Repayment Plan Adjustments for Chapter 13 Bankruptcy in Pipestone, MN

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.

Debts Discharged in Chapter 13 Bankruptcy

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.

Leniencies with 401(k) and Other Retirement Funds in Chapter 13 Bankruptcy

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.

How to Enjoy the Holidays While Working Through a Chapter 13 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.

 

Different Types of Bankruptcy in Redwood Falls, MN

Because the current time is full of uncertainties, any growing financial worries can add a tremendous amount of stress on a household. Whether you’re an individual, a family breadwinner, or a business owner, you can rest assured that when worst comes to worst, you will always have the option to file for bankruptcy if your financial circumstances call for it. Bankruptcy often gets a negative image cast over it, but the truth is that it’s a system designed to protect debtors, creditors, and the economic system overall with fair and just treatment to every party involved. If you are finding it impossible, or even just difficult, to meet debt payments each month, you can join thousands of other U.S. citizens who filed for bankruptcy and received permanent debt relief. With the help of Behm Law Group Ltd., you can build a strong case for Chapter 13 or Chapter 7 or Chapter 12 bankruptcy in Redwood Falls, MN, and start down your own road to a debt-free life.

At Behm Law Group, we work with individuals or joint-filing spouses going through Chapter 7 or Chapter 13 bankruptcies. We also work with Minnesota family farmers and fishers to help them file for Chapter 12 relief. The different chapters/types of bankruptcy outlined in the code include:

  • Chapter 7: This process is for individuals or businesses of any size. It works to liquidate non-exempt assets in exchange for the discharge of debts. With most individual cases, the exemptions provided by the bankruptcy code protect one’s property from liquidation and all one loses are one’s debts.
  • Chapter 13: This bankruptcy is primarily for individuals, but sole proprietorship businesses can file by combining personal and business debts into one case. This process works to reorganize debts into a manageable repayment plan lasting three to five years that is tailored to one’s monthly income and reasonable and necessary monthly living expenses.
  • Chapter 12: This works like Chapter 13, but it is exclusively designed for family farmers and fishers who derive 50% of their yearly income from their farming/fishing operations.
  • Chapter 11: This is another reorganization bankruptcy, but it’s typically available to very large businesses that aren’t sole proprietorships or partnerships and to individuals who have a lot of property and have more than $419,275 of unsecured debts and more than $1,257,850 of secured debts. Chapter 11 typically costs more, takes longer, and involves more debts than the other reorganization bankruptcies.
  • Chapter 9: This bankruptcy process is for cities, towns, and other municipalities. The process protects the filing municipality from its creditors while a debt reorganization plan is drafted.
  • Chapter 15: This chapter applies to bankruptcies that cause cross-border insolvencies and is used when a filer has debts in the United States and in another country.

This is a brief explanation of the general chapters in the U.S. bankruptcy code. To learn more about bankruptcy law or to file for bankruptcy relief in Redwood Falls, MN, today, call Behm Law Group Ltd. at (507) 387-7200 or email at stephen@mankatobankruptcy.com.

Why Small Businesses Aren’t Filing for Bankruptcy Now

Since the end of March and the height of the coronavirus shutdowns, small businesses and beyond have struggled to stay afloat. The benefits of stimulus packages and federal loans have helped many individuals and businesses keep their heads above water and even make a profit during months of decreased income. Unfortunately, most of the effects of the stimulus bills came to an end, and small businesses now need to decide what steps to take to protect themselves given current economic conditions. If you own a sole proprietorship or partnership business, you can use Chapter 13 bankruptcy to resolve debts without losing your business. With the help of Behm Law Group Ltd., you can work through that type of reorganization bankruptcy in New Ulm, MN, and the surrounding areas to file a successful case that will resolve your debts without liquidating your business operations.

Although sole proprietorship and partnership businesses can file for bankruptcy by rolling business debt into the owner’s personal debts, many other small businesses are not able to file because they would be restricted to Chapter 11 reorganization as they may have large amounts of debt and assets with significant values.

Both Chapter 13 and Chapter 11 function similarly to reorganize debts into a repayment plan. Filers will slowly repay debts included in the plan over several years. Many debts will be paid in full but under different terms as denoted in the plan. Other debts will receive payment for a finite period of time and only be partially paid. The remaining balances of those debts at the conclusion of the bankruptcy case would be discharged. While those businesses that qualify for Chapter 13 bankruptcy are more likely to file during this time, if it’s the correct choice given their current finances, businesses that only qualify for Chapter 11 bankruptcy still might not be able to file.

The situation for small businesses right now is complicated. Big business bankruptcy cases have increased by almost 120% in the past 8 months, largely due to the effects of COVID-19, but many smaller businesses have been left unable to file for bankruptcy simply because the costs of filing can be significant. These smaller businesses are operating on shoestring budgets, and once stimulus aid comes to a full stop, they will likely be left with little to no resources.

Because small businesses will be (or already have been) operating on such low incomes, they will literally not be able to afford to file for Chapter 11 bankruptcy. The cost of an attorney and the filing fees involved in a Chapter 11 bankruptcy case are often upward of $10,000 for many small to medium businesses. Most struggling to meet debt payments will just keep operations running until a third party intervenes rather than put time and money into Chapter 11 bankruptcy reorganization plans.

With PPP (payroll protection) loans and stimulus support still helping some small businesses and other businesses with incomes too low to cover bankruptcy fees and costs, small business bankruptcies are down by about 14% from last year.

If you are able to fund a Chapter 13 bankruptcy in New Ulm, MN, or the local area, Behm Law Group Ltd. can help you build a repayment plan for long-term debt relief. Contact us at (507) 387-7200 or stephen@mankatobankruptcy.com today.

Filing for Chapter 13 Bankruptcy with a Business Partner in Worthington, MN

For individuals in the position to file for bankruptcy, there are two common options available: Chapter 7 or Chapter 13 bankruptcy. Chapter 7 works to liquidate your non-exempt assets in exchange for the discharge of your debts. This process is most common for filers without a steady income and the loss of non-exempt property does not occur in most Chapter 7 cases. However, for those with income who want to keep properties that could otherwise be liquidated in Chapter 7, Chapter 13 is a better option. Chapter 13 bankruptcy works to restructure your debts into a manageable three-to-five-year repayment plan that is based upon your monthly “net” income and your monthly reasonable and necessary living expenses.

While Chapter 7 is a bankruptcy process available to individuals and businesses in Worthington, MN, alike, Chapter 13 is mostly filed by individuals. If you own a sole proprietorship or partnership business, you may be able to combine business and personal debts and use Chapter 13 bankruptcy to resolve all debts at once.

If you’re in the position to file for Chapter 13 bankruptcy in Worthington, MN and the surrounding area, Behm Law Group, Ltd. can help you build a strong case and get your reasonable repayment plan put into place.

For Chapter 13 filers with a sole proprietorship, combining business and personal debts is relatively simple because there’s only one party filing for bankruptcy. For partnership businesses, however, that process can get a little more complicated. These complications often create situations where filing for Chapter 13 bankruptcy is less than ideal for a partnership.

What to consider:

  • Your business contract: Many partnership businesses build clauses into their contracts that will dissolve the business as soon as one partner files for Chapter 13 bankruptcy. This is largely because of the potential negative results in a bankruptcy case that could befall a non-bankruptcy filing partner.
  • Potential case results: If the non-filing partner is able to repay the debts with their personal income, a creditor could request to have the case switched to a Chapter 7 on those grounds. The creditor could possibly receive more money in this case by targeting your partner’s assets, and your business would be forced to close down operations.
  • Who has to pay: If your partner files for bankruptcy, they’ll wipe out their responsibility for that business debt. This may leave you fully responsible for the debt. Additionally, if either of you guaranteed the debt, a bankruptcy case may trigger a clause that will require an immediate full payment of a loan.
  • Who will own the business: When your partner files for bankruptcy, they give up their share in the business to the bankruptcy trustee. Their ownership interest in the business becomes property of their bankruptcy estate. Technically, this will make a bankruptcy trustee your new business partner. If a trustee chooses to liquidate that asset, you could lose half of your business (or however much your partner owned). However, if the business has no “net” value in excess of the debts it owes, the trustee will likely conclude that it has no value to the bankruptcy estate. In that case, the partner filing for bankruptcy relief would likely be allowed to continue operating the business with the non-bankruptcy filing partner, as was the case before the bankruptcy was filed.

Don’t Try to Navigate Chapter 13 Bankruptcy Alone

If you or your partner plan to file for Chapter 13 bankruptcy in Worthington, MN or the surrounding area, Behm Law Group, Ltd. can help you decide whether or not it’s a good idea. Contact us at (507) 387-7200 or stephen@mankatobankruptcy.com today.

Understanding the Elements of a Chapter 13 Bankruptcy Repayment Plan

If you are in a difficult financial situation that will benefit greatly from a bankruptcy case, you have two primary potential options as an individual consumer. Depending on your financial circumstances, you can either file for Chapter 7 or Chapter 13 bankruptcy. For those with a debt-to-income ratios higher than the state median or average income of a similar household, Chapter 7 bankruptcy is not an option. If you don’t qualify for Chapter 7 based on your income, you may find your situation is better suited to filing for Chapter 13 bankruptcy. Those considering filing for Chapter 13 bankruptcy in Owatonna, MN, can put together a strong case with the legal protection and guidance of a Behm Law Group Ltd. attorney.

 

Chapter 13 bankruptcy works to restructure your debts into a repayment plan with monthly payments suited to your current income. This plan will last three to five years, depending on your income level. During this time, any material changes in your monthly income and monthly living expenses will be reflected by slight adjustments to your repayment plan. Because the filer and filer’s attorney must work together to create a repayment plan proposal to submit to the trustee, you should make a point of understanding the basic components of a typical Chapter 13 repayment plan.

 

Included in your plan:

  1. Bankruptcy and administrative fees, including your filing fee, trustee’s fee of 3%-10% of each monthly payment, and attorney fees. You will pay 100% of these fees in your plan.
  2. Priority debts, including child support, most tax debts, criminal fines and penalties, alimony, wages owed to people you may have employed, and others. You will pay 100% of these debts in your plan but these debts will not be paid interest.
  3. Secured debts, including mortgages, car loans, and any other debts tied to real estate and items of personal property. You will pay most of these debts in your plan under different/adjusted terms that are more compatible with your regular monthly income and your regular reasonable and necessary monthly living expenses.
  4. Unsecured debts, including credit card debts, medical bills, and any other debts not tied to a property or protected with a lien. You will pay only a percentage of these debts.  Generally, these debts will not be paid in full and they will not be paid interest.  The amount you’ll repay depends on your disposable income (remaining monthly income after your reasonable and necessary monthly living expenses are paid) that will be paid monthly in the repayment plan and on how many months your plan will last.

 

You now are aware of the basic components of a typical Chapter 13 bankruptcy repayment plan. With the help of a skilled bankruptcy attorney, you can easily craft a reasonable repayment plan proposal that fits your current monthly income and other financial circumstances and restrictions.

 

To learn about other, more complex components of a chapter 13 repayment plan or to file for Chapter 13 bankruptcy in Owatonna, MN, contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com.

 

 

 

How the CARES Act Affects Mortgage Forbearances for Those in a Chapter 13 Bankruptcy

Since the beginning of 2020, and for the foreseeable future, everyone in the United States and across the world is dealing with some serious difficulties in the face of COVID-19. One of the most prominent issues many in the United States are struggling with is a lack of income due to shelter-in-place orders and nonessential business shutdowns. Combined with layoffs and other factors, the situation is worse for those who struggled with finances even before the outbreak of the virus. These people are having to take actions to protect themselves and they are working with creditors, banks, and other loan providers to come up with a sound financial plan.

 

The CARES Act was put into place this past March to provide relief to U.S. citizens and businesses through various means. For many, one of the most helpful parts of the CARES Act is the allowance of a mortgage forbearance for up to six months. However, for those working through a Chapter 13 repayment plan, the CARES Act may affect a mortgage forbearance differently than for other individuals. If you are considering filing a Chapter 13 bankruptcy in Waseca, MN, or the surrounding area during this time, Behm Law Group Ltd. can help you understand how the CARES Act could change a mortgage forbearance and other aspects of your finances.

 

For those not in a Chapter 13 bankruptcy, the CARES Act allows individuals to request a forbearance on their mortgage lasting up to six months. There may also be an option to delay making payments on mortgages through forbearance of an additional six months. Requesting this forbearance for those in a Chapter 13 bankruptcy, however, becomes a bit more complicated.

 

For any changes in a Chapter 13 repayment plan, including a mortgage forbearance, all parties involved must be notified. While requesting a mortgage forbearance on the bankruptcy filer’s end is almost the same as for individuals outside of a bankruptcy, the passing of information among the loan services, trustee, and bankruptcy attorney can be complicated. Because the COVID-19 pandemic is an unprecedented situation, the bankruptcy code doesn’t have in-place guidelines to handle issues related to it. Consequently, the reporting of mortgage forbearance requests to parties involved in a Chapter 13 bankruptcy depends on a local district bankruptcy court’s regulations.

 

To properly provide a temporary mortgage forbearance notification in a chapter 13 bankruptcy, the National Association of Chapter 13 Trustees has established a few basic ways mortgage lenders can provide forbearance information to parties involved in a bankruptcy proceeding.

 

  1. General notice: Mortgage lenders can file a general notice with the bankruptcy court outlining the forbearance terms in the court docket for a particular bankruptcy case.
  2. Claims register: Mortgage lenders can also file a claim on the claims register, which is typically more directly linked to the chapter 13 trustee’s system.
  3. Mail a letter: Mortgage lenders can send a physical letter to the bankruptcy filer, the chapter 13 trustee and all interested parties detailing the mortgage forbearance terms.
  4. Notice of payment change: Finally, mortgage lenders can file a notice of payment modification in the bankruptcy court claims register for a particular bankruptcy case.

 

All of these options have their advantages and disadvantages, depending on the locality. Mortgage lenders should be working through whichever process is best for each bankruptcy judicial district.

 

To learn more about mortgage forbearance in a Chapter 13 bankruptcy in Waseca, MN, contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com today.

Making Chapter 13 Bankruptcy Work for Your Small Business

Owning a small business is a difficult endeavor with hundreds of obstacles to overcome in order to turn a profit. Because it’s so difficult to maintain a successful business, many business owners find themselves in poor financial circumstances. If you are struggling to keep making payments on your business and/or personal debts, it may be time to consider taking action for debt relief. For many businesses and individuals, filing for bankruptcy is an effective way to receive long-term debt relief for many common debts. If you are considering filing for bankruptcy, but want to keep your business running, you may be able to use Chapter 13 bankruptcy in Mankato, MN, to find debt relief with the help of Behm Law Group Ltd.

 

Chapter 13 bankruptcy is a reorganization/repayment type of bankruptcy that is typically only reserved for individuals. However, there are circumstances that may allow for a business owner to file Chapter 13 and include business debts along with personal debts in the case.

 

Specifically, your business debts can be included in a Chapter 13 bankruptcy if you own the business as a sole proprietor or a partnership. If this is your situation, you can include business debts in your repayment plan as personal debts including business tax debts.

 

Including your business debts into your Chapter 13 repayment plan means they will be rolled into your personal debts and repaid within a three- to five-year period. Secured and unsecured business debts are handled in the same ways your personal secured and unsecured debts might be. This means your secured business and personal debts will be repaid in full, often under adjusted contractual terms that are more favorable to you and your business, and your business and personal unsecured debts will be repaid in amounts between 0% and 100%, depending on the value of your assets. The percentage is determined, in part, by the amount that your unsecured creditors (creditors without security or collateral) would receive if you had filed for a Chapter 7, liquidation type bankruptcy.

 

If you own a business in a partnership, you may not be able to file for Chapter 13 bankruptcy if the trustee determines that your creditors will receive more back on their claims if you file for a Chapter 7 bankruptcy instead and close down your business. Some cases of one partner filing for Chapter 13 bankruptcy and repaying the business debts without the help of the other partner, however, have occurred.

 

In a Chapter 13 bankruptcy, you can generally keep your business assets and keep your business operating as long as you continue to meet your Chapter 13 plan payment obligations each month.

 

If you are considering filing for Chapter 13 bankruptcy in Mankato, MN, as a business owner or as an individual, Behm Law Group Ltd. can guide you through the process and help you understand your case options. To learn more about bankruptcy, contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com.