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.

Income-to-Debt Ratio and What It Means for Liquidation Bankruptcy

Many people have been struggling financially during 2020 because of the countless destructive economic impacts of the coronavirus pandemic. Even those with a stable income may be finding it difficult to meet debt payments each month.

 

If your finances are out of balance, no matter the cause, you always have the option to file for bankruptcy and receive long-term debt relief. At Behm Law Group, Ltd. we help clients work through reorganization chapter 13 or liquidation chapter 7 bankruptcy in Windom, MN, offering legal protection and guidance from start to finish.

 

One of the aspects of your finances that’s considered for any type of bankruptcy, but especially for liquidation bankruptcy (Chapter 7), is your income-to-debt ratio. This ratio measures your net surplus income after all debts are paid, and the ratio is a percentage of that value. For example, if your income is $35,000 before taxes and other deductions are removed and your total annual debt amount is $14,000, your income-to-debt ratio is 40%. When mortgage lenders or landlords take a look at your finances to see if you are eligible for a contract or loan, they typically measure your income-to-debt ratio on a monthly basis. For most lenders, a minimum income-to-debt ratio allowance is 43%.

 

When it comes to Chapter 7 liquidation bankruptcy, the income-to-debt ratio determines if a filer is eligible for that process. Chapter 7 bankruptcy works to discharge debts in exchange for the liquidation or sale of non-exempt assets.  In most cases, the bankruptcy code exemptions allowing one to protect one’s property are more than adequate to protect all of a person’s property from liquidation, however.  To prevent abuse of this system, filers are required to pass a legal mathematical threshold called the Means Test.

 

The Means Test asks a series of questions and requests the submission of some financial documents. It essentially determines your income-to-debt ratio and decides whether that ratio is below or above the state median or average income for a household of a similar size. If your income-to-debt ratio is lower than the state median or average, you qualify for chapter 7 bankruptcy.

 

The reason your income-to-debt ratio is considered rather than just your gross monthly income is because the debt load of each household can vary so greatly. You might have a low income but very little debt, and that combination could be a deterrence for filing Chapter 7. Likewise, a very high-income household might also have very high debt that renders an income-debt-ratio that is appropriate for the filing of a chapter 7 bankruptcy.

 

Income-to-debt ratio is also used to calculate certain aspects of your repayment plan in a Chapter 13 case if you’re ineligible for Chapter 7 or if you simply don’t wish to file chapter 7. Mainly, this ratio helps determine how much you will pay to the trustee every month for distribution among your creditors during your Chapter 13 repayment plan period.

 

If you are considering filing for bankruptcy or would like to learn more about chapter 7 bankruptcy in Windom, MN, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

 

Why Chapter 7 Bankruptcy Is Essential

Because the United States is currently in a financial crisis due to the economic shutdowns taking place during the coronavirus pandemic, many people are now struggling to meet monthly debt payments. If you are among the many individuals fighting against debt and unstable finances, you may need to take positive action for debt relief. One debt relief option that is available to all individuals and businesses is the process of filing for bankruptcy. At Behm Law Group Ltd., we work with clients to support and guide them through filing for Chapter 13, Chapter 12 and Chapter 7 bankruptcy in Mankato, MN.

 

Bankruptcy is often incorrectly viewed negatively or as some kind of bail-out tool for big businesses. The truth is that bankruptcy is a highly important legal process that protects the economy from failure in many ways. Chapter 7 bankruptcy, in particular, is an essential process for sustaining and invigorating the U.S. economy.

 

Especially during these financially challenging times, Chapter 7 bankruptcy is important to both individuals and businesses.

 

  1. Individual consumers: Chapter 7 bankruptcy is a powerful debt resolution tool for individuals. This type of bankruptcy works to liquidate filers’ non-exempt assets in exchange for the discharge of certain debts. In most cases, however, the bankruptcy exemption laws are more than adequate to protect all property and all people lose are their debts.  With the help of Chapter 7, filers are rid of debts that they would never be able to repay, such as high credit card debt and medical bills. Creditors are also protected in this process as they are paid in part from the value gained in the possible liquidation/sale of non-exempt assets. The ability to help both debtors and creditors is key in preventing economic impediments. Chapter 7 bankruptcy allows both parties to re-enter the economy and continue participating in that system more efficiently.
  2. Businesses: Chapter 7 bankruptcy is also important for business debt relief. When businesses file for Chapter 7, the process is similar to when individuals file. Business assets are liquidated in exchange for the discharge of all business debts. The major differences between business and individual Chapter 7 bankruptcies is that businesses usually close operations when they file and businesses do not have bankruptcy exemptions with which to protect assets/property. The closures of businesses that file for bankruptcy relief serve to eliminate continually failing companies from the economic network. The fact that businesses only file for Chapter 7 when they have absolutely no other options shows that it’s critical to have that bankruptcy process available when no other solution works. If a business cannot be revived, it is best for the economy to have it closed and have creditors paid as much as possible.

 

Chapter 7 bankruptcy is a powerful and essential tool that many people have used to receive relief from severe financial burdens. If you are finding it impossible to meet individual or business debt payments, consider whether filing bankruptcy might be right for you. Contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com to learn more about filing for Chapter 7 bankruptcy in Mankato, MN.

 

 

When and Why You Should Redeem Property in Chapter 7 Bankruptcy

If you’re struggling with a low income and looming debts, it may be time to start thinking about taking positive actions for relief that keeps your finances stabilized in the long term. One of the most effective resources available to you for debt relief is bankruptcy. Specifically, if you’re facing a severe imbalance between debt and income, you’ll likely benefit most from a liquidation type of bankruptcy that discharges your debts. The U.S. bankruptcy code outlines Chapter 7 as a liquidation bankruptcy for individuals and businesses alike. Behm Law Group, Ltd. attorneys have helped many clients file successful cases in Chapter 7 bankruptcy and receive effective debt relief.

 

Chapter 7 bankruptcy, like all other types of bankruptcy, is still a process that must remain fair to debtors and creditors alike. This means that, though the filer will have their debts discharged, they also could lose some of their non-exempt assets to a liquidation process that returns a monetary value to creditors. Even if they’re not repaid in full on the debts you owe, creditors will sometimes not be left empty handed.  However in the vast majority of cases all of a filer’s assets can be protected from liquidation with the bankruptcy exemptions (such as the homestead or motor vehicle exemption) provided under the bankruptcy code or provided by state law.

 

While exemptions are the primary method of protecting assets, there are some other ways to save your property. One less common way to keep your property is through redemption.

 

Why to redeem: Typically speaking, you will only benefit from redeeming a property in Chapter 7 bankruptcy if you owe substantially more debt on the property than the actual value of the asset. For example, if your car is not protected by the motor vehicle exemption and it’s currently worth $2,000 but you still owe a debt of $5,000 on the loan, you can redeem that property by paying the $2,000 value of the car to the creditor.

 

When to redeem: You can only redeem an asset if certain requirements are met:

 

  1. The property is tangible, but the asset cannot be real estate or business property.
  2. The property is collateral for a secured debt.
  3. The bankruptcy trustee abandons the property.
  4. You are able to repay the value of the property in one lump sum.

 

For the most part, those who redeem property use it for vehicles because they are products that depreciate quickly in comparison with the large amounts of the debts that remain on them. Other common properties redeemed in a Chapter 7 case are household appliances, furniture, antiques, and luxury goods.

 

With our guidance, you can build a strong case for Chapter 7 bankruptcy and determine the best course of action for exemptions, redemption, and other aspects of the process. To learn more about filing, contact Behm Law Group, Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com today.

 

Understanding the Means Test Eligibility for Chapter 7 Bankruptcy

In times of financial difficulty there are many options for individual consumers to find relief from the hardship of debt. One of the most effective methods of debt relief is the process of bankruptcy. Filing for bankruptcy provides a government organized relief system that offers long-term results. The most common types of debt, such as credit card debt, medical debt and mortgages, can be treated and discharged in bankruptcy. If you’re considering filing for bankruptcy relief, Behm Law Group, Ltd. can provide guidance and protection in Chapter 13 and Chapter 7 bankruptcy in St. Peter, MN.

Both Chapter 13 and Chapter 7 bankruptcy offer debt relief in different formats. With Chapter 13, your debts will be worked into a repayment plan lasting three to five years where the terms of payment can be much more lenient and beneficial. In Chapter 7 bankruptcy, your debts will be discharged in exchange for the collection and sale of any non-exempt assets by the chapter 7 bankruptcy trustee. However, the vast majority of chapter 7 cases are “no asset” cases where there are no non-exempt assets that are collected and sold by the chapter 7 trustee and where the only things that are lost are filers’ debts. This means Chapter 7 is ideal for most filers’ situations, but without proper vetting, some might be able to abuse this type of bankruptcy. To prevent bankruptcy abuse, the court applies a method for the examination of the financial conditions of filers called the Means Test.

The Means Test works in two steps to determine if your income-to-debt ratio merits eligibility for Chapter 7 bankruptcy. Put simply, if your disposable income is equal to or lower than the state median disposable income of a similar sized household, you qualify for Chapter 7 bankruptcy relief.

• The Means Test calculates your current household disposable income. If your initial income, without taking debts into account, is lower than the state median disposable income, you qualify for Chapter 7 and can continue to file.

• If the Means Test calculates that your disposable income is higher than the state median disposable income, other steps must be performed in the examination of your financial situation. To complete this calculation, you must complete a significantly broader range of paperwork. This paperwork determines your disposable income after all reasonable and necessary living expenses are accounted for. The types and allowed amounts of these expenses (such as food, gas, and other necessities) are set forth in the bankruptcy code itself and are used to determine your disposable income. If your disposable income is equal to or higher than the median disposable income for a household of similar size, you would not be eligible for Chapter 7 bankruptcy.

If you can’t qualify for Chapter 7 bankruptcy relief after going through the Means Test, you still will most likely be eligible for Chapter 13 bankruptcy relief. If your disposable income is determined to be higher than the state median disposable income for a similar sized household, your Chapter 13 repayment plan will be scheduled for a five-year period. If your disposable income is lower than the state median disposable income as determined by the Means Test and you still choose to file for Chapter 13 bankruptcy relief, your repayment plan will be set for a three-year period.

To learn more about how the Means Test will decide the course of your Chapter 13 or Chapter 7 bankruptcy in St. Peter, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today or stephen@mankatobankruptcy.com.

Understanding Why Some Tax Debts Are Excluded from Discharge in Bankruptcy

After tax season has come and gone, people with lingering tax debts may be wondering how to cope with repayment or they are searching for a source of relief from that debt. If you’re looking for relief from other debts on top of tax debts, you may be able to find positive, long-term relief through Chapter 7 bankruptcy. In many cases, income tax debts can be discharged if they are at least three years old and those tax debts have been assessed as being due and payable for at least two years. However, some types of tax debt cannot be discharged through the bankruptcy process. Depending on your tax debts, you may or may not be able to have them discharged in a Chapter 7 bankruptcy. With the help of Behm Law Group Ltd., you can determine if filing for chapter 7 bankruptcy in Mankato, MN, is right for you.

 

Chapter 7 bankruptcy works to discharge debts in exchange for the sale of non-exempt assets. Non-exempt assets are assets whose values exceed the applicable protective exemption amounts provided by the bankruptcy code.  However, tax debts can be complex and how they are treated in bankruptcy can be nuanced.

 

Generally speaking, the conditions for a tax debt to be discharged in bankruptcy are stringent. First, it must be an income tax type of debt.  Second, the debt must be at least three years old, and you must have filed the return for the tax year giving rise to the tax debt at least two years ago. Also, the tax debt must have been assessed (acknowledged as due and payable) by the taxing authority for at least 240 days before you file bankruptcy, and there must be no evidence that you have engaged in fraud or willful tax evasion. If the income tax debt meets these conditions, it can be considered hardship and proof that you were unable to pay that debt for reasons outside of your control and such tax debt can be discharged in a chapter 7 bankruptcy case.

 

Tax debts that are excluded from the bankruptcy process are typically non-dischargeable for good reason. Most of these debts directly impact another person, organization, business, or other third party.

 

With a few exceptions, the tax debts that will typically survive a chapter 7 bankruptcy case include:

 

  1. Property taxes: These affect your city, state, and federal government in many ways. Because property taxes typically impact a local government, they can have significant influences on housing costs, licensing, and other property requirements if they are left unpaid.  Usually, when a city or county is owed property taxes the city or county will be entitled to assert a secured lien against any subject real estate for the amount of the delinquent property tax debt.    For instance, if you owe $10,000.00 to a city for property taxes, the city will assert a secured lien against your home in the amount of $10,000.00.  Such liens are essentially like other secured liens, such as liens on motor vehicles.  In a chapter 7 bankruptcy proceeding, you could technically be relieved of such property tax debt but you would also have to surrender your house.  For example, presume that you own a house that is worth $100,000.00 and that there is a $90,000.00 secured mortgage on the home.  Presume further, that you are delinquent with property tax debt to the city in the amount of $10,000.00 and that the city has asserted a tax lien for that amount.  If you were to file for chapter 7 bankruptcy relief, both the $90,000.00 mortgage and the $10,000.00 property tax lien would be considered secured debts secured by the value of your home.  In a chapter 7 case, both the mortgage lender and the city would only have recourse/relief for such debts against the value of the house.  You could walk away from personal liability for those debts going forward but you also would have to accept that you would have to surrender or lose the home.
  2. Third-party taxes: These include taxes paid to trust fund parties such as FICA and Medicare. It also includes sales taxes paid to the debtor by customers.
  3. Tax liens: Some tax debts can be secured by a tax lien asserted by the Internal Revenue Service or the Minnesota Department of Revenue.  In this case, the lien filed by the taxing authority essentially becomes secured by pretty much everything you own, including 401(k) plans, IRA’s, checking/savings account deposits, furniture and appliances, etc.
  4. Employment taxes: These includes excise taxes and custom duties, depending on time periods.
  5. Tax return errors: If you were erroneously refunded more than you should have on a tax return, you owe that back as a debt to whatever government entity paid it to you. This can significantly affect local governments if you do not repay it.

 

If you are planning on filing for chapter 7 liquidation bankruptcy in Mankato, MN, and want to know how it will affect your tax debt, contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com.

When A Trustee Might Abandon a Nonexempt Property in Chapter 7 Bankruptcy

Choosing to file for bankruptcy is a difficult decision that requires important consideration of all factors of your current financial circumstances. If you choose to file for individual consumer bankruptcy, you likely have no other effective or truly productive way of working out your debts and keeping your quality of life stable. People considering filing for Chapter 13 or Chapter 7 bankruptcy in Pipestone, MN can find legal guidance and protection with the help of an expert Behm Law Group, Ltd. attorney.

 

When you choose to file for bankruptcy as an individual consumer, you have two primary options available: Chapter 13 or Chapter 7 bankruptcy. Chapter 13 is a debt reorganization bankruptcy procedure that is highly effective for filers with steady, stable incomes and for those people who may own property that would have more value than their available bankruptcy exemptions would be able to protect and could be liquidated in a Chapter 7 proceeding. On the other hand, Chapter 7 liquidation bankruptcy is a better option for filers without steady incomes or with properties that have values that are within the limitations of their available bankruptcy exemptions.

 

While Chapter 7 bankruptcy will liquidate (sell off) some of your non-exempt properties and possessions (properties that have values exceeding the limitations of your available bankruptcy exemptions), there are ways to exempt important items, like your home and primary vehicle. While you’re allotted exemption amounts for properties that will be removed from the liquidation process, there are sometimes nonexempt properties that will still be removed from the bankruptcy process.

 

Trustee Abandonment of Property

The primary, and for the most part, only reason a trustee will abandon the liquidation of an asset in Chapter 7 bankruptcy is because of its worth. If your property’s current market value is less than the debt you owe on it, it’s not worth the time spent for the trustee administering your case to sell it and return what little value was received to your creditors. This can happen if you continue to default on a debt and the accumulation of interest and late fees increases the debt over time. For example, if you haven’t paid your mortgage in some time, the amount of the mortgage may have increased to well over the market value of your home.

 

Instead of selling the property, the trustee will allow you to keep it. If you own the property outright (as is often the case with jewelry and other luxury goods that would otherwise be liquidated), you get to keep it without any conditions. If your creditor has secured that property with a loan, you can keep it if you continue making payments on the debt to that creditor. Otherwise, the creditor can choose to employ collection agencies, file lawsuits, foreclose, or seize the property from you.

 

One other reason a creditor or a bankruptcy trustee might abandon your property is if it will be too difficult to sell due to an obscure market or an oversaturated market.

 

If you’re considering filing for Chapter 7 bankruptcy in Pipestone, MN, and want to learn more about the process or how your properties will be handled, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

Why the 180-Day Inheritance Rule in Chapter 7 Bankruptcy Exists

One common misconception about bankruptcy is the idea that it will leave the filer with little to their name and damage their credit beyond repair. In reality, bankruptcy is an extremely helpful process for ridding individuals and businesses of debts they would otherwise not be able to repay.

 

Bankruptcy is a legal process administered through the bankruptcy court system. While bankruptcy does affect the filer’s credit and some could lose certain non-exempt properties in liquidation-type bankruptcies, the overall benefits can greatly outweigh the negatives. If you are considering filing for Chapter 13 or Chapter 7 bankruptcy in Jackson, MN, Behm Law Group, Ltd. can help you build a strong, successful case.

 

If you qualify for Chapter 7 bankruptcy by passing the Minnesota Means Test, you will have the majority of your debts discharged. The majority of common debts like credit card debt, medical bills, mortgages, and car loans are discharged in Chapter 7. When it comes to unsecured debts (debts not tied to a property/collateral), the discharge has no side effects. On the other hand, the discharge of secured debts may mean you’ll lose the property tied to that debt in the liquidation process if there is no equity or value in excess of the debt against the property that you can assert an exemption claim to. Exemptions protect important properties like your home, vehicle, furniture, etc.

 

Some properties that are only established as a money value, such as your retirement fund, trust fund, or an inheritance, may also be subject to the liquidation process, though there are generous exemptions for tax qualified retirement accounts such as an IRA, 401(k), 403(b), etc.  For inheritances in particular, such as those received through a will or a life insurance policy, there are special rules in place to prevent bankruptcy abuse and maximize the potential benefit/return to one’s creditors:

 

  • If your relative is still alive, your inheritance is safe from the liquidation process because you don’t own it yet.
  • If you received your inheritance more than 180 days after the date you filed your petition – meaning your relative passed away more than 180 days after the date you filed your case – it’s not considered part of your estate and it will be safe from liquidation.
  • If you receive your inheritance within 180 days of filing for bankruptcy (specifically, your relative passed away within 180 days after you filed your bankruptcy case), your case may be amended, and any inheritance could be at risk of being liquidated.  If you cannot use your available bankruptcy exemptions to protect some of the inheritance, whatever amount is not exempted will be liquidated by the bankruptcy trustee and paid over to your creditors.

 

This 180-day inheritance rule was established to prevent debtors from filing for bankruptcy to rid themselves of debt with the knowledge that they will soon receive a large sum from the death of a family member. Filing for Chapter 7 bankruptcy with that knowledge shows that you wanted a way around repaying your debts honestly with the money gained from your inheritance.

 

To learn more about inheritances or other assets and what happens to them when you file for Chapter 7 bankruptcy in Jackson, MN, contact Behm Law Group, Ltd. today at (507) 387-7200 or via email at stephen@mankatobankruptcy.com.

Frequently Asked Questions about Chapter 7 Bankruptcy

If your low income is preventing you from meeting financial obligations like debts and bills, you might benefit from looking into the process of bankruptcy. Bankruptcy is available to individuals who have come into difficult times, whether that means unemployment, sudden medical costs, long-term accumulation of debt, or any combination of circumstances. Unlike other types of debt relief, bankruptcy is a formal legal process with permanent results. This means you will be protected by things like the automatic stay, a trustee, and other provisions of the bankruptcy code. With the additional guidance of a Behm Law Group Ltd. attorney, you can file a strong case for Chapter 7 bankruptcy in Luverne, MN.

 

Chapter 7 bankruptcy is a liquidation type of bankruptcy. It’s the most commonly filed U.S. chapter for individuals and corporations alike. For those who haven’t filed before, there are often many frequently asked questions (FAQs), including:

 

  1. How does it work?
    1. Chapter 7 bankruptcy works to liquidate your non-exempt property and repay creditors with the value gained from the sale of non-exempt property.  Most cases, however, are “no asset” cases where no assets are liquidated by the chapter 7 trustee and all of one’s assets are protected by one’s available bankruptcy exemptions.
    2. In exchange for this liquidation of non-exempt assets, your debts are discharged and you are permanently released from having to repay them.
  2. Will I get to keep my house?
    1. While Chapter 7 bankruptcy liquidates non-exempt properties, the bankruptcy code and Minnesota state law provide an allotment of exemptions you can claim to protect assets from sale.
    2. This includes the homestead exemption that protects the equity or value you have in your home and other exemptions that can be used to protect the equity or value you have in your car, additional real estate, personal items, or other properties.
  3. How will it affect my credit?
    1. While bankruptcy can be extremely beneficial for permanent, long-term debt relief, it will have a negative effect on your credit score.
    2. Your credit score will improve over time – indeed, it starts to improve the day after you file for bankruptcy relief – and a bankruptcy notation will generally be removed from your credit profile seven to ten years post-filing, although it is sometimes removed much earlier.
  4. How long does it take?
    1. Chapter 7 bankruptcy cases are generally closed in about three to six months depending on the case circumstances.
  5. How do I qualify?
    1. Individuals who pass the Means Test are eligible for Chapter 7 bankruptcy.
    2. The Means Test measures income-to-debt ratios against the state median income. If your income is lower than the Minnesota median income of a similar filer with a similar household size, you can qualify for Chapter 7.
  6. Which debts will be discharged?
    1. Your unsecured debts, including credit card debt and medical bills, will be discharged.
    2. Your secured debts that are tied to properties that are liquidated or surrendered will be discharged.
    3. Your secured debts related to property that you cannot exempt because there is no equity or value, since the amount of debt you may owe exceeds or is equal to the value of the property, will not be discharged if you choose to voluntarily reaffirm (reassume personal liability)  the related debts.
    4. Your priority debts, including most tax debts, child support, and criminal fines, will not be discharged.
    5. Student loans can be discharged but the process can be very expensive and protracted.  A person must actually sue the student loan lender in bankruptcy court, prove undue hardship , as that term is defined and interpreted under 11 U.S.C. §523(a)(8), and ask the bankruptcy court to discharge the student loan debt.

 

If you want to learn more about how the bankruptcy process will work and how it will affect your life, contact Behm Law Group Ltd. at (507) 387-7200 or via email at stephen@mankatobankruptcy.com for information about Chapter 13 or Chapter 7 bankruptcy in Luverne, MN.

Redeeming Secured Property in Chapter 7 Bankruptcy

If you’re facing a large amount of debt and unable to make payments each month on those debts without severely compromising your quality of life, you may want to consider filing for bankruptcy. Chapter 7 bankruptcy is the most commonly filed case for individual consumers. In fact, there were over 400,000 non-business Chapter 7 bankruptcy cases filed in 2017. If you are considering filing for Chapter 7 bankruptcy in Redwood Falls, MN, Behm Law Group, Ltd. can help you put together a strong case that will provide long-term debt relief.

Chapter 7 bankruptcy works as a liquidation process. You will have to provide all your financial information including debts, income, and properties to the bankruptcy trustee assigned to oversee your case. The trustee will then liquidate (sell) any non-exempt assets (properties) you have if you cannot claim an exemption on them. You can claim exemption amounts on properties like your home or car and other assets to protect them from liquidation. Once your non-exempt assets have been liquidated, the debts tied to them are discharged along with your unsecured debts such as credit card and medical debt.

There is one other way your secured properties can be treated in Chapter 7 other than with liquidation or exemption. They can be redeemed.

Property redemption essentially means you are buying the property back from your creditor for the value it’s currently worth. This is a beneficial option for filers if they owe a debt on the property larger than its value. By redeeming the property, you may pay less than actually paying back the debt, and you will be able to keep the asset.

The value of the property is either agreed upon by you and your creditor, or, if you disagree, the court holds a valuation hearing. When the value is determined, you have to buy it back by paying one lump sum.

To redeem a property, there are several requirements that must be met. These include:

  • The property cannot be of value in the Chapter 7 case. This may mean you exempted it from liquidation or the trustee has determined that it has no value to your bankruptcy estate.
  • The property must be a tangible item.
  • The property cannot be real estate. It has to be a personal item such as a vehicle or computer – something other than your home or other real estate properties.
  • The property cannot be used for business purposes (i.e. if you use your car for onsite jobs).

Redemption is an effective way to reclaim property you owed a debt on that was much higher than its actual value. If you want to own your property debt-free, the Chapter 7 bankruptcy process and redemption is one way to do it.

To learn more about redemption and filing for Chapter 7 bankruptcy in Redwood Falls, MN, contact Behm Law Group, Ltd. at (507) 387-7200 or via email at stephen@mankatobankruptcy.com today.