Major Bankruptcy Acts in the U.S. During the Twentieth Century and Their Significance for Bankruptcy in Marshall, MN, Today

Bankruptcy laws have changed significantly since the early twentieth century, and even since the mid to late 1900s, amendments and jurisdictions have altered how bankruptcy cases in the U.S. are processed. To an individual or small business unfamiliar with the bankruptcy system, the information involved in bankruptcy laws can seem complicated, tedious, and even confusing. To unravel the complexities of the bankruptcy code, Behm Law Group, Ltd. offers legal advice and assistance for those considering filing for bankruptcy in Marshall, MN.

In the past century, there have been several major changes to the U.S. bankruptcy system. Among these legislations, three main acts deserve recognition:

  • The Bankruptcy Act of 1938, or the Chandler Act, gives individuals and businesses the agency they have today for voluntarily filing bankruptcy petitions. This act opened filing to a wider range of debtors and made it easier and more appealing to file for bankruptcy. The basis of the act was to make it beneficial to file for debt reorganization overseen by a court-appointed trustee.
  • The Bankruptcy Reform Act of 1978, or the Bankruptcy Code, significantly changed the bankruptcy system. Not only did it replace the Bankruptcy Act of 1898, it also established much of today’s Title 11 standards, changed the structure of U.S. Bankruptcy Courts, forbid employment discrimination against those whom have filed for bankruptcy, and served to regulate the majority of bankruptcy cases filed under Chapter 7 and Chapter 13.
  • Bankruptcy Amendments and Federal Judgeship Act of 1984 was established to alter the 1978 Act and amend any flaws. This legislation is still considered the most permanent and major act affecting the U.S. bankruptcy system and allows for the direct application of all current amendments that relate to any bankruptcy case in question. The act of 1984 also affected how changes are made to the system in accordance with social, economic, and technological growth (credit cards, etc).

While these three acts are all major in U.S. bankruptcy history, there are still many other amendments involved in Title 11 bankruptcy cases, including numerous changes made between 1984 and today, particularly the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. For more information about filing for bankruptcy in Marshall, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.

Dallas’s Threat of Bankruptcy and How Municipal Cases of Bankruptcy Can Force Government Employees to File for Bankruptcy in Mankato, MN

In late November, reports covering the delicate financial situation of Dallas, TX, began to appear in several publications, including the New York Times. The possibility of Dallas filing for municipal bankruptcy has forced many individuals and small businesses tied into the city budget on the defense. Though Dallas is far from south-central Minnesota, its municipal bankruptcy case serves as a predictive tale for how the financial failure of a city’s government affects its employees. At Behm Law Group Ltd., we provide legal advice and assistance for government workers and other individuals filing for bankruptcy in Mankato, MN.

The 385 square miles of Dallas has experienced the fastest economic growth in the past 50 years out any of the 13 largest cities in the US. Unfortunately, that rapid expansion has caught up with the city budget, and Dallas will likely be filing for municipal bankruptcy in the new year. This situation will affect almost all government employees, including pension-earning police officers and firefighters.

The Dallas budget is estimated around $3 billion, and the city government is currently in need of an emergency bailout of roughly one third of the total annual budget. The problem stems largely from a retirement plan put into place in 1993 for police officers and firefighters. The plan offered the city’s public safety officials the opportunity to delay the standard retirement at age 50 and work for a few more years in exchange for a substantial bonus to their pension.

However, the idea that there would be a 5% employment growth each year with a 9% annual return on the new employees fell through, leaving the promised pensions with no support system. Twenty-three years later and this lack of financial balance left the city at a loss. Hints that public safety retirees would no longer be allowed to withdraw their pensions in large amounts caused a scare that pushed the withdrawal of around $220 million from the pension accounts.

This imbalanced pension system, in combination with several over-budget public projects, landed Dallas in the precarious financial situation the city government now faces. Dallas Mayor Michael Rawlings is now forced to consider filing for municipal bankruptcy to request a federal bailout.

The Dallas situation has been reflected on a smaller scale in several cities across the US, largely due to the city promising government retirees more than they can afford. Not only does the municipal debt affect those retirees, it also affects every other government employee and all entities associated with the government budget. Read more about the Dallas case here, here, and here. Contact Behm Law Group Ltd. at (507) 387-7200 for more information about your own financial situation as a government employee and for guidance on how to take steps to file for bankruptcy in Mankato, MN.

Why Cases Are Dismissed When Filing for Bankruptcy in Redwood Falls, MN

In the early half of the 20th century, the bankruptcy system in the United States was much less rigorous than it is today, and could be abused with relative ease. This abuse led to hundreds of cases with less than deserving bankruptcy petitions, and the system was finally altered with successive overhauls and additions to bankruptcy law in the 1970s, 1980s, and early 2000s. Today, it can be difficult to file for bankruptcy in Redwood Falls, MN, without legal help such as the assistance Behm Law Group can provide.

Filing for bankruptcy without the advice and assistance of an experienced attorney can damage the validity of your petition, and for several reasons, it may even lead to your case being dismissed.

A common reason why many petitions are dismissed is because the filer did not complete a mandatory credit counseling course before filing. US law requires that all filers go through state-approved credit counseling, and failing to do so is ground zero for your case being dismissed.

All filers must also pay a filing fee in order to enter into the bankruptcy process. Without paying the court fees, your case will certainly be dismissed. For low-income filers, it is possible to apply to waive the court fees.

The Minnesota Means Test is applied to all bankruptcy cases, and failing this test will immediately render your petition null. The test is designed to measure your income against the median income of Minnesota households. If your income is higher than the median you will not be able to file for Chapter 7 bankruptcy, but you may have options for a Chapter 13 petition.

Failing to submit all the required information will also get your bankruptcy case a quick boot out the door. The forms, documents, and schedules needed to submit a complete petition are extensive and tedious, but Behm attorneys can help you organize and gather all of the necessary information.

The silliest way to guarantee the dismissal of your bankruptcy case is by failing to attend your meeting of creditors. Mark down the date of this short, mandatory meeting, and don’t be late.

Behm attorneys help you throughout the bankruptcy process, including helping you determine whether you qualify for bankruptcy and how you can become a viable bankruptcy candidate.

For more information about filing for bankruptcy in Redwood Falls, MN, contact Behm Law Group at (507) 387-7200.

Collaborative Possibilities for Debtors Filing for Bankruptcy in Redwood Falls, MN

Handling financial troubles alone is trying, but when you fall into a situation where filing for bankruptcy would be your best option, the process can often seem inescapably daunting. For an individual filer, Chapter 7 bankruptcy is the most common and generally the best option for relieving debt. Behm Law Group, Ltd. can help you use your options to the greatest outcome when filing for bankruptcy in Redwood Falls, MN.

The U.S. Bankruptcy Courts understand that individual filers may need options beyond the standard Chapter 7 process, and thus there are bankruptcy mechanisms that allow for collaboration between debtors in similar financial situations.

 

Joint Administration, for example, is a method of processing two or more bankruptcy cases in U.S. Bankruptcy Courts in unison. The separate cases are combined into one and administered as such, meaning the collaborating debtors can join their resources, assets, and debts into one case representing the debtors as one party in the court. Cooperating debtors can also join together in hiring attorneys and credit counselors.

 

Substantive Consolidation goes hand-in-hand with Joint Administrations and defines the act of repaying all involved creditors with the combined assets of all involved debtors. Pooling assets alleviates the burden of liquidation that would be placed on a single creditor, but it must also result in equal benefits to all creditors.

 

Joint Petition allows spouses to file for bankruptcy in the state of Minnesota under the same petition. This means that all debts and assets are consolidated to represent the spouses as a single entity. Joint petitions are similar to Joint Administration proceedings, but they’re more beneficial for spouses because all asset liquidation and debt discharges are contained within the single household.

 

The collaborative possibilities that individual filers have when considering Chapter 7 bankruptcy may help them in the long run after debts are discharged and assets are liquidated. If you feel any of these options are right for your financial situation, contact Behm Law Group, Ltd. at (507) 387-7200 for more information about filing for bankruptcy in Redwood Falls, MN.

American Apparel® Files for “Chapter 22” and Why Small Businesses File for Bankruptcy in Mankato, MN

For the second time in its 27 years as a U.S. free-trade fashion retailer, American Apparel® has filed for Chapter 11 bankruptcy—unofficially named “Chapter 22.” The company originally filed in 2015, struggled through its plans for financial recovery, and reentered U.S. bankruptcy courts in early November of 2016. American Apparel caters to the global market, but the company’s situation still serves as an advisory tale to smaller businesses in Minnesota. Behm Law Group, Ltd. is dedicated to assisting residents and business owners during the process of bankruptcy in Mankato, MN.

Since American Apparel left bankruptcy court in early 2016, they’ve struggled with several factors that affected the performance of their company.

 

Financial Issues for American Apparel

Despite attempting to recover from their first bout of bankruptcy, American Apparel faced poor market conditions that affected retailers across the country. The company has also been consistently set back by certain internal affairs and several unwise marketing choices (i.e. advertising swim suits off-season and neglecting to increase online sales). Since its debts of $497 million forced American Apparel to file in 2015, the lack of turnaround has left the company with $215 million in debt this year alone.

American Apparel filed for bankruptcy this year because of several factors, many of which affect small businesses in Mankato very similarly.

 

Financing and Funds

The majority of small businesses that file for bankruptcy gather debts based on their lack of financing and funding, both internally and externally. Loans can only help a business in the long run if they are able to gain back significant revenue to continue making loan repayments. Many startups are unable to reconcile expenses and debts with their cash flow.

 

Market Status

Just as American Apparel struggled with the market conditions over the past year, small businesses are affected by the economy as well. Overarching depression in the market harm revenue for small businesses, but fluctuations within specific markets also affect local companies. The revenue of any business is based on the demand of its product, and market shifts can be subtle and sudden, leaving bankruptcy in a company’s path.

 

Economic Choices

While it’s true that business owners making wise economic choices can still have revenue affected negatively in ways outside of their control, the choices any company makes will impact its ability to cash flow. Poor economic choices, such as some of American Apparel’s marketing decisions, will push a business further into debt and closer to bankruptcy.

 

If you own a small business and have recently struggled with debts, bankruptcy may actually be the right choice for you. Contact Behm Law Group, Ltd. at (507) 387-7200 for more information about filing for bankruptcy in Mankato, MN.

Understanding Reaffirmation Agreements when Filing for Chapter 7 Bankruptcy in Mankato, MN

Like most individuals and business owners, many of our clients are new to the bankruptcy process.  Many people view the bankruptcy process as being a perpetual black mark on their credit and an indictment of their personal character. This couldn’t be further from the truth. In fact, bankruptcy is a legal process specifically designed to help those who have struggled financially for any reason. As you embark on the journey of filing for bankruptcy in Mankato, MN—especially with the legal advice and assistance of the attorneys at Behm Law Group, Ltd.—you will find that bankruptcy is a helpful, rehabilitative and, possibly, cathartic experience.

Chapter 7 (or liquidation) bankruptcy is the most common form of bankruptcy for individuals and small businesses. One aspect of filing for bankruptcy that allows you to alter the “black and white” situations occurring frequently in Chapter 7 bankruptcy is the subject of reaffirmation agreements.

 

What is a reaffirmation agreement?

A reaffirmation agreement is something that is unique to Chapter 7 bankruptcy.  A bankruptcy filing nullifies one’s legal, contractual obligations to pay one’s debts.  This applies to all debts, except those debts that may be exempted from discharge under 11 U.S.C. §523 such as child support debts, student loans, criminal fines and certain tax debts.  This means that one is no longer required to pay one’s credit card debts, medical debts, vehicle loans or home mortgage loans. However, one may wish to retain certain debts such as vehicle loans or home mortgage loans.  One does this by completing a reaffirmation agreement.  A reaffirmation agreement is an entirely voluntary agreement between a debtor and a creditor that recites the terms and conditions of the original loan or mortgage.  By signing a reaffirmation agreement a debtor and an impacted creditor agree that the terms and conditions of the original loan or mortgage will be exempted out of the bankruptcy process and will continue after the bankruptcy process has been completed.  They essentially agree that a debtor will continue to be personally liable for the loan or mortgage after the bankruptcy has concluded.  Reaffirmation agreements, in most cases, must be approved by a bankruptcy court.

 

Why are they beneficial?

Reaffirmation agreements allow you to work with creditors to keep some debts in place, letting you maintain that property or asset.  They allow one to retain debts on assets, such as a house or a vehicle, which may be essential for one’s financial rehabilitation going forward.  Reaffirmation agreements can have positive and rehabilitative credit rating implications because creditors will continue to report one’s ongoing payments to the three big credit reporting agencies – Experian, Transunion, and Equifax.  Positive and consistent reporting by creditors after a bankruptcy has concluded can cause one’s credit rating to rise.

 

How can they be dangerous?

Because you must sign a reaffirmation agreement before your debts are discharged, you have to be 100% sure that you can continue meeting payments for any debt you want to reaffirm. In fact, we often advise against signing reaffirmation agreements unless it’s certain you will meet regular payments without hardship after the bankruptcy process is complete. If you aren’t sure, you could add to your financial struggles even after other debts are discharged.  The signing of a reaffirmation agreement means that one will be personally responsible for a debt after a bankruptcy has concluded.  If one were to sign a reaffirmation agreement on a vehicle loan, for instance, and if one were not able to continue making payments on the debt, the creditor could repossess the vehicle and sell it.  If there was any remaining deficiency balance (i.e. the sale price of the vehicle was not sufficient to retire the entire debt), one would be fully liable on such debt and the creditor could pursue collection remedies against the person.

 

If you’re unsure whether choosing Chapter 7 or entering into a reaffirmation agreement is right for you, contact Behm Law Group, Ltd. at (507) 387-7200 for more information about bankruptcy in Mankato, MN.

Foreclosure Proceedings with Chapter 7 and Chapter 13 Bankruptcy in Mankato, MN

In the majority of cases, filing for bankruptcy puts Minnesota residents and businesses back on their feet by erasing or significantly lessening much of their financial burden. In terms of mortgage debts and foreclosure, filing for bankruptcy will almost always alter the conditions of your mortgage debts to some degree. At Behm Law Group, Ltd., our attorneys are dedicated to assisting you in all aspects of bankruptcy in Mankato, MN, including fighting foreclosure and liquidating or apportioning your mortgage debt.

 

The two common types of bankruptcy, Chapter 7 and Chapter 13, are designed to handle cases of mortgage debt. In both cases, an automatic stay will be in place preventing creditors from collecting debts or harassing you during the filing process. An automatic stay is in place for a limited time period, however, and completing the bankruptcy process is vital to stopping foreclosure and alleviating your mortgage debts. Each type of bankruptcy filing treats the issue of foreclosure in different ways.

 

Chapter 7:

Chapter 7, or Liquidation Bankruptcy, is a process that will discharge all debts that qualify. This means your mortgage and all other debts that are not considered non-dischargeable under 11 U.S.C. §523 from the process will be eliminated. If you are behind on your home mortgage payments and you want to keep your home, filing for a Chapter 7 bankruptcy is probably not your best choice because there is no mechanism allowing you to “cure” or pay back your mortgage delinquency over a period of time.  A chapter 7 bankruptcy proceeding will delay a foreclosure by only about 90 to 120 days while the automatic stay injunctive provisions of 11 U.S.C. §362 are in effect.   While the automatic stay will prevent or stop a foreclosure, the relief is only temporary.  Generally speaking, after the chapter 7 case is concluded in 90 to 120 days the automatic stay terminates and a creditor can restart or initiate foreclosure proceedings at that time.

 

 

Chapter 13:

A Chapter 13 simple bankruptcy is labeled “reorganization bankruptcy” but it really is more aptly referred to as “partial re-payment bankruptcy”.  In a chapter 13, you draft a chapter 13 plan of reorganization in which you specify a particular payment that fits your income and expenses which you pay for a set period of time – usually 36 to 60 months.  In a chapter 13 bankruptcy, you can “cure” or pay back your mortgage delinquency over the 36 to 60 months.  After your case is filed, you must still make the regular monthly mortgage payments going forward but the delinquency itself would be paid out of the payments you make through the chapter 13 plan.  For instance, assume your regular mortgage payment is $1,000.00 a month and that you are $10,000.00 delinquent.  Further assume that your monthly chapter 13 plan payment is $500.00.  After you file for bankruptcy relief, you would still need to pay your $1,000.00 regular mortgage payment.  However, the $10,000.00 delinquency would be spread over the 36 to 60 month time of your chapter 13 plan.  If your plan was a 36 month plan, roughly $277.77 of the aforementioned $500.00 chapter 13 plan payment would go towards the payoff of the $10,000.00 pre-bankruptcy mortgage delinquency ($10,000.00 / 36 months = $277.77).  If your chapter 13 plan was a 60 month plan, roughly $166.66 of the aforementioned $500.00 chapter 13 plan payment would go towards the payoff of the $10,000.00 pre-bankruptcy mortgage delinquency ($10,000.00 / 60 months = $166.66).  You must be able to meet this repayment plan to keep your home and stop the foreclosure process.   When the plan is completed, your mortgage debt will be fully cured.

 

There are many legitimate reasons why Minnesota residents fall into debt and find foreclosure looming over them. Call Behm Law Group, Ltd. at (507) 387-7200 today and find out how we can help you stop foreclosure with bankruptcy in Mankato, MN.

Liens, Automatic Stays, and Set-Offs: Understanding Terminology Involved with Bankruptcy in Mankato, MN

For many in precarious financial situations, the option of filing for bankruptcy seems to be only found down a long and complicated road of legal red tape and confusing fine print. At Behm Law Group, Ltd., we understand that it’s entirely normal for people and small businesses without a dedicated legal department to be unfamiliar with the intricacies and terminology involved in the process of bankruptcy in the U.S. If you’re considering filing for bankruptcy in Mankato, MN, the attorneys at Behm Law Group, Ltd. are dedicated to providing information and legal assistance throughout the process.

 

If you’ve been wondering whether bankruptcy is the answer to your situation, you may have found yourself skimming online information about bankruptcy and encountered some terms that are unfamiliar to the jargon of everyday life. Some common terms used when discussing bankruptcy proceedings include:

 

Liens

Creditors can hold a lien over your property before and during your bankruptcy process. Essentially, a lien is a type of interest that secures your repayment of the debt you owe. Liens are most often used when speaking about mortgage debts and, in some cases, allow the lien holder to seize and sell your mortgaged property in the event of your inability to meet debt payments. During the bankruptcy process, there are options that allow you to forestall property seizure even if your creditors have a lien on your home or business.

 

Automatic Stay

During the filing process, U.S. Bankruptcy Courts can enforce an automatic stay on your creditors. In the event that an automatic stay is enacted, your creditors will be legally bound to halt their collection actions against you. When you petition for bankruptcy, your creditors are immediately put under automatic stay, protecting you against judicial proceedings, property seizure, lien enforcement, and the potential of a debt set-off.

 

Set-Off

In some bankruptcy cases, the debtor and the creditor owe money respectively to each other.  With a checking account, for instance, a bank owes you the money in your checking account and must pay it to you on demand.  Perhaps in you owe a debt to that same bank on a vehicle loan.  If you are late paying your vehicle loan with that bank, the bank can offset what it owes you in your checking account against what you owe it on the vehicle loan.  Instead of paying you what is in your checking account, the bank can offset what is in your checking account against what you owe it on the vehicle loan.

 

The many legal terms used in bankruptcy lingo are foreign to most people. We are here to help when it comes filing for bankruptcy in Mankato, MN. For more information, contact Behm Law Group, Ltd. at (507) 387-7200.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) and How to Declare Bankruptcy in Mankato, MN

Coping with the financial and personal hardships that come with debt can pose significant struggles for families and businesses alike. While these hardships put pressure on the lives of those involved, filing for bankruptcy is an option for Minnesota residents and business owners when the financial stress of debt becomes overwhelming. The process of declaring and filing for bankruptcy, however, can add even more difficulties to those struggling with debt. At Behm Law Group, Ltd., we are dedicated to providing expert legal advice and assistance for those considering filing for bankruptcy in Mankato, MN.

In October of 2005, a law was passed that requires any individuals declaring bankruptcy to go through credit counseling during the 180 days prior to filing. However, before the filing process can begin, the filer in question has to take the first step and see if one actually qualifies for chapter 7 bankruptcy relief. One can qualify for chapter 7 bankruptcy relief by satisfying the “means test” of 11 U.S.C. §707(b).

2005 Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) Means Test

The means test is designed to determine if an individual qualifies for filing for chapter 7 bankruptcy. The potential filer must provide pay advices, pay stubs and any other evidence of income generation for the past six months for a bankruptcy attorney to analyze and then compare with the median Minnesota income or state average income for a household of similar size to the household of the person seeking to file for chapter 7 bankruptcy relief. If the analysis proves that the filer’s income is less than the median, the filer can begin the filing process for Chapter 7. If the filer’s income is found to be greater than the median income for a household of that filer’s size in Minnesota, the filer must choose to file Chapter 13 bankruptcy.

To officially begin filing, paperwork detailing debts, income, living expenses, property, major transactions, and tax returns must be gathered and provided to a bankruptcy attorney. With our help, gathering this paperwork won’t be as daunting as it may seem.

The BAPCPA Means Test is in place to start those considering bankruptcy on the path that will best suit their financial situation. For more information about declaring bankruptcy in Mankato, MN, contact Behm Law Group, Ltd. at (507) 387-7200.

 

Large Cases of Bankruptcy and How They Relate to Filing for Bankruptcy in Mankato, MN

There are several common misconceptions about filing for bankruptcy, one being that only large companies or people with extreme wealth end up in situations that require bankruptcy filing. There is also the misconception that “regular” people only fall into bankrupt circumstances after irresponsible spending and racking up reckless debt. In reality, bankruptcy affects a diverse number of people and businesses with varying incomes. If you are struggling with your debts, Behm Law Group, Ltd. is here to help you through the steps of filing for bankruptcy in Mankato, MN.

Because bankruptcy affects people and businesses of all wealth and sizes, it’s important to look at different cases of bankruptcy. If you are struggling with your own bankruptcy, other cases may help you better understand your own situation. If you’re worried you’re falling into a bankrupt state, you may benefit from learning about other cases that are happening today.

Magnetation LLC

Minnesota-based iron ore processing company, Magnetation LLC, announced the possible shutdown of one of its three plants across the state. The company has slowly lost financial security, and without the support of another financier or a third party buyer, Magnetation LLC will have to officially enter bankruptcy court by the end of September.

Because the company filed for bankruptcy in May of 2015, they are currently working with government agencies to establish an agreement that will protect stakeholders and any employees affected by the dissolution of this company branch.

Christian Laettner

After an attempt to turn out-of-use tobacco warehouses in Durham, NC into apartments and spaces for various uses, this former Minnesota Timberwolves NBA player now owes his creditors (other financiers and project managers) around $14 million in investments and loaned project money.

The events leading up to Laettner’s situation involve a lot of money, but, monetary scale aside, they are similar to many other cases we see with our clients here in Mankato, MN.

Even though the bankruptcy situations with Magnetation and Laettner seem far from the circumstances most people find themselves in, there is a lot that can be taken away from the problems of others. If you have questions or are considering filing for Bankruptcy in the Mankato, MN, area, contact Behm Law Group, Ltd. at (507) 387-7200.