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Common Misunderstandings about the Risks of Bankruptcy in New Ulm, MN

There are several ways to find debt relief in the United States, each with varying effectiveness and cost. Debt relief programs may seem like attractive options, but in the long term, they always cost more than filing for bankruptcy, don’t relieve the stress of debt and are far worse for your overall credit profile/rating than a bankruptcy filing. A creditor will sometimes try and persuade you to do a “settlement” on a debt.  The term “settlement” is a gross misnomer and a half-truth.  While the creditor may allow you to pay less than the full amount of a debt, the creditor will sell the right to collect the remaining amount that you don’t pay to a third-party debt purchaser for 10 or 20 cents on the dollar.  The third-party debt purchaser will then start collection actions against you on that remaining balance.  Sometimes, you can try and work things out with your creditors through a so-called “debt settlement” company.  However, “debt settlement” companies are rife with fraud.  By far, the best way to quickly and permanently resolve debts is through the bankruptcy process. While many people are fearful of filing bankruptcy, the truth is that bankruptcy helps thousands of households find their way to financial balance and peace of mind each year. Behm Law Group Ltd. attorneys can protect and guide you through your case and help you understand the many misconceptions about filing bankruptcy in New Ulm, MN.

Avoiding bankruptcy mills and accepting the advice and support of a skilled bankruptcy attorney can help you find permanent relief from various kinds of debts. With bankruptcy, you can resolve debts related to credit cards, medical bills, foreclosed mortgages, car loans, personal loans, some tax debts, personal business expenses and debts, past due utility bills, overdraft lines of credit attached to your checking and savings accounts and many other types of debt.

The ideas behind the risks of bankruptcy are often inflated by third-party “debt settlement” providers, creditors and other self-interested, for-profit and credit-industry sponsored/financed parties who want you to be fearful of bankruptcy and who will profit from you choosing their questionable services over a permanent, court-enforced process. You will receive timely, expeditious, positive and permanent results by filing a bankruptcy case.  You’ll find the following prevalent myths to be false.

  1. “Filers lose all their property.” This is faulty thinking about Chapter 7 liquidation bankruptcy as Chapter 7 liquidates your non-exempt assets in exchange for the permanent discharge of your debts. While it’s true that some people can lose some property in a Chapter 7 case, it is not a common occurrence.  In the vast majority of Chapter 7 bankruptcy cases, all people lose are their debts.  Generally speaking, you’ll be able to protect all your assets (like your home and car) with the allotted bankruptcy exemptions which are quite generous.
  2. “Married spouses have to file together.” While married couples can file jointly,  it’s not a requirement for them to do so. One spouse can file as an individual and have that case handled like the bankruptcy case of any other unmarried filer.  With debts that are in both spouses’ names, however, the filing of a joint bankruptcy case is necessary for those debts to be completely handled and discharged.
  3. “Your credit will never recover.” This is a falsehood about bankruptcy that is exaggerated. Yes, your credit will take a hit, but it’s typically only around 200 points. Additionally, that drop can quickly be recovered. Many filers who spend frugally and practically after a bankruptcy end up seeing a jump in their credit scores to “good” ranges (650 – 720) within just six to eight months after the conclusion of a bankruptcy case. Plus, bankruptcy usually completely falls off your credit profile after five to six years.

One other common myth is that bankruptcy filers are not financially responsible. The reality is that people can find themselves in debt for myriad reasons which are completely beyond their control. (Learn about more bankruptcy myths here.)

Contact Behm Law Group Ltd. by calling (507) 387-7200 or emailing stephen@mankatobankruptcy.com for more information about the real benefits and risks of bankruptcy in New Ulm, MN.

 

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Home Equity, Homestead Exemptions, and Keeping Your Home When Filing for Chapter 7 Bankruptcy in Mankato, MN

In the U.S., there is often a negative shadow cast across the idea of going bankrupt. While the fear of struggling with extreme financial difficulties and being unable to pay back various debts is quite justified, bankruptcy is still stigmatized as the worst possible outcome. In reality, much of the anxiety about how bankruptcy will affect one’s life is either over-exaggeration or myth. Behm Law Group, Ltd. will help you by revealing the distinctions between reality and fallacy during the process of filing for bankruptcy in Mankato, MN.

 

One common misconception around the bankruptcy process is that the individual filer will lose everything, including their home. In fact, even under Chapter 7 liquidation bankruptcy, there are conditions that allow the filer to keep their home.

 

Home Equity

Your home or property can only be liquidated during the Chapter 7 bankruptcy process if it has equity. Home equity essentially means that the value of your property is higher than the value of your mortgage on that property. If you have a home valued at $300,000, and your mortgage is $200,000, you have $100,000 in equity, and a bankruptcy trustee could, theoretically, sell the home to pay off the mortgage debt you owe.

 

If you have no equity (your mortgage value is greater than your property value), your trustee will abandon the property and it will not be liquidated to pay debts.

 

Homestead Exemption

Even if you have home equity, there is still a way to keep your home with the Minnesota homestead exemption. If your homestead exemption can cover the value of your home equity (Minnesota allows exemptions up to $390,000 for homes in cities), you may protect the equity in your home and keep your home in the liquidation bankruptcy process.

 

Continued Payments

Although your mortgage creditor cannot target you as an individual during the bankruptcy process, payments must still be made to repay the debt on your mortgage. If you are able to continue payments on your mortgage during and after a Chapter 7 filing, your mortgage creditor will not take your home from you and the equity in your home will be preserved and protected for your benefit.

 

If you are balking at filing for bankruptcy because you fear you may lose your home, know that you will be able to protect the equity in your home with the Minnesota homestead exemption. For more information about filing for bankruptcy in Mankato, MN, contact Behm Law Group, Ltd. at (507) 387-7200.

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Common Bankruptcy Myths Debunked in Mankato, MN

Sometimes hard-working and honest people in Mankato, MN find themselves mired in a financial mess and need to seek refuge from their hardships by filing for bankruptcy. If that description fits you, turn to the knowledgeable and compassionate professionals at Behm Law Group, Ltd. We have the expertise and experience to help you get through the bankruptcy process step-by-step.

There are many myths that swirl around bankruptcy and the types of people who file for it. Listed below are four common bankruptcy myths:

  • Bankruptcy doesn’t affect that many people. The number of people who file for bankruptcy protection has decreased since the peak of The Great Recession. From 2008-2010, over 4.1 million U.S. families filed for bankruptcy. These days, the number of families who file hovers around the one million mark annually.
  • Bankruptcy only happens to the poor and uneducated. Sure, among the million or so families filing for bankruptcy protection every year, there are poor and uneducated people. However, it also strikes wealthy and highly educated people. Lawyers, doctors, accountants, business owners, teachers, and many others in highly respected and high-paying professions file for bankruptcy every day.
  • Bankruptcy is the result of irresponsible spending. There are some individuals who try to game the system, carelessly racking up mountains of debt and then filing for bankruptcy. However, the majority of filers are hard-working folks who may have become financially ruined by a job loss, pay decrease, divorce, or a serious illness and the subsequent pile of medical bills that creates. In many cases people rely on their credit cards to buy the necessities – food, gasoline, car repairs, clothing for the kids – and hope that their situations will improve. Sadly, things don’t always turn around, and bankruptcy is the only viable option.
  • Bankruptcy permanently ruins your credit. People who file for bankruptcy are often surprised at how quickly their credit bounces back and how fast they start getting credit card offers in their mailboxes again. To rebuild your credit, think about applying for a secured credit card with a low limit that requires a deposit to a bank. Once approved for the card, make regular, on-time payments, and check your credit report to ensure that everything that was discharged in bankruptcy is, indeed, marked as discharged.

If you or a loved one is facing the difficult decision of whether or not to file for bankruptcy, give us a call today at (507) 387-7200 to learn what your options are. Even if you decide not to file, knowing the available options can bring you tremendous peace of mind.