Potential Covid-19 Student Loan Relief Act of 2020 and Debt Relief through Bankruptcy

Tuitions in the United States are higher than ever before, and individuals who graduated within the last ten years are facing large amounts of student loan debt. For those already struggling with additional debts, student loans with high interest rates can push some people to the point of needing debt relief. With the additional financial stresses of the current pandemic times, many people are turning to bankruptcy as a source of government-regulated debt relief. At Behm Law Group Ltd., we can help you find long-term financial stability and debt relief in Redwood Falls, MN, and the surrounding area by filing for bankruptcy.

 

While student loans are typically exempted under 11 U.S.C. § 523(a)(8) from the general discharge awarded at the end of the bankruptcy process, with some rare exceptions, there may be some changes as to how student debt is treated in bankruptcy due to a potential Covid-19 relief act.

 

The many lingering effects, both medical and financial, of the peak of the coronavirus pandemic and subsequent shutdowns are still being recognized and processed by the U.S. government, and acts like the potential Covid-19 Student Loan Relief Act might be put in place until national health and economic conditions are more stable. The initial CARES Act of March 2020 put many other benefits into place, including stimulus checks and additional federal unemployment, but now that much of that first act is coming to a close, new legislation will likely be enacted to continue addressing the severe economic effects of the pandemic.

 

For now, those with federal or private student loans looking for debt relief through bankruptcy may be able to have those loans discharged depending in a few specific circumstances. Primarily, discharge of student loans in bankruptcy is only available to filers who have been directly economically affected by the coronavirus shutdown. This means:

 

Your income was significantly reduced because of Covid-19. This reduction must be a certain percentage, depending on your prior income. Qualifying reductions of income include:

  • 20% reduction for those earning $75,000 or less;
  • 30% reduction for those earning $75,000 to $125,000;
  • 40% reduction for those earning $125,000 or more.

Your household’s primary income earner passed away during the pandemic shutdowns. The timeline for the period this rule covers will be outlined more specifically in the legislation’s details.

You were permanently disabled during the shutdown/pandemic. Again, the timeline will have more specifics for qualifying dates in the legislation’s details.

 

While the requirements of the potential Covid-19 Student Loan Relief Act are highly limiting, the legislation could open the door for many more people struggling financially to benefit from student loan discharge in addition to the discharge of the other usual debts included in a bankruptcy.

 

To learn more about how the new stimulus legislation might affect your bankruptcy case, more about qualifying for student loan discharge, or more about how filing for bankruptcy can be an effective source of debt relief in Redwood Falls, MN, and the surrounding area, contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com.

Litigation That Can Move from State Court to Bankruptcy Court

Working through the U.S. legal system is often a complex process, and no matter what type of case you’re handling, it’s likely that details will vary greatly from other similar cases. For example, if you’re working through a state court case that involves litigation and one of the parties in the case files for bankruptcy relief, certain aspects of the litigation may be moved to bankruptcy court.

 

When this sort of thing happens, it’s essential to have the expertise of a bankruptcy attorney on your side. Whether you’re involved in state court litigation or not, Behm Law Group, Ltd. attorneys can guide you through the process of filing for bankruptcy relief in Jackson, MN.

 

Filing for bankruptcy is a nuanced process, and moving civil litigation from state court to bankruptcy court can make the bankruptcy process even more complicated. There are several types of litigation that may result in the removal of a case from state court to bankruptcy court. All litigation that involves the payment from one party to another will impact a bankruptcy case because the litigation may piecemeal or dilute resources that would otherwise have been used to repay creditors in a bankruptcy. For example:

 

Fraud: A common example of a fraud litigation that may be moved to bankruptcy court is when a creditor files suit against a debtor and claims the debtor misrepresented one’s financial standing in a repayment contract. The bankruptcy court needs to determine if the debt would be discharged in a bankruptcy outside of the litigation case. If the bankruptcy court determines that fraud has been committed, the bankruptcy court could decide that the debt is not dischargeable which could change the value paid to all creditors in the bankruptcy estate.

Personal injury: In personal injury litigation, the offender may need to make monetary restitution to the victim or the victim’s family. If the offender also files for bankruptcy relief, the money that could be used to pay the victim in the personal injury litigation could be used to pay other creditors as well through the debtor’s bankruptcy estate. This means there could be less money to repay the personal injury creditor.

Business: The movement of business litigation to bankruptcy court occurs most commonly when shareholders of a company file a lawsuit against that company for negligently or intentionally causing their stock to lose value due to ineffective or incompetent business decisions or outright corruption. If the company then files for bankruptcy relief, the shareholders will likely request that the litigation case be moved to the bankruptcy court to save money. If the case is handled in bankruptcy court, the process would likely be less costly for the parties.

 

The results of moving litigation from state court to bankruptcy court can be highly varied depending on the circumstances and timeline of any particular case. If you are considering filing for bankruptcy in Jackson, MN, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com to learn more about the process.

Case Dismissal without Prejudice and How Bankruptcy Assistance Can Help

If you are working through a difficult financial time, you are not alone. The results of the Covid-19 pandemic and associated economic hardships are impacting millions of individuals and businesses across the United States. Through the process of filing for bankruptcy, debt relief and financial stability are all possible for people who are struggling to pay their bills.

 

Filing for bankruptcy may seem like a tough choice, but it’s a much more common occurrence than you might think. In fact, bankruptcy is a legal process that aids many individuals and businesses in need of positive debt relief and financial rehabilitation. If you take the step to file for bankruptcy relief, Behm Law Group Ltd. can provide you with bankruptcy assistance in St. Peter, MN, and the surrounding area. Our attorneys’ expert legal support can help you work through a case and limit the risk of having your bankruptcy case dismissed with or without prejudice.

 

To eliminate the potential for abuse of the bankruptcy system, the U.S. Bankruptcy Court system has strict requirements for filers. Bankruptcy petitions involve extensive documentation of your financial situation and rigorous paperwork on top of pre-bankruptcy requirements. The guidance and support of a Behm attorney can help you navigate through the very nuanced bankruptcy filing process and prevent the possibility of case dismissal.

 

If there is intentional fraud or other such issues with your case, the court could dismiss your bankruptcy case with prejudice, and this ruling comes with its own significant restrictions on being permitted to file for bankruptcy relief again and the potential of criminal prosecution. However, even if there is no intentional fraudulent behavior or abuse of the bankruptcy system involved in your case, there is still the possibility of that your case could be dismissed without prejudice. Dismissal without prejudice is highly improbable with the expertise and legal aid of an experienced lawyer. If you choose to file without the support of an attorney, you will have a greater chance for dismissal of your bankruptcy case without prejudice.

 

In fact, dismissal without prejudice can occur if you:

 

  1. Do not file the correct bankruptcy forms or fail to fill out a form accurately
  2. Do not submit full documentation of your financial standing that supports your bankruptcy paperwork
  3. Do not perform all pre-bankruptcy requirements, including the attendance of a credit counseling course with an approved credit counseling agency
  4. Do not attend the 341 hearing
  5. Do not make monthly payments to your trustee in the event you file a Chapter 13 case and have a repayment plan approved and put into motion for a three- to five-year period
  6. Fail to meet any additional deadlines or paperwork requirements that may be specific to your case

 

If the court dismisses your case without prejudice, you can file again right away with corrections made and other failures remedied. However, if you file again right away, the automatic stay placed on your creditors’ ability to collect debts is limited to 30 days. Also, if you have two or more cases dismissed within the past year, you will receive no automatic stay protection when you file again.

 

To learn more about receiving bankruptcy assistance in St. Peter, MN, contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com.

How Bankruptcy Is a Stigmatized Source of Debt Relief and Why That Assumption is Wrong

Anyone who has struggled financially knows the unfortunate potential of feeling ashamed. While the stigma against poverty and debt isn’t unique to the U.S., it certainly is made worse by our social standards and consumer society. The negative assumptions around debt are a centuries-old standard that will take a change in mindset to reverse. If you have assumptions about debtors and bankruptcy, you’re one of many, but those ideas are not necessarily based on any facts.

 

Rather than being a last-gasp chance for “destitute people” or something that throws your credit into the trash forever, bankruptcy is a highly effective process that provides long-term debt relief, financial stability, and a second chance to thousands of individuals every year. At Behm Law Group, Ltd., we provide advice and protection to our clients, guiding them through the bankruptcy process and helping them receive much needed debt relief in Worthington, MN and the surrounding area.

 

A large part of the stigma against bankruptcy is based on an old idea of tying morality to money and social status. This is an unfortunate mark of the classist history that has saturated the western world for centuries. The idea of “poor” people having low morals is an outdated, problematic one that needs to be left behind along with stigmas against race, gender, and other marks of oppression.

 

The problems of social stigma aside, bankruptcy itself is often seen as the wrong choice because of the impact it has on the filer’s credit. While it’s true bankruptcy will lower your credit score and make you ineligible for certain things like taking out a mortgage, those effects are temporary, and the permanent positive impacts of bankruptcy greatly outweigh the temporary negatives. The assumption that bankruptcy is a bad choice because of any impact it might have on your financial standing is a flawed idea. To see how beneficial bankruptcy is for anyone in the right situation, you only have to look at the number of people who went on to improve their quality of life and maintain a balanced income-to-debt ratio after filing.

 

Those who are in the position to file for bankruptcy are often not able to take out a mortgage in the first place, and it’s likely that their credit score has already been lowered to some degree because of their current income-to-debt ratio, late payments, defaults on loans, and other conditions that lead them to qualify for bankruptcy.

 

Finally, filing for bankruptcy is almost always the better option for debtors than other debt management practices. Debt consolidation, payday loans, debt settlement, and other non-bankruptcy options for debt relief are frequently used to take advantage of people and end up costing them much more in the long run. Bankruptcy is a law-based process that is designed to serve an honest filer’s best interests.

 

To learn more about how bankruptcy debt relief in Worthington, MN is worth it and why the stigma is wrong, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

Why Bankruptcy Cases Decreased during COVID-19 Shutdowns, and What the Future Will Bring

As we continue to move through this uncertain time, more economic concerns may rise, including the increase in business and individual bankruptcy cases. If you are struggling to meet debt payments during the COVID-19 pandemic, you are not alone. Millions of Americans are finding their finances shaken up in an unwelcome way, and many will find relief in bankruptcy. While filing for bankruptcy is often viewed as a drastic action, the process is a truly effective one that provides debt relief for many more people and businesses than you might think. At Behm Law Group Ltd., we offer clients expert guidance, advice, and legal protection while they find their financial footing as an individual or business by filing for bankruptcy in Owatonna, MN.

 

The initial coronavirus crisis and ensuing shutdowns caused many events to occur, including a steep decrease in the number of bankruptcies filed from March to June. This plunge in cases was directly caused by the lockdown and stay-at-home orders, in addition to some other factors.

 

Why the decrease happened:

  1. Courts were closed during the state-wide shutdowns. This caused the cases already in motion to be halted, and other individuals who might have filed soon were forced to hit the pause button.
  2. The CARES Act included financial boosts for almost every individual with the issuance of stimulus checks and the federal benefit of $600 per week for each individual for unemployment. This aid was added to many people’s bank accounts and it enabled them to pay their creditors during the shutdowns.
  3. The government alleviated many debt obligations through a moratorium on evictions, foreclosures, and other aspects of loans, which included all federal loans and many private loans through banks and other lenders.
  4. Finally, many creditors offered grace periods on loans, giving debtors more time to pay, waiving late fees, and offering forbearance programs. Both the government alleviation and the provision of adjusted debt requirements allowed those struggling financially to better address more pressing needs with their tight budgets.

 

All of the factors that contributed to the decrease of bankruptcy cases are now over. The stimulus checks have been spent, the unemployment benefits will be ending at the end of July, and many other aspects of the CARES Act have run their course. Now, with the debt payment requirements and the consequences for not making payments back to normal, the same financial issues that people faced before the coronavirus pandemic started are becoming problems again. This, in combination with the beginnings of a severe economic recession, show signs that bankruptcies will increase dramatically in the next year.

 

For those facing the newest financial burdens on top of the ones they were already facing before the COVID-19 pandemic started, filing for bankruptcy might be the right choice. To learn more about filing for bankruptcy in Owatonna, MN, and the surrounding area, contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com.

How Bankruptcy Offered Debt Relief to Many During the 2008 Financial Crisis

 

During this unsure economic time, many of us look to the past to see how we reacted, what worked, and what didn’t. Since the first Great Depression in the U.S., there have been many ups and downs in the economy. One notable “down” was the 2008 financial crisis. The unexpected depression during that time was a recent crisis that took place in an economy very similar to the one today.

 

While there are many components to any depression, the 2008 crisis is one we can most likely prevent from occurring again. However, if any financial crises happen in our future, individuals and businesses alike can find solid ground and protection from the relief a bankruptcy case provides. If you’re struggling to make ends meet during these challenging times, Behm Law Group, Ltd. can help you find debt relief in Marshall, MN and the surrounding area through the process of filing for bankruptcy relief.

 

The financial crisis of 2008 saw many bankruptcies, including Lehman Brothers, who filed the largest case of all time. Individuals, small businesses, and Fortune 500 companies were all affected financially during this time. A combination of risky investments, the collapse of the housing market, and various other bad choices made by large players in Wall Street led to a severe financial crisis and a trickle-down effect that made everyone change the way they looked at our economy.

 

In addition to many of the large bankruptcy cases like Lehman Brothers, thousands of people across the U.S. found themselves filing bankruptcy to protect their homes and find debt relief. For individuals then (and now) there were two main options.

 

If their income was lower than the state median income, an individual could file for Chapter 7 bankruptcy and have their non-exempt assets sold in exchange for the discharge of debts. In a Chapter 7 case there are exemptions filers can use to protect the vast majority of their assets (in most cases people are able to protect all of their assets) from liquidation, depending on their financial circumstances. In 2007 there were 467,248 non-business Chapter 7 cases. After the crisis in 2008, that number jumped to 949,002 in 2009 and 1,105,534 in 2010.

 

A debtor’s other option was to file for Chapter 13 bankruptcy. This was an option for those with an income higher than the state median income who were ineligible for Chapter 7. Chapter 13 worked to restructure debts into a manageable repayment plan lasting three to five years. In 2007, there were 307,521 non-business Chapter 13 cases. In 2009, that number increased to 393,786, and in 2010, rose again to 430,583.

 

All of the bankruptcy cases born out of the 2008 crisis were effective in many ways, helping to rebalance our economy and provide much needed debt relief to filers. To learn more about filing for debt relief in Marshall, MN during today’s difficult financial times, contact Behm Law Group, Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com.

Part One: The Beginnings of Bankruptcy Code from the Renaissance to the American Shift

If you have filed for bankruptcy before in Mankato, MN, or are working through a case now with the help of Behm Law Group Ltd., you know there are many intricacies of the bankruptcy code. Bankruptcy laws weren’t always so complex nor with fairness to all parties involved. Since the first semblances of the bankruptcy code starting in 1542, a lot about bankruptcy has changed.

 

1542:  After centuries of brutality against debtors, the first bankruptcy code was enacted in 1542 in the form of the Statute of Bankrupts. Put into place under the reign of King Henry VIII, the statute was an act of parliament and the first law to deal with bankruptcy. Broadly speaking, the act stated that debtors committing fraud (i.e. not making payments) should have all their assets seized and sold. The value of that sale would then be returned to creditors in amounts proportionate to the debts owed to them. While this form of bankruptcy law was less than fair to debtors, it was the first time something remotely resembling our bankruptcy code today was established.

 

1570: In 1570, Queen Elizabeth established the first modification to the still-young bankruptcy laws of England. The second of the English Bankruptcy Acts broadened and specified many of the offenses debtors could commit and the punishments therefore. Despite changes and clarifications, this act was still largely unfair to debtors.

 

1705: Under Queen Anne’s reign in 1705, the first signs of ease to debtors were established. In Queen Anne’s bankruptcy act, debtors had options for discharge and debt relief without the drastic consequences of the past. This departure was considered radical, but since then, every English bankruptcy law included some form of debtor relief provision.

 

1776: In this auspicious year, the United States of America declared independence from British rule, and the shift in bankruptcy law to what it is today began. To emphasize distance from English law, much of American legislation written in the early years of the United States was based on critical examination of what was wrong with how the parliament and monarchy operated. The lack of favor for the people in the English legislature was exactly the opposite of what the United States was founded on, and to shift away from that, every law was carefully outlined, including the bankruptcy code and the treatment of debtors. At this point, Congress had power to enact general bankruptcy legislation, but the standard for bankruptcy was to have each state establish the insolvency laws it saw fit.

 

The American shift away from English bankruptcy law was a significant and critical aspect of what our current bankruptcy code is based on. The fine-tuning and improvement on the American shift will be covered in the second part of this blog post. If you are seeking advice on how to file and navigate the bankruptcy code in Mankato, MN, or the surrounding area today, contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com.

The Strange (and Unnerving) History of Bankruptcy

If you’re struggling with financial hardship, you are not alone. Today, over 38 million people in America live at or below the poverty line. While finances should never be paired with human decency, unfortunately for hundreds of years, they have gone hand in hand with social comment. In years past, millions of people living in poverty with debts to pay were treated much differently, and more severely, than they are today. If you are in need of financial relief and are filing for bankruptcy in Windom, MN, you are making a positive choice for your household that is trending away from any social stigma. Indeed, Behm Law Group Ltd. can help you work through your bankruptcy case and receive long-term debt relief that is much different than history’s strange and often drastic reactions to debt.

 

In the past, holding debt was much more dangerous and unsettling than it is with today’s bankruptcy laws. Years ago, in many parts of the world, if you were a debtor and were unable to repay your lender, you could be subject to some unnerving consequences such as those that follow.

 

Corporal punishment: Throughout the majority of history, debtors were punished with physical harm if they did not or could not pay their lenders. A sentence might have manifested itself as a beating, stockage, mutilation, or other similar negative reprisal. In fact, throughout many societies, corporal punishment in varying degrees of severity was the most common consequence of not repaying your debt.

Death penalty: The most severe punishment for unpaid debts was execution. Infamously, the vast empire of Ghengis and Kublai Khan demanded an execution penalty for unpaid debts that was typically inflicted by trampling a debtor to death under horse foot.

Jail time: Throughout history, being thrown into a dungeon or jailed for some time was another common punishment. While jail conditions of the past were significantly less sanitary and more dangerous than they are today, at the time, imprisonment was considered one of the least severe punishments for debtors.

Slavery: Ancient Greeks and Romans implemented debt slavery laws that forced debtors (and often their family members) into indentured labor positions. Debt slaves could work off what they owed over time, but more frequently than not, they faced a life sentence of hard servitude.

“Compromise”: In societies where debt settlements were directly worked out between the lender and borrower, certain compromises were available. These “compromises,” however, were often less than fair to the debtor and could include sacrificing your wife and daughters as property, offering sons into slavery, or facing public humiliation. One compromise is where bankruptcy, which comes from the Latin bancus ruptus, literally “broken bench,” got its name. In ancient Rome, businesses operated from a simple bench or a stall. If they could not repay their debts, creditors could carry off or destroy/break their bench/storefront.

 

There are many other strange ways we have handled debts in the past, but today, we have a well-established system of government-mandated bankruptcy law. If you are considering filing for bankruptcy in Windom, MN, contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com today.

Filing with the Help of a Bankruptcy Attorney During Quarantine

After a long spring of dark news and constant worry as we shelter in place, the severity of the COVID-19 pandemic is beginning to show signs of lifting. However, while states are relaxing aspects of the coronavirus lock down, many of us are still coping with work, communication, and other parts of our lives remotely.

 

Minnesota district courts implemented a preparedness plan outlining how they will navigate in the face of COVID-19, but civil cases like bankruptcy are still being conducted largely through remote contact. If you’re struggling with debt and considering filing a bankruptcy case during this unsure time, you can benefit greatly from the advice and guidance of an expert bankruptcy attorney in Pipestone, MN and the surrounding area. Behm Law Group, Ltd. attorneys offer the skill, knowledge, and experience you need to navigate a case in times like this when bankruptcy rules are changing rapidly to address the circumstances of the coronavirus outbreak.

 

Fortunately for all parties involved, bankruptcy is a legal process that can, in part, be done remotely. With phone, video conferencing, email, and other remote contact resources, you can work through the preparation process with relative efficiency. On the other hand, understanding the new rules when it comes to those remote processes can be difficult, and accessibility to continually updated information is less than ideal. Currently, the basic conditions of filing under quarantine include remote scheduling of the following:

 

  • Meetings with your bankruptcy attorney: These can be scheduled over the phone or through video conferencing. Attorneys can provide online drop boxes for forms and all signatures. Your lawyer has the ability to conduct the 341 meeting of creditors with the trustee remotely.
  • Meeting of creditors: The meeting of the creditors (or 341 meeting) is one of your bankruptcy requirements. All creditors may attend, as well as the trustee, the bankruptcy filer, and the bankruptcy filer’s attorney. Currently, these meetings are scheduled through video conferencing or telephonically.
  • Credit counseling: One other bankruptcy requirement that can be conducted in person is credit counseling. All filers must complete a credit counseling course through a court-approved agency within 180 days prior to filing their bankruptcy petition. These counseling sessions are now being scheduled remotely through various means.
  • Document exchange: Finally, all document exchanges between the filer, court, trustee, creditors, and bankruptcy attorney can be done digitally. This includes the suspension of wet (in person) signature requirements. In addition to electronic document exchanges, attorneys are providing digital packets that unpack the nuanced and complicated rules of current filing conditions for bankruptcy.

 

Overall, courts and attorneys have reacted quickly to state shutdowns and other coronavirus conditions, putting remote options into place and changing rules as things progress. To start your filing process remotely, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com for a trusted, experienced bankruptcy attorney in Pipestone, MN.

 

What Current Big Businesses Bankruptcies Mean for Individuals Already Seeking Debt Relief

The continued COVID-19 crisis is still showing the impact it’s having on the global economy. More and more large companies, local businesses, and nonprofit organizations will struggle to make ends meet, and those that cannot may find debt relief in bankruptcy. With the cases of Neiman Marcus and J.Crew, we’re seeing the first of many large business bankruptcies that are an almost direct result of the coronavirus pandemic and shelter-in-place orders.

 

There are many signals that big business bankruptcies send to individual consumers, including the fact that we’re entering a recession. An economic recession often includes increases in individual debts. If you’re struggling with worsening financial circumstances, Behm Law Group, Ltd. can help you join others who are finding debt relief in Mankato, MN through bankruptcy.

 

While big business bankruptcies might not affect you directly, they’re a signal of a changing economy. This often means that you may be impacted in other ways. If you haven’t already seen harder financial times due to the pandemic and national crisis shut down, these big business bankruptcies might be a sign of worse times to come:

 

  • Art Van Furniture filed for reorganization bankruptcy on March 8th. In April, that reorganization was converted to a liquidation case which will require the closure of Art Van as a whole.
  • Bar Louie shuttered almost half of its locations in January after struggling with early COVID-19 shutdowns.
  • CMX Cinemas filed to reorganize its debts on April 25th, shutting down all 41 locations in the meantime.
  • Frontier Communications filed a $10 billion debt reorganization plan on April 14th. It’s one of the largest telecom companies in America.
  • J.Crew filed on May 4th for a reorganization plan of $1.7 billion in debt. 181 J.Crew stores, 140 J.Crew-owned Madewell brand stores, and 170 factory stores are currently closed but will open after COVID-19 restrictions are lifted.
  • Pier 1 filed reorganization bankruptcy on February 17th with almost 1,000 stores. The company’s stock has declined steadily since 2013.
  • Rubie’s Costume Company is the largest costume supplier in the world. The company filed for bankruptcy on April 30th.

 

Other large oil companies and retailers have also begun the process to file for reorganization or liquidation bankruptcy. The big takeaway from these large business bankruptcies for individual consumers is a wide view of how the economy is changing as a result of the coronavirus pandemic.

 

Individuals with growing debts should know that they’re not alone. If you’re considering filing bankruptcy for debt relief in Mankato, MN, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.