Category: Chapter 7 Bankruptcy

If you are struggling to make debt payments on time or if trying to pay off debts has significantly damaged your quality of life, finding debt relief through bankruptcy might be the right choice. The most commonly filed type of bankruptcy is Chapter 7, which discharges debts in exchange for the liquidation of non-exempt assets. This means some of your property may be subjected to sale and the resulting sale proceeds may be paid over to your creditors. However, in the vast majority of chapter 7 bankruptcy cases, a person is able to protect all of his or her property.  Chapter 7 bankruptcy isn’t designed to leave filers destitute and without property to reorganize.  There are ways to protect your assets from liquidation. By asserting and taking advantage of the applicable bankruptcy exemptions, filing a reaffirmation agreement on a debt that is secured by some of your property, or by redeeming an asset by paying the present value of that asset to the creditor holding a secured lien on that asset, you can keep your home, car, appliances, and other important items. Behm Law Group, Ltd. provides protection and guidance for those filing for Chapter 7 bankruptcy in Redwood Falls, MN and the surrounding areas. Our attorneys help you work through your petition to protect your assets from liquidation and to file a strong case for long-term, bankruptcy court enforced debt relief.

Each state has different bankruptcy exemptions that Chapter 7 bankruptcy filers can claim. The most current exemptions will protect the value in your home, car, household appliances, clothing, retirement accounts, life insurance policy proceeds, and many additional miscellaneous items.

Filers can also choose to redeem an asset in a Chapter 7 bankruptcy petition from a creditor that has a secured lien on that asset.  In order to redeem an asset, one must pay the asset’s present value to the secured creditor in one lump sum. The value of the property you want to redeem may be agreed upon between you and the creditor. If the creditor believes that the property is worth more than you do, you can present the matter to the bankruptcy court and the bankruptcy court will determine the appropriate value for the asset.

If you have the resources/funds to redeem an asset, it can be beneficial to your financial circumstances in many ways. Redeeming an asset makes the most sense if:

• The value of the property is less than the debt against it. If the subject debt has accumulated over time with missed payments, late fees, and interest, it makes sense to pay off the actual, present value of the property in a redemption rather than pay the total debt owed. For example, if you bought a car worth $15,000 in 2015 and the loan in 2021 has only been reduced to $10,000 but the value of the car has depreciated to $5,000, it makes more sense to pay the $5,000 value of the car than the $10,000 debt.
• If the asset works well and will be reliable going forward or if it is an asset that is unique, difficult to replace and is needed for your employment, trade or profession, such as specific mechanical tools or farming equipment or equipment used in construction, it makes sense to redeem the asset rather than invest time and energy looking for a new replacement.
• Sometimes it may be challenging to obtain a loan to purchase a vehicle or other asset after a bankruptcy.  In such circumstances, it makes sense for someone to use proceeds from a retirement account, use tax refunds or use the cash value that has been built up in a life insurance policy to redeem an asset.

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

When you file for bankruptcy, information about all your debts, income, and properties must be disclosed in your bankruptcy paperwork. Documentation about your financial history as far back as six months to two years must be reviewed for any bankruptcy chapter. Any material inaccuracies or omissions of debts, income, and properties can be considered fraudulent and result in a dismissal of your case. Because of the strict and thorough documentation requirements for any bankruptcy petition, filing without the help of a professional can be difficult and risky. The guidance and protection Behm Law Group, Ltd. attorneys provide will help you file a successful petition and receive long-term debt relief through Chapter 12, Chapter 13 or Chapter 7 bankruptcy in St. Peter, MN.

Chapter 7 bankruptcy is the most filed for individual consumers and businesses alike. Chapter 7 works to liquidate non-exempt assets in exchange for a discharge of debts. The value of your non-exempt liquidated property is distributed among your creditors. Because a key part of a Chapter 7 bankruptcy case is the liquidation of your non-exempt assets, it’s important to know how you can protect property from that process.

Protecting properties from liquidation is accomplished by asserting exemptions provided either under state law or under the bankruptcy code, but it can also be done through a reaffirmation agreement or through redemption.

1. Exemptions: Allotted exemptions vary by state.  In most states, you are allowed to claim the federal exemptions provided under the bankruptcy code instead of the exemptions provided by a particular state if the federal exemptions serve your situation better. Typical exemptions claimed protect the home, car, and household appliances, clothing, life insurance policies, jewelry and many other items from liquidation. Exemptions also change over time as incomes and costs of living are adjusted. A recent list of common Minnesota exemptions can be found here.
2. Reaffirmation agreement: In Chapter 7, if you are current on payments for a certain debt, such as your car loan, you can file a reaffirmation agreement to have that debt preserved or exempted out of the bankruptcy process. This basically leaves a debt as-is, meaning you can keep your property secured by the subject loan, but you still have to make payments on the debt as usual. More on reaffirmation agreements can be found here.
3. Redemption: Finally, you can protect a property from the liquidation process through redemption. You indicate that you wish to redeem a certain property item when you file your initial bankruptcy petition paperwork. You notify the court and the creditor that has a lien that you wish to keep a certain item of property.   Through redemption you must pay a secured creditor the present value for the property that serves as the creditor’s collateral.  Typically, that value is paid in one lump-sum payment to the secured creditor.  However, sometimes the issue of what constitutes present or current value for that asset will be disputed.  If you and the affected secured creditor disagree on that value, the issue is presented to the court at a redemption hearing and the court determines what constitutes the present or current value for the asset.

These ways of protecting a property from the liquidation process can become complex depending on the circumstances of each loan, property type, creditor, and much more. Behm Law Group, Ltd. can help you work through this and many other parts of a Chapter 7 bankruptcy in St. Peter, MN. Contact us at (507) 387-7200 or stephen@mankatobankruptcy.com today to learn more.

 

Common law bankruptcy was established centuries ago to handle debtors that couldn’t repay their debts. In a successful economy, the best way to handle debts that can’t be paid by the borrower is with a bankruptcy system that stabilizes that debt load, returning consumers to the trade of goods and services while remaining fair to creditors with some form of repayment. Today, that foundational system is still in place with modern bankruptcy law. Contemporary bankruptcy systems can be highly complex, and because of this, it is highly recommended bankruptcy filers take advantage of the guidance an attorney can provide. At Behm Law Group, Ltd., our expert attorneys can help you work through a Chapter 13, Chapter 12 or Chapter 7 bankruptcy in New Ulm, MN or the surrounding areas.

 

The U.S. bankruptcy code offers relief for the debtor and, sometimes, provides a return of some payment to creditors in two general ways: liquidation and discharge or reorganization and repayment. Chapter 13 and Chapter 11 were developed for individual and business debtors respectively to offer a restructuring of debts into a repayment plan that fits the filer’s income. Creditors are repaid but under different repayment terms that are more beneficial to the bankruptcy filer.

 

Chapter 7 bankruptcy, on the other hand, is reserved for filers who don’t have disposable income every month – surplus income after necessary living expenses are paid – and wouldn’t be able to work through a chapter 13 repayment plan.  Chapter 7 bankruptcy is also intended for those whose household incomes are below the state median income for a household of their size. Instead, Chapter 7 bankruptcy provides debt discharge by liquidating the filer’s non-exempt assets and providing that value to creditors. Filers will no longer be legally, contractually responsible in any way for a debt once it’s officially discharged by the court.  In the vast majority of chapter 7 bankruptcy cases, however, people are able to retain all of their property and all they lose are their debts.

 

When does discharge happen?

Discharge happens at the end of your Chapter 7 bankruptcy case, but only after you’ve met court requirements including:

 

1. filing all the necessary paperwork and schedules with your bankruptcy petition
2. given the court a correct and accurate documentation detailing your finances
3. paid the bankruptcy court filing fee
4. attended the meeting of creditors with the trustee
5. attended court-approved credit counseling and financial management courses

 

When you’ve met these requirements, the court will issue an order of discharge. While this order discharges your legal responsibility to pay your debts, the issuance of the discharge order doesn’t always mean that your case will be closed right away.  Sometimes, a bankruptcy case must remain open to allow the bankruptcy trustee to sell non-exempt assets (assets that you can’t retain) and disburse the resulting sale proceeds among your creditors. Additionally, in the event an adversary proceeding was filed, your case will remain open until the adversary proceeding has concluded.

 

The discharge order discharging your debts will be issued by the bankruptcy court about three to four months after your bankruptcy case is filed. The discharge order won’t list each debt that is discharged, but instead provides general information about the debts that are discharged and the debts that you may still have to pay, such as tax debts, child support debts, debts related to alimony, some student loans, etc.

 

Keep in mind that the court can revoke or deny a discharge if you are untruthful or did not correctly file your paperwork. To get the most out of your debt discharge and file a successful and accurate case for Chapter 7 bankruptcy in New Ulm, MN, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

The United States bankruptcy code is in place to discharge many different types of individual consumer and business debts.  However, some debts are more difficult to have discharged and some debts are not discharged in bankruptcy at all.  For example, there is a common misperception that student loans cannot be discharged in bankruptcy.  While student loans are typically exempted from the general discharge a bankruptcy court grants a filer at the conclusion of a typical bankruptcy case, one can formally request the bankruptcy court to discharge student loans.  The process can be protracted and expensive, however, because one must hire a bankruptcy attorney to start a lawsuit against a student loan creditor in bankruptcy court.  The burden of proof is on the filer who is asking the bankruptcy court to discharge the student loan.  A filer must show that the student loan could cause the filer to experience an undue financial hardship going forward.  Common types of debt that are often not discharged through the bankruptcy process include alimony, child support, most tax debts, and debts resulting from personal injuries that someone may have caused while driving under the influence of alcohol or drugs. Though there are whispers of changes to make it easier to discharge student loans in bankruptcy, the other aforementioned debts will likely remain excluded from discharge in any bankruptcy case. However, some of the more common debts that the majority of filers use bankruptcy to resolve include medical bills, mortgages, car loans, and credit card debts. At Behm Law Group Ltd., our attorneys can help you build a successful case for Chapter 7 bankruptcy in Fairmont, MN, and the surrounding region. Behm lawyers will work with you from start to finish to help get your debts discharged and find long-term financial stability through the Chapter 7 bankruptcy process.

Most individual consumers in Minnesota have credit card debt. The average amount of credit card debt across the state since 2019 is around $6,000 to $30,000, but those who file for Chapter 7 bankruptcy can have anywhere between $3,000 and upward of $100,000. Since there is no debt limit in Chapter 7, filing for Chapter 7 bankruptcy is the most effective solution for those with serious amounts of unsecured debts like credit card and medical debts.

The Chapter 7 bankruptcy process works to liquidate your non-exempt assets in exchange the discharge of your debts.  A discharge will vary on a case by case basis depending on debt types, but overall, credit card debt and other unsecured debts are discharged in full. In order to find out if you qualify for Chapter 7 bankruptcy, you need to take the Means Test, which determines whether your income is under or over the state median/average income for a household of similar size. If your income is lower, you qualify for Chapter 7 and you can start your bankruptcy petition.

Once you have made the decision to seek debt relief through the Chapter 7 bankruptcy process, it is not advisable for you to make further payments to most of your creditors because any debts to those creditors will be fully discharged. As soon as you find out that you qualify to file a Chapter 7 case and you’ve gotten the go-ahead from your lawyer, stop paying your credit card and other debts that you don’t want to keep. If you continue payments past that point, it will simply put you in a worse financial situation because you could be using that money for other, more productive purposes.

When you file your petition, an automatic stay under 11 U.S.C. § 362 is imposed upon your creditors preventing them from initiating or continuing any collection actions against you. This means that those creditors will not be able to impose additional late fees against you as your case continues.  It also means that your creditors cannot harass or sue you. If any creditors start or continue collection actions against you, Behm Law Group bankruptcy attorneys are here to protect you and hold those creditors accountable in court by formally asking the court to hold them in contempt.

Thousands of Americans resolve their credit card and other debts through the  bankruptcy process. To learn more about filing for Chapter 7 bankruptcy in Fairmont, MN with the help of a skilled attorney, call Behm Law Group Ltd. at (507) 387-7200 or email stephen@mankatobankruptcy.com.

 

 

 

 

 

The process of Chapter 7 bankruptcy works to liquidate the filer’s non-exempt assets, distribute the value to creditors, and provide a discharge of debts to the filer. In 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act established stricter regulations for Chapter 7 cases. These regulations were intended to make it more difficult to commit bankruptcy fraud without repercussions when filing a Chapter 7 case.

Qualifying for Chapter 7 bankruptcy today means passing the Means Test, completing pre-bankruptcy requirements, and filing a bankruptcy petition that accurately represents your financial situation. With the help of Behm Law Group, Ltd., you can build a strong, successful case for Chapter 7 bankruptcy in Redwood Falls, MN and the surrounding area.

When you file for Chapter 7 bankruptcy, the bankruptcy trustee assigned to your case will review your financial records, both to cross-check the representations made on your bankruptcy documents and to determine if you qualify for bankruptcy relief. Because some of your financial records will be under review and because bankruptcy debt relief is intended to benefit only an honest and forthright filer, there are several actions to avoid before you file for Chapter 7 bankruptcy:

• Favoring a creditor: Choosing to pay more to one creditor over another is considered a “preferential transfer”.  It could result in the trustee suing that creditor, recovering what you paid the creditor and evenly splitting that amount between all of your creditors. Generally, you want to show that you have acted with fairness to all of your creditors and that you have done everything you can do to repay your debts in an ordinary fashion.
• Transferring assets: If you transfer any asset out of your name to someone else before filing for bankruptcy relief and then don’t disclose that transfer in your bankruptcy paperwork you will be deemed to have committed a “fraudulent transfer”, even if you made the transfer without any bad intent. While such a “fraudulent transfer” generally won’t be considered a criminal act in most cases, it could result in the denial of a bankruptcy discharge and the trustee could sue the person you transferred the asset to in order to undo the “fraudulent transfer” and recover the asset.
• Credit card purchases: Credit card debt is included in your bankruptcy case, and is almost always fully discharged in a Chapter 7 bankruptcy. If you are using your credit card for anything not considered a necessity (food, gas, etc.) before filing, however, you could be deemed to be acting with fraudulent intent by purposefully adding to the debts you know will be discharged. A good example of this would be charging a vacation to Europe or Hawaii on a credit card and then filing for bankruptcy relief a month later.  Under such a scenario, the credit card company could sue you in bankruptcy court and ask the bankruptcy court to except or exclude the debt from the discharge granted to you at the end of your case.
• Receive future payments: If you are aware that you will receive future payments while your case is still open, you will have to report those future payments and such future payments could be seized by the chapter 7 trustee and used to pay your creditors.  A good example of this is if someone passes away within 180 days of the filing of your bankruptcy case and you inherit money or property.   If this happens you must report it to the bankruptcy trustee and to your attorney.  If you fail to report it, the trustee could ask the bankruptcy court to revoke or deny any debt relief that you would otherwise receive.
• Sue someone: If you have the right to sue someone for personal injury or property damage, (vehicle accident, someone else’s tree falling on your house etc.) you will have to disclose any such claims in your bankruptcy petition.  Sometimes, the trustee will assist you and your attorney in resolving the claims.  Sometimes, any settlement proceeds will be able to be fully protected/retained.  Sometimes, some of the settlement proceeds will have to go to the trustee for the benefit of your creditors.  If you have the right to sue someone, it is essential that you disclose this to your bankruptcy attorney before   your bankruptcy case is filed so that you and your attorney can determine how to properly disclose and prosecute the claim and protect as much of the resulting settlement proceeds as possible.

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

Financial struggles can happen at any age, whether you’re in your 20s living paycheck to paycheck at an entry level job or a senior citizen surviving on a retirement fund. No matter your age, chapter 7 bankruptcy is the only form of permanent, reliable and court enforceable debt relief available.

Filing for bankruptcy can turn around an individual’s life at any age and help them maintain long-term financial stability debt free. If you’re considering filing for bankruptcy as a retiree, there are several things to take into account that might affect you differently than a similarly situated younger person. At Behm Law Group, Ltd. we provide expert legal guidance and protection throughout the process of filing for Chapter 7 bankruptcy in Jackson, MN and the surrounding area.

Chapter 7 bankruptcy is called “liquidation bankruptcy”. Quite simply, a filer’s non-exempt assets are liquidated or sold by a chapter 7 trustee and the proceeds are used to make some sort of payment to one’s creditors. The vast majority of one’s debts are completely discharged in 90 to 120 days. However, in the vast majority of cases, the bankruptcy exemptions provided by the bankruptcy code are quite generous and are more than sufficient to protect all of a person’s property and the only things a person loses are one’s debts.

If you plan to file for Chapter 7 bankruptcy as a retiree, there are some things to consider before you file a bankruptcy petition that are specific to your age and situation:

• Retirement funds: In Chapter 7 bankruptcy cases, retirement funds are exempt from the liquidation process. The bankruptcy exemptions protect 401(k) and 403(b) accounts, as well as profit sharing accounts and certain other types of IRAs and retirement funds from liquidation. However, if you’re living off income from those accounts as a retiree, keep in mind that you might not qualify for Chapter 7 bankruptcy if the monthly retirement income causes your income to exceed the state median income for a household of your size. Fortunately, other income from Social Security benefits, veterans’ disability assistance and COVID-19 relief/stimulus will not affect whether you qualify for chapter 7 bankruptcy relief.
• Home equity: Most retirees have paid off their mortgages and fully own their homes. This means they have built up a significant amount of home equity or value. If you do have a lot of equity in your home and plan to use that value to support you financially in the coming years, under the Minnesota state bankruptcy exemptions, you will be able to protect that value or equity up to $420,000 if your homestead is not used for agricultural purposes or up to $1,050,000 if your homestead is used for agricultural purposes.
• Medical bills: The majority of senior citizens and even younger retirees face health issues as the years pass. Because of this, it’s common for medical bill debt to become a significant factor in the decision to file for Chapter 7 bankruptcy. If you have severe medical debt, filing for Chapter 7 bankruptcy is the most effective way to find relief from medical bills and other unsecured debts. In fact, medical debt is sometimes the only reason retirees file Chapter 7 bankruptcy.

To learn more about filing for Chapter 7 bankruptcy in Jackson, MN as a retiree, contact Behm Law Group, Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com.

In the United States, the bankruptcy system was put into place to help balance the economy in times of a depression, support individuals and businesses who will never be able to repay their debts, and provide creditors with some form of possible compensation. If you are struggling to meet debt payments each month, you may want to consider bankruptcy as a viable option for permanent debt relief. Behm Law Group Ltd. can provide you with important legal support and guidance through a Chapter 13, Chapter 12 or Chapter 7 bankruptcy in Windom, MN, and the surrounding area.

 

Chapter 7 bankruptcy is the most commonly filed type of individual bankruptcy case in the United States. The process of Chapter 7 bankruptcy works to liquidate the filer’s non-exempt assets in exchange for the discharge of one’s various debts. Credit card debts and medical bills are often the most common debts involved in an individual Chapter 7 bankruptcy, but other debts like mortgages and car loans can also be involved in many cases.

 

The process of filing for Chapter 7 bankruptcy is relatively straightforward, but each step must be done properly and in a timely manner or your case could be at risk of being dismissed. Generally speaking, the steps of a Chapter 7 bankruptcy include the following:

 

1. Consultation: An initial consultation with a bankruptcy attorney is the first step in any case. Behm attorneys help you determine if Chapter 7 is right for your financial situation and where to go from there.
2. Scheduling payments: After the initial consultation, we work with you to plan a payment schedule of our attorney costs and the court fees.
3. Petition: Once we’ve determined a payment schedule that fits your income, we guide you in completing the necessary paperwork involved in your petition. This information includes comprehensive debt and income details, your tax returns, bank statements, and any other relevant financial documentation.
4. Credit counseling: Part of qualifying for Chapter 7 bankruptcy is taking a court-approved credit counseling course. This course can be completed online and takes about 60 to 90 minutes to complete.  It is available at minimal cost.
5. Case preparation: Once you submit your financial information to our attorneys, we review your paperwork and forms to ensure everything is correct. We also spend time pinpointing potential issues that might arise with creditors or the trustee, and we work to eliminate or mitigate any potential problems.
6. The 341 hearing: The 341 hearing (or Meeting of the Creditors) is another requirement that must be completed before you receive your discharge and before your case can be closed. This typically involves a short meeting with the trustee to answer relevant questions to verify, under oath, the information in your bankruptcy petition. Creditors can attend, but they frequently don’t find it necessary to do so.
7. Financial Management/Debtor Education:  Before you are eligible to receive a bankruptcy discharge, you must complete a second course called “Financial Management” or “Debtor Education”.  This course provides various tips and techniques to help one budget one’s finances more efficiently and manage one’s debts more effectively going forward.  Like the credit counseling course, this course can also be completed online and it takes about 2 hours to complete.  It also is available at minimal cost.
8. Debt discharge: Once your petition is submitted to the court and your 341 hearing has been conducted and you’ve fulfilled all of the other bankruptcy code requirements, your debts are discharged and all of your creditors receive a copy of the discharge order issued by the bankruptcy court.  The discharge order permanently prevents your creditors from pursuing you for any debts that you owed them.  It also operates as a warning to your creditors that they could be sued and severely sanctioned by the bankruptcy court if they continue collection activities against you.
9. Trustee administration: Finally, the trustee goes through the process of selling any non-exempt assets and distributing the sale proceeds to creditors. This is the last step in your case before it’s closed.  However, in most cases all one loses are one’s debts.  The bankruptcy code exemptions, which are used to protect property, are quite generous and they are normally sufficient to protect all of one’s property.

 

To learn more about the details of filing for Chapter 7 bankruptcy in Windom, MN, contact Behm Law Group Ltd. by calling (507) 387-7200 or emailing stephen@mankatobankruptcy.com.

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.