Understanding the Role of the Bankruptcy Trustee in Your Petition for Bankruptcy in Owatonna, MN

When you enter the process of filing for bankruptcy, you agree to follow the many stipulations of U.S. Bankruptcy Courts and U.S. Bankruptcy Code. These regulations play important roles in protecting you as a filer, protecting your creditors, and protecting others involved in your bankruptcy case. One such requirement involved in Chapter 13 and Chapter 7 bankruptcy cases is the appointment of a trustee to oversee the administration of the petition. Behm Law Group, Ltd. offers guidance throughout your own process of filing for bankruptcy in Owatonna, MN, and will work with your trustee to ensure optimal results.

Entering into a bankruptcy case means that you are automatically given a trustee to handle your petition. What a bankruptcy trustee actually does and who they actually are, however, may not be clear to filers.

Who are they?

In a nutshell, your bankruptcy trustee is a qualified individual the court will appoint to your bankruptcy case. Essentially, the trustee is a chaperone for your case. Your trustee is there to work through your case as a liaison between you and your attorney, your creditors, and the bankruptcy court. Bankruptcy trustees handle forms involved in virtually all kinds of cases, so they are well equipped to oversee your petition to the end.

What do they do?

The responsibility of a bankruptcy trustee is to administer your case. This includes the following:

  1. Examining your paperwork and all other information involved in your case
  2. Overseeing your confirmation hearing in a Chapter 13 case
  3. Overseeing your reaffirmation hearing in a Chapter 7 case
  4. Overseeing the meeting of the creditors
  5. Overseeing any other hearing involved (e.g. a hearing for a creditor’s motion for relief on an automatic stay)
  6. Identifying and selling all your nonexempt assets involved in a Chapter 7 case
  7. Evaluating your repayment plan in a Chapter 13 case to verify its fair treatment of you and your creditors
  8. Overseeing adversary proceedings if a lawsuit occurs during your bankruptcy process
  9. Overseeing the motion to dismiss your Chapter 13 case if you do not make repayment plan payments
  10. Ensuring legal accuracy throughout the process

Without bankruptcy trustees, the process of filing a petition and completing a case would be filled with confusion, unfair treatment of players involved, and probably a bit of foul play.

Our attorneys can also help you throughout the process of filing for bankruptcy in Owatonna, MN, with legal advice and assistance. For more information, contact us at (507) 387-7200.

How Lawsuit Money is Handled When You File for Bankruptcy in Marshall, MN

When you file for bankruptcy, your finances are very closely scrutinized. No matter what type of bankruptcy you file for, all your sources of income and debts must be considered in the process. When it comes to your income, this can mean anything from your normal job to money from a garage sale. Income you’ve gained from a lawsuit is no exception to this requirement, and in some cases, you may have to forfeit your lawsuit money. Behm Law Group, Ltd. can help you navigate through the process of determining how your lawsuit money is handled during a bankruptcy filing in Marshall, MN.

The two main types of bankruptcy—Chapter 7 and Chapter 13—treat your income differently. When you file for Chapter 13 bankruptcy, your income is considered in balance with your debts in order to determine a suitable repayment plan. This means that your lawsuit money is taken into account for your debt repayment, but it remains generally untouched. The process of Chapter 7 bankruptcy is when your lawsuit money really comes into question.

Lawsuit Money With Chapter 7

In Chapter 7 bankruptcy, your assets will be liquidated in order to repay your creditors and discharge your debts. While it’s almost always beneficial to Chapter 7 filers to have these debts discharged, they still have to sacrifice many of their property assets in the process.

Lawsuit money falls into the category of assets in a bankruptcy estate. This includes any money you have received/expect to receive/are entitled to receive from a lawsuit case. In some situations—for example, if you did not have many assets and were in a position to potentially file a lawsuit against a person or entity—your bankruptcy trustee has the right to pursue that claim on your behalf. However, the money from any lawsuit will be used to pay your creditors and discharge your debts unless you can use an exemption.

Exemptions can work to protect the income you’ve earned from a lawsuit. In Minnesota, you can exempt lawsuit money from liquidation if it’s protected under certain exemption laws. For example, Minnesota exemption laws protect lawsuit money from cases involving personal injury, wrongful death, and damaged exempt property (e.g. if your home is wrongfully damaged after it was protected with a Homestead Exemption.)

Federal exemption laws also protect lawsuit settlements involving wrongful death, personal injury, and future incomes lost. Depending on your financial situation, you may choose federal or Minnesota exemption laws to protect your lawsuit money.

Behm Law Group, Ltd. works with you through the process of filing for bankruptcy in Marshall, MN, to help you choose exemptions and protect your assets during Chapter 7 bankruptcy filings. For more information, contact us at (507) 387-7200 today.

Getting Automatic Stays Fast and Filing for Emergency Bankruptcy in Luverne, MN

There are times in many people’s lives when financial emergencies come suddenly. Whether it happens because of a failed investment, a major business loss, stock market crashes, or other unexpected life events, financial difficulties can arise in a matter of minutes. When issues like this loom over your income and assets, filing for bankruptcy may be your best option. When you file for bankruptcy, however, the process can take up to several months to reach the point where you have submitted all of the necessary documentation to your attorney. In cases where you need the protection of the bankruptcy code sooner rather than later, Behm Law Group, Ltd. can help you file for bankruptcy on an emergency basis in Luverne, MN.

The most important immediate result of filing for such a bankruptcy filing is getting the automatic stay fast.  The automatic stay of 11 U.S.C. Sec. 362 is actually a court-mandated injunction that blocks the collection activities of most of one’s creditors. If you have filed for bankruptcy relief, it’s almost certain that the automatic stay was in effect and prevented your creditors from collecting or contacting you during your bankruptcy proceeding.

Steps in Filing for Emergency Bankruptcy:

  1. Collect the required documents needed to file for emergency bankruptcy. The attorneys at Behm Law Group, Ltd. will help you throughout this process
  2. To get the automatic stay as quickly as possible, you must file a Voluntary Petition (Form 1), a statement of your SSN (Form 21), and Mailing Matrix information denoting the addresses of your creditors
  3. Once your initial forms have been processed and the automatic stay is in effect, you must complete the filing of the remaining required bankruptcy forms within 14 days of the filing date. This period can be extended upon request by your attorney.

Filing an emergency bankruptcy petition is a way for individuals and businesses to access the bankruptcy system immediately and get some “breathing space” and time to gather all other necessary paperwork without ongoing creditor harassment.  The process of emergency bankruptcy does not eliminate any of the other necessary standard forms needed to complete your petition, but instead rearranges the order in which you complete the majority of those forms. By completing Forms 1 and 21 along with a mailing matrix listing your creditors, attorneys, debt collectors, or any other agencies seeking payment, the automatic stay will be immediately in place.

Getting an automatic stay quickly when you’re in serious financial trouble is the best benefit of an emergency bankruptcy filing. This rearrangement for the process of filing for bankruptcy in Luverne, MN, allows a quick automatic stay to prevent continued financial struggles throughout your bankruptcy process. For more information about how an emergency bankruptcy can benefit you, contact Behm Law Group, Ltd. at (507) 387-7200.

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

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

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

Non-Exempt Pensions

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

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

Automatically-Excluded Pensions

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

Automatically-excluded pensions include the following:

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

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

What, When, and Why With the Wildcard Exemption When Filing for Chapter 7 Bankruptcy in Fairmont, MN

When it comes to Chapter 7 bankruptcy, the idea established with the bankruptcy code was to find a balance between the discharging or getting rid of one’s debts and allowing one to retain enough assets to reorganize and not endure further financial hardship.  Indeed, it would not make much sense and it would not be of any public benefit to take all of a one’s assets.  In such a case, the person would only continue to struggle and could not get back one’s feet.  Certain precautions and allowances have been set in place to protect a person against complete destitution after Chapter 7 bankruptcy. Exemptions for qualifying properties are the saving grace for someone who files for bankruptcy relief. At Behm Law Group, Ltd., we can work with you to determine which exemptions would apply to your particular circumstances when filing for bankruptcy in Fairmont, MN.

There are several kinds of exemptions that you can use when filing for bankruptcy relief.  There are exemptions provided by the laws of the State of Minnesota and there are exemptions provided by the bankruptcy code. One exemption that allows you to protect certain assets from liquidation is the wildcard exemption.

What is the wildcard exemption?

When you file for bankruptcy relief, there are several exemptions that apply to specific types of property to prevent liquidation of those assets (e.g. homestead exemption or motor vehicle exemption). The wildcard exemption is a non-specific exemption that you can use to protect one or more assets from among several types of properties.  It is a spill-over or catch-all exemption that allows you to retain miscellaneous property for which there may not be a specific exemption.  In addition, it can allow you to double up on property. For instance if you own 2 vehicles, you could use the motor vehicle exemption to protect the first vehicle and the wildcard exemption to protect the second vehicle.  Alternatively, you could use the wildcard exemption to protect an asset, such as a snowmobile or a boat or a weapon, where there is no specific exemption that can be used to protect it.

When can you use the wildcard exemption?

Because the Minnesota exemption laws do not have a wildcard exemption, a bankruptcy filer can only use the wildcard exemption if one chooses the bankruptcy exemptions provided under the bankruptcy code. The current federal wildcard exemption amount is set at $1,250, but can change based on application. For example, when used in combination with one’s homestead exemption, one may use the federal wildcard exemption amount plus up to $11,850 of one’s unused homestead exemption amount for a total of $13,100.  One can use the wildcard exemption on any one item of property or one can split the amount between multiple items of property.

For example: If one owns a car worth $4,000, and one does not owe anything on the car, one’s equity is $4,000.  In this case, one could use the motor vehicle exemption of 11 U.S.C. §522(d)(2) to protect $3,775 of this amount and then use part of the wildcard exemption of 11 U.S.C. §522(d)(5) to protect the other $225.  Also, if one has a second car worth $5,000, one can use an additional amount of the wildcard exemption of 11 U.S.C. §522(d)(5) to protect it, too.

Why does the wildcard exemption exist?

The bankruptcy exemptions, including the wildcard exemption, were put in place to protect US citizens from irreparable loss and destitution. In the long run, allowing bankrupt individuals to keep assets with which to reorganize will in turn prevent unemployment from growing and keep the economy from falling.

For more information about filing for Chapter 7 bankruptcy in Fairmont, MN, and how exemptions can help you keep your property, contact Behm Law Group, Ltd. at (507) 387-7200.

Motor Vehicle Exemptions and Keeping Your Vehicle When Filing for Chapter 7 Bankruptcy Relief in Redwood Falls, MN

At Behm Law Group, Ltd., we have often found that our clients considering bankruptcy know they could benefit from filing for Chapter 7 but balk at the idea of possibly losing some of their assets.  However, the concern about losing assets is often exaggerated.  The drafters of the bankruptcy code understood the need for households to hold on to some of their assets to prevent the bankruptcy process from doing more harm than good and to allow people to retain assets with which to reorganize their lives and maintain their financial security.  Thus, the drafters of the bankruptcy code included various exemption laws, which are very generous, that allow people to retain assets in bankruptcy. Behm Law Group, Ltd. can help you work through the process of filing for bankruptcy in Redwood Falls, MN, including identifying which exemptions can be applied to your case.

One major concern of those entering into the process of Chapter 7 bankruptcy is the potential loss of their motor vehicle.  For many families and individuals, the loss of a vehicle means the loss of any means of transportation.  However, 11 U.S.C. § 522(d)(2) of the bankruptcy code allows for the exemption or retention of a motor vehicle. It is more accurate to state that the exemption allows the retention of an equitable interest in a motor vehicle rather than the retention of the vehicle itself.

The exemptible equity in your car is determined by its current market value balanced with the amount of your car loan. For example, if you own a car worth $5,000 and have a loan balance of $2,000, your motor vehicle equity is $3,000.  This $3,000.00 would constitute equitable interest that would be protected by or exempted with the applicable bankruptcy exemption.   It is possible to have $0 in equity if your loan is equal to the value of your car and it is possible to have a negative equity if your loan is greater than the value of your car. For instance, if your car is worth $5,000.00 and there is a $5,000.00 or $6,000.00 loan against it there would be no equity to protect or exempt with the applicable bankruptcy exemption.

Federal Exemption

The Federal motor vehicle exemption of 11 U.S.C. § 522(d)(2), among other federal exemptions, changes every three years according to economic conditions and other factors. The current motor vehicle exemption amount is $3,775.  This means that if you have equity in your car less than the exemption amount, the bankruptcy trustee administering your bankruptcy case would not be able to take your motor vehicle, sell it and use the sale proceeds to pay a dividend your creditors.

Minnesota Exemption

In Minnesota, those filing for Chapter 7 bankruptcy have the option of choosing either the federal exemptions or the Minnesota exemptions. The Minnesota motor vehicle exemption clocks in at a maximum of $4,600 in equity. The amount increases up to $46,000 for vehicles that accommodate physical disabilities and are eligible for handicapped parking spaces (but only if changes made to the vehicle are more than $3,450).

The bankruptcy exemption laws are designed to help you find ways to keep your motor vehicle and other assets, even if you file for Chapter 7 bankruptcy relief. For more information about exemptions you may qualify for and for help with filing for bankruptcy relief in Redwood Falls, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.

How Divorce and Filing for Bankruptcy in Mankato, MN, Affect Each Other

Bankruptcy affects individuals of all economic statuses, and the people involved in a bankruptcy case or struggling financially are also often facing many other challenges in their lives. Unfortunately, low income and high debt—according to  statistics—are a leading cause of weakened relationships. At Behm Law Group, Ltd., we’ve found that some of our clients are facing the struggle of divorce alongside the imminent difficulty of filing for bankruptcy in Mankato, MN.

The problem with divorce law, when it comes to bankruptcy proceedings, is that both deal with finances between spouses. It’s virtually impossible to handle the process of divorce at the same time as the process of filing for bankruptcy. The real question isn’t how to combine the two together, rather, which legal process to tackle first.

Bankruptcy before Divorce

Most divorces are not the dramatic affairs portrayed on television. In the real world, spouses are often on good terms. If on good terms, we recommend that bankruptcy proceedings take precedence over divorce. Filing a joint petition as spouses means your debts are consolidated into one bankruptcy case. Combining your debts means you and your spouse could increase your chances of qualifying for Chapter 7 along with your exemptions. It also means you and your spouse can get rid of joint contracts you don’t want and eliminate your unsecured debts before divorce.   Most couples file for chapter 7 bankruptcy relief prior to starting a divorce because a bankruptcy can simplify the divorce process as there is no need for provisions for the assignment of debts in a divorce decree.

Divorce Before Bankruptcy

If your joint income is high enough to prevent you and your spouse from qualifying for Chapter 7 bankruptcy relief and you’re on poor terms and don’t want to be forced into a chapter 13 bankruptcy and handle chapter 13 repayment plan after your divorce, you should consider completing divorce proceedings before filing for bankruptcy. Spouses can separately qualify for Chapter 7 bankruptcy relief after divorce because there are increased living expenses.  After a divorce, each spouse must support his or her own household on his or her own income instead of combining two incomes to support one household while married.  In addition, sometimes it is better to have marital assets divided as between spouses in a divorce proceeding prior to filing a bankruptcy proceeding.  Also, if one spouse winds up owing child support to the other spouse after a divorce the child support obligation can help the spouse who has to pay it qualify for chapter 7 bankruptcy relief when, otherwise, he or she would not be able to qualify.

For more information about how divorce can affect bankruptcy in Mankato, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.

Why the Small British Car Company Zenos Went Bankrupt and Why It Matters for Small Business Bankruptcy in St. Peter, MN

In today’s technology-rich digital age, small businesses have more expenses than ever before. While these expenses all open up incredible marketing and product design outlets for small businesses, the increase in number and variety of expenses also leads to an increase in the potential for going into debt. If you own a small business that’s deep in debt, Behm Law Group, Ltd. can help you file for bankruptcy in St. Peter, MN.

Because the commercial system of today’s world has grown so complex, it’s inevitable that many businesses struggle and fall into debt. For example, the sports car company Zenos—a tiny enterprise by the standards of the auto industry—recently declared bankruptcy. After losing a major investor and having several orders for their new model of the E10 cancelled in the US, Zenos was left with debts racked up from product building and marketing expenses.

Quality Product: Despite the technologically-sound craftsmanship of the Zenos E10 models, cars widely considered to be potential rivals of Alfa Romeo, Mazda, and even Lotus cars of similar caliber, the company continued to lose money after the release of their newest models. Of course, this is just one of hundreds of examples of popular companies with great products falling off the industrial map, proving time and time again that a quality product doesn’t get your business off the ground and running forever. What it really comes down to is money, and a substantial amount of money for small businesses comes from investors.

Investors: In the case of Zenos sports cars, the company gathered a loyal cult following of fans of unique cars who appreciated the well-crafted Zenos products. Unfortunately, while a cult following is often the sign of an innovative product, it also frequently can’t support a company as whole. When the small batch of investors that Zenos largely relied upon could no longer support their investment, the company quickly lost money, and the straw that broke the camel’s back came when U.S. orders were cancelled.

Even small businesses here in Minnesota can recognize the importance of investors going hand in hand with a quality product to support all of the necessary expenses.  

Debt Payment: Zenos is on the market for new investors, and if the company can find one, they will be able to start a debt repayment plan under UK bankruptcy codes. However, without proper cash flow, Zenos—just like any other bankrupt small business—will have to liquidate its assets in order to discharge debts.

If your small business is struggling financially with no possibility of meeting debt payment requirements, Behm Law Group, Ltd. can help you work through filing for bankruptcy in St. Peter, MN. Contact us today at (507) 387-7200 for more information.

Priority, Secured, and Unsecured Claims and How These Types of Debts are Treated With Bankruptcy in Mankato, MN

If you find yourself in a position where filing for bankruptcy is the most logical course of action for you and your family or for your business, you will also find that you have creditors to who will fall into different categories and that creditors in the different categories have different rights.  When you think of creditors in bankruptcy, you should think of them being listed in their different categories as on a totem pole.  Behm Law Group, Ltd. provides legal assistance to help you throughout the process of filing for bankruptcy in Mankato, MN, and to protect and direct you in the face of your creditors.

When you file for bankruptcy, your creditors must file proofs of claim with the bankruptcy court to show, as a matter of public record, the type or category of debt that you have with each of them and how much you owe to each of them. These claims can fall into the following three categories.

Secured Claims: These claims should be viewed at the top of the totem pole.  When your creditor has a lien on your property (or a security interest), they can file a secured claim. Mortgages and car loans are common examples of debts with security interests attached. If you default on these types of debts, your creditors can enforce their liens and reclaim the property (i.e. house, vehicle, washer/dryer) securing their liens. Chapter 7 filers must specify in a bankruptcy form called the “Statement of Intention” whether they want to surrender property/collateral to a creditor or continue making debt payments and retain the property/collateral. Chapter 13 filers can continue paying off the debt secured by the property/collateral with their established repayment plan and in some cases even eliminate the lien their creditors have on that property/collateral.

Priority Claims: These claims should be viewed in the middle of the totem pole.  Where unsecured claims are on dischargeable debts with no secured collateral, priority claims are non-dischargeable debts with no secured collateral. “Non-dischargeble” means that they are not subject to being wiped away or discharged.  These debts are unsecured debts but they are debts that Congress, for certain public policy reasons, determined should not be subject to discharge.  For example, child support debts, some tax debts, and criminal fines are generally not subject to discharge in a Chapter 7 case. Creditors to whom you owe these types of debts file priority claims when you file for bankruptcy relief. Because these debts are not discharged, you must keep paying them even if you file for Chapter 7, and they must be completely repaid with your chapter 13 repayment plan if you file for Chapter 13. Creditors with priority claims will be repaid before those holding unsecured claims, but after those with secured claims.

Unsecured Claims: These claims should be viewed at the bottom of the totem pole as they have a lower priority than secured claims and priority claims.  These claims are only applicable to debts with no secured collateral. Most frequently, these debts include medical bills, personal loans, and credit card debt and are almost always discharged with a Chapter 7 case. With Chapter 13 cases, your non-exempt assets and your disposable income determine the repayment plans for these debts. Creditors with unsecured claims are often paid last and paid least.

If you are considering filing for bankruptcy in Mankato, MN, and you would like to learn more about how Behm Law Group, Ltd. can help you throughout the process, contact us today at (507) 387-7200.

What to Expect from a Meeting of Creditors when Filing for Bankruptcy in Owatonna, MN

Filing a bankruptcy petition often seems intimidating to our clients because of the many steps and requirements involved in the process. While it’s true that bankruptcy proceedings in the U.S. have several requirements, forms, schedules, and a mishmash other legal formalities, filing for bankruptcy doesn’t have to be insurmountable. At Behm Law Group, Ltd., we offer legal advice and assistance for those considering filing for bankruptcy in Owatonna, MN.

Among the many requirements demanded of filers are the preemptive measures U.S. Bankruptcy Courts take to ensure a debtor has a valid petition and will not be rejected for debt discharge or debt reorganization. Some of these measures are also designed to educate debtors on their financial situations and are required in the hopes that a filer will be better equipped to survive financially after the bankruptcy process is complete.

Mandatory credit counseling is one such requirement, as well as the meeting of creditors—also known as a 341 hearing.

 

Meeting of Creditors for Chapter 7 Petitions

If you’ve chosen to file for Chapter 7 (liquidation) bankruptcy, you will attend a meeting of creditors between 21 and 40 days after filing your petition. While a Chapter 7 trustee will orchestrate this meeting of creditors, there will not be a judge present. The meeting essentially serves to verify the accuracy of the representations made in your bankruptcy petition.  It also serves to provide the bankruptcy trustee and, perhaps, some of your creditors to ask you questions about the representations made in your bankruptcy petition and about your assets.  In most cases your creditors will not be present, but there are instances where some or all of your creditors may attend and ask you questions.

 

Meeting of Creditors for Chapter 13 Petitions

In Chapter 13 cases, the meeting of creditors is more likely to be referred to as a 341 hearing (although it is not an official court hearing). The 341 hearing will take place between 21 and 50 days after your petition for Chapter 13 (reorganization) bankruptcy is filed. Just as with a Chapter 7 meeting of creditors, there will be a trustee and, perhaps, some of your creditors in attendance, but no judge will be present. This purpose of a 341 hearing is to determine your past and present financial and tax situations, including expenses, exemptions, income, and asset values.

Our attorneys at Behm Law Group, Ltd. are well equipped to help you get through the process of a meeting of creditors. If you have questions about what to bring to your meeting of creditors and how to organize your financial history, contact us at (507) 387-7200 for more information about filing for bankruptcy in Owatonna, MN.