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Properties Excluded from an Estate when Filing for Bankruptcy in Owatonna, MN

If you’re struggling to meet debt payments on a regular basis and have been for some time, you may find yourself in over your head financially. Fortunately, U.S. law offers a way back to the surface and an opportunity for a fresh start through the process of bankruptcy. Navigating this nuanced system alone is a large feat, but with the help of Behm Law Group, Ltd., you’ll have the guidance and support you need to file a strong, successful case for bankruptcy in Owatonna, MN.

When you choose to file for bankruptcy, the long-term benefits are numerous, and you receive certain immediate advantages as soon as you file (automatic stay, for example). However, the benefits that bankruptcy provides come with the rest of the process, including the examination of your debts and the categorizing of your properties and accounts into a bankruptcy estate.

No matter which type of bankruptcy you file for, the bankruptcy estate plays an essential part in your case. In a Chapter 7 case, the estate determines what your trustee can liquidate in exchange for your debt being discharged. In a Chapter 13 case, the bankruptcy estate can determine the structure of your debt repayment plan and the amount you will have to repay to your creditors. While most of your properties and accounts are included in the bankruptcy estate, there are some exceptions.

What’s not in the bankruptcy estate?

  1. Any property or accounts you acquired after the date you file your bankruptcy petition. Keep in mind, however, that you must notify your bankruptcy attorney of any property that you acquire within 180 days of the date that you filed for bankruptcy relief. Your bankruptcy attorney will speak with the bankruptcy trustee administering your bankruptcy case to determine whether how much, if any, of such property may be subject to seizure.
  2. Child support arrears owed to you from another party.
  3. Joint bank accounts that your name is on along with the name of some other party (if the proceeds in such an account don’t actually belong to you).
  4. Withheld wages for employee benefits and health insurance programs.
  5. Education funds that are tax deferred.
  6. Funding from tuition programs qualified under the 2005 bankruptcy act and Coverdell account—if those funds are deposited at least one year prior to filing for bankruptcy or are for the benefit of your child, stepchild, step-grandchild, or foster child. Any funds deposited two years prior to bankruptcy are exempt from your estate, and you can exempt up to $5,850 from your estate if it was deposited between the one and two-year period.
  7. Last but not least, the majority of retirement funds are exempt from the bankruptcy estate.

The process of bankruptcy is designed to give debtors recovery and relief and not to punish or leave them without anything to their name while repaying something to their creditors as best as possible. While many of your properties are included in the bankruptcy estate, you’ll still have ample opportunity to exempt and protect most of your assets.

To learn more about filing for bankruptcy in Owatonna, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.

 

 

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

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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Choosing Chapter 13 when You Qualify for Chapter 7 Bankruptcy in Mankato, MN

Financial recovery through the federal process of bankruptcy is a public option for all businesses and individuals, but there are eligibility standards for any bankruptcy case. If you want to file for liquidation bankruptcy, for example, you must pass the Means Test to qualify for a Chapter 7 petition. If you’re ineligible for Chapter 7, you can choose to file for debt reorganization (Chapter 13), but even that process has certain prerequisites. With the help of Behm Law Group, Ltd., you can determine which type of bankruptcy in Mankato, MN is best for your financial situation.

The two common types of bankruptcy for individuals are Chapter 13 and Chapter 7. The former reorganizes your debts into a manageable repayment plan for a three to five-year period. The latter liquidates non-exempt assets, distributing the value of those non-exempt assets to creditors and discharging your debts in return. Which type you file for depends on two things: your debt-to-income ratio (passing the Means Test or not) and your choice.

Your Choice

If you pass the Means Test and qualify for Chapter 7 bankruptcy, you’ll have the option to choose between Chapter 7 or Chapter 13. While there are occasionally financial circumstances that force filers to stick with Chapter 7 bankruptcy, it’s likely that you’ll have a choice. Behm attorneys can help you make this choice based on several factors of your situation:

  1. Nonexempt assets: Non-exempt assets are assets that have value in excess of your applicable bankruptcy exemptions or for which there are no bankruptcy exemptions that one can utilize to protect or keep them. These assets will be liquidated in a Chapter 7 case and the sale proceeds will be used to repay something to your creditors. If you want to keep non-exempt property, Chapter 13 is the right choice for you.   As long as you pay the value of those non-exempt assets to your creditors through a 36 to 60 month chapter 13 repayment plan, you can retain non-exempt assets that you would otherwise lose in a chapter 7 liquidation bankruptcy.
  2. Car loan: If you have debt on your motor vehicles, you could have those assets taken back by the creditors who have liens on them in a Chapter 7 bankruptcy. However, choosing a Chapter 13 repayment plan could allow you to repay your car loans over time and in a more manageable way and keep your credit in a more stable position.
  3. Mortgage: Similarly, you can have equity or value in your home protected by the Homestead Exemption in a Chapter 7 case but you may be behind with your mortgage payments. In a chapter 7 case and if you wanted to eventually avoid a foreclosure proceeding, you would likely have to pay back any delinquency in full to the mortgage lender in 30 to 60 days.  However, in a chapter 13 repayment plan, you could break that mortgage delinquency up and repay it over 36 to 60 months, avoid a foreclosure proceeding and retain your home property.  You may also be able to strip off or cram down any second or third mortgages in a Chapter 13 case.
  4. Priority debts: When you file for any type of bankruptcy there are a number of debts that fall into the “priority” category. These debts cannot be discharged in Chapter 7 liquidation, but they can be integrated into a Chapter 13 repayment plan and paid off. If you want to repay debts like child support and tax debt in a structured repayment plan, choose Chapter 13 over Chapter 7.

Both chapters have their own advantages depending on your situation. To find out which type of bankruptcy in Mankato, MN is right for you, contact Behm Law Group, Ltd. at (507) 387-7200 today.

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

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

 

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

 

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

 

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

 

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

 

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

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

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

 

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

 

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

 

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

 

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

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Health Risks of Financial Stress and How Filing for Bankruptcy in Fairmont, MN Could Save Your Life

In today’s world, we face a huge amount of daily stress. From taking care of family and friends to work responsibilities and more, we all have many roles to fill. With all the pressures of the average American adult, it can seem almost impossible to cram another burden on top of all the others. However, it’s common that most are also dealing with a wide range of financial difficulties. Ridding yourself of this unnecessary stress is a real possibility. With the help of Behm Law Group, Ltd. attorneys you can successfully file for bankruptcy in Fairmont, MN, and get the stress-free fresh start you need.

Debt is one of the heaviest loads we bear. It weighs heavily on our daily activities and also impacts our mental and emotional state. Any individual can struggle with the stress that debts bear on quality of life and happiness, whether they’re responsible for a large household or just themselves.

 

The stress we experience each day has more negative health effects, both mental and physical, than many realize. Chronic stress is a real causative factor in increasing a range of health risks including heart conditions, anxiety, depression, gastrointestinal problems, weight fluctuations, diabetes, psoriasis, eating disorders, insomnia, and even cancer. Substance abuse is another common problem often caused in part by chronic stress, which leads to a wide range of additional health problems.

 

If you’re dealing with the stress of severe financial difficulties or have had difficulty in keeping up with debt payments for several months, bankruptcy might be the answer to rid yourself of debt and stress.

 

If your income is lower than the state median, you can choose to file for Chapter 7 bankruptcy. This process works to liquidate your non-exempt assets, distributing the sale value to your creditors. In return, your debts are discharged, lifting the stress of that burden.  In most cases, no assets are sold/liquidated and the only things “lost” through the procedure are one’s debts.

 

Even if your income is a little higher than the state median, you can still choose to file for Chapter 13 bankruptcy. This allows you to restructure your debts into a 3 to 5-year repayment plan that suits your current income. In this process your debts will also be discharged and you will only be required to pay back a portion.

 

Considering the severity of stress that financial difficulties can cause, using bankruptcy as a way out might save you from damaging health issues. With the help of Behm Law Group, Ltd., you can find out which type of bankruptcy is right for you and file a successful bankruptcy petition. For more information about filing for bankruptcy in Fairmont, MN, contact us at (507) 387-7200 today.

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

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

 

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

 

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

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

 

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

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

 

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

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Facing the Bankruptcy Appellate Panel With the Help of a Bankruptcy Attorney in Jackson, MN

For many people, the prospect of facing legal issues in any type of court is a daunting one. Because most legal actions can affect your life for the long-term, it’s natural to be apprehensive about going through any court proceeding. The process of bankruptcy is no exception, but with the help of a reliable legal professional, you can be protected and guided from start to finish. Behm Law Group, Ltd. provides support and assistance with the preparation of your petition, the accurate recording of your financial information, protection from creditors, case structuring, and help navigating the bankruptcy process every step of the way. Before you launch into this complicated process, take full advantage of the help of a Behm bankruptcy attorney in Jackson, MN.

When you file a bankruptcy case, it gets filed in the U.S. Bankruptcy Court in your location. In Minnesota, there is only one District for the bankruptcy court – the District of Minnesota.  However, there are several Minnesota bankruptcy court divisions, including St. Paul, Minneapolis, Duluth, and Fergus Falls.  Whether you choose to file for liquidation bankruptcy – chapter 7 – or debt reorganization bankruptcy – chapter 13 – and whether you’re filing on behalf of your business or as an individual consumer, your bankruptcy case will be processed through one of these divisions, depending on where you reside in the state.  The filing of a bankruptcy case is a federal legal proceeding, as opposed a legal proceeding brought under Minnesota state law.  The Bankruptcy Court is a specialized federal court that was specifically created by Congress to process bankruptcy cases.  It was the sense of Congress that bankruptcy matters were so specialized, detail oriented and nuanced that a highly specialized court system was needed to process them.

With the guidance of a Behm attorney, our clients are able to successfully file a bankruptcy petition that provides them a fresh financial start, freedom from creditor harassment, and relief from crushing debt.

Occasionally, however, a case must be appealed after the court makes a decision that doesn’t rest well with either the filer or the creditors involved. If this occurs, your bankruptcy case will be taken to the Bankruptcy Appellate Panel (BAP). This is a panel of three bankruptcy judges that reviews the initial decision of the bankruptcy court. Minnesota is located in the Eighth Circuit Court of Appeals, and bankruptcy appeals would be processed through the Thomas F. Eagleton Courthouse in St. Louis, MO.

The process of resolving bankruptcy appeals is an undertaking that’s complicated and nuanced to an exacting degree. How these cases are handled depends on the financial past of both filer and creditors, the arguments of the parties involved, and a wide variety of other current circumstances. For those who have little to no experience with bankruptcy law, self-representation is a dangerous choice especially if a case is put to the test of the BAP.

Don’t put yourself at risk if you’re considering filing for bankruptcy. Instead, schedule a consultation with Behm Law Group, Ltd. Even if your case isn’t sent to the BAP, the guidance of an experienced attorney is a critical benefit during this trying time. For more information about our work as bankruptcy attorneys in Jackson, MN, contact us at (507) 387-7200 today.

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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.

 

 

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Handling Debt Sale When Filing for Bankruptcy in Worthington, MN

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

 

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

 

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

 

How does this affect filing for bankruptcy?

 

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

 

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

 

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