Posted on

Debt Punishment of the Past Compared to Today’s Bankruptcy in St. Peter, MN

For as long as the concept of trade has been around, so has the concept of debt. Today, debtors have a wide range of options to recover from financial difficulties. Filing for bankruptcy is one of the most viable options for debt recovery we have as US citizens. Bankruptcy is designed to handle a filer’s debts in a process that provides fair treatment of creditors’ claims and results in a manageable situation for the filer. At Behm Law Group, Ltd., we have seen the system of bankruptcy in St. Peter, MN, prove its worth time and time again with each successful financial recovery our clients make.

We provide legal support with Chapter 7, 12, and 13 bankruptcies for community members and businesses in Mankato, MN, and the surrounding Southern Minnesota area, and we stand by the value of a successful bankruptcy case in helping our clients recover.

While the system of bankruptcy is a great option today, the debtors of the past didn’t have things so easy. In fact, there has been a wide range of harsh punishments for debtors throughout history.

A few of the most notorious punishments for debtors in history include:

  • Debt Slavery Laws: Up until 326 BCE, “debt slavery” in Rome and Greece was a common practice. Because there was no option for bankruptcy, debtors would instead pledge their labor as a security interest on loans. Creditors could take advantage of this security pledge and keep debtors in a slave-like internment until they could repay their debts. Slave bondage could even be passed from parent to child.
  • Death Penalty: Under the reign of Genghis Khan, debtors were given even fewer choices if they could not repay their loans. While they had the option to declare a form of relief akin to bankruptcy, after the third declaration, they were sentenced to death.
  • Medieval Penalties: Colloquially known as the Dark Ages, the medieval times have a reputation for hard conditions and harsh punishments. Debt punishments were no exception and included anything from flogging and branding to execution.
  • Imprisonment: Today, debts are not often associated with prison. Even fraudulent behavior in a bankruptcy case will most likely result in no harsher penalty than the dismissal of that case or the denial of debt relief. In Victorian England, however, failure to pay debts was punished with prison sentences or with exile to the British Empire’s “prison island” of Australia.

Debtors in today’s legal system can rest easy and know that they have many options to settle financial woes through the system of bankruptcy. Whether you qualify for Chapter 7 liquidation or Chapters 12 and 13 reorganization, the process of bankruptcy can turn the tides of unmanageable debt.

Contact Behm Law Group, Ltd. at (507) 387-7200 for expert support and legal counsel from beginning to end when you choose to file for bankruptcy in St. Peter, MN.

Posted on

Filing for Bankruptcy in Mankato, MN, with an Income of $100,000

Bankruptcy in the U.S. is designed to help those struggling to meet their financial obligations and debt payments each month. Because bankruptcy is generally linked with extreme financial circumstances, it’s a process that’s often associated with low incomes and financial destitution. There are many cases, however, when an individual has a high income yet still qualifies for bankruptcy. Even if you have a steady, high income, bankruptcy might still be the right option for you. Behm Law Group, Ltd. offers legal advice and counsel to those considering filing for bankruptcy in Mankato, MN.

Many reasons exist why an individual consumer in the American economy might have accumulated debts they are unable to handle. Credit cards, mortgages, car loans, and medical bills are the most common causes of debt that can lead to a bankrupt household, even with a high income supporting that household.

The median income in 2017 was approximately $60,000 a year, but with the financial pressure of debts, bills, and everyday expenses, many households that earn median or higher incomes struggle to make ends meet.

A recent NPR story interviewed several households across the country. Each household in this story had an income higher than the national median, yet each still faced financial difficulties. The balances of the household debts and incomes were close, and many had higher debt-to-income ratios than families who get by just fine on incomes lower than the national median.

Because of this debt-to-income ratio, each of these households could benefit from filing for bankruptcy and receiving debt relief in the form of liquidation (Chapter 7) or debt reorganization (Chapter 13).

Chapter 7 With a High Income

It’s possible for households with an income higher than the state median to qualify for Chapter 7 bankruptcy. Most households that qualify will often have incomes lower than the median, which allows them to automatically pass the Means Test. However, you can still sometimes pass this test if your total monthly household income is less than your total monthly household living expenses.

Chapter 13 With a High Income

If you don’t pass the Means Test, you may still file for Chapter 13 bankruptcy. If you file for Chapter 13 bankruptcy your debts will be restructured, and you’ll only be required to repay a fraction of your overall total debt.

Even if you have a high income, you may still benefit from filing for Chapter 7 or Chapter 13 bankruptcy. Contact Behm Law Group, Ltd. today at (507) 387-7200 for more information about filing for bankruptcy in Mankato, MN.

Posted on

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.

Posted on

Cross-Collateralization and Bankruptcy in Jackson, MN

If you are considering filing for bankruptcy, your debts will be categorized as those securing purchased properties (secured debts) and those that do not involve tangible property (unsecured debts). Your creditors will also be categorized similarly, depending on which type of debt you owe to each. In the case of debt owed to a bank or credit union, categorization varies based on “collateral.” Behm Law Group, Ltd. works to determine how collateral may affect you when you file for bankruptcy in Jackson, MN.

Collateral

When you take out a loan through your bank or credit union, you give a security interest to that creditor. In the case that you fail to make payments on your loan, your bank or credit union can seize the property in which it has a security interest and sell it to satisfy the debt owed. In such a situation, such property is called “collateral”.

Collateral and Credit Unions

Banks and credit unions have two marked differences. First, credit unions do not operate for profit as banks do, and second, credit unions offer borrowing services that may include cross-collateralization clauses. Essentially, a cross-collateralization clause states that the security interest and a particular item of collateral may be connected to all your debts through your credit union.

This means that you may be able to take out a loan on a car from your credit union and you may also have credit card debt through your credit union card provider. A cross-collateralization clause may be attached to one of those debts tying the two together. Even if you pay back the full debt on your car loan, that car may still be sold as collateral if you stop making payments on your credit union credit card.

Debt Categorization and Cross-Collateralization

Cross-collateralization through a credit union can change the way your debts are categorized, which will, in turn, change the way those debts are handled in a bankruptcy case. For example, if you take out a loan through your bank to purchase a car, that debt is a secured debt because it is tied to and secured by the car. If you have credit card debt through that same bank, it is considered an unsecured debt because it is not secured by or connected to the car. In a Chapter 7 case, unsecured debts like credit card debts are discharged completely, and in a Chapter 13 case, you will only have to repay portions of those debts. However, if your car loan and credit card debt are taken out through a credit union and the credit union has a cross-collateralization clause, they both are considered secured debts. This means you will be required to repay both debts if you want to keep your car in a Chapter 7 case and to repay both debts in a Chapter 13 case.

If you are considering filing for bankruptcy in Jackson, MN, and have multiple loans through a credit union, you may have a situation where a cross-collateralization clause is involved. Contact Behm Law Group, Ltd. at (507) 387-7200 today for expert advice and legal assistance in your bankruptcy case.

Posted on

Treatment of Your Annuity When You File for Bankruptcy in Mankato, MN

When you file for bankruptcy, every aspect of your financial situation and all of your income and all of your debts are subject to review. Behm Law Group, Ltd. offers legal assistance and counsel in navigating the bankruptcy code for our community’s individuals and small businesses filing for bankruptcy in Mankato, MN.

Changes to the bankruptcy law in 2005 with the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”) made a big difference in how a bankruptcy filer’s monthly income sources, monthly living expenses, debts and assets are analyzed in both Chapter 7 and Chapter 13 bankruptcy cases. If you are considering filing for bankruptcy, the current law requires that all of these aspects be accurately determined before a case is filed. When it comes to annuities, pensions, and retirement plans, the 2005 BAPCPA changes may help one determine one’s long-term options for one’s financial future after bankruptcy.

Understanding Annuities

Even if you own an annuity, it may not be fully clear how that account works or what type of annuity it is or what taxation rules apply to it. Annuities are investment accounts that regularly pay specified amounts to the owner from the total lump sum of money originally deposited in the account. The installments from an annuity are commonly scheduled to be paid out on a monthly basis, but they can also be paid out on a weekly or yearly basis.

Annuities are designed to help manage large amounts of money, safely containing the sum and providing a fixed income stream to the beneficiary of the annuity account. Common annuity accounts contain retirement funds, proceeds from insurance claims, proceeds from lawsuit settlements, and lottery winnings. The payments of an annuity can be made immediately upon the setup of the account or they can be deferred to start after a set period of time.

Annuity Exemptions in Bankruptcy

If you file for bankruptcy and you own an annuity, the annuity may or may not be protected by the bankruptcy exemptions.  Depending on the type of annuity involved and depending on the rules of taxation that apply to it, the following could apply:

  1. First, your annuity may qualify for exemption from the case. Because an annuity is a source of income, it becomes an asset in a Chapter 7 case. If your annuity is exempt, you may keep that account and protect the value from liquidation to repay creditors. If you file for Chapter 13 and can exempt your annuity, the value of that account may not factor in calculating the amount you will pay back to unsecured creditors in your repayment plan.
  2. Second, your annuity may not qualify for exemption from the case. This means the value of the account will be used to repay creditors in a Chapter 7 case, and in a Chapter 13 case, the account value will play a part in determining how much you will have to pay back to your unsecured creditors in your repayment plan.

Federal exemption laws allow the immediate exemption of tax qualified retirement plans and offer a Wildcard Exemption of potentially up to $13,200.

Whether your annuity qualifies for exemption when you file for bankruptcy in Mankato, MN, depends on a number of factors. To learn more about how your annuity will be handled in bankruptcy, contact Behm Law Group, Ltd. at (507) 387-7200 today.

Posted on

The Role of a “Bankruptcy Estate” When Filing for Bankruptcy in Worthington, MN

In every type of bankruptcy case, whether a Chapter 7 case or Chapter 13 case, a separate, distinct legal entity called the “bankruptcy estate” is created by operation of 11 U.S.C. §541 of the bankruptcy code.  This “bankruptcy estate” is in fact a separate, legal being from the person filing for bankruptcy relief.  When a bankruptcy case is filed, all a filer’s property is thrown into the bankruptcy estate.  In other words, when a person files for bankruptcy relief, all of that person’s property actually belongs to the bankruptcy estate.  However, the drafters of the bankruptcy code did not want a person to emerge out of the bankruptcy process completely destitute and without any property to reorganize. Therefore, the bankruptcy code provides for various value allotments or value limitations called bankruptcy exemptions that allow a filer to reclaim property back out of the bankruptcy estate and retain it.  In most cases, a person’s bankruptcy exemptions will be sufficient to allow one to retain all of one’s property.  If you are thinking about filing for bankruptcy in Worthington, MN, Behm Law Group, Ltd. provides legal advice and assistance throughout the process.

Chapter 7 Estate: If you qualify for Chapter 7, the bankruptcy trustee appointed by the bankruptcy court to administer your bankruptcy case will review all of your property in the bankruptcy estate and analyze whether some of the property will not be able to be protected with your bankruptcy exemptions.  To the extent that some of the property can’t be protected with your bankruptcy exemptions, that property will be labeled “nonexempt”, and the trustee will be able to sell it and distribute the value to your creditors.

Chapter 13 Estate: Chapter 13 bankruptcy is designed to restructure your debts into a manageable payment plan that lasts three to five years. The bankruptcy trustee, you, and your lawyer will work together to draft a repayment plan that the court will approve. A feasible plan is determined by your types of debts, your exemptions, and the value of the property in your bankruptcy estate.

What Makes Up the Bankruptcy Estate?

The property included in a bankruptcy estate is determined by Section 541 of the bankruptcy code. Although each bankruptcy case and each bankruptcy estate is different, the bankruptcy estate can be comprised of the following:

  • Real estate properties
  • Motor vehicles and vehicles of trade
  • Personal property items (clothing, jewelry, appliances, etc.)
  • Financial accounts
  • Security deposits
  • Properties loaned to another party
  • Wages, commissions, tax refunds, and other sources of income to which you are entitled
  • Income from rented properties
  • Asset value appreciation
  • Applicable community property
  • Applicable payments made to creditors before filing for bankruptcy
  • Property acquired within 180 days of filing for bankruptcy

Because these exact properties can vary from case to case, it may be difficult to determine which assets are exempt from your bankruptcy estate and which will not be exempt.

If you are considering filing for bankruptcy in Worthington, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today to learn more about the different chapters of bankruptcy and how your bankruptcy estate may be determined.

Posted on

Filing for Bankruptcy in Luverne, MN, Before or During the Holiday Season

The holiday season is a time spent with family and friends, giving gifts, and attending festive gatherings. It’s also a time when the entire country greatly increases its spending. The pressure of spending more money during this time can place undue stress on those struggling with debt or going through a bankruptcy proceeding. However, the holiday season is actually the best time to file for bankruptcy. Behm Law Group, Ltd.  offers legal advice and assistance if you’re considering filing for bankruptcy in Luverne, MN, this holiday season.

It may seem counterintuitive and in un-holiday-like spirits to file for bankruptcy during this time of cheer and abundance, but because of the timeline involved, filing before December 31st may be your best option.

There are several reasons why you may benefit from filing for bankruptcy before December 31st, and some are directly linked to what happens during the holidays. For example:

  1. Christmas or year-end bonuses give you an overall increase in your income. These bonuses are considered verified parts of your total income, and they are subject to scrutiny in your bankruptcy case.
  2. Gifts as cash or check are also added into your gross income, even though they are personal non-employment related transactions. These gifts from family and friends can be considered as income in your bankruptcy case.

This change in your income comes into play when you complete the Means Test. To qualify for Chapter 7 liquidation bankruptcy, you must satisfy the Means Test, meaning your income must be lower than the state median for a similar household size. The slight increase in your income during the holiday season might be the difference between filing for Chapter 7 and being forced into Chapter 13.

The timeline for the bankruptcy Means Test takes into account the last six months of your income. However, the six-month period prior does not end directly on the date you file for bankruptcy relief. Instead, if you file your petition on or before December 31st, the six-month period ends at the end of November. This means that the income as calculated for the preceding 6 months (June – November) would be less for purposes of completing the Means Test, giving you a better chance of qualifying for Chapter 7 bankruptcy.  If you were to file bankruptcy after December 31st, all of the income you would receive in December from bonuses, profit sharing, commissions or gifts would be included in the 6 month look-back period (July – December).  Your income could be artificially inflated by these sources such that you would not satisfy the Means Test and you would have to file a chapter 13 bankruptcy.

If you’re considering filing for bankruptcy in Luverne, MN, the date you file may affect your petition. For more information about bankruptcy and the Means Test, contact Behm Law Group, Ltd. at (507) 387-7200 today.

Posted on

Understanding Fraudulent Behavior When Filing for Bankruptcy in Windom, MN

Bankruptcy relief is a very powerful remedy.  Quite literally, with a few exceptions, all of your legal, contractual obligations to pay debts are discharged and nullified.  Creditors can never pursue you for collection on those debts.  If you do everything that is required by the bankruptcy code and the associated bankruptcy rules, the debt relief you receive is a certainty.  When you choose to file for bankruptcy relief, no one comes to your house to see what you have and take inventory of your assets.  However, the benefit of bankruptcy relief is only for the “honest but unfortunate debtor”.  In other words, you must be completely forthright and honest in disclosing and listing all of your assets and all of your creditors. You’ll be required to review your bankruptcy petition and related schedules with your bankruptcy attorney and you will be required to sign off on them under oath and subject to penalty of perjury.  One way a bankruptcy case can be rejected is if one intentionally fails to list all of one’s assets and creditors.  Another way a bankruptcy case can be rejected is if one is sloppy and negligent in preparing and reviewing one’s bankruptcy petition and schedules.  Mistakes and errors in one’s sworn bankruptcy petition as a result of sloppiness or inattentiveness to necessary details can be often construed as an intentional failure to list one’s assets and creditors.  If one intentionally fails to list one’s assets and creditors or if mistakes are made due to one’s sloppiness in preparing a bankruptcy petition, one could be accused of bankruptcy fraud and the bankruptcy court could completely deny one’s bankruptcy relief.  If the supposed fraud is serious enough, one could even be prosecuted, fined and incarcerated.  Behm Law Group, Ltd.  offers expert legal advice and assistance to help you avoid conduct or mistakes that could be construed as fraudulent behavior when you file for bankruptcy in Windom, MN.

With the help of an experienced bankruptcy attorney, it’s much less likely for someone filing for Chapter 7 or Chapter 13 bankruptcy to commit unintentional fraud. When you choose to complete your bankruptcy petition without professional assistance, your chances of making serious mistakes—an occurrence that can come in the form of providing inaccurate information on your bankruptcy forms and schedules, failing to attend required meetings/hearings, failing to undergo credit counseling prior to filing, or several other rare circumstances—are increased.

In addition to the several reasons you can accidentally commit fraudulent behavior on your bankruptcy petition, there are many ways one can commit willful bankruptcy fraud.

Willful Fraud

If you file a bankruptcy petition with clear fraudulent intentions, our attorneys will decline to work with you. For example, if your situation reveals that you’ve committed any of the following actions, we will not represent you:

  • Created false documents
  • Failed to list all assets
  • Withheld or destroyed documents relevant to your case
  • Hid a property transfer, including personal gifts of property that may be involved in your bankruptcy case
  • Bribed or paid-off a creditor, lender, or other party to hide information pertinent to your case

In more common circumstances, filers who willfully commit fraudulent behavior may have done the following:

  • Provided inaccurate income and expense information in a Chapter 7 or Chapter 13 case or prior to filing for bankruptcy relief or when submitting credit applications to creditors from whom one may have sought a loan
  • Purchased various items, such using credit cards to engage in gambling activities, not identified as “necessities” prior to filing for bankruptcy.
  • Writing personal or business checks while planning to file for bankruptcy in a short period (i.e. writing a bad check)

If you have engaged in any of these or like activities, you must fully disclose every detail to your bankruptcy attorney before you elect to file for bankruptcy relief.  Such conduct could be a basis for a finding of bankruptcy fraud.  Indeed, bankruptcy may not even be an appropriate remedy for you to pursue.  If you’d like to discuss filing for bankruptcy in Windom, MN, and take full advantage of the debt relief benefits provided by the bankruptcy code, contact Behm Law Group, Ltd. at (507) 387-7200 today.

Posted on

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.

Posted on

Bankruptcy in Owatonna, MN, Since 2005

As with all departments of US legislation, bankruptcy is an ever-changing legal process. Because the status of finances and the economy are rapidly transforming with the development of new technology, new energy, and new ways to spend, save, and make money, the laws that govern how debt is handled must change accordingly. Since 2005 the laws, standards, and procedures of bankruptcy have changed significantly. If you’re considering filing for bankruptcy in Owatonna, MN, it’s important to understand how bankruptcy law works today. Behm Law Group, Ltd. provides the legal advice and assistance necessary to successfully navigate bankruptcy.

The most recent changes made to bankruptcy law came in 2005 when Congress amended the bankruptcy code for purposes of determining how consumer households file for Chapter 7 bankruptcy and how Chapter 13 repayment plans are structured. These changes included the following.

Means Test and Income Measurement

 Before the 2005 overhaul, individual filers could choose the type of bankruptcy that worked best with their situation (in their or their lawyer’s opinion). This allowed filers with high incomes to benefit from Chapter 7 bankruptcy in a way that was perceived to be unfair to creditors.  Namely, Congress believed that people with higher incomes could enter into a Chapter 13 repayment plan and pay at least something to their unsecured creditors. Today, all filers are required to take the Means Test to analyze their income for the 6 month period prior to the month in which their bankruptcy petition is filed. The bankruptcy code requires an attorney to add up all of a filer’s gross income for the pre-bankruptcy filing 6 month period and then determine an average.  Then, the bankruptcy code requires an attorney to multiply the average by 12 to determine what a filer’s yearly projected income is and analyze it against the state average income for a household of the filer’s size.  If the filer’s income is in excess of the state average income for a household of the filer’s size, then the person would probably have to file a Chapter 13 instead of a Chapter 7.  For instance, presume a single person needs to file for bankruptcy relief and that he or she earned gross monthly income of $5,000.00.  Presume further that the state average income for a household of 1 in Minnesota is $52,785.00.  The bankruptcy code would require the attorney to add up the $5,000.00 for the preceding 6 months which would be $30,000.00.  Then, the bankruptcy code would require the attorney to determine the monthly average which would be $5,000.00 ($30,000.00 divided by 6).

Next, the bankruptcy code would require the attorney to multiply that average by 12 which would be $60,000.00 to determine the filer’s yearly projected income.  Since the $60,000.00 would exceed the state average income for a household of 1 in Minnesota of $52,785.00, the filer would probably be required to file a Chapter 13 bankruptcy because he or she would not have passed the Means Test.  The monthly income average is measured against some expenses and payments of some debts, so it’s still possible for filers with a high income to qualify for Chapter 7. If a filer doesn’t qualify for Chapter 7 and must instead file for Chapter 13, the expenses of a household are still subtracted in the total of disposable income that must be used to repay creditors through a Chapter 13 repayment plan.

Credit Counseling

Another notable change made with the 2005 bankruptcy overhaul was the requirement of all filers to undergo credit counseling before a petition is filed. The United States Trustee office must also approve the counselors who offer this service. This is necessary requirement irrespective of whether you file for Chapter 7 or Chapter 13 bankruptcy. A counselor may offer an advisable repayment plan in cases of Chapter 13 bankruptcy, but filers are not obligated to follow those plans.

These changes made in 2005 were also accompanied by several other minor details but overall, they were designed to create a situation of fairness for all parties involved in a bankruptcy case. For more information about the changes made or for help with filing for bankruptcy in Owatonna, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.