to a wider range of debtors and made it easier and more appealing to file for bankruptcy. The basis of the act was to make it beneficial to file for debt reorganization overseen by a court-appointed trustee.
  • The Bankruptcy Reform Act of 1978, or the Bankruptcy Code, significantly changed the bankruptcy system. Not only did it replace the Bankruptcy Act of 1898, it also established much of today’s Title 11 standards, changed the structure of U.S. Bankruptcy Courts, forbid employment discrimination against those whom have filed for bankruptcy, and served to regulate the majority of bankruptcy cases filed under Chapter 7 and Chapter 13.
  • Bankruptcy Amendments and Federal Judgeship Act of 1984 was established to alter the 1978 Act and amend any flaws. This legislation is still considered the most permanent and major act affecting the U.S. bankruptcy system and allows for the direct application of all current amendments that relate to any bankruptcy case in question. The act of 1984 also affected how changes are made to the system in accordance with social, economic, and technological growth (credit cards, etc).

While these three acts are all major in U.S. bankruptcy history, there are still many other amendments involved in Title 11 bankruptcy cases, including numerous changes made between 1984 and today, particularly the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. For more information about filing for bankruptcy in Marshall, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.

Protect Yourself from Discrimination Against Bankruptcy Filers

When discrimination makes the news, people pay attention. We all like to think we are fair-minded individuals. Even fair-minded individuals have differences of opinion. If it weren’t for these differences of opinion, we probably wouldn’t need a set of laws to follow. But, we do. The Mankato bankruptcy attorneys at Behm Law Group, Ltd., want you to be aware of the following:

“No. 11 U.S.C. sec. 525 prohibits governmental units and private employers from discriminating against you because you filed a bankruptcy petition or because you failed to pay a dischargeable debt.”

You have rights. It can be heart-wrenching and embarrassing enough to admit you need to file for bankruptcy, let alone having everyone else constantly remind you. Now you know there are rules on how others can treat you.

Of course, you still have obligations to fulfill. A bankruptcy plan can detail how and when those obligations are met. Looking at the bigger picture, you will have to own how you got to this point. If you don’t recognize why you had to file for bankruptcy, you may end up repeating this scene in the future.

For your own self-worth and knowledge, really dig deeply. If you have poor financial habits, take steps to change them. Don’t buy things you don’t need. Shop around to minimize costs for what you need. Save for inevitable surprises that might disrupt your cash flow.

Keeping your focus and energy directed toward positive steps will diminish any hurt and embarrassment you feel. You can’t change what has already happened. You can change how you deal with your dilemma though.

Forward momentum will catapult you past the bad feelings toward the good ones. Your positive action will result in the bankruptcy becoming a distant memory. Good habits will help keep you solvent in the future.

Those who have to file for bankruptcy relief have the power to change their outcomes for the better. We know what you want. Bankruptcy is all that we do. In Mankato, MN, call the bankruptcy attorneys at Behm Law Group, Ltd., to discuss the how, why, what, wherefore, and when of bankruptcy law today.

Defining “Undue Hardship” – Bankruptcy Law in Mankato, MN

Mankato, MN Bankruptcy Law with Behm Law Group, Ltd.

Generally speaking, discharging student loans via bankruptcy can difficult endeavor. However, when you’re facing outright bankruptcy—which can be challenging and stressful enough—it can’t hurt to explore all your options. It may surprise some people to learn there is a section of the Bankruptcy Code (11 U.S.C. Sec. 523[a][8]) which addresses student loans specifically. It basically states: “Student loans can be discharged as long as one can show that excepting [excluding] such debt from discharge (debt relief provided through bankruptcy) would impose an undue hardship on the debtor and the debtor’s dependents. Behm Law Group, Ltd. provides professional bankruptcy counsel in Mankato, MN in your time of need.

The key term here is “undue hardship,” a term which only government lawmakers could conjure that sounds ridiculously simple.  However, what constitutes “undue hardship” is a very factually intensive inquiry.  In order to establish “undue hardship”, one must review all of the circumstances surrounding someone’s financial situation.  Serious medical conditions, job losses, the likelihood of being able to get higher paying employment and one’s other living expenses and sources of income are only a few factors that need to be considered.  Discharging student loans in bankruptcy can be done and, indeed, has been done in many cases.

One example of a fact substantiating “undue hardship” is to show you’ve incurred a disability since graduating from college that prevents you from being able to realistically carry out the necessary tasks that are part of any job aligned with your college degree. Let’s say you graduated with a degree in astronomy that requires you to look through a telescope, but after graduating you became permanently blind. You may be able to show and convince a bankruptcy judge that this constitutes “undue hardship.”

If you’re filing for bankruptcy protection, and you’re interested in exploring whether you qualify for a student loan bankruptcy discharge, you should seek out professional bankruptcy counsel. In Mankato, MN and the surrounding communities, Behm Law Group, Ltd. should be your first point of contact when considering your bankruptcy options. We have highly trained bankruptcy attorneys with extensive experience when it comes to making sense of the Bankruptcy Code and how it applies to our clients’ unique situations.

Let us guide you through the bankruptcy process. We know how bankruptcy law works and how it can work for you. Contact Behm Law Group, Ltd. today to discuss your bankruptcy options.