Why Chapter 13 Is Less Common than Chapter 7 Bankruptcy in Mankato, MN

If you’re considering filing for bankruptcy, you’re not alone. Over 700,000 individuals file for bankruptcy each year in the United States. While those numbers have decreased significantly since the 2008 market crash, they still show that anyone can struggle financially in the face of many different factors. Filing for bankruptcy is a process designed to treat personal and business debts with a legal, federal court-administered relief program. However, filing for bankruptcy can also be a highly complex, nuanced system to navigate. The help of an expert bankruptcy attorney can turn a difficult case into a successful one with long-term debt relief. Behm Law Group Ltd. attorneys have the knowledge, skills, and experience to guide you through a Chapter 13 or Chapter 7 bankruptcy in Mankato, MN.

 

The two most frequently filed types of individual bankruptcies are Chapter 13 and Chapter 7. Chapter 13 bankruptcy works to reorganize your debts into a manageable repayment plan suited to your income. This plan lasts three to five years depending on your income in comparison to the state average income of a similarly sized household. Chapter 7, on the other hand, works to liquidate your non-exempt assets in exchange for the discharge of your debts.

 

While both Chapter 7 and Chapter 13 are common bankruptcies for individuals, Chapter 7 bankruptcy is filed for much more frequently than Chapter 13. From 2006 to 2017, the ratio of Chapter 13 to Chapter 7 cases filed was on average 30% versus 70%. These ratios range from 75.09% of Chapter 7 bankruptcies versus 24.85% Chapter 13 bankruptcies in 2006, and 61.50% versus 31.94% in 2017 with fluctuations between. Historically, in the United States, every year’s total of cases shows more Chapter 7 bankruptcies than other type, and for good reason.

 

Bankruptcy isn’t something that people choose to go through if they can help it. Those who file for bankruptcy are truly struggling with debts and have other financial hardships, and they turn to bankruptcy as the best choice for help in resolving those issues. If you are considering filing for bankruptcy, you can understand the legal, mental, and general stress that those who file experience. On top of this, the most common cause of bankruptcy is unemployment. The stress of financial burdens and a typically lower income means that filers will more frequently qualify for Chapter 7 bankruptcy.

 

Chapter 13 bankruptcy is a highly effective process for those with steady incomes. While you are more unlikely to have a significant amount of debt when you have a steady income, it’s completely possible to find yourself with heavy debts and a steady income. Typically, however, a low income is a primary cause of burdensome debt and leads to a Chapter 7 bankruptcy case more often than not.

 

If you are struggling financially for any reason, filing for bankruptcy may be the best step to take for long-term debt relief. To learn more about Chapter 13 and Chapter 7 bankruptcy relief in Mankato, MN, contact Behm Law Group Ltd. at (507) 387-7200 today.

Why Many Local Restaurants File for Chapter 7 Bankruptcy in Jackson, MN

Running a business is a difficult endeavor, especially if it’s a young company. Maintaining a steady income and company growth means battling on several different fronts and working through many different expenses. Not only do the local economy and your business marketing endeavors affect your business standing, but also the national and even global economy play a role as well. Additionally, some businesses are even more difficult to run than others. Restaurants, for example, are notoriously difficult to maintain successfully. Behm Law Group Ltd. has helped many people work through a Chapter 7 bankruptcy in Jackson, MN, and the surrounding area.

 

If you find yourself facing a business bankruptcy after your restaurant becomes impossible to maintain, you’re not alone. Every year, many restaurants close due to bankruptcy, each case with its own unique set of circumstances. Despite the differences among cases, we can often highlight several common factors that played a part in the situation leading up to a bankruptcy.

 

Common Factors Playing a Part in Bankruptcy

 

  1. Capital: Restaurants require a lot of capital to operate. Not only does this include expensive kitchen equipment, restaurant-specific building systems, staff facilities, a large supply of furniture, registers/accounting systems, uniforms, and many other concrete items, they also include a range of food types with varying shelf lives. Building maintenance and restaurant operations are more expensive than almost any other service company.
  2. Licensing and Property: Liquor licenses, health inspections, zoning laws, rent, property taxes, and many other restaurant requirements are sky-high for restaurants. With the food service industry booming in the United States, state and municipal governments put restrictions on opening restaurants with these licensing and property expenses. In addition, federal health and food safety certification requirements put further strains on business incomes.
  3. Market Saturation: Another effect of the booming restaurant industry is market saturation. Restaurant customers are picky and they are eager to try new things and they are constantly demanding newer options and better quality. This results in a restaurant market that is highly saturated with many different types of restaurants that provide stiff competition to anyone else trying to make a living in the area. All of this means it’s extremely difficult to succeed based on market saturation alone, let alone in addition to other obstacles.

 

All these factors make restaurants a unique business in the fact that they are more difficult to run and more likely candidates for bankruptcy than most other companies.

 

Restaurant owners who file for Chapter 7 bankruptcy will face the good and bad of their situations. Chapter 7 works to liquidate some business assets in exchange for the discharge of debts, including mortgages, personal loans, equipment debts, and more. However, in many cases, this discharge comes with the reality of having to close down operations. It’s not impossible to reopen a restaurant again in the future, but for the time being, filers usually shut down their businesses.

 

If you are considering filing for Chapter 7 bankruptcy in Jackson, MN, contact Behm Law Group Ltd. at (507) 387-7200 to learn more about restaurant bankruptcy cases.

Resolving Medical Bills and Other Debt Relief in Mankato, MN, with Bankruptcy

In the United States, the cost of healthcare is high, even with medical insurance. This expense is often a cause of much hardship for those who encounter medical costs of any kind, expected or otherwise. These expenses put pressure on household finances during an already stressful and often emotional time. If you are facing unmanageable hospital bills and medical expenses on top of other common debts (e.g., credit cards, mortgages, car loans, taxes), you can find debt relief that offers long-term, effective results by filing for bankruptcy. With the help of Behm Law Group Ltd., you can file a successful case and receive debt relief in Mankato, MN, from your medical bills and other debts.

 

While filing for bankruptcy may seem drastic, it is the most effective and direct way of resolving your medical expenses in addition to many other debts. Instead of working through the red tape of most hospital administrations without the assurance that your debts will be resolved at all, consider filing for bankruptcy, which kills several birds with one stone with the treatment of many debts and a guarantee that your medical bills will be completely dissolved.

 

Because medical bills are considered an unsecured debts, they will be fully discharged in any type of bankruptcy you can file for as an individual.

 

Chapter 7

As a liquidation type of bankruptcy, Chapter 7 discharges debts in exchange for the liquidation of your non-exempt assets. In most cases, the bankruptcy exemptions that are available to you are more than sufficient to protect all of your property from liquidation.  Unsecured debts such as credit card debts, and of course, medical bills, are discharged in full. Chapter 7 is the quickest and most expeditious type of bankruptcy to treat unsecured debts because the process usually takes only three to four months to complete.  However, you must pass the Means Test in order to prove you qualify for chapter 7 debt relief by showing that your household income is not greater than the state median income for a household of your size.

 

Chapter 13

Chapter 13 is a debt reorganization form of bankruptcy. Also referred to as wage-earner bankruptcy, Chapter 13 is an option available to those with an incomes too high to file for Chapter 7 or for those who want to protect their non-exempt assets from possible liquidation.  Chapter 13 reorganizes your debts into a manageable three- to five-year repayment plan. This means that you will pay your unsecured debts what you can afford to pay for a limited time with no interest, no late fees and no penalties.  At the end of your three- to five- year plan, whatever amounts of your unsecured debts that remain are discharged.

 

In a nutshell, filing for bankruptcy will ensure your relief from medical bills, and in most cases, many other debts as well. To learn more about filing for bankruptcy and receiving debt relief in Mankato, MN, contact Behm Law Group Ltd. at (507) 387-7200 today.

Why Student Loans are Leading to Increased Rates of Chapter 7 Bankruptcy in Owatonna, MN

In many countries across the world, a college degree is considered necessary to enter a majority of job markets, and a bachelor’s degree is often viewed as the minimum standard for education. In the U.S., over 65% of high school graduates attend college, university, or other forms of higher education. The experience and certifications higher education provides are important to many students, but with the rising cost of tuition, a college degree can lead to financial troubles down the road.

Under the weight of large student loans, many college graduates are finding it difficult to keep their heads above financial waters. If you’re struggling to meet monthly debt requirements for any reason, Behm Law Group, Ltd. can help you determine whether filing for bankruptcy is the right choice. If you’re considering filing, our expert attorneys can guide and protect you from start to finish during a Chapter 7 bankruptcy in Owatonna, MN.

Student loans rates have increased significantly over the past ten years in the U.S. A recent study showed that 32% of yearly bankruptcies in the U.S. were driven primarily by student loan debts. Those that filed on the basis of student loan debts reported that almost 50% of their debt was made up of federal or third-party student loans. The total of U.S. student loan debt in 2019 is hitting a record high at $1.5 trillion and averaging at about $30,000 per student.  According to a July 24, 2018 Forbes article, the cost of attending a university and obtaining a degree has increased 8 times faster than wages.

With the highly competitive job market and the requirement of even further education within many career paths, new graduates are struggling to repay loans while facing the additional financial requirements of adult life. For many individuals, this struggle meets a breaking point, and bankruptcy or other forms of debt relief must be considered.  According to a May 24, 2012 Forbes article, the cost of higher education has risen 500% since 1986.

 

Student Loans and Chapter 7 Bankruptcy

In any type of bankruptcy, it is possible to discharge student loans. However, the process can be protracted, difficult and expensive.  In order to have student loans discharged in bankruptcy, you must actually sue the student loan lender in bankruptcy court and alleged uncommon financial and personal circumstances which would demonstrate undue hardship.   If one proves up circumstances demonstrating undue hardship, the bankruptcy court will discharge one’s student loans.  Typically, the process is unavailable to someone, however, because of the costs and time involved. So why would filing for Chapter 7 bankruptcy help college graduates with 50% of their debt in student loans?

 

Put simply, Chapter 7 bankruptcy discharges the majority of other common debts, including credit card debt, car loans, mortgages, medical bills, and personal loans. The process resolves these debts with a liquidation of non-exempt assets in exchange for debt discharge. Typically, in most cases, the bankruptcy exemptions one has available in bankruptcy are very generous and are sufficient to protect all of one’s property and the only things that one loses in bankruptcy are ones debts.  Chapter 7 bankruptcy is the most commonly filed and the most directly effective process of debt relief. However, it’s not a process everyone qualifies for. To be eligible for Chapter 7, filers must pass the Means Test to prove their debt-to-income ratio is severely out of balance. With the high numbers student loans censuses show, almost all college graduates struggling financially can qualify for Chapter 7 bankruptcy.

 

If you’re having a hard time meeting your debt payments due to student loans or other factors, contact Behm Law Group, Ltd. today at (507) 387-7200 to learn more about filing for Chapter 7 bankruptcy in Owatonna, MN.

Authors, Artists, and Other Creatives Filing for Chapter 7 Bankruptcy in Redwood Falls, MN

For the majority of creators and others working in the arts, finding a source of steady income is often a difficult part of the vocation. From visual and performance artists to authors and musicians, work is hard to come by, and these jobs are highly competitive.

 

Because of this hardship, it’s understandable that there are several cases of bankruptcy a year filed by creatives. Even famous artists are not safe from financial struggles, as told by the 2009 circumstances of famed photographer, Annie Leibovitz. If you’re struggling to make ends meet as a creative, Behm Law Group, Ltd. provides guidance and support to help you file a successful case for Chapter 7 bankruptcy in Redwood Falls, MN.

 

For the most part, artists filing for bankruptcy don’t have a steady income to qualify for Chapter 13 reorganization. Because of this, Chapter 7 liquidation is the most common type of bankruptcy for those relying on their art, writing, performance, or other creative abilities for income. Chapter 7 bankruptcy provides a valuable debt discharge process overseen by a bankruptcy trustee, with fair treatment of both the filer and the creditors.

 

Assets in Chapter 7 Bankruptcy

For the most part, Chapter 7 bankruptcy is the same process for creatives as it is for those making a living from more typical vocations. The trustee sells off non-exempt property and distributes the sale proceeds to the creditors involved.  In most Chapter 7 bankruptcy cases, however, filers are able exempt and they retain all of their property; typically, the only things they lose are their creditors.  Priority debts such as child support debt and tax debt have to be listed in the Chapter 7 bankruptcy proceeding but, for certain public policy reasons, those types of debt are more difficult to get discharged.

 

For artists, there may be some differences in the Chapter 7 asset liquidation process. Specifically, any income you make from your work is counted as an asset. If you’re a painter, for example, unsold paintings created at any point before you file for bankruptcy are considered business inventory that must be disclosed. Typically, there is a “tools of the trade” and a “wildcard” exemption with which such business inventory and brushes, canvasses and other “tools” used to produce the paintings can be protected.

 

As a writer, if you have intellectual property rights to a book or a play you’ve written, any income from the sales of that book or from the royalties of your work will be included in the bankruptcy process. If you can’t exempt all of that intellectual property, you may lose some of the rights to it and to some of the future income it may provide.  Your creditors may benefit from the non-exempt values or portions of those rights and future income.   This is commonly seen with musicians filing for bankruptcy. The intellectual property will go to the purchaser of that asset (to a record label, for example).

 

In a nutshell, if your art, craft, or other creation is providing you with income but you still need to file for Chapter 7 bankruptcy, those creations can be included in and are relevant to the Chapter 7 process.

 

To learn more about filing for Chapter 7 bankruptcy in Redwood Falls, MN, as an artist, author, musician, or other creative, contact Behm Law Group, Ltd. at (507) 387-7200 today.

When Corporations, LLCs, and Other Businesses File for Chapter 7 Bankruptcy in Mankato, MN

Running a business is a difficult venture, and even with support systems in place, the enterprise can go wrong. Whether it’s sudden or gradual, debts can overcome a business income and leave no other option than some form of debt relief. Debt relief options vary, but the most effective solution for the long term is to file for bankruptcy. Corporations, LLCs, and other businesses that are not sole proprietorships or partnerships can file for two forms of bankruptcy: Chapter 11 (reorganization bankruptcy) or Chapter 7 (liquidation bankruptcy). Individuals and businesses alike can find guidance when filing for Chapter 7 bankruptcy in Mankato, MN, with the help of Behm Law Group Ltd.’s attorneys.

 

Chapter 7 works similarly for individuals and businesses, but with slight differences. The primary function of Chapter 7 is to liquidate the filer’s assets in exchange for debt discharge. Individual filers may claim exemption allowances to protect certain properties (e.g., the homestead exemption protects the filer’s home from liquidation), but businesses have no such exemptions to claim.

 

How Chapter 7 Bankruptcy Works

Corporations, LLCs, and business formats that are not tied to the owner’s personal debts can petition for Chapter 7 to discharge all of their business debt. Compared to an individual consumer Chapter 7 bankruptcy case, business bankruptcies are fairly cut and dry.

 

Filers work with an attorney to build their case, including all the required documents and financial records. When the petition is submitted to the court and all necessary bankruptcy fees are paid, the court appoints a trustee to handle the liquidation of the business assets. Properties, equipment, business accounts, and any other components of the bankruptcy estate are sold. Creditors are paid with the value of those sales, and the trustee takes his or her commission based on a percentage of the values received.

 

When the assets are liquidated and the trustee distributes the sale proceeds among the creditors of the business, the court will then discharge unsecured business debts, including credit card debt, utilities owed, lease obligations, loans, and other business debts. When this process is complete, the business filing is shut down, effectively ending operations.

 

Chapter 7 bankruptcy is a highly effective debt relief process for businesses, though it’s undeniable that your company will be closed down. Many large U.S. businesses, such as Lehman Brothers in 2008, have used Chapter 7 to rid themselves of debt and shut down. Lehman Brothers filed with $691 billion in assets and $619 billion in debt. This was a case that affected hundreds of employees, but for the long term, was a positive solution for all involved.  In many cases, after the bankruptcy process is completed, one can create a brand new business operation that does the same work as the business that filed for bankruptcy relief and one can operate much more efficiently and smoothly without all of the debts that encumbered the former business.

 

If your business is struggling to keep the lights on and hasn’t had success negotiating with creditors or finding other ways of resolving debt, filing for Chapter 7 bankruptcy may be the final option. Filing will release you from all your business debt effectively, though it will just as effectively close down your business operations.

 

To learn more about filing for Chapter 7 bankruptcy in Mankato, MN, as a business or individual, contact Behm Law Group Ltd. at (507) 387-7200 today.

How Bankruptcy Debt Relief Can Stop Legal and Illegal Creditor Debt Collections in Jackson, MN

Whenever you take a loan, whether it’s in the form of a mortgage, car loan, credit card, or otherwise, you become a debtor, and the loan provider becomes a creditor. The relationship between you and your creditors is generally a perfectly amiable, professional one if you’re able to meet your monthly payment requirements. If you find yourself in a position of being unable to meet those monthly payments, that relationship may start to change to something less amiable, and in some cases, less professional. With the protection of Behm Law Group, Ltd. attorneys, you can put a stop to creditor debt collections and find debt relief in Jackson, MN by filing for bankruptcy.

 

Anyone who has been in the position of being unable to repay their debts may know something about just how ugly creditor debt collection practices can get. Filing for bankruptcy can quickly resolve any issues you may be facing from your creditors’ collections attempts as well as provide a long-term solution for debt relief. Whether you file for Chapter 13 bankruptcy and have your debts reorganized into a repayment plan that is suited to your financial circumstances, or for Chapter 7 bankruptcy and have your non-exempt assets liquidated in exchange for a discharge of your debts, you receive the benefits of an automatic stay.

 

The moment you file for any type of bankruptcy, the court automatically places a stay on your creditors’ ability to collect debt. This stay, with the additional protection of a bankruptcy attorney, should put a stop to any creditor debt collection attempts, legal or illegal.

 

Legal Creditor Actions 

Before you file for bankruptcy and receive automatic stay protection, creditors are allowed to collect debt according to the Fair Debt Collection Practices Act (FDCPA). This means they can directly attempt collections and negotiations with you for the first six months you are delinquent. After that time period, your creditors can bring in a third-party collection agency. These collectors can communicate with you directly unless you have attorney representation, in which case that agency must work with your lawyer. If your original creditor sells your debt, the buyer of the debt must also abide by the FDCPA laws.

 

Illegal Creditor Harassment

The moment your creditors or collection agents attempt to collect outside of the laws the FDCPA outlines, they enter harassment territory. Illegal harassment actions include anything from calling you repeatedly at inconvenient times or places, calling you when they should be calling your lawyer, contacting your family members, threatening you, misleading you about their identity, threatening you with jail time and much more. Learn more about illegal debt collection here.

 

Illegal and legal debt collections alike are halted with an automatic stay that goes into effect the moment you file for bankruptcy. For more information about bankruptcy and debt relief in Jackson, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.

Exemptions for Chapter 7 Bankruptcy in Pipestone, MN

If you are unable to meet your monthly debt payments and don’t know how to get yourself out of your current financial situation, bankruptcy might be a valuable option for government-addressed debt relief. Filing for bankruptcy is a process that’s frequently given a negative image, primarily because of the impact it has on your credit score, but in fact, bankruptcy often has a positive long-term effect on your financial standing. Petitioning for bankruptcy and working through the filing process may seem daunting, and it is a nuanced legal procedure. However, with the help of a professional bankruptcy attorney, you can put together a strong, successful case for Chapter 7 bankruptcy in Pipestone, MN.

 

Chapter 7 bankruptcy is one of the most common bankruptcy chapters individuals and businesses file for in the United States. The process of Chapter 7 bankruptcy works to liquidate your non-exempt assets (properties) in exchange for discharging (dissolving) your debts. If your income is lower than the amount you are required to pay for your current monthly debts and your reasonable and necessary living expenses, you qualify for Chapter 7.

 

While Chapter 7 seems like a last gasp for many, largely because of the liquidation process, it’s not a process designed to leave you destitute. While some of your assets could be sold or liquidated, that is the exception rather than the rule.  Most people who  file for bankruptcy relief can and do protect and keep their properties with their allowed bankruptcy exemptions.

 

Exemptions are a key part of the filing process for Chapter 7 bankruptcy. The U.S. Bankruptcy Code provides exemption allowances for many of your properties, from your home and car to your small personal property items. The current Minnesota exemptions include:

 

  1. Homestead: Up to $420,000 for most homes (non-agricultural use) or $1,050,000 if the home is used primarily for agricultural purposes.
  2. Insurance: Including accident, disability, and life insurance for a spouse and dependent beneficiaries as well as fire and police beneficiaries.
  3. Trade Tools: Including agricultural equipment, livestock, and crop stores up to $13,000 in value; teaching materials and other tools of trade up to $12,000.
  4. Wages: 75% of your earned, unpaid wages within the past six months; wages earned within six months of release from prison; and wages paid within six months of employment after welfare.
  5. Personal Property: Including appliances, furniture, radios, and TVs up to $10,800; burial plots, church pews, clothing and watches, food, utensils.
  6. Public Benefits: Including compensation for crime victims, unemployment, and workers’ as well as veterans’ benefits.
  7. Miscellaneous: The wages of your child under 18, ERISA-qualified benefits and IRAs under $72,000, and property of partnership businesses.
  8. Vehicle. Value in a motor vehicle of up to $4,800.00.

 

The preceding list denotes just some of the many exemptions you can claim in a Chapter 7 case. First and foremost, bankruptcy is designed to be fair to you and your creditors alike. The court does not want you to be left with nothing, and so exemptions allow you to protect your property during a Chapter 7 liquidation.

 

To learn more about filing for Chapter 7 bankruptcy in Pipestone, MN, contact Behm Law Group Ltd. at (507) 387-7200 today.

Navigating through Bankruptcy Delays with the Help of a Bankruptcy Attorney in Marshall, MN

Bankruptcy can be a highly effective way to find the financial relief you need for long-term stability. It can also be one of the most emotionally difficult legal processes you ever go through. Because bankruptcy is such a legally-nuanced process, it can be one of the most trying court-administered procedures for individual consumers to face—especially if they choose to start a case without the help of a knowledgeable bankruptcy attorney. If you are struggling to meet debt payments, but are hesitating to take the leap into filing for bankruptcy for fear of the difficulty and emotional toll it may take, it may be time for you to seriously think about how a lawyer can help. Behm Law Group Ltd. provides the legal counsel, advice, and comprehensive guidance you need from a bankruptcy attorney in Marshall, MN, and the surrounding area if you plan to file.

Whether you choose (and qualify for) Chapter 7 liquidation bankruptcy or decide to restructure your debts into a three- to five-year repayment plan with Chapter 13 bankruptcy, Behm attorneys can navigate each step of the process as well as advise you on the best bankruptcy choice before you even have to make a decision. When you enter a bankruptcy case, lots of information is thrown your way. While this can be overwhelming, our bankruptcy attorneys are here to tell you what everything means and how to proceed.

One part of bankruptcy many past filers have found difficult to work through is the occasional delay the court may have to pause action on your case.

 

Delays

Bankruptcy case delays occur for a number of reasons, some of which may be your responsibility and some of which may not. While there are many types of delays to a case that can occur out of unusual circumstances, the most common types of delays include:

  1. Missing information: If you have information the court needs that is not a part of a standard petition, your case may be put on delay while you gather the necessary documents and during the court’s review of them.
  2. Creditors’ requests for information: If creditors request information about your case, the court may put a pause on the proceedings until the creditors are informed in full.
  3. Creditors’ claims: Sometimes, creditors may have grounds to claim an asset is their property or that their debt is non-dischargeable. This may occur for a wide range of reasons, but if it does, it’s incredibly important to have the protection and assistance of a bankruptcy attorney.
  4. Your income: If you have initially filed for Chapter 7 and your income changes before you start your case (with a new job, for example), the court may delay your case while it decides whether you qualify for a Chapter 13 bankruptcy.

 

If you are considering filing for bankruptcy, don’t underestimate the necessity of a bankruptcy attorney in Marshall, MN, and the surrounding area. Contact Behm Law Group Ltd. at (507) 387-7200 to learn more today.

Resolving a No-Asset Case with Chapter 7 Bankruptcy in Worthington, MN

If you own a car or house, you are like most other U.S. citizens in the fact that you possess an asset. Additionally, your property may be like most others if it’s tied to a loan agreement. Because of the high cost of housing and vehicles as well as many other necessary or luxury properties, financing agreements are quite common, and there are a range of ways you can enter into these agreements. While loans are very useful for you to acquire what you need in your daily life, they can also pose problems if you are unable to repay your debts. Behm Law Group, Ltd., can help you recover from burdensome debts and protect your property from liquidation by filing for Chapter 7 bankruptcy in Worthington, MN.

 

Filing for Chapter 7 bankruptcy may seem drastic, but in the long term, it can actually be one of the most effective ways to recover from onerous debts that you could struggle with for much longer if you didn’t file for bankruptcy. Though there are compromises you have to face in the process of filing for bankruptcy, the overall advantages can greatly outweigh the disadvantages.

 

Chapter 7 bankruptcy is a legal process through which your non-exempt assets (properties) are liquidated (sold). The money from the liquidation/sale process is then distributed by the chapter 7 trustee administering your case to repay some dividend to your creditors (lenders), and in return, your debts are discharged (dissolved). However, because the U.S. Bankruptcy Court does not want to leave people who file for Chapter 7 bankruptcy destitute and unable to reorganize and contribute to the national economy, it allows filers to claim exemptions on their properties.

 

These exemptions protect certain values or equitable interests as to your properties, from your home to your car to some luxury items. Because of the allowances your claims to exemptions provide, most Chapter 7 individual consumer cases are considered “no-asset” cases because the bankruptcy exemptions are typically sufficient to protect any values or equitable interests that you have in those assets.

 

No-Asset Cases

While there are technically assets involved in virtually every Chapter 7 bankruptcy case, your trustee and the court take the exemptions you claim into consideration when determining a no-asset case. Simply put, if your claimed exemptions don’t allow the liquidation of major asset values, your trustee will not pay your creditors anything.

 

This means your trustee won’t get paid any additional amounts from your case beyond his or her typical per case fee of $60.00. It’s similar to the situation of salespeople who are paid commission on top of base wages when they make a sale. If they don’t make a sale, they aren’t paid any extra commission wages.

 

Your trustee may also consider your case to be no-asset if the majority of your properties are exempt from the bankruptcy process. From the perspective of bankruptcy filers, a no-asset case usually bodes well because they will be able to protect their property from liquidation.

 

If you are considering filing for Chapter 7 bankruptcy in Worthington, MN, and want to learn more about exemptions, assets, and liquidation, contact Behm Law Group, Ltd., today at (507) 387-7200.