Handling Bankruptcy Audits with the Help of a Bankruptcy Attorney

Filing for bankruptcy is a nuanced process that can be difficult without the assistance of an experienced bankruptcy attorney. No matter what type of bankruptcy you file for, the process can be greatly improved and filed without mistakes when you take advantage of the protection and guidance of a professional. Bankruptcy cases for individual consumers are typically formatted into Chapter 7 (non-exempt asset liquidation in exchange for debt discharge) or Chapter 13 (debt reorganization into a three- to five-year repayment plan). Both of these Chapters can be further complicated with the introduction of a bankruptcy audit. If you choose to file for bankruptcy, the help of a Behm Law Group Ltd. bankruptcy attorney in Owatonna, MN, can counsel and protect you in the face of an audit or any other legal hurdles you may face.

 

Bankruptcy audits are rare, but they are done routinely each year by the U.S. Trustee’s office, which can audit up to 1 in every 1,000 Chapter 7 and Chapter 13 cases and is required to audit a minimum of 1 in every 250 cases per district. The audits are randomly selected, but the office can also audit unusual cases based on an income or debt alert system.

 

In a bankruptcy audit, the Trustee’s office delegates an external auditing company to verify aspects of the case, including income, expenses, debts, and assets. You, as the filer, do not have to pay any fees in the audit, but you are required to provide copies of any requested financial documents.

 

The audit firm has 21 days to submit the audit report to the court, and the court uses that data to determine how the audit affects your case.

 

If your case is audited by random selection or based on the office’s alert system, a few outcomes can happen. If the court finds any issues in the audit with your case, you may have your case dismissed, your right to a discharge may be denied, or your case may be marked as fraudulent and criminal proceedings could be commenced if you have tried to use the process to hide assets. In most cases, if a bankruptcy filing is audited randomly, there are no issues and your petition continues through the court process normally and you get a discharge of your debts.

 

In some circumstances, filers may have made mistakes in their paperwork that appear fraudulent or must be remedied by reopening the case. With the support of a bankruptcy attorney, however, corrections can be made in the course of an audit and your case will not be dismissed and you will get a discharge of your debts. To file a case with integrity and receive long-term debt relief, contact Behm Law Group Ltd. at (507) 387-7200 or via email at stephen@mankatobankruptcy.com to get started with a bankruptcy attorney in Owatonna, MN, today.

Frequently Asked Questions about Chapter 13 Bankruptcy

If you are finding your quality of life compromised due to the difficulty you have meeting monthly debt payments, it may be time for you to consider seeking debt relief. While there are many forms of debt relief available to individuals, the most effective option for long-term, permanent debt relief is bankruptcy. Bankruptcy is a system that has long been put into place by the government to protect debtors from destitution, provide fair treatment to creditors, and promote a healthy economy overall. If you are considering bankruptcy, Behm Law Group Ltd. attorneys can help you file a strong case for Chapter 7 or Chapter 13 bankruptcy in Pipestone, MN.

 

Both Chapter 7 and Chapter 13 are the most frequently filed types individual consumers. While Chapter 7 provides liquidation of non-exempt assets in exchange for debt discharge, it’s not a chapter that most wage-earning debtors can qualify for because their incomes are often too high.

 

Chapter 13 bankruptcy, on the other hand, offers a way to restructure your debts into a manageable repayment plan lasting three to five years. Although Chapter 13 is a common bankruptcy format, there are still many frequently asked questions we receive including:

 

  1. How much of my debt will I have to repay?
    1. You will have to pay all of your secured debts (i.e., mortgages and auto loans) that you want to retain in full, but the payment arrangements may be under different and under more friendly terms.
    2. You will have to pay priority debt (i.e., child support and tax debt) in full.
    3. You will most likely have all or much of your unsecured debt (i.e., credit card debt and medical bills) discharged after your chapter 13 plan is concluded. The amount you will pay depends on how much your monthly income exceeds your monthly reasonable and necessary living expenses and how much you would be able to repay creditors with the value of your non-exempt, liquidated assets in hypothetical Chapter 7 bankruptcy case.
  2. How long will my plan last?
    1. Your plan will last three years if your income is below the state median income of a similar household size.
    2. Your plan will last five years if your income is above the state median income of a similar household size.
  3. Will I have any income for personal use?
    1. The remainder of your income after you meet payment requirements for your secured and priority debts will be split into two types, disposable and discretionary.
    2. Your disposable income will go to your household needs, including income tax, utilities, food, and gas.
    3. Your discretionary income is yours to spend as you see fit.
  4. What happens if my income changes?
    1. Fluctuations in income and expense obligations are taken into account throughout the duration of your repayment plan. Three to five years is a long time, and your trustee will understand if changes occur.
    2. If you do have a job change or other significant life event that might affect your plan, notify your attorney and the trustee right away so your monthly plan payment can be altered accordingly.

 

Filing for bankruptcy is a complex process without the assistance of a trained professional no matter what chapter you file. Contact Behm Law Group Ltd. at (507) 387-7200 or via email at stephen@mankatobankruptcy.com for help getting started with Chapter 13 bankruptcy in Pipestone, MN, today.

Frequently Asked Questions about Chapter 7 Bankruptcy

If your low income is preventing you from meeting financial obligations like debts and bills, you might benefit from looking into the process of bankruptcy. Bankruptcy is available to individuals who have come into difficult times, whether that means unemployment, sudden medical costs, long-term accumulation of debt, or any combination of circumstances. Unlike other types of debt relief, bankruptcy is a formal legal process with permanent results. This means you will be protected by things like the automatic stay, a trustee, and other provisions of the bankruptcy code. With the additional guidance of a Behm Law Group Ltd. attorney, you can file a strong case for Chapter 7 bankruptcy in Luverne, MN.

 

Chapter 7 bankruptcy is a liquidation type of bankruptcy. It’s the most commonly filed U.S. chapter for individuals and corporations alike. For those who haven’t filed before, there are often many frequently asked questions (FAQs), including:

 

  1. How does it work?
    1. Chapter 7 bankruptcy works to liquidate your non-exempt property and repay creditors with the value gained from the sale of non-exempt property.  Most cases, however, are “no asset” cases where no assets are liquidated by the chapter 7 trustee and all of one’s assets are protected by one’s available bankruptcy exemptions.
    2. In exchange for this liquidation of non-exempt assets, your debts are discharged and you are permanently released from having to repay them.
  2. Will I get to keep my house?
    1. While Chapter 7 bankruptcy liquidates non-exempt properties, the bankruptcy code and Minnesota state law provide an allotment of exemptions you can claim to protect assets from sale.
    2. This includes the homestead exemption that protects the equity or value you have in your home and other exemptions that can be used to protect the equity or value you have in your car, additional real estate, personal items, or other properties.
  3. How will it affect my credit?
    1. While bankruptcy can be extremely beneficial for permanent, long-term debt relief, it will have a negative effect on your credit score.
    2. Your credit score will improve over time – indeed, it starts to improve the day after you file for bankruptcy relief – and a bankruptcy notation will generally be removed from your credit profile seven to ten years post-filing, although it is sometimes removed much earlier.
  4. How long does it take?
    1. Chapter 7 bankruptcy cases are generally closed in about three to six months depending on the case circumstances.
  5. How do I qualify?
    1. Individuals who pass the Means Test are eligible for Chapter 7 bankruptcy.
    2. The Means Test measures income-to-debt ratios against the state median income. If your income is lower than the Minnesota median income of a similar filer with a similar household size, you can qualify for Chapter 7.
  6. Which debts will be discharged?
    1. Your unsecured debts, including credit card debt and medical bills, will be discharged.
    2. Your secured debts that are tied to properties that are liquidated or surrendered will be discharged.
    3. Your secured debts related to property that you cannot exempt because there is no equity or value, since the amount of debt you may owe exceeds or is equal to the value of the property, will not be discharged if you choose to voluntarily reaffirm (reassume personal liability)  the related debts.
    4. Your priority debts, including most tax debts, child support, and criminal fines, will not be discharged.
    5. Student loans can be discharged but the process can be very expensive and protracted.  A person must actually sue the student loan lender in bankruptcy court, prove undue hardship , as that term is defined and interpreted under 11 U.S.C. §523(a)(8), and ask the bankruptcy court to discharge the student loan debt.

 

If you want to learn more about how the bankruptcy process will work and how it will affect your life, contact Behm Law Group Ltd. at (507) 387-7200 or via email at stephen@mankatobankruptcy.com for information about Chapter 13 or Chapter 7 bankruptcy in Luverne, MN.

What Happens to Timeshares When One Owner Files for Bankruptcy

No matter what type of bankruptcy chapter you file for, all your properties will be examined in addition to your debts and income sources. This includes any real estate you own, such as your regular homestead, business real estate, and vacation homes like timeshares. When it comes to the unique system of owning a timeshare property, it can be difficult to predict what might happen to that property if you file for bankruptcy. With the help of Behm Law Group Ltd., you can work through any type of individual bankruptcy in Windom, MN, and file a strong case that will provide long-term debt relief.

 

The two common types of individual consumer bankruptcy, Chapter 7 and Chapter 13, treat properties very differently. Chapter 7 liquidates non-exempt assets like non-homestead real estate with some opportunities to assert exemption claims to some properties. This liquidation of non-exempt assets is done in exchange for the discharge of the related debts. Chapter 13, on the other hand, reorganizes debts into a repayment plan that provides for the payment of any debts secured by a property on adjusted loan terms.

 

In filing for Chapter 7 bankruptcy, you can sometimes use the Wildcard Exemption to protect your timeshare from the liquidation process. If you use this exemption for other properties instead, your bankruptcy trustee will sell your timeshare and return the value of that sale to your timeshare lender. However, if your timeshare value is equal to or less than the debt you owe, your trustee won’t bother selling the property, and you can maintain possession of it if you continue making payments on the related debt.

 

In filing for Chapter 13 bankruptcy, your timeshare will most likely be included in your repayment plan as a secured debt to be repaid under adjusted loan terms or surrendered. You will have to prove that your income will allow the amount of the debt to be included in your plan without compromising your disposable and discretionary income. If you can’t prove that your income will allow your timeshare to be included in your plan, you will have to surrender it in exchange for the discharge of that debt.

 

In the event that your bank forecloses on your timeshare before you file for bankruptcy, you can still resolve any remaining debts related to that property. This includes debts from maintenance fees or debt from the deficiency between what you owe and the proceeds of the foreclosure. A timeshare can also be surrendered voluntarily for liquidation in any type of bankruptcy if you do not wish to keep it. If you do surrender your timeshare, you won’t be liable for maintenance fees or any other debts related to the property in a chapter 13 bankruptcy case.  However, such timeshare related debts are not generally subject to discharge in a chapter 7 bankruptcy proceeding.

 

If you have a timeshare that you want to keep or surrender in your bankruptcy case, Behm Law Group can help you work through the process of claiming exemptions, organizing a repayment plan, and any other actions that need to be taken depending on the type of bankruptcy you file. To learn more about filing for bankruptcy in Windom, MN, contact us at (507) 387-7200 or via email at stephen@mankatobankruptcy.com today.

Using Bankruptcy for Debt Relief as a Senior Citizen

If you’re considering filing for bankruptcy, you’re not alone. People of all ages and financial circumstances file bankruptcy cases of varying types with results that provide long-term debt relief.

At Behm Law Group, Ltd., we’ve worked with clients in many different situations, from young couples to divorcees and even senior citizens. There are many reasons why filing for bankruptcy as a senior citizen is a positive step forward. If you’re unsure about using bankruptcy for debt relief in Waseca, MN and the greater Mankato area, Behm attorneys can help you determine what type, why, and how you can file.

There are two types of bankruptcy available to the majority of individual consumers: Chapter 7 and Chapter 13. Chapter 7 works to liquidate (sell) your non-exempt assets (properties) in exchange for debt discharge (debt relief). Chapter 13, on the other hand, works to reorganize your debts into a manageable repayment plan lasting three to five years. This repayment plan is tailored to your income and other financial circumstances, including your obligations to repay debts not included in bankruptcy.

For many senior citizens, Chapter 7 is a more effective, beneficial type of bankruptcy. This is largely due to the income and types of debts senior citizens are likely to have.

Income: Because most seniors are living with income from retirement accounts, pensions, and government support, the average income of U.S. senior citizens is much lower than that of younger, still employed filers. To be eligible for Chapter 7, filers must pass the Means Test. In other words, their income has to be lower than the state median of a similar household. Not only are most seniors eligible for Chapter 7, they also don’t have the income to support a long-term repayment plan through Chapter 13.

Debt: Chapter 7 discharges unsecured debts and debts that are tied to properties in full. Many senior citizens have medical debts due to the minimal coverage of Medicare programs or a lack of work-provided health insurance. Credit card debt is another common debt that senior citizens hold, along with most Americans of all ages. Both credit card and medical debt are discharged completely in Chapter 7. Additionally, most seniors have paid off debts on their properties in years prior, which means they won’t have to worry about their non-exempt properties being liquidated in the Chapter 7 process.

While some seniors can effectively file a Chapter 13 case, most will find more relief through Chapter 7. If you’re considering filing for any type of bankruptcy, contact Behm Law Group, Ltd. at (507) 387-7200 or via email at stephen@mankatobankruptcy.com for more information about debt relief in Waseca, MN.

How Filing for Bankruptcy Will Affect Embezzlement Judgments

Bankruptcy is a highly effective debt relief option available to individual consumers and businesses alike. It’s a system that is designed to protect the economy on varying scales from the oversaturation of debtors unable to continue making regular payments. It’s also designed to protect debtors from destitution while maintaining fair treatment for any creditors involved. If you are considering choosing bankruptcy as a long-term debt relief option, it’s important to understand how difficult it could be to file without professional experience, knowledge, and guidance. With the help of Behm Law Group Ltd, you can work through the nuances and complexities of filing for bankruptcy in Fairmont, MN, and build a strong, successful case.

While bankruptcy is an efficient tool for debt relief, it doesn’t necessarily wipe out all debts. Unsecured debts like credit card debt or medical bills are almost always discharged, but other debts like some taxes or priority obligations like child support are largely exempt from discharge in bankruptcy. Like those debts, not all legal debts like lawsuit judgments, fines, or other debts are always discharged in a bankruptcy.

Embezzlement judgments, for example, may or may not be discharged in your bankruptcy. If you have committed embezzlement fraud and have gone through the legal processing of that crime, you will most likely have a criminal fine or restitution on your record. Criminal fines or restitution fall into the category of priority (non-dischargeable) debt and they will not be discharged in your bankruptcy. However, you may be able to have that debt discharged if it is only classified as a civil judgement.

Civil judgments are claims against you that fall into the category of debts owed for “fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny.” If your debt for embezzlement is a civil judgment rather than a criminal fine or restitution, the creditor you owe that debt to must request that the court declare it non-dischargeable. To do this, they must take action early on in your case, specifically, within 60 days of the date set for the 341 meeting of creditors.

To request this, a creditor will have to file an adversary proceeding (i.e., lawsuit) with the court. In this proceeding, the creditor must prove that your embezzlement actions were fraudulent, that you were not authorized by the company or by the law to take the money or property, and that the property taken was held in trust for another party (i.e., the company or person embezzled from). If a creditor files a successful adversary proceeding, your civil judgment debt will not be discharged in bankruptcy.

If you are considering filing for bankruptcy in Fairmont, MN, and want to learn more about how different debts will be affected, contact Behm Law Group Ltd. at (507) 387-7200 or via email at stephen@mankatobankruptcy.com today.

Newlyweds Using Joint Bankruptcy to Find Debt Relief in Mankato, MN

When people find themselves in a relationship with the person they want to spend the rest of their life with and they decide to take the next step into marriage, not much will stop them from tying the knot. Even something such as financial circumstances, which can be considered relatively trivial in the grand scheme of life, will be unlikely to prevent a marriage if a couple is truly determined. This means that many couples enter a marriage with substantial debt, low incomes, or otherwise less-than-stable finances. If you and your spouse are finding it difficult to pay your debts, bankruptcy might be the next step to finding long-term financial improvement. With the help of Behm Law Group Ltd., you and your spouse can file a successful joint bankruptcy case and receive effective debt relief in Mankato, MN.

Individual consumer bankruptcy chapters, including Chapter 7 liquidation and Chapter 13 reorganization type bankruptcies, can also be filed jointly by a married couple. Joint filings allow the combination of both your and your spouse’s debts into one case, requiring only one each of the pre-bankruptcy requirements, including the meeting of creditors, Means Test, credit counseling, and more. In addition to the consolidation of two of each pre-bankruptcy requirements into one, the bankruptcy fees are the same for individuals as for joint-filing spouses. This cuts in half the amount you and your spouse would pay if you each filed for an individual case.

If you choose to file a joint bankruptcy, all your financial information will be combined into a report that essentially represents as a single filer. Your assets (properties) and liabilities (debts) will be combined, and both of your incomes will be taken into consideration. For most joint filers, we recommend considering Chapter 13 more seriously than attempting to file for Chapter 7 for two reasons: eligibility and exemptions.

With a higher income from your combined jobs, accounts, or any other sources, you may not qualify for Chapter 7 because you may not pass the Means Test. The Means Test assesses your income-to-debt ratio. To be eligible for Chapter 7, your income-to-debt ratio must be lower than the state median of a similar household. Additionally, you can only claim the same exemptions of an individual filer. This means you may not be able to protect some of your property from liquidation in Chapter 7 because your debts are higher, your assets are more valuable, but your exemptions are not adjusted accordingly.

Filing for joint Chapter 13, however, means you save money in bankruptcy fees and attorney costs, save time on pre-bankruptcy requirements, have an easier time meeting repayment plan requirements with both of your incomes, and can pay off your plan more quickly than you would as two individuals.

To learn more about joint bankruptcy and debt relief in Mankato, MN, contact Behm Law Group Ltd. today at (507) 387-7200 or via email at stephen@mankatobankruptcy.com.

Redeeming Secured Property in Chapter 7 Bankruptcy

If you’re facing a large amount of debt and unable to make payments each month on those debts without severely compromising your quality of life, you may want to consider filing for bankruptcy. Chapter 7 bankruptcy is the most commonly filed case for individual consumers. In fact, there were over 400,000 non-business Chapter 7 bankruptcy cases filed in 2017. If you are considering filing for Chapter 7 bankruptcy in Redwood Falls, MN, Behm Law Group, Ltd. can help you put together a strong case that will provide long-term debt relief.

Chapter 7 bankruptcy works as a liquidation process. You will have to provide all your financial information including debts, income, and properties to the bankruptcy trustee assigned to oversee your case. The trustee will then liquidate (sell) any non-exempt assets (properties) you have if you cannot claim an exemption on them. You can claim exemption amounts on properties like your home or car and other assets to protect them from liquidation. Once your non-exempt assets have been liquidated, the debts tied to them are discharged along with your unsecured debts such as credit card and medical debt.

There is one other way your secured properties can be treated in Chapter 7 other than with liquidation or exemption. They can be redeemed.

Property redemption essentially means you are buying the property back from your creditor for the value it’s currently worth. This is a beneficial option for filers if they owe a debt on the property larger than its value. By redeeming the property, you may pay less than actually paying back the debt, and you will be able to keep the asset.

The value of the property is either agreed upon by you and your creditor, or, if you disagree, the court holds a valuation hearing. When the value is determined, you have to buy it back by paying one lump sum.

To redeem a property, there are several requirements that must be met. These include:

  • The property cannot be of value in the Chapter 7 case. This may mean you exempted it from liquidation or the trustee has determined that it has no value to your bankruptcy estate.
  • The property must be a tangible item.
  • The property cannot be real estate. It has to be a personal item such as a vehicle or computer – something other than your home or other real estate properties.
  • The property cannot be used for business purposes (i.e. if you use your car for onsite jobs).

Redemption is an effective way to reclaim property you owed a debt on that was much higher than its actual value. If you want to own your property debt-free, the Chapter 7 bankruptcy process and redemption is one way to do it.

To learn more about redemption and filing for Chapter 7 bankruptcy in Redwood Falls, MN, contact Behm Law Group, Ltd. at (507) 387-7200 or via email at stephen@mankatobankruptcy.com today.

Overview of the Basic Differences between Chapter 7 and Chapter 13 Bankruptcy

In the United States, there are two main types of bankruptcy available to individuals and businesses alike: Chapter 7 and Chapter 13. While both types provide government-administered debt relief, the two chapters work very differently. Both are valuable options for debtors, and the more suitable one depends on the financial and personal circumstances of any given filer. If you are considering bankruptcy but don’t know where to start, Behm Law Group Ltd. can help. We can work with you to determine which chapter is right for you, and we can guide and protect you throughout your case. Filing for bankruptcy in St. Peter, MN, isn’t the impossible process it might seem to be, and our expert attorneys can help you see that every step of the way.

The main differences between Chapter 7 and Chapter 13 lie in how the debts are handled and how long the cases take.

Debt Handling

  • Chapter 7 is a liquidation process. This means your non-exempt assets/properties are liquidated/sold, and the amount realized from that sale is given to your creditors. This payment to your creditors allows any debts tied to those sold properties to be discharged. Your unsecured debts, such as credit card or medical debt, will also be discharged in the Chapter 7 process.
  • Chapter 13 is a reorganization process. This means that you will take your debts and reorganize them into a repayment plan customized to your income. The repayment plan requires one lump monthly payment until your plan is complete. You may be able to repay your secured debts in full under different terms, but your unsecured debts will be fully discharged after your chapter 13 plan has concluded.

Time

  • Chapter 7 takes between three to four months to complete. The time period varies depending on how quickly you complete the pre-bankruptcy credit counseling and other requirements, how long it takes your trustee to liquidate any non-exempt assets, and whether there are any judgment claims in your case that need to be expunged. 
  • Chapter 13 takes three to five years to complete. Your repayment plan will either be a three-year or a five-year period. If your income is lower than the state median of a similar household, it will be a three-year plan. If it’s higher, then your plan will be five years.

There are other differences between Chapter 7 and Chapter 13 as both are nuanced processes that vary case by case. Another major difference, for example, is that you can only qualify for Chapter 7 if you pass the state Means Test. This test measures your income-to-debt ratio. You’ll only be eligible for Chapter 7 if that ratio is lower than the state median of a similar household.

To learn more about the differences between the two chapters or to begin filing for bankruptcy in St. Peter, MN, contact Behm Law Group Ltd. at (507) 387-7200 or via email at stephen@mankatobankruptcy.com today.

How Government Debts Are Handled in Chapter 7 Bankruptcy

Chapter 7 bankruptcy is the most frequently filed individual consumer case type. This type of bankruptcy discharges your debts in exchange for the liquidation of your non-exempt assets. While the loss of some property in return for the dissolving of certain debts is a possibility, such is not the case for most filers because they can use bankruptcy exemption allotments to protect their assets.

To qualify for Chapter 7 bankruptcy, you must satisfy the Means Test, which measures your income-to-debt ratio. If your income-to-debt ratio is lower than the state median of a similar household, you are eligible to file for Chapter 7. If you are considering filing for Chapter 7 bankruptcy in Jackson, MN, Behm Law Group, Ltd. can provide support, guidance, and legal protection throughout your case.

In Chapter 7, the majority of your unsecured debts will be discharged. This commonly includes credit card debt and medical bills, but may also range into more unusual debts like personal loans and income taxes. There are also various forms of government debts that are unsecured but might be treated as priority debs in your case.

SSA Overpayments: If you were accidentally given overpayments on your social security checks, you may be required to repay that debt if the SSA notices. If you file for Chapter 7 bankruptcy, however, this debt will be treated as an unsecured debt. The SSA may file an objection to the discharge of this type of debt on the grounds that you defrauded the SSA, but more likely, the debt will be discharged.

County/City Fees: Certain fees you owe to your local government may be discharged in part. This typically includes first-time fines, tickets, and other fees. For example, if you were required to pay a government-employed contractor to tear down an illegal structure on your property but could not make the payment, that debt would likely be discharged. If you paid a private contractor to tear it down but were fined for failing to tear it down in a timely manner, that contractor debt will likely be discharged, but the fine may or may not be discharged.

Fines: Strictly speaking, government fines are not discharged. The only exception to this rule is if the debt was gained in reimbursing the government for money that entity spent or lost separately from the fines you were charged. For example, you are billed for the removal of a tree on your property but the government over-estimated the cost of that removal. The over-fine will be discharged in a Chapter 7 case.

If you have government debts, they will most likely be discharged in Chapter 7, but there are a few exceptions. To learn more about how debts are treated in bankruptcy or to get started on filing for Chapter 7 bankruptcy in Jackson, MN, contact Behm Law Group, Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com today.