Category: Chapter 13 Bankruptcy

Bankruptcy is considered one of the last resorts for individuals struggling with debt in the U.S., so the idea of being ineligible for bankruptcy might be a startling concept. But bankruptcy is not a one-size-fits-all process, and being ineligible for one type may not necessarily mean you are ineligible for another. At the Behm Law Group, we can help you determine what type of bankruptcy meets your needs, and for many individuals in Waseca, MN, Chapter 13 bankruptcy may just be the best option.

The Basics of Chapter 13 Bankruptcy

 Chapter 13 bankruptcy, also known as wage-earner bankruptcy, is a method of breaking your debt down into manageable payments where you pay only a portion of it over time with no interest, late fees or penalties.  Unlike Chapter 7, the time period for repayment is longer, usually three years.  In some cases, your repayment plan may extend out to a maximum of five years. During this time, your pay cannot be garnished, and your property cannot be repossessed and the money in your bank accounts cannot be seized. In a sense, it’s like hitting the pause button on your debt and taking the time you need to emotionally and mentally decompress and to get things back in order. This means your home, car, and other assets will not be at risk of being taken to satisfy your debts.

Qualifications for Bankruptcy

 As relieving as a big pause may sound, not everyone is able to utilize Chapter 13 bankruptcy. You do have to meet certain requirements in order to file. First and foremost, you must have a stable income that will be capable of meeting the payment requirements for the assigned amount of time. This is where the name wage-earner bankruptcy originates.

There is also a limitation on how much debt you can hold in order to file for wage-earner bankruptcy, broken down into secured and unsecured debts. A bankruptcy lawyer can help you navigate and calculate where your debt falls, but if you’re a billionaire, Chapter 13 bankruptcy is not for you. You will also need documentation substantiating your monthly income and your monthly living expenses, such as tax documents, bank statements, mortgage statements, and more.

Because of the meticulous documentation requirements, having a bankruptcy lawyer on your side makes the entire process much simpler and much more successful.

If you’re a Waseca, MN area resident in need of bankruptcy support or more information on wage-earner bankruptcy, Behm Law Group has the Chapter 13 bankruptcy lawyers you need to get started and on the road to financial recovery. Contact us at (507) 387-7200 or by email today.

Coming back from bankruptcy as a fully employed worker can feel as difficult and daunting as one dare imagine. A lack of time outside of work, the stress of managing daily life or a family, and the logistics of financial stress can keep you running in place perpetually. The benefits of Chapter 13 bankruptcy are how it allows you to press pause on your debt and create a plan that will give you the space you need to make a full financial recovery. Our Owatonna, MN team at the Behm Law Group can help you navigate your way up the hill and beyond into a relieving new year.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy is also known as wage-earner bankruptcy or a “wage-earner plan,” as it can only be claimed by individuals with a consistent income. This may be income from social security, full-time employment, or other sources, but it must be steady. A key part of this type of bankruptcy is how much flexibility plan development allows. You will work side by side with your Behm Law Group support team to create a plan that fits your financial abilities.

Lack of Interest Accrued

A major boon to declaring bankruptcy is that interest, late fees and penalties, which cause debts to be unmanageable outside of bankruptcy, are immediately terminated. Wage-earner bankruptcy can also stop foreclosure proceedings and prevent creditors from demanding higher payments than what the court, the chapter 13 trustee and your attorney determine are fair. After developing a payment plan, individuals will have between three to five years to make their predetermined payments.

The process of developing a monthly plan is coordinated between our lawyers and you. If you are looking for a bankruptcy recovery plan that can be precisely catered to your situation, wage-earner bankruptcy might be the solution you need.

For more information about Chapter 13 bankruptcy or the other ways Behm Law Group can support your recovery in Owatonna, MN, contact us today at (507) 387-7200 or visit our website.

If you’re facing debt you can’t repay, you might have considered some debt resolution options like one on one settlements with your creditors, a relief program, or debt consolidation. These options can be effective in relieving your debts in a few ways but none is as quick, reliable, efficient and permanent as a bankruptcy case. Filing for bankruptcy might seem like a last resort choice, but it’s actually a highly effective process that helps thousands of households find permanent financial stability in the U.S. annually. For individual consumers or spouses filing jointly, there are mainly two kinds of bankruptcy cases that can be used to handle debts. The most common type is Chapter 7 bankruptcy, which discharges your debts in exchange for the liquidation of your non-exempt assets. If your debt-to-income ratio does not pass the requirements set by the bankruptcy Means Test (if your household income is higher than the Minnesota median or average income for a similarly-sized household), you can file a Chapter 13 case instead. Chapter 13 works to reorganize your debts into a manageable repayment plan. Behm Law Group, Ltd. offers legal guidance and protection for anyone working through Chapter 13 bankruptcy in Redwood Falls, MN and the surrounding area.

Chapter 13 Bankruptcy

A Chapter 13 repayment plan lasts three to five years, a period that’s determined by your income. Secured debts like mortgages, car loans, and other debts tied to properties or liens are repaid in full under adjusted and more favorable terms.  Also, priority debts like child support, alimony, criminal fines and penalties and tax debts are fully paid over three to five years with no interest.  Your unsecured debts like credit card debts, medical bills, bounced checks, old utility bills, past due rent and personal loans, will be only partially paid anywhere from 0-50% and, generally, they will not be paid with interest.  The amount that is paid to the unsecured creditors included in your plan will be dictated by your disposable income (income not necessary to cover your reasonable and necessary monthly living expenses), the length of your chapter 13 plan and the best interests of your creditors.

Disposable Income

In any chapter 13 bankruptcy case, you and your bankruptcy lawyer prepare a monthly budget.  The budget will address all your ordinary monthly living expenses, such as food, mortgage payments, vehicle loan payments, children’s tuition expenses, gasoline for your vehicle, vehicle insurance, homeowners’ insurance, home repairs, recreational expenses, charitable contributions and many other expenses.  However, in chapter 13 you are not allowed to utilize/practice the same budgetary habits that you employed before and which may have helped cause your financial problems.  Your claimed monthly living expenses are viewed through and limited by the “reasonable and necessary” test.  In other words, your living expenses must be reasonable and they must be necessary for you and your family to live comfortably without causing undo prejudice to your creditors.  For instance, living expenses such as food, mortgage payments, vehicle loan payments would be reasonable and necessary.  Expenses such as monthly motorcycle payments, payments for boats, snowmobiles, motor homes and other non-essential luxuries would not be reasonable and necessary. Any remaining income after your reasonable and necessary living expenses are paid is considered “disposable,” and you are required to use that income to repay unsecured creditors in your Chapter 13 plan every month. In this way your income determines the amount your unsecured creditors will receive.  If your income changes during your repayment period, you and your attorney may need to make plan adjustments to either increase or decrease your plan payments.

Best Interests of Creditors

The other aspect of your financial circumstances that will determine the overall amount your unsecured creditors receive is “the best interests of the creditors” test.  With every chapter 13 case, the attorney must conduct a “liquidation analysis” of your financial situation.  Essentially, the attorney must look at your case from the perspective of a hypothetical chapter 7 case filing.  The attorney must determine the total value of all your property.  The attorney must determine how much of that property you would be able to protect with the available bankruptcy exemptions.  And, the attorney must figure out how much of your property would be non-exempt or surrendered in a chapter 7 proceeding.  For instance, presume $10,000 worth of property would be non-exempt or surrendered in a hypothetical chapter 7 case.  To satisfy the “best interests of the creditors” test in a chapter 13 case, your unsecured creditors would have to receive at least $10,000 over the three-to five-year chapter 13 plan repayment period.

If this test is not satisfied, a chapter 13 repayment plan can not be approved by the bankruptcy court and the chapter 13 case will be dismissed.

If you’re filing for Chapter 13 bankruptcy in Redwood Falls, MN or the local region, contact Behm Law Group, Ltd. today at (507) 387-7200 or email stephen@mankatobankruptcy.com for more information.

It’s very common for a bankruptcy to follow a divorce, and the legal settlements that a divorce establishes can be affected in various ways with a subsequent bankruptcy filing. While domestic support obligations, such as alimony and child support, are typically excepted from discharge in any bankruptcy filing, many other obligations incurred through a divorce can be discharged. Bankruptcy is a nuanced system that helps thousands of individuals and businesses find permanent relief from debts that they would never be able to repay. For those considering filing for Chapter 7 or Chapter 13 bankruptcy in Windom, MN and the surrounding area, Behm Law Group, Ltd. attorneys provide expert legal guidance and protection throughout the entire process. We help you construct your petition, file the necessary paperwork, documents, and forms, and navigate through all the legal requirements and court procedures.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy, or wage-earner bankruptcy, is a reorganization process that restructures your debts into a three- to five-year repayment plan that is suited to your monthly income and monthly necessary living expenses.  If you file for Chapter 13 after entering a divorce settlement, the particulars of that legal arrangement can be impacted in different ways.

Divorce Settlements

Marriage settlement agreements are contracts that divide the assets the couple previously jointly owned among the two divorcing parties.  It can also assign responsibility for certain debts that the parties incurred during the marriage.  Also, it establishes and assigns domestic support requirements like alimony and child support. The domestic support obligations, such as alimony and child support, established through the divorce decree/settlement typically won’t be discharged in a subsequent bankruptcy proceeding.  For various public policy reasons, the drafters of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 wanted to hyper-prioritize obligations related to child support and alimony so that such obligations would be virtually immune to the bankruptcy process.

Divorce and Bankruptcy

However, sometimes divorce settlement agreements will require one spouse to pay certain debts that were jointly incurred during the marriage and hold the other spouse harmless or immune from such debts.  Also, where one spouse receives more hard assets or property than the other spouse, a divorce settlement agreement can require the spouse who is receiving more hard assets/property to pay a lump sum cash amount to the other spouse as an equalizer of sorts.  These sorts of obligations sometimes can be altered or discharged in a Chapter 13 case.

To learn more about why divorce often leads to bankruptcy and how divorce settlement obligations are handled in Chapter 13 bankruptcy in Windom, MN, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

When you purchase a car and establish a loan, that contract comes with certain requirements. If you miss monthly payments, you’ll likely have to pay late fees and other monetary penalties. When too many payments are missed, your vehicle will likely be in danger of being repossessed. In many cases, individuals whose cars are going to be repossessed are struggling financially in other ways as well. If you’re unable to meet monthly debt payments, including your car payments, filing for bankruptcy can halt the repossession of your car and offer long-term debt relief. If you file for Chapter 7 bankruptcy, your car may be at risk of being liquidated by the chapter 7 trustee or being taken by the vehicle lender after your bankruptcy case has concluded.  However, you may be able to protect it from the liquidation process by asserting an appropriate vehicle exemption.  You may also protect it from being seized by the vehicle lender after your case has concluded by entering into a reaffirmation agreement with the vehicle lender.  In a reaffirmation agreement, you and the vehicle lender mutually agree that the vehicle loan will survive the bankruptcy process and that you will continue to be contractually liable on it.  Another way to keep your car and stop possible repossession is through Chapter 13 reorganization bankruptcy. With the help of Behm Law Group, Ltd., you can build a strong petition for Chapter 13 bankruptcy in Mankato, MN and the surrounding areas, work through a Chapter 13 repayment plan, and find permanent financial stability.

 

Chapter 13 bankruptcy is a reorganization process. When you file a Chapter 13 petition, you’ll work with your bankruptcy attorney to create a proposal that takes your debts and structures them into a manageable repayment plan suited to your income and reasonable, necessary living expenses.  The proposal is called the Chapter 13 Plan and it lasts three to five years. The Chapter 13 Plan will provide for the discharge of up to 100% of unsecured debts.  It can also provide for the payment of your secured debts, including your vehicle loan, under terms that are much more favorable to you and which are designed or suited to your unique budget circumstances.

 

Because your car loan can be included in your Chapter 13 repayment plan, you will be able to keep your vehicle since you’ll still be repaying the debt; you’ll just be repaying the debt under different terms.  This aspect of Chapter 13 stops vehicle repossession, but repossession is also halted immediately when you file because of the automatic stay injunctive mandates of 11 U.S.C. § 362.  The automatic stay prevents creditors from starting or continuing their collection activities, including repossession. Even if the vehicle creditor has already taken your car (as long as they haven’t sold it), they may have to return it to you when your bankruptcy case is filed and the mandates of the automatic stay take effect.

 

When You File

• The automatic stay is in effect
• Your Chapter 13 repayment plan proposal is submitted to the bankruptcy court
• All your creditors will be able to review your Chapter 13 Plan
• Your car lender may return your vehicle if it has been repossessed
• The case is resolved through the bankruptcy court and there is finality when your case is completed
• You start making monthly plan payments to the Chapter 13 trustee within thirty (30) days after your bankruptcy case has been filed
• You can catch up on any missed car payments
• After the three- to five-year plan is finished, the debt on your car is completely paid off

 

Chapter 13 reorganization bankruptcy can also help you catch up on many other missed payments, such as missed mortgage payments, and it can help you pay off other secured debts in full under more favorable terms.  Chapter 13 can significantly help you resolve your financial problems in a short, three-to-five year period. Outside of Chapter 13 bankruptcy, you may have to repay missed payments in a lump sum instead of being able to spread the payments over a three-to-five year repayment period.

 

To learn more about vehicle repossession and Chapter 13 bankruptcy in Mankato, MN, contact Behm Law Group, Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com.

Bankruptcy is a legal debt remedy that many people believe is limited to individuals struggling severely due to a low income and debts they cannot repay. Many people aren’t aware that Chapter 13 (aka “wage earner” bankruptcy) can provide just as much support to those with steady incomes and accumulated debts as Chapter 7 (aka “liquidation” bankruptcy) offers those at or below a state’s median or average income. Both chapters are valuable support systems for individuals in many different financial circumstances. Whether you plan to file for Chapter 7 or Chapter 13 bankruptcy in Pipestone, MN, Behm Law Group Ltd. can help you build a strong case and receive long-lasting debt relief.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy works to reorganize your debts into a three- to five-year repayment plan that fits your income. Over that time, you will pay only a percentage of your unsecured debts, like credit card debts and medical bills.  At the end of the three-to five-year period, the remaining balances on those unsecured debts will be discharged.

With secured debts, like mortgages or car loans, one can pay those debts in chapter 13 under adjusted and more favorable terms.  With a vehicle loan, for instance, one can lower the applicable interest rate.  Further, one must only pay the present value of the vehicle rather than what is actually owed on the subject loan.  This is called “cram down”.  For instance, if one has a vehicle that is worth $10,000.00 but one owes $20,000.00 on the subject loan, one must only pay the $10,000.00 present value.

Also, if someone is delinquent or past due with one’s mortgage payments, those past due payments can be paid back or “cured” through a chapter 13 plan and the mortgage lender will not be able to commence foreclosure proceedings.

Your submitted petition will include your proposed repayment plan that you and your attorney have worked out together. The trustee will review the plan and your creditors will be allowed to examine it as well.  Your bankruptcy plan will then be submitted to and approved by the bankruptcy court.

Although the court may take a month or two to review and approve a submitted plan, you will still be required to start payments to the trustee within thirty (30) days after the plan has been filed with the bankruptcy court.  During this time, however, it’s possible that you may have a change in financial circumstances that necessitates a modification to your plan even before it is approved by the bankruptcy court.

Submitting an explanation and documentation to the bankruptcy court denoting the changed financial circumstances will likely be an acceptable basis for the bankruptcy court to allow the plan to be modified before approving it.   Presume that you initially submit a three-year (36 month) plan that provides for monthly payments of $500.00.  Presume further that after you submit your initial plan your monthly income decreases so that you can only afford to make monthly payments of $200.00.  If you and your attorney provide the chapter 13 trustee and the bankruptcy court with documentation denoting the reasons for the income changes, you can file a modified three-year (36 month) chapter 13 plan that provides for monthly payments of $200.00.

If you have income or other financial circumstances that change after your plan is confirmed or approved by the bankruptcy court during your three- to five-year repayment period, you will be able to make further adjustments. If you’ve had a major life change like losing your job, getting divorced, or having a child, you can file a motion with the bankruptcy court to change the terms of your chapter 13 plan.

To learn more about repayment plan adjustments with Chapter 13 bankruptcy in Pipestone, MN, contact Behm Law Group Ltd. by calling (507) 387-7200 or emailing stephen@mankatobankruptcy.com.

If your debts are piling up with no end in sight, you’re not alone. People all across the U.S. struggle financially for many different reasons. No matter how you’ve incurred debts like credit card debts, medical expenses, mortgage delinquencies, car loans and debts following vehicle repossession, and many other kinds of secured and unsecured debts, almost all can be treated favorably and discharged completely through bankruptcy. Both Chapter 7 and Chapter 13 bankruptcy are designed to help individual consumers work through a debt relief process overseen by a bankruptcy court that remains fair to all parties involved. Behm Law Group, Ltd. can help you navigate the unfamiliar and nuanced process of bankruptcy from start to finish. Our attorneys work with individuals and businesses filing for Chapter 7 or Chapter 13 bankruptcy in St. Peter, MN and the surrounding region.

 

Chapter 7 bankruptcy is reserved for filers with modest household incomes (incomes below or equal to the state median/average income of a similar sized household) or a debt-to-income ratio that justifies eligibility. Chapter 13 bankruptcy, on the other hand, is a process that wage-earning individuals can qualify for who have more robust and steady incomes. Unlike Chapter 7 where debts are discharged completely within 90 to 120 days, Chapter 13 bankruptcy reorganizes debts into a three- to five-year repayment plan where the repayment terms are adjusted favorably in light of your monthly income and necessary monthly living expenses.

 

Chapter 13 bankruptcy addresses debts in unique ways that are beneficial to your long-term financial rehabilitative consequence.  The purpose of Chapter 13 bankruptcy is for you to propose a plan of reorganization, lasting 3 to 5 years, where you make one monthly payment to a chapter 13 trustee which the chapter 13 trustee divides up among your creditors.  Generally, the repayment terms of the chapter 13 plan are much more favorable to you than what you may experience outside of bankruptcy.    A primary goal is to have as many of your debts, even secured debts like vehicle loans and priority debts like tax debts and child support arrearages, incorporated into your chapter 13 plan for payment by the chapter 13 trustee with the payment you make each month of your plan’s duration.  How a particular debt can be treated in a chapter 13 plan depends on what kind of debt it is.

 

Secured Debts

 Secured debts are debts that are secured by or collateralized by one of your assets.  If you don’t make your monthly payments to a creditor who holds a secured debt, the creditor can take or seize the asset that operates as security or collateral for the loan.  A good example is a vehicle loan.  With vehicle loans, a person can do something known as “cram down” in chapter 13 bankruptcy.  This is where the amount of a particular vehicle loan is reduced or crammed down to the present value of the vehicle.  The interest rate of the vehicle loan can also be crammed down.  For instance, presume you own a vehicle that is presently worth $5,000.00 and you presently owe $15,000.00.  Presume further that the interest rate you pay outside of bankruptcy on the vehicle loan is 15%.  In chapter 13 bankruptcy, rather than paying your vehicle loan payment to the creditor you simply include the loan for payment in your chapter 13 plan.  Your plan could provide for a reduction of the loan from $15,000.00 to the present value of the vehicle – $5,000.00.  In addition, your plan could provide for a cramdown of the interest rate that would be applied to the $5,000.00 from 15% to 5%.

 

Home mortgages arrearages/delinquencies are also secured debts that can be addressed favorably through chapter 13 bankruptcy.  Presume that before filing chapter 13 bankruptcy, your monthly mortgage payment is $1,000.00 and presume further that you are $10,000.00 behind with your mortgage payments.  Your chapter 13 plan can provide for payment of the $10,000.00 mortgage delinquency and the mortgage creditor would not be able to foreclose on your home.  However, going forward throughout your chapter 13 bankruptcy plan, you would be required to continue making your regular, monthly mortgage payments.  The chapter 13 trustee would only pay the pre-bankruptcy mortgage arrearage/delinquency over 3 to 5 years.  If you failed to make your ongoing, regular monthly mortgage payments to your mortgage lender, the mortgage lender could get relief from your bankruptcy case and commence foreclosure proceedings against your home.

 

Tax Debts and Child Support Arrearages

 Tax debts and child support arrearages are priority unsecured debts.  Generally, these debts are not secured by or collateralized by any of your assets.  They are, technically, unsecured debts.  However, due to certain public policy considerations, the drafters of the bankruptcy code wanted to make these debts more difficult to discharge in bankruptcy.   However, they can still be favorably treated in chapter 13 bankruptcy.  The bankruptcy code requires the chapter 13 trustee to pay these debts in full.  The chapter 13 trustee will pay these debts first or at the same time as the trustee pays the secured debts included in the chapter 13 plan.  While the chapter 13 trustee pays these debts first, the debts are usually not paid with interest.

 

General Unsecured Debts

These debts are lowest on the trustee’s payment priority list and they are generally paid last and receive whatever funds are left over after the chapter 13 trustee pays secured debts, tax debts and child support arrearages.  Generally, the chapter 13 trustee does not pay interest on these debts.  When the term of your chapter 13 plan has concluded, whatever is left owed on these debts is completely discharged.  Common unsecured debts that are only fractionally or partially paid in Chapter 13 bankruptcy include the following:

 

1. Credit card debt: Credit cards are often a significant factor in pushing an individual to file for bankruptcy. Fortunately, they are the most easily discharged.
2. Medical bills: Like credit card debt, medical bills are also a large piece in many bankruptcies but are also easily discharged. This includes medical bills incurred from uninsured medical treatments.
3. Some tax debts: While most tax debts are excepted from discharge in bankruptcy, older tax obligations can be discharged, as long as the older tax debt was not incurred through fraud.
4. Unsecured personal loans: Personal loans that are not secured by some kind of property can be discharged. A good example of an unsecured personal loan is a payday loan.
5. Some judgment debts: If someone has sued you for breach of contract or negligent conduct and obtained a judgment against you, the debt underlying the judgment can be discharged in Chapter 13 bankruptcy. An exception to this would be debts reduced to judgment where you may have injured someone either while driving under the influence of alcohol or in a fistfight.

 

To learn more about how debts are handled with Chapter 13 bankruptcy in St. Peter, MN, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

Everyone wants to save money for the future, whether putting away $10 per paycheck, or contributing thousands of dollars to a 401(k) or other retirement plans. For many, however, those financial goals might be difficult to maintain. If you’re struggling to meet monthly bills and other debt payments, it might be time to consider filing for bankruptcy. The process of bankruptcy has benefited thousands during trying economic times. Despite the misconception that bankruptcy is a choice that will either leave you homeless or with crippling credit, it’s actually a highly effective long-term debt relief solution. At Behm Law Group Ltd., our expert attorneys are here to help. We provide guidance and legal protection for those filing for Chapter 7 or Chapter 12 or Chapter 13 bankruptcy in New Ulm, MN, and the surrounding region.

 

While Chapter 7 bankruptcy is an option for those with household incomes lower than the state median/average income for their household size, Chapter 13 bankruptcy is a process better suited for financial circumstances with steady incomes. Also called “wage-earner bankruptcy,” Chapter 13 bankruptcy reorganizes the filer’s debts into a three-year to five-year manageable repayment plan suited to his or her income. Only portions of unsecured debts (debts without collateral) are paid at no interest and secured debts (debts with collateral such as vehicle loans) are repaid under terms that are more favorable over a three- to five-year period. All disposable income (income not necessary for your reasonable and necessary monthly living expenses) is used to make monthly plan payments, and the filer’s remaining discretionary income is used for living expenses like food, gas, utilities, and home maintenance and many other things.

 

While the chapter 13 bankruptcy trustee is required to review your reasonable and necessary living expenses, there is also considerable flexibility that allows you to contribute some of your income towards certain items such as saving up to travel for the holidays and making monthly contributions to retirement plans.

 

Discretionary Income and Retirement

Strictly speaking, making contributions to retirement funds/plans does not constitute a reasonable and necessary living expense such as purchasing food, making vehicle or mortgage payments, etc.  However, provided someone has made contributions to a 401(k) or some other retirement account before filing for bankruptcy, the bankruptcy code allows one to continue making such contributions.  There is a sound public policy behind this.  Quite simply, the drafters of the bankruptcy code wanted to encourage people to save for themselves and build a financial reserve or “nest egg” that could be relied upon later and which would help prevent the need to file for bankruptcy relief again.  Indeed, for older filers near retirement age, such contributions can be considered necessary because they will soon be living off that income.  If you are currently enrolled in a voluntary or non-voluntary contribution plan through your employer or if you are repaying a retirement account loan, those obligations will be worked into your case and will continue normally.

 

Filing for Chapter 13 bankruptcy in New Ulm, MN, or the surrounding area doesn’t mean that you will lose the ability to save something for yourself during that three- to five-year repayment period. Contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com to learn more details about Chapter 13 repayment bankruptcy.

During the holidays, many households struggle with the financial expectations of gifts, decorations, and fancy foods. If you are one of the many individuals having a hard time meeting debt payments, it may be time to take action for permanent debt relief.

 

While there are options for debt relief outside of bankruptcy, such as debt settlement or debt consolidation these options are rife with fraud and full of bad actors who are only interested in taking your money, have no legal authority to make your creditors do anything and will not provide permanent debt relief.  At Behm Law Group, Ltd., we can guide you through the process of filing for Chapter 7 or Chapter 13 bankruptcy in Pipestone, MN and the surrounding area to receive immediate, effective and permanent debt relief.

 

Those who are already in the process of working through a three to five-year long Chapter 13 bankruptcy repayment plan can still enjoy the Holiday Season as they would any other year outside of the bankruptcy process. While it’s true that some income must be paid to the chapter 13 trustee to meet monthly repayment plan requirements, one can still purchase gifts for friends and relatives, spend money entertaining friends and relatives and plan and take trips to visit friends and relatives as one would normally do outside of the bankruptcy process.

 

Discretionary Income

When you enter into a Chapter 13 bankruptcy repayment plan, your income will be broken into disposable and discretionary categories. Your disposable income is what’s left after all reasonable and necessary living expenses are paid. Utility bills, food, gas, taxes, and all other household financial needs are considered reasonable and necessary living expenses that you can use any amount of your discretionary income to pay. What’s left of your income after reasonable and necessary living expenses are paid is called disposable income. For the full period of your Chapter 13 bankruptcy, your disposable income will be used to make your chapter 13 plan payments to the chapter 13 trustee and the chapter 13 trustee will divide those monthly payments among your unsecured creditors.  Christmas presents, decorations, and luxury foods are all things that you can use your discretionary income to purchase during the Holiday Season. Being in a Chapter 13 bankruptcy simply means that you and your attorney and the chapter 13 trustee will draft a monthly budget to help you spend your discretionary income more efficiently to cover your reasonable and necessary living expenses, including recreational expenses and charitable contributions.

 

Budgeting

Even with your disposable income being used to repay unsecured creditors through your chapter 13 plan, you can still enjoy the Holiday Season as you always have enjoyed it. One significant resource you can rely upon is part of your yearly income tax refunds. Although your yearly tax refunds technically constitute disposable income that should be used to repay unsecured creditors, the chapter 13 trustee will only require you to pay over a portion of your yearly tax refunds and permit you to use the rest as you wish. You could also request an adjustment to your repayment plan for the months during the Holiday Season.  Most chapter 13 trustees will allow a temporary change in your plan.

 

If you are facing serious debt problems this year, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com to learn more about filing for Chapter 7 or Chapter 13 bankruptcy in Pipestone, MN.