Meeting the Best Interest of Creditors in Chapter 13 Bankruptcy in Fairmont, MN

Bankruptcy in the U.S. is designed to give debtors methods of working through their financial obligations in a way that offers more leniency and payment options when repaying accumulated debt. Whether you file for reorganization or liquidation types of bankruptcy, you’ll be given a set of options that will help solve your debt case. However beneficial bankruptcy is to the filer, the process must also be equitable to the creditors involved. Behm Law Group, Ltd. offers legal advice and assistance that will help you navigate through your petition for Chapter 7 or Chapter 13 bankruptcy in Fairmont, MN.

If you file for reorganization bankruptcy, it’s likely you’ll be filing for Chapter 13. In this case, you’ll be working with a bankruptcy trustee to establish a repayment plan. The results of this plan will allow you to reorganize how you repay your debts, changing the amount that must be repaid and the time period in which it’s repaid. Your plan can make your debts vastly more manageable given your financial situation, but it’s required to also meet the best interest of your creditors.

Whether your repayment plan is fair to your creditors or not is a status determined by the Best Interest of Creditors Test.

Best Interest of Creditors Test

In a nutshell, you must repay priority debt creditors, such as tax creditors or child support creditors, the full amount you owe. This is a standard for all Chapter 13 cases. What varies from case to case is the amount you’ll repay to your non priority unsecured creditors, such as medical debts and credit card debts. This is where the Best Interest of Creditors Test comes into play. What the test measures is how much you’re repaying to your creditors, and if that amount is fair. The bottom line is that your repayment plan must repay, at minimum, the amount that creditors would have received from your liquidated assets if you had filed for Chapter 7 instead. This in turn depends on your property values and the exemptions you can claim.

Not only does the test decide whether you’re meeting your creditors’ best interests, but it also partially determines how much you’ll pay to priority unsecured creditors in your repayment plan.

The Best Interest of Creditors Test is most effective in determining if you’re meeting the minimum requirement for amounts repaid to nonpriority unsecured creditors. It doesn’t take your disposable income into account, but that amount will be considered outside of the test to determine the maximum amount you must repay. For legal help with your repayment plan and working through filing for Chapter 13 bankruptcy in Fairmont, MN, contact Behm Law Group, Ltd.at (507) 387-7200 today.

Using Charitable Contribution Deductions and Avoiding Fraudulent Transfers With Chapter 13 Bankruptcy in Redwood Falls, MN

If you file for Chapter 13 bankruptcy and reach an approved petition and repayment plan, it’s guaranteed that you must use all of your disposable monthly income to meet your monthly debt repayment requirements. Before you file your petition, however, there are approved ways to lower your monthly requirements by lowering the amount categorized as disposable income. Working with a bankruptcy attorney during this time is important to ensure your safety against accidental fraud associated with transferring incomes. Behm Law Group LTD. provides the legal advice and assistance you need throughout the process of filing for Chapter 13 bankruptcy in Redwood Falls, MN

One way to decrease your monthly payments by lowering your disposable income is by dedicating some of that income to charitable donations.

Charitable Deductions:

In order to reduce your disposable income with charitable donations, your donation expenses have to meet certain standards set by the US Bankruptcy Courts. First, the charity of your choice must be qualified under the tax code as a legitimate, government-approved religious or charitable organization. You can also donate to the government for public use of your funds, to your church, or to tax-exempt 501(c)(3) charities. Second, the donations must come from your own disposable income and not through other means under your control, such as your business or trust fund. Additionally, the donation must be monetary and the organization can’t be politically involved in legislative affairs or candidacies.

Fraudulent Transfer:

You may deduct up to 15% of your gross annual income for charitable donations to reduce the disposable income and lower monthly payment requirements in a Chapter 13 repayment plan. Any amounts over that 15% donated prior to filing for Chapter 13 bankruptcy can be considered as breaking the fraudulent transfer law. This means that your bankruptcy trustee can take back the amount over 15% from the charity you chose for those donations. You will also have to prove you’ve been making regular donations to an approved charity to have the full amount of your expenses deducted from your disposable income.

In the months leading up to your petitioning for Chapter 13 bankruptcy in Redwood Falls, MN, you can do a lot to optimize your repayment plan. With our bankruptcy attorneys advising you along the way, you can keep your petition legitimate as well as getting the most out of what Chapter 13 bankruptcy has to offer. For more information, contact Behm Law Group LTD. at (507) 387-7200.

Working With the Best Effort Requirement When Filing for Chapter 13 Bankruptcy in Fairmont, MN

If you’re considering filing for bankruptcy, you’ve probably started to do some research of your own and learning about your options. If you think you may qualify for Chapter 13 bankruptcy, you might have already discovered that a long road of meeting financial and legal obligations set by the U.S. Bankruptcy Courts, your bankruptcy trustee, and your creditors is ahead of you. Navigating these requirements is crucial to successfully working through a Chapter 13 petition and completing a repayment plan, but it can be a difficult process without the help of a well-versed professional. Behm Law Group, LTD. can provide that help with our experienced bankruptcy lawyers in Fairmont, MN

One stipulation you must continue to meet if you’re about to begin your repayment plan is the Best Effort requirement.

What is “Best Effort?”

Essentially, the Best Effort requirement demands that you must be able to prove you will use the entirety of your disposable income—any income you do not spend on taxes, household needs, transportation, or other debt payments—on meeting your monthly repayment plan installments. Specifically, your disposable income must be used to make payments to nonpriority unsecured creditors in your repayment plan.

Nonpriority Unsecured Debts

Your nonpriority unsecured debts (such as credit card debt, personal loans, and medical bills) may not always be paid back in full like your priority debts. The amount you pay back to your nonpriority unsecured creditors is again determined by your average income. If your income average over the six months prior to filing for bankruptcy falls below the Minnesota median income, the length of time you have to repay your nonpriority unsecured debts back can be as short as 36 months or 3 years; your creditors, accordingly, would receive lesser amounts. If your income is higher than state median, the length of time you have to repay your creditors must be 60 months or 5 years. In such a case, your creditors would receive larger amounts.

With the right guidance it’s easy to meet the Best Effort requirement and still have deduction options for your disposable income. Behm Law Group, LTD. can provide that guidance in the months leading up to your petition and throughout the process of filing for Chapter 13 bankruptcy. For more information about how our experienced bankruptcy lawyers in Fairmont, MN can give you the best legal advice and assistance with your bankruptcy case, contact us at (507) 387-7200 today.

Good Faith and Debt Repayment Plans With Chapter 13 Bankruptcy in St. Peter, MN

Your disposable income plays a large part in determining your path when it comes to filing for bankruptcy as an individual. This income is taken into consideration with your debts and the value of your assets and properties. The result decides whether you qualify for Chapter 7 or Chapter 13 bankruptcy. If your results don’t pass the Means Test, you may opt to work with a bankruptcy trustee to build a repayment plan and file for Chapter 13 bankruptcy. If you’re considering filing for Chapter 13 bankruptcy in St. Peter, MN, Behm Law Group, Ltd.  can provide legal assistance with your repayment plan and your petition.

A debt repayment plan with Chapter 13 bankruptcy is designed to reorganize your standing debts while keeping things balanced and fair between you and your creditors. You can’t propose a repayment plan to your trustee and the courts, however, if you don’t prove your good faith in repaying debts in full within a five-year period.

Good Faith:

Filing your petition for Chapter 13 bankruptcy covers most of the required information, forms, and schedules for the process, but you must also provide your proposal for a repayment plan. The outline of your plan proposal describes your monthly payments towards priority debts, secured debts, and unsecured debts, and the term in which the selected amount of those debts will be repaid. This is where your “good faith” comes in.

In order for your petition to be fully-approved by U.S. Bankruptcy Courts, your bankruptcy trustee must be able to approve your good faith in using all your disposable income to meet your monthly repayment requirements.

Lacking Good Faith:

There are several reasons why your bankruptcy trustee may determine that you’re not in good faith for your repayment plan. Most of the time, if you’re lacking good faith, there will be some inconsistencies with your income, deductions, or petition. For example, if your current monthly income is subject to change during your repayment period and you do not notify the courts, your plan may be denied. If you’re found lacking in good faith, you may respond with an explanation, and your trustee may reexamine your standing.

Behm Law Group, Ltd. can help you navigate the process of determining a repayment plan and holding a good faith standing when you file your petition for Chapter 13 bankruptcy in St. Peter, MN. If you’re considering bankruptcy contact us at (507) 387-7200 today.

Understanding Debt Repayment In Chapter 13 Bankruptcy in Mankato, MN

Most individuals considering filing for bankruptcy have two main options: filing for Chapter 7 bankruptcy or filing for Chapter 13 bankruptcy. In the case of Chapter 7, a filer has qualified for this type of bankruptcy after passing the Means Test, determining that their debts and financial obligations outweigh their disposable income and estate value. The process of Chapter 7 liquidates assets, uses asset value to repay creditors, and discharges debts. However, even if a high income prevents qualification for Chapter 7, accumulated debts can cripple finances. If you cannot file for Chapter 7, you may choose debt reorganization with Chapter 13 bankruptcy. For any type of petition, Behm Law Group, Ltd. can help you through the process of filing for bankruptcy in Mankato, MN.

Chapter 13 bankruptcy is designed to take your monthly reasonable and necessary living expenses and weigh them against your monthly “net” take home income and the value of your assets. This type of bankruptcy reorganizes your debt repayment, effectively restructuring the process by which the creditors are paid to the best possible advantage to you.  Generally, unsecured creditors (credit card debts, medical debts, etc.) and priority creditors (tax debts, child support arrearages, etc.), receive no interest, no late fees, or any other default fees through the Chapter 13 process.

Because Chapter 13 cases vary so widely, it can be difficult for prospective bankruptcy candidates to apply the basic description of debt reorganization onto their own situation. Though the provisions of a Chapter 13 repayment plan may change from case to case, there are some constants across the board.

Amount to Pay

With most debts, a Chapter 13 repayment plan doesn’t change the amount you have to pay each particular creditor.  Rather, you make one monthly payment to a Chapter 13 trustee and the trustee divides that payment among your creditors pursuant to the provisions of your Chapter 13 plan.  The debts you will have to pay in full can include:

  1. Priority debts, such as alimony, child support, tax debts, and wages owed to employees.
  2. Mortgage delinquencies, if you plan on keeping your home throughout the bankruptcy process.

Other debts, however, may only be partially paid. This portion can be between 0% to 100% of what you originally owed the creditors. What you will have to pay is determined by your nonexempt estate value, your disposable income available to repay debt, and the period of your repayment plan.

Repayment Plan Length

Simply put, your income level directly determines the period of your repayment plan. There are two basic options when it comes to balancing your income with your debt repayment.

  1. If your monthly income is higher than the monthly median income in Minnesota for a household of similar size to your own, you will be required to file a five-year repayment plan.
  2. If your monthly income is lower than the monthly median income in Minnesota for a household of a similar size to your own, you may opt for either a three-year plan or a five-year plan.

Chapter 13 bankruptcy may seem more complicated than Chapter 7 bankruptcy, but for many, it’s exactly the right choice for financial recovery. For more information about filing for bankruptcy in Mankato, MN, contact Behm Law Group, Ltd. at (507) 387-7200.

Resolving Your Debts With Repayment Plans in Chapter 13 Bankruptcy in Windom, MN

Of the two common bankruptcy options available to individual filers, Chapter 13 is the more varied and personalized code applicable to your debts. The repayment plan established when you file for Chapter 13 is unique to your own case, and it may be very different from the repayment plan of another individual. The financial situation—the balance of debts, income, and assets—of the individual dictates how the repayment plan is structured. Behm Law Group can offer legal advice and assistance to help you determine how your repayment plan will affect you during your petition for Chapter 13 bankruptcy in Windom, MN.

To understand how your repayment plan will resolve your financial situation, you must first look at how each type of debt is considered in Chapter 13 bankruptcy.

 Priority debts are always included in a repayment plan. This means you will have to pay back the entirety of all your priority debts. The benefit of having a repayment plan is that this payback will happen little by little, usually at no interest, with payments that fit your unique financial situation. Priority debts include child support, alimony, and tax debts incurred in the last 3 years, compensation owed to your employees, or money you owe to an employee fund. These debts are not subject to discharge with any form of bankruptcy.

 Secured debts are an optional part of your repayment plan. These debts include properties you owe payments for, such as vehicles or homes. If you want to keep any properties bound by secured debt, you will have to include the present value of the property securing that debt in your repayment plan and repay that value over time.  Sometimes the value of the property securing a debt is a lot less than the amount of the debt itself.  In such a case, you only have to pay the actual value of the property. For example, if you owe $15,000.00 on a vehicle that is presently worth $5,000.00 and the debt on the vehicle is more than 910 days old, all you would have to pay is $5,000.00.  Tax liens are also considered secured debts that you must pay back within a Chapter 13 bankruptcy plan.

 Unsecured debts vary the most when it comes to determining the right repayment plan for you. What you will pay back on unsecured debts is decided based on the balance of your nonexempt properties with your disposable income and the total period of your repayment plan. These unsecured debts include credit debt, medical bills, and several other forms of consumer or non-property debts.

As a side note, you will also have to pay the entirety of your bankruptcy fees for the process of filing for Chapter 13 bankruptcy. This includes trustee compensation and any fees due to your bankruptcy attorney.

The comprehensive help that Behm Law Group, Ltd. offers with our expert bankruptcy attorneys can be key in guiding you through the process of filing for Chapter 13 bankruptcy in Windom, MN. For more information, contact us at (507) 387-7200 today.

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

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

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

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

 

Meeting of Creditors for Chapter 7 Petitions

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

 

Meeting of Creditors for Chapter 13 Petitions

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

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

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

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

 

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

 

Chapter 7:

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

 

 

Chapter 13:

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

 

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

Spring Ahead with Your Bankruptcy Timeline in the New Ulm, Minnesota Area

Last weekend throughout the New Ulm, Minnesota area and across the country, folks set their clocks ahead one hour. Time has been a topic of conversation throughout the last week as we’ve been adjusting to new times for daylight and nightfall and work to recover lost sleep.

When it comes to your personal bankruptcy filing, time is also an important topic of conversation. Do you know how long it takes to undergo a Chapter 13 filing or how many days you have to wait before initiating your petition?

In today’s post, we’ll examine a few important aspects of your personal Chapter 13 bankruptcy timeline:

180 Days: After going through a counseling session with an attorney, the credit counseling certificate of completion you receive is good for 180 days. If you don’t file within this 180 day time frame, the certificate of completion will expire and you will have to re-take the credit counseling course and pay the course fee again.

30 Days: Once bankruptcy has been filed, the first payment to your bankruptcy trustee will be due within 30 days.

45 Days: In about forty-five days, the court will hold a formal creditor meeting. This will be an opportunity for you to testify under oath about information regarding your bankruptcy filing.

Two Hours: This is the length of the required bankruptcy education course once your case has been accepted and discharged.

Three to Five Years: With Chapter 13 cases, this is the typical amount of time it takes to formally discharge bankruptcy. This is also contingent on the successful completion of the predetermined pay schedule.

Time is of the essence in the New Ulm, Minnesota area. If youre considering a personal bankruptcy filing, or if you feel like Chapter 13 may be the best option for you, it’s important to understand the length of time required for such a case.

For further information regarding your bankruptcy case, or to learn more about the process of filing, contact the professionals at Behm Law Group Ltd. today.

 

Knowing When and How to File For Bankruptcy in New Ulm, MN

Filing for bankruptcy may be a daunting task in New Ulm, MN, and knowing how and when to do so can be overwhelming. The attorneys at Behm Law Group, Ltd. will help you with your bankruptcy process by making it flow smoothly and easily.

The timing for when you file for bankruptcy can be an advantage or detriment to the bankruptcy process. For instance, there is a popular belief that one can splurge with a large amount of money right before filing for bankruptcy and not have to pay it back.

This is simply not true.

The money will have to be paid back and, in addition to that, the legitimacy of the bankruptcy claim may be questioned. Our attorneys will inform you whether you qualify for bankruptcy and which bankruptcy option is best for you.

There are two ways one can file for bankruptcy in New Ulm, MN. The first is voluntary and the debtor chooses to file for bankruptcy. The second is when a debtor is forced by a court order to file for bankruptcy.

How to file for bankruptcy depends on the type of debt you have. At Behm Law Group, Ltd., we assist with filing for Chapter 7, 12, and 13 bankruptcies. Since Chapter 12 is for fishermen and family farmers with a regular annual income, most people choose Chapters 7 or 13.

Chapter 7 bankruptcy does not allow the debtor to repay their debt using a payment plan. Rather, the debtor’s non-exempt assets are sometimes sold in order to pay some of their debt.  While much of the analysis would depend on the value of property and the amount of debt, if any, against that property, some non-exempt property may include a second home or car, family heirlooms, or an expensive musical instrument. A person eligible for Chapter 7 does not have an income to pay off or materially reduce over time the debts that have accrued.

Chapter 13 bankruptcy allows debtors with a regular income to repay all or a portion of their debt based on their income. The debtor will repay the debt for the next three to five years. This process can be a tad more complicated, but the professionals at Behm Law Group, Ltd. will make the bankruptcy process easier and understandable.

Knowing your options during your bankruptcy in New Ulm, MN will help make for a smoother process. The professionals at Behm Law Group, Ltd. will take you through the process and thoroughly inform you every step of the way.