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Risks of Filing for Bankruptcy Without a Bankruptcy Attorney in Waseca, MN

If you’re struggling to meet loan payments and bills alongside daily living expenses, bankruptcy is an option for individuals, business owners, and corporations alike. Designed to liquidate assets, discharge debts, reorganize expenses, and generally give the filer a fresh start while maintaining the fair treatment of creditors, bankruptcy in the U.S. is a process that can fix a lot more than most realize. As American citizens, our freedoms extend to self-representation in all courts of law, including the U.S. Bankruptcy Courts. Utilizing the counsel and support of Behm Law Group, Ltd.’s bankruptcy attorneys in Waseca, MN when filing for bankruptcy, however, can protect you from the potentially costly errors you may make through self-representation.

Representing yourself and filing your own bankruptcy petition is an option, but it can mean you’ll be taking many risks. At the very least, it can be difficult to reach optimal results in your bankruptcy case without the help of a trained professional.

Filing your own bankruptcy petition means you risk case dismissal or court prejudice and forgo the protection of an experienced bankruptcy attorney.

Mistakes When Filing for Bankruptcy:

Mistakes on the required paperwork are the most common reasons a case is dismissed. Gathering the necessary information about household or business income sources, debts, loans, assets, properties, and expenses can be a difficult process. Bankruptcy attorneys have the knowledge, experience, and resources to put together a flawless petition with no room for inaccuracies. Self-representation, on the other hand, offers countless opportunities for small mistakes that may lead to case dismissal. Misrepresentation of finances can appear as fraudulent and can provide a basis for the court to reject your bankruptcy petition.

Protection When Filing for Bankruptcy:

One of the roles of a bankruptcy attorney is to provide legal protection for clients. Business or individual, all filers may be experiencing aggressive collection action from lenders. The automatic stay in a bankruptcy case halts collection action for a period of time, but some creditors may petition the bankruptcy court for the lifting or termination of the automatic stay for certain debts. If approved, those creditors can collect or repossess collateral. A bankruptcy attorney can protect a client from harassment and aggressive actions by creditors, collection agencies, debt collectors, and any other lenders before the automatic stay is lifted.

Above all, a bankruptcy attorney offers expertise, experience, knowledge, and legal protection. Forfeiting your right to attorney protection and guidance may result in a less than successful bankruptcy case.

We’ll take a critical part in creating a positive outcome for your case from beginning to end. Relieve the stress of managing your own bankruptcy case and eliminate risks of failure. Contact Behm Law Group, Ltd. today at (507) 387-7200 for more information about working with an expert bankruptcy attorney in Waseca, MN.

 

 

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Limitations of the Automatic Stay When You File for Bankruptcy in Windom, MN

Whether you file for Chapter 7 liquidation bankruptcy or Chapter 13 debt reorganization bankruptcy, you benefit from the immediate action of the automatic stay as soon as your bankruptcy petition is filed. The automatic stay is a wonderful tool designed to prevent creditors from collecting on debts that may be discharged or restructured during the bankruptcy process. It also prevents collections and blocks harassment from your creditors during the period of your bankruptcy case. If you’re struggling financially, the short-term effects of the automatic stay and the long-term effects of bankruptcy as a whole might be a viable option for recovery. Behm Law Group, Ltd. offers legal advice and assistance when you file for bankruptcy in Windom, MN.

The automatic stay provides a wide range of advantages (link to blog post “The Power of Automatic Stay When You File Bankruptcy in Fairmont, MN”) along with its ability to prevent your creditors from collecting debt payments during the stay period. In addition to the many ways the automatic stay can help you, however, there are some things it cannot do, including:

1. Halting certain lawsuits.

Lawsuits that affect minors (i.e. children of the parties involved) are protected against most financial proceedings, including bankruptcy. For example, the automatic stay cannot stop a lawsuit that involves paternity or child custody tests, nor can it stop a lawsuit that attempts to modify, collect, or confirm child support payments.

2. Halting certain tax requirements.

The automatic stay can’t alter or prevent IRS tax audits or issues regarding tax deficiency. Additionally, the automatic stay cannot prevent the IRS from demanding your tax returns and demanding payment for taxes owed.

3. Halting wage garnishment for pension loan repayment.

If you took out a loan from your retirement pension, the automatic stay doesn’t stop the garnishment of your income (including wages, salary, commissions, bonuses, and any other sources of income) for the repayment of that loan. This is the only condition where the automatic stay is not effective in preventing wage garnishment.

4. Halting criminal sentence proceedings.

If you’re in the process of undergoing criminal proceedings involving debt, or otherwise, the automatic stay is only able to impact the conditions of your sentence that involve debt repayment. The automatic stay does not change the parts of your sentence that involve community service, therapy, jail time, or other requirements.

Despite the many advantages of the automatic stay, these situations remain unchanged during the stay period when you file for bankruptcy. Additionally, if you’ve filed for bankruptcy the previous year, the automatic stay period will end after 30 days, unless you can prove the need for an extension.

If you’re considering filing for bankruptcy in Windom, MN, and want to learn more about how the automatic stay can apply to your situation, contact Behm Law Group, Ltd., at (507) 387-7200 today for more information.

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Getting Through the Holidays During Chapter 13 Bankruptcy in Redwood Falls, MN

From October to January, national spending on holiday decorations, parties, and gifts increases by an average of $500 to $1,000 per person. This extra spending during the holidays is a luxury that many consumers may take for granted. Families living below the poverty line often struggle to make ends meet during the holiday season more than any other time of year, and households working through Chapter 13 bankruptcy have fairly strict options for spending during the holidays. If you’re considering filing for bankruptcy in Redwood Falls, MN, or if you’re working through a Chapter 13 repayment plan during the holiday season, Behm Law Group, Ltd. can help.

Chapter 13 bankruptcy is designed to restructure your debts into a manageable repayment plan, and it can be a highly effective process for resolving debts without crippling the debtor. When it comes to extra spending, however, the budget of a Chapter 13 plan can make things difficult.

Spending Limits

The problem with a Chapter 13 repayment plan during the holiday season is the limitation on disposable income. When you propose a repayment plan to the U.S. Bankruptcy Court, you disclose all of your debts, expenses, and income.

Your income is broken into categories of discretionary and disposable. The income you would normally spend during the holidays is a part of your disposable income, but during a Chapter 13 repayment period, most of that income must be used to repay your unsecured creditors.

Repayment plans last three to five years, and despite the rise in national spending during the holidays, your budget must be built around the requirements of your plan. Your budget in a chapter 13 case will have some cushion such that you will be able to use some of your disposable income to purchase gifts, etc. during the Holiday Season.  However, during a chapter 13 case there’s naturally going be to less room for spending money on gifts, decorations, or any other holiday luxuries than would be the case if one were not in a bankruptcy proceeding.  Most of your disposable income still must be applied to the benefit of your unsecured creditors.

Ways to Spend

There are some options that make it possible for your household to have holiday spending money during a Chapter 13 plan:

  • You can modify your repayment plan for a month or two and use the excess money on holiday festivities
  • You can borrow certain amounts from your 401(k) and resolve to replace that amount when your repayment plan period ends
  • When you receive your tax refund, your trustee will take most of that income since it’s considered disposable income, but will often leave a decent part of it for you to save or spend. If you plan ahead, this saved money can be used during the holidays

While these options may not be advisable during any other time of the year, it might be worth having holiday cheer to take advantage of these options.

If you’re considering filing for Chapter 13 bankruptcy in Redwood Falls, MN, Behm Law Group, Ltd. can help you throughout the process and offer legal advice and support for spending options during the holidays. Contact us at (507) 387-7200 today for more information.

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Filing for Bankruptcy in New Ulm, MN, as a Military Personnel or Veteran

All government employees, including military personnel, have the same rights to file for bankruptcy as any other citizen of the U.S. In some cases, members of the military and veterans even have additional benefits and options during the process of filing for bankruptcy than other citizens. Despite government pensions, salaries, benefits, and other financial support systems that military personnel and veterans have access to, sometimes it isn’t enough. Financial problems and debt can accumulate over time or happen suddenly when unforeseen expenses arise. With the help of Behm Law Group, Ltd., filing for bankruptcy in New Ulm, MN, is an effective method of recovery from financial struggles as a military veteran.

While members of the military and veterans follow the same rules and processes of bankruptcy as other citizens for the majority of cases, there are certain circumstances where they have additional benefits.

  1. Active-Duty Military: If you’re on active duty and file for bankruptcy, you’re protected under the Servicemember’s Civil Relief Act (SCRA). This act provides legal protection and may allow the courts to postpone or stay bankruptcy proceedings while you are in service overseas. The effect of automatic stay is also still active in addition to the benefits of the SCRA.
  1. Disabled Veterans: If you’re a disabled veteran, you’re not required to pass the Means Test to qualify for Chapter 7 bankruptcy. As a disabled veteran with debts primarily incurred while you were on active duty or in homeland defense, you’re exempt from taking the Means Test. Government-rated disabilities at 30% or higher, or discharge from duty because of disability will allow you to forgo the Means Test when filing for Chapter 7.
  1. Call to Active Duty: There are other cases that exempt military personnel from taking the Means Test when filing for Chapter 7. If you’re on reserve duty or a member of the National Guard and you’re called to active duty, or were in homeland defense 90 days after the 9/11 attack, you can forgo the Means Test during and 540 days after active duty.

As a U.S. citizen—civilian, military personnel, or veteran—the support system of financial recovery through bankruptcy is designed to be an option for all that qualify. If you’re considering filing for bankruptcy in New Ulm, MN, military personnel or not, Behm Law Group, Ltd. can help. Contact us at (507) 387-7200 today for more information.

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Exemption Basics in Chapter 7 and Chapter 13 Bankruptcy in Pipestone, MN

Whether you file for liquidation bankruptcy (Chapter 7) or reorganization bankruptcy (Chapter 13), a bankruptcy estate – a legal entity that is separate and distinct from you, the bankruptcy filer – will be created by operation of the bankruptcy code.  All of your property will essentially be dumped into the bankruptcy estate and, for a time, the bankruptcy estate will actually own the property.  However, Congress did not want people to emerge from the bankruptcy process completely destitute and with no ability to reorganize their financial situation.  While there is a risk that one may lose some assets when one files for bankruptcy relief, such a situation is the exception rather than rule.  Most people go through bankruptcy and retain all of their assets.  Congress allocated various value allotments called “bankruptcy exemptions” that people can assert and absorb most or all of the property back out of the bankruptcy estate.  Depending on your situation and the exemptions you claim, Behm Law Group, Ltd. can help you understand how your exemptions work and what role they play when you file for bankruptcy in Pipestone, MN.

 

When exemptions come into play during your bankruptcy case, you may use them to protect your value interest or equitable interest in your assets from liquidation.  There is a common misunderstanding that one gets to keep a car or a house, etc. in bankruptcy.  It is much more accurate to say that one gets to protect or keep an equitable interest in an asset.  For instance, if you own a home worth $200,000 and the mortgage loan is $150,000, your equitable interest is $50,000.  It is this $50,000 that you would protect with the applicable bankruptcy exemption.  The applicable bankruptcy exemption would not make the underlying mortgage go away and you would still have to pay it or the mortgage lender could initiate foreclosure proceedings against your house.  Every individual filer has access to the bankruptcy exemptions in both Chapter 7 and Chapter 13 cases.  As indicated above, the policy goal of bankruptcy is rehabilitative and the intent behind the bankruptcy code is not to leave a bankruptcy filer completely destitute.  Rather, the intent is to allow a person some property with which to reorganize one’s financial situation and move forward free of debt entanglement (other than those debts one actually wants to retain).

 

In Minnesota, a bankruptcy filer can choose either the exemptions provided under Minnesota state law or the exemptions provided under the federal bankruptcy code.  Whether one elects one or the other depends largely on how much equity or value one has in one’s homestead.  Again, equity is the value of an asset in excess of the debt owed on that asset.  For instance, presume again that one owns a home worth $200,000 and that one owes $150,000 on the subject mortgage.  One, therefore, has $50,000 equity.  One would protect this equity with one’s homestead exemption.  The homestead exemption under the Minnesota state exemptions is $390,000 for a homestead that is located in a city/town and $975,000 for a rural homestead or farm.  The homestead exemption under the federal bankruptcy code is $23,675.  In this example, given the $50,000 equity figure, one would want to use the exemptions provided under Minnesota state law where one could protect the full $50,000.  If one were to choose the exemptions provided under the bankruptcy code, one could protect only $23,675 and the bankruptcy trustee administering one’s case could sell the house, pay off the $150,000 mortgage and pay the bankruptcy filer the exemption claim of $23,675 and use the rest to pay one’s creditors.

 

The analysis regarding one’s property and the applicable bankruptcy exemptions needed to protect it can be highly nuanced and exceedingly detailed and whether one chooses the exemptions provided under Minnesota state law or those provided under the federal bankruptcy code depends on one’s unique circumstances.  For more information about how exemptions can benefit your situation when you file for bankruptcy in Pipestone, MN, contact Behm Law Group, Ltd. at (507) 387-7200.

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Avoiding Dismissal With Prejudice With the Help of a Bankruptcy Attorney in Fairmont, MN

In the wonderful world of the freedom of the United States of America, it’s always optional to take advantage of the help that a trained and experienced lawyer can provide. Since the Gideon v. Wainwright case in 1963, the US courts will appoint a publicly funded attorney in criminal cases to defendants who can’t afford their own. That being said, any person in any type of US legal case can also choose to represent oneself in court.

However, just because one can, doesn’t necessarily mean that one should. Criminal cases aside, there are countless opportunities for those attempting to represent themselves to make a legal a misstep. At Behm Law Group, Ltd., we emphasize the importance of taking advantage of the legal support and counsel that an experienced bankruptcy attorney in Fairmont, MN, can offer throughout your bankruptcy case.

Aside from the difficulty of managing your own bankruptcy petition while working through the day-to-day demands of your personal and financial life, the actual requirements of filing for bankruptcy from start to finish can be nuanced, exacting and rigorous. The help of a bankruptcy attorney can truly change the outcome of your case, whether you intend to liquidate in a Chapter 7 or reorganize in a Chapter 13. One of the dangers you may face if you choose to file without a bankruptcy attorney is the possibility of your case being dismissed with prejudice by the U.S. Bankruptcy Court.

There are several reasons your bankruptcy case may be dismissed with prejudice, and many of them involve fraudulent behaviors—intentional or unintentional.  “Dismissed with prejudice” means that you would be prohibited from filing for bankruptcy relief again for a certain period of time.

  1. Lying and being wrong: One of the most common reasons bankruptcy cases are dismissed with prejudice is that the court finds the filer has lied (or been inaccurate) about some information involving one’s debts or one’s overall financial situation. If you intend to file without a lawyer, you risk case dismissal with prejudice from certain inaccuracies on your bankruptcy forms and schedules, but this is easily avoided with the help of a bankruptcy attorney.
  2. Disobedience: In circumstances where a filer has appeared to willfully disobey a court order, one’s bankruptcy case can be dismissed with prejudice. This can include obstruction or hindrance of your creditors’ rights, which is a situation you may accidentally create.

A bankruptcy case is never black and white. The gray area involved in a case is best navigated with the help of a bankruptcy attorney. The implications of a dismissal with prejudice can affect your legal and personal life in extremely negative ways.

Taking advantage of the professional counsel and legal advice a lawyer can provide is critical if you’re considering filing for bankruptcy. For more information about our expert bankruptcy attorneys in Fairmont, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.

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Selling in Foreclosure and Automatic Stay in Chapter 7 Bankruptcy in Pipestone, MN

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

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

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

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

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

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

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Holding on to Retirement Plans and Pensions When Filing for Bankruptcy in Pipestone, MN

Sometimes financial difficulties arise when least expected, and tackling the burdens of debt can prove more and more trying as time passes. Even with the relief that the U.S. Bankruptcy Code can provide to households and individuals in need of debt alleviation, the stripping of assets with debt liquidation or the reorganization of debts with repayment plans does not solve all problems. If you’re considering filing for bankruptcy in Pipestone, MN, Behm Law Group, Ltd. can provide assistance with your petition so you can make the best out of a sticky situation.

For the majority of bankruptcy cases, pensions and retirement plans are left untouched. The U.S. Bankruptcy Code was designed to protect the filer as much as possible during and after the bankruptcy process, including shielding all pension funds and retirement plans with only a few exceptions.

Non-Exempt Pensions

The few pensions that do not qualify for an exemption from bankruptcy filings include the following:

  • Employee Stock Purchase Plans (ESPP)
  • Plans that are not considered legitimate retirement plans under sections of tax code indicated in the bankruptcy process
  • Plans that are not fully funded or that are incorrectly funded
  • Plans that are not in compliance with tax code in any other way, including roll-overs or transfers and plans without approval from the Internal Revenue Service
  • An Individual Retirement Account (IRA) inherited from anyone not your spouse

Automatically-Excluded Pensions

There are many types of pensions that are untouchable during the bankruptcy process because they are considered excluded from your asset stockpile (your estate). As such, you do not need to claim them as exempt, but you should still offer information about these accounts to your trustee and attorney.

Automatically-excluded pensions include the following:

  • Plans under IRC 414(d) (most government retirement plans)
  • Plans under IRC 567 (most deferred compensation plans)
  • Plans under IRC 530(1)(b) (most educational IRAs)
  • Plans under IRC 403(b) (most tax deferred annuity plans)
  • Plans that qualify under the Employee Retirement Income Security Act of 1974 (ERISA)

There are also several forms of non-excluded retirement funds and pensions that you can claim as exemptions in your bankruptcy case; however, these codes change between state exemption laws and federal exemption laws. You can elect to choose either state or federal exemptions when you file for bankruptcy in Pipestone, MN, depending on which will benefit you most in the long term. Behm Law Group, Ltd. can provide the legal advice you need to make these kinds of decisions throughout the bankruptcy process. Contact us today at (507) 387-7200 for more information.

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How Filing for Chapter 7 Bankruptcy in Waseca, MN, Affects Types of Small Business Ownership

Small business owners are some of the bravest adventurers when it comes to finances. Not only does starting a small business often require a large investment in the form of a loan or personal funds, but the liabilities of starting and maintaining a small business are numerous. Sadly, many entrepreneurs are unable to keep expenses balanced with revenue, especially during the first few years of a startup. Although bankruptcy is a common occurrence for small businesses, the outcome of bankruptcy will change depending on the type of business and the ownership status. At Behm Law Group, Ltd., our attorneys work to protect small business owners throughout the process of filing for Chapter 7 Bankruptcy in Waseca, MN.

For most small businesses, there are three main forms of ownership. Each type of ownership is affected differently when the business enters the process of Chapter 7 bankruptcy:

  • Sole: If you own your business, you are the sole proprietor. As a sole proprietor, your finances are linked with your business finances. If your business (or you) are over your head in debt, you can only petition for a personal case of Chapter 7 bankruptcy. It’s not possible for your business to file for bankruptcy alone because there is no separate, distinct business entity apart of you, so the process must combine your personal and business debt into one case. You can, however, prevent many of your assets from being liquidated with your bankruptcy exemptions.
  • Partner: If your business is a partnership, it still is not a separate entity from you and your partner’s personal finances. When filing for a Chapter 7 partnership business case, the process is not really any different from a personal case. In partnership business bankruptcy, the partnership debts are collectible against you and all partners personally and your personal assets must also be listed in the bankruptcy petition.  However, you can still protect your personal assets with your bankruptcy exemptions.
  • Corporations and LLCs: A business owned as a corporation or an LLC is a separate and distinct legal entity from you and, therefore, it must file for a separate business bankruptcy.  In such a bankruptcy, however, there are no exemptions that can benefit the corporation or LLC. The trustee handles liquidation for corporations and LLCs. If your business is an LLC, you are required to eliminate any of your own debts with a personal bankruptcy case before filing a business case.

Filing for bankruptcy can give you the financial relief you need when there are no other options. For more information about filing as a small business for Chapter 7 bankruptcy in Waseca, MN, contact Behm Law Group, Ltd. at (507) 387-7200.

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Guilt, Blame, and Shame: The Real Reasons Why Most People File for Bankruptcy in Mankato, MN

The accumulation of debts is a widely varied process that can occur over the course of years or in an instant. Those struggling with overwhelming debts for whatever reason often experience situational guilt or shame. Creditors will frequently add to this negative mindset, placing the blame solely on the debtor and gaining an advantage over them by emphasizing their guilt. At Behm Law Group, we’re here to tell you that the guilt and shame you may be feeling about your debts is unwarranted, despite the blame-game your creditors play. If you are considering filing for bankruptcy in Mankato, MN, we’re here to help, starting with lifting the pressure on your conscience and beginning to think critically about the situation.

While your creditors would have you believe that your debts are all your fault and shame you into feeling guilty enough to place repaying them ahead of your health and your family, these claims are often baseless. In fact, the vast majority of debts leading to bankruptcy are due to unavoidable or unexpected circumstances.

Job loss is one of the most common reasons our clients have found the need to file for bankruptcy. Lay-offs and a poor job market make optimal conditions for people of all income brackets to gain debts.

Medical bills are a necessary debt for anyone who needs medical care to stay healthy and capable of caring for their families. Unfortunately, even those with insurance can land in a pit of soaring medical expenses.

Divorce rates grow each year and the emotional upset alone can be enough to damage the health and security of a household. The debts from lawyer fees, spousal lawsuits, and general divorce expenses can send anyone down a spiraling path to bankruptcy.

Credit misuse is a common occurrence for people of all ages and financial backgrounds. With late fees, interest rates, and general credit card misuse, credit debt can multiply right beneath your nose.

Accumulated expenses from a variety of sources can quickly land you in a world of debt. These expenses are often unexpected and unavoidable, such as home damage after a natural disaster or costs related to a broken–down car.

You may be in a rough financial situation, but know that the blame does not rest on your shoulders alone. If you are considering filing for bankruptcy in Mankato, MN, contact Behm Law Group for a consultation at (507) 387-7200.