The Rise of Consumer Bankruptcy in Owatonna, MN, During the Summer

Bankruptcy in the U.S. has a number of seasonal patterns that have existed for years. These patterns show an increase or decrease in the rates of bankruptcy for consumer households and businesses depending on the status of the economy and certain other events—for example, tax season sees an annual increase in bankruptcy cases during April. For the times of year when bankruptcy becomes more likely an option for individuals and businesses, Behm Law group, Ltd. can help. Our experienced bankruptcy attorneys provide legal advice and assistance to those considering filing for bankruptcy in Owatonna, MN.

In comparison with the last few years, bankruptcy rates have shown an unusual increase in filings during June and July of 2017. The numbers in record showed around a 16% increase in bankruptcy cases from the same time the previous year. These additional cases include both consumer and business bankruptcies.

Though there is no exact pinpoint cause of this abnormal increase in bankruptcy rates, there are several economic conditions that have accumulated against individuals and businesses. These circumstances have pushed those considering bankruptcy into deeper and deeper financial struggle.

From dipping storefront stability due to an ever-growing online shopping market affecting businesses, to changing interest rates and debt treatment affecting most consumers, there is a wide range of aspects to take into account when understanding why bankruptcy is growing.

Although it seems dangerous for so many US businesses and households to rely on bankruptcy relief all at once, it remains a viable option for those struggling with debts and difficult financial obligations. With the help of Behm Law Group, Ltd. attorneys, small businesses and individuals can benefit from choosing to file for Chapter 7 liquidation or Chapter 13 reorganization bankruptcy.

Long-Term Benefits of Bankruptcy

  • Debt relief is the main benefit from filing for bankruptcy. If your debts are treated with Chapter 7, there are several debts you will not have to pay back, and if your debts are treated with Chapter 13, you’ll have a chance to restructure your repayments into a manageable plan in which you pay only small parts of your debts.
  • Credit relief is also a viable long-term option for those with completed bankruptcy cases. Although your credit will not reflect positive changes immediately, you can begin to rebuild your credit over time without the negative impact of accumulated debts.
  • An overall fresh start is possible with bankruptcy, and despite the disadvantages that bankruptcy may pose, the immediate and long-term advantages outweigh the economic damages that may affect you.

If you’re considering filing for bankruptcy in Owatonna, MN, this summer, or in the near future, our attorneys can be key in helping you put together a successful case. For more information, contact Behm Law Group, Ltd. at (507) 387-7200 today.

When Things Aren’t Straightforward During a Petition for Bankruptcy in Luverne, MN

Preparing for bankruptcy requires a significant amount of paperwork for the filer. The forms, schedules, and other paperwork involved in a bankruptcy petition are necessary to determine how your case will be handled. Filling out any of this information about your financial situation incorrectly can drastically impact how well a bankruptcy case can go. Behm Law Group, Ltd. provides important legal advice and assistance for those struggling financially. If you’re considering filing for bankruptcy in Luverne, MN, our bankruptcy lawyers might be your key to a successful case.

When you file for bankruptcy, you must list all of your debts in your bankruptcy paperwork. This includes mortgage debts, vehicle loans, tax debts, student loans, old utility bills, debts to friends and relatives, among others.  These claims of debt are often straightforward for individual consumer bankruptcy cases, but in some cases, claims can be more complicated. If your debts depend on several past actions or disagreements, they may fall into the categories of contingent, unliquidated, or disputed. 

Contingent Claims: When the amount of your claim depends on a pending event or decision, it is considered contingent. Cosigners on secured loans often face contingent claims when filing for bankruptcy because the principal signer is responsible for the debt until that signer defaults their claim.

Unliquidated Claims: In cases of unliquidated debts, a claim exists on paper, but its amount has yet to be determined. This often includes claims involved in pending legal cases such as lawsuits and insurance claims. Debts owed to your lawyer involved in pending cases are also considered unliquidated claims.

Disputed Claims: Whenever you and your creditor disagree on the amount or even the existence of a debt, it is a disputed claim. This can include personal debts, mortgages, and car loans, but it can also include tax debts in dispute with the IRS.

Finalized claims can be resolved during your bankruptcy case, but the end result depends on a number different aspects of your financial situation. For example, liens, creditor decisions, and the determination of pending events will all affect how your claims are decided.

For more information about how your claims will be handled during your case, contact Behm Law Group, Ltd. at (507) 387-7200 today. Our experienced lawyers can be the key to helping you prepare for bankruptcy in Luverne, MN.

Understanding Unsecured Debt and How It’s Treated During Bankruptcy in Windom, MN

In most cases of consumer bankruptcy, the debts accumulated will be partially made up of unsecured debts. Whether this means the filer has a large amount of credit card debt or simply a significant amount of personal loans, if you’re struggling with your debts, unsecured or otherwise, bankruptcy might be the right option for you. Behm Law Group, Ltd. can help you understand how your unsecured and secured debts are treated differently when you file for bankruptcy in Windom, MN.

Unsecured debts are treated differently in both Chapter 7 bankruptcy and Chapter 13 bankruptcy. The type of bankruptcy case you file under will decide the outcome of how unsecured debts change the way your bankruptcy case is handled.

What is Unsecured Debt?

There are many kinds of debt that fall into the category of unsecured debt. The most common of these is credit card debt, but several other types of debt many people encounter in life are also considered unsecured. The fundamental definition of unsecured debt is any debt that doesn’t use a tangible property as collateral. Any debt that involves a property, such as a home or a motor vehicle, is considered secured debt and is treated differently in both Chapter 7 and Chapter 13 cases.

Some other examples of unsecured debt include:

  • student loans
  • utility bill debts
  • income tax debts
  • personal loans not involving property
  • medical bills
  • pending court judgments
  • and, of course, credit debts in all forms

How are Unsecured Debts Treated?

In a Chapter 7 case, your unsecured debts will most likely be entirely discharged. There are, however, exceptions to this. For example, student loans are not subject to the general discharge granted in Chapter 7 or Chapter 13 cases.  In order to get student loans discharged, one must start an actual lawsuit against the student loan creditors and ask the bankruptcy court to specifically discharge the student loans. In a Chapter 13 case, the way your unsecured debts are paid in your chapter 13 repayment plan and how much of those debts are paid depends on the amount of disposable income you have.

If you’re considering bankruptcy because of your accumulated unsecured debts, contact Behm Law Group, Ltd. for legal advice and assistance. For more information about filing for bankruptcy in Windom, MN, contact us today at (507) 387-7200.

When and Why a Business Might Be Subject to Involuntary Bankruptcy in Pipestone, MN

In the majority of situations, a bankruptcy case is a voluntary legal process. However, Congress put provisions in the bankruptcy code so that it would be a fair process for both the filer and creditors involved in a case. While most cases of bankruptcy are set into motion by the choice of the filer because of accumulated debts and difficulty in meeting financial obligations, there are times when creditors can force a bankruptcy case upon the debtor. If you are facing involuntary bankruptcy in Pipestone, MN, Behm Law Group, Ltd. can help you through the process with legal advice and assistance.

Involuntary bankruptcy occurs very rarely, but it’s legal for creditors to file bankruptcy proceedings against their debtors. In most situations, involuntary bankruptcy is forced on businesses, but on some occasions, involuntary bankruptcy can be filed against an individual.

When Involuntary Bankruptcy Occurs

The bankruptcy code includes provisions that protect creditors against debtors who may refuse to pay their debts despite having viable assets which could be used to pay creditors. If a debtor isn’t paying debts to their creditors but has assets that could be used to repay creditors, it’s possible for creditors to file an involuntary bankruptcy against that debtor. Small businesses find themselves forced into involuntary bankruptcy more often because businesses typically have more assets than individuals.

If you own a small business and aren’t paying your debts but own a large amount of assets, your creditors can, sometimes, legally force you into bankruptcy. Because most individuals have significantly fewer assets compared to businesses, filing an involuntary bankruptcy is often unhelpful for creditors because the possible return to the creditors would be far less than the cost of forcing an individual into bankruptcy.

How It Works

If your creditors know you have assets but are refusing to pay your debts, they can file a petition to the bankruptcy court against you, requesting forced bankruptcy action.  Usually, three creditors must be required to do this.  If an involuntary bankruptcy is filed against you and if you don’t respond within 20 days, the bankruptcy court will allow creditors to go forward with the involuntary bankruptcy action. If you do respond, you’ll have a hearing and a chance to defend your situation. If you’re forced into involuntary bankruptcy, the process after that will be similar to a voluntary bankruptcy case.

If your creditors have threatened or have begun the process of petitioning your involuntary bankruptcy in Pipestone, MN, Behm Law Group, Ltd. can help. For more information about our bankruptcy lawyers and your case, contact us at (507) 387-7200 today.

The Good and Bad of Taxes After Debt Forgiveness in Mankato, MN

Whether you’re on your first, second, or third mortgage, debt gathered on your home over time is often a large factor in your bankruptcy case and how you are affected after your case is finished. If you’re considering filing for Chapter 7 or Chapter 13 bankruptcy, or you’re in the process of filing, it’s important to also think about what happens to your financial situation after your case is complete. Behm Law Group, Ltd. can help you prepare for what comes ahead when you experience debt forgiveness in Mankato, MN.

When your bankruptcy case is finished and you’ve had a mortgage debt cancelled, forgiven, or reduced, there are a number of ways it can affect you when tax season comes around.

The Bad Stuff

Your mortgage debt can be forgiven in a few ways. For example, you may have restructured your mortgage or modified the payments with your mortgage lender. Unfortunately, if your mortgage debt is forgiven before you file for bankruptcy relief, you still may have to pay taxes on such forgiven mortgage debt because mortgage debt that has been cancelled or forgiven may be considered income. That means you may be paying income tax on the amount you “gained” from debt forgiveness.

The Good Stuff

 Though the default for forgiven debts in your taxes is to treat them as income, there are some ways you can get out of paying that income tax. In 2007, Congress established an act that allows those with forgiven debts to avoid paying high income taxes. The two catches, however, with The Mortgage Forgiveness Debt Relief Act of 2007 are that it only covers debts gained in 2014 or earlier, and it only covers up to $2 million of a forgiven debt.

 The Mortgage Forgiveness Debt Relief Act of 2007

To qualify for getting out of paying income tax on some or all of your forgiven mortgage debt under the 2007 debt relief act, your situation must meet the following stipulations:

  1. Your mortgage debt was forgiven within 2007 to 2014 (calendar years).
  2. Your forgiven debt was principally used to buy or modify your home (not a home you rent to others nor a vacation home).
  3. Your debt was cancelled, forgiven, or reduced because of a change with your lender, or it was cancelled through foreclosure.
  4. None of the money gained in a refinanced mortgage was used outside of home improvement (no outside purchases or bills).

Mortgage debts that qualify for the debt relief act of 2007 can have up to $2 million taken out of the income tax bracket. For many, this means their entire forgiven mortgage will be excluded from their taxes, making the Mortgage Forgiveness Debt Relief Act of 2007 one of the saving graces for those who have filed for bankruptcy.

For more information about debt forgiveness in Mankato, MN, and how it affects your bankruptcy and taxes, contact Behm Law Group, Ltd. at (507) 387-7200.

Doubling Exemptions With Chapter 7 and Chapter 13 Bankruptcy In Windom, MN

Many of the Chapter 13 and Chapter 7 cases we work with are either individuals or households filing for bankruptcy. For those struggling financially with debts accumulated over the years, bankruptcy is often a beneficial option. When it comes to a family in need of bankruptcy help, it can actually be a good thing for married couples to own joint property. Owning property with your spouse plays a big role in a household’s ability to double exemptions. Behm Law Group, Ltd. provides expert legal advice and assistance to help a household work with exemptions and petitioning for bankruptcy in Windom, MN.

Exemptions

Exemptions are allotted amounts that depend on variables like federal or state regulations and the total of a debt. You may apply exemptions to certain properties during the bankruptcy process to prevent some or all of the value of those properties to be used for debt repayment.

Using your exemptions during a Chapter 7 case can significantly increase the amount of your property you may keep. In Chapter 13, more exemptions equal less paid back to unsecured creditors during your repayment plan.

 Doubling

If you’re married, you might have the option of filing for joint bankruptcy with your spouse. A joint case, however, is only applicable if you have debts that are in both of your names, meaning you jointly owe a debt such as jointly obligated on a house mortgage. If you and your spouse both have your names on the assets that would be subject to the bankruptcy process, you can then double your exemptions on those joint assets.

Doubling your exemptions in a joint case means you and your spouse are each able to claim the amount you would claim as an individual filer. In Minnesota, filers are able to choose between federal exemptions and state exemptions, depending on their debt amounts and abilities to double an exemption.

For example: The Minnesota Motor Vehicle Exemption allows up to $4,600 of an for people who own motor vehicles. If you and your spouse are both listed on the title of a vehicle worth $9,200, you both have an ownership interest in and to that vehicle.  In order to protect and keep it in a bankruptcy proceeding each of you could assert your independent $4,600 exemptions and stack them together ($4,600 x 2 = $9,200) and protect the entire $9,200 value of the vehicle.

If you and your spouse are considering filing for bankruptcy in Windom, MN, keep in mind that you can jointly file and, if you both own the subject property/assets, double or stack your bankruptcy exemptions. For more information about your options with joint bankruptcy, contact Behm Law Group, Ltd. at (507) 387-7200.

Cramming Down Secured Debt With Chapter 12 Bankruptcy in Mankato, MN

Today, the food industry is largely industrialized across the country, but there are some farming and fishing families still thriving today. However, because farming and fishing are some of the most difficult trades with which to support a household and maintain a healthy business, there are also a large number of financially struggling family farmers and family fishermen. For these family businesses, bankruptcy might be the best path to take. While our attorneys often handle cases for individuals working through Chapter 7 or Chapter 13 bankruptcy, Behm Law Group, Ltd. also offers legal advice and assistance to family farmers and family fishermen filing for Chapter 12 bankruptcy in Mankato, MN.

Chapter 12 works in many similar ways to Chapter 13, but is specifically designed to serve family farmers and family fishermen rather than a household or individual. Chapter 12 filers will work with their bankruptcy trustee to establish a 3 to 5-year repayment plan for their debts, where they must pay back 100% of their priority debts and to be determined portion of their other debts. The amount a family farmer or family fisherman must repay of non-priority debts is determined by their average income received within the 6 months prior to filing for bankruptcy.

There are ways, however, to reduce the amount of your secured debts as a family farmer or family fisherman filing for Chapter 12 bankruptcy. By effectively “cramming down” secured debts, you can lower your owed debt and pay less in the long run.

Cram Down: The cram down method is a way of bringing your debts back in time. This means you can reduce certain debts (for example boat loans, business mortgages, and farm equipment debts) to the present market value of the property. This method is effective on “upside down” loans where you owe more debt than the base value of the property. If you owe $4,000 on a loan after the accumulation of missed payments and interest and the collateral for the loan is worth $2,000.00, you can reduce that debt down to the base value, and you would not have to pay more than $2,000. In Chapter 13, cram downs are limited in many ways, but in a Chapter 12 case, the court can authorize the cram reduction of almost all secured debts, including your home mortgage and car loans.

Cramming down secured debts can often give a family farmer or family fisherman the ability to meet Chapter 12repayment plan requirements. For more information about cram downs and the process of filing for Chapter 12 bankruptcy in Mankato, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.

Claiming Excessive Exemptions and What You Can Buy Before Filing for Bankruptcy in New Ulm, MN

Making prudent use of the financial help that filing for Chapter 7 bankruptcy can provide is one of the smartest things you can do if you’re overwhelmed by accumulated debts and financial obligations. Chapter 7 was designed to help people recover from crippling debt and get back on their feet financially. The U.S. Bankruptcy Courts have to treat each case with fairness to debtors and creditors alike, so Chapter 7 works as a balanced process. Behm Law Group, Ltd. helps filers with legal advice and assistance throughout the process of filing for Chapter 7 bankruptcy in New Ulm, MN.

To keep things balanced between creditors and debtors, Chapter 7 bankruptcy works to discharge your debts while simultaneously liquidating your nonexempt assets, if any, to repay your creditors.  Most cases, however, are “no asset” cases which means that all of one’s assets are exempt and creditors don’t get paid anything.  It’s your job as a debtor to claim your own exemptions to prevent assets from being unnecessarily liquidated. The flipside to claiming exemptions, however, is that it’s possible to claim too many for your case.

Excessive Exemption Planning

Generally speaking, exemption planning—taking assets you may not be able to keep in bankruptcy and liquidating them and using the money to pay down your mortgage or purchase assets that you would be able to keep so you can maximize your exemptions—can be a tricky process. In fact, it can be considered fraudulent behavior and can be a basis for the dismissal of a bankruptcy case or a denial of all and any debt relief. That being said, there are times when exemption planning is possible when it comes to making purchases before filing for bankruptcy.

Purchasing Before Bankruptcy

Many purchases you make on credit before filing for bankruptcy can be construed as fraudulent use of credit and can render the subject credit debt non-dischargeable. For example, any debts you gather within 90 days before filing for bankruptcy that exceed $675 in total can be considered non-dischargeable. This applies to “luxury goods,” a term that covers most purchases that are not necessary to your household like televisions, furniture, trips to Hawaii or Europe. Purchases that you are allowed to acquire credit debt for within the 90-day period before filing for bankruptcy includes necessities like food, gas, rent, and auto care. These debts may still be petitioned for discharge.

Your spending during the 90-day period prior to filing for bankruptcy is flexible. If you make some bad choices, however, by “maxing out” your credit before filing for bankruptcy, many of your debts may not be discharged, and your case may even be dismissed. Behm Law Group, Ltd. can help you navigate exemption planning and purchasing before you file for bankruptcy in New Ulm, MN. For more information, contact us today at (507) 387-7200.

Converting Assets and Exemption Planning When Filing for Bankruptcy in Jackson, MN

If you plan to file for Chapter 7 bankruptcy, having a bankruptcy lawyer is essential. In some cases, a person may have assets that he or she would not be able to retain either because the value of the assets are too high or there are no applicable bankruptcy exemptions to protect the assets.  Before filing for bankruptcy relief, you generally are allowed to rearrange your finances and property in a way that’s legal and allows you to maximize your bankruptcy exemptions to benefit you as much as possible. The more exemptions you can claim, the more of your assets you can protect from the liquidation process involved in a Chapter 7 case. The bankruptcy attorneys at Behm Law Group, Ltd. can assist you during this time and throughout the process of filing for Chapter 7 bankruptcy in Jackson, MN.

It’s possible for you to work with your attorney and convert many properties or cash itself into exempt assets without crossing the line into excessive exemption planning or fraud. The help of a bankruptcy attorney is crucial.  You first must determine the values of your assets and whether there are exemptions available that will protect them.  Also, you must determine if the value of a particular asset exceeds the allowance of the particular exemption with which you intend to protect it.

Nonexempt vs. Exempt

Generally speaking, if an asset is determined to be a basic need to the filer, it’s considered an exempt asset. U.S. Bankruptcy Courts do not want to strip filers of all their property, even if the value of those assets could be used to repay creditors for debts that are dischargeable. Homes, means of transportation, wages, and other important properties are categorized as exempt in the majority of Chapter 7 cases.

Nonexempt properties, however, are often involved in a Chapter 7 case. Many assets are considered nonexempt from the liquidation process because their value is needed for repayment in order to keep the process balanced between debtors and creditors.

Converting Assets

Spending your nonexempt assets (i.e., the money in your bank accounts) is one lawful way to make use of them for your benefit, but keep in mind you should only spend them on necessary items like food, gas, repairs to your vehicle.  You must not pay debts to friends or relatives or make gifts to friends or relatives or put assets into someone else’s name.  Also, you must remember that you will be asked by your lawyer and by the bankruptcy trustee administering your case for a thorough accounting concerning how you spent any non-exempt money and how you disposed of any non-exempt assets.  The Bankruptcy Code requires you to do this and you could be denied bankruptcy relief if you don’t do it.   Spending that money on luxury items such as expensive trips or fancy furniture or big screen televisions could also be considered excessive and could be scrutinized. Chapter 7 code also allows you to sell nonexempt properties and use the money gained to buy exempt assets (for example, selling a yacht and using that money to buy a household vehicle).

Unfortunately, it can be easy to cross the line from legitimate exemption planning and engage in conduct can be viewed as fraudulent or inappropriate. The help of our bankruptcy attorneys prior to filing for Chapter 7 bankruptcy in Jackson, MN, is the key to doing exemption planning right. For more information, contact Behm Law Group, Ltd. today at (507) 387-7200.

Understanding Priority Debts When Filing for Chapter 7 Bankruptcy in Marshall, MN

Those who are considering filing for bankruptcy most likely have more than one debt to tackle among their financial obligations. In fact, virtually every bankruptcy filer faces several debts accumulated over years. From mortgages to credit card debt, filers often have a wide range of debts to repay. If these filers pass the Minnesota Means Test, they qualify for Chapter 7 bankruptcy, which allows the majority of their debts to be discharged. If you qualify for Chapter 7 bankruptcy in Marshall, MN, Behm Law Group, Ltd. can help you throughout the process of petitioning and filing with professional legal advice and assistance.

When it comes to discharging your debts in Chapter 7 bankruptcy, the process is determined by your exemptions, your qualifying debts, and a number of other factors regarding your household status. In a case where the bankruptcy trustee is able to collect money to pay some dividend to your creditors, the question remains of how the money will be allocated. First and foremost, any financial obligations falling into the category of “priority debt” will be paid something before any other debts such as credit card debts, medical debts, etc. receive anything.   11 U.S.C. §507 sets for the priority of how debts are to be paid in bankruptcy cases.

Priority debts will be paid first.  If there is any money left after those debts are paid, then other creditors with lower priority, such as credit card debts or medical debts, will receive a dividend from the trustee. Unfortunately for the filer, most priority debts are not subject to discharge and must be fully repaid.

Priority Debts: Debts involved in individual consumer bankruptcy cases are considered priority if they are categorized as the following:

  1. Deposits up to $2,850 for property purchases, leases, or rentals
  2. Deposits up to $2,850 for services pertaining to household, family, or personal use that were not provided
  3. Alimony, child support, or other familial maintenance and obligations
  4. Wages, salaries, commissions, or other compensations owed to employees up to $12,850 per person within 180 days of filing for Chapter 7 bankruptcy
  5. Debts owed to farmers and fishermen up to $6,325 each
  6. Income taxes owed within three years before filing for bankruptcy
  7. Taxes withheld from employees but not paid to the taxing authorities by employers
  8. Any customs, duties, and penalties due to the federal, state, and local governments
  9. Personal injury or death claims against you from driving under the influence

With the help of our experienced bankruptcy attorneys, you can navigate your own case when it comes to priority debt, asset liquidation, and debt discharge. For more information about filing for Chapter 7 bankruptcy in Marshall, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.