Posted on

How Your Trustee Benefits When You File for Bankruptcy in Luverne, MN

Understanding government and legal positions is a complicated business. The role of an employee and how they are compensated varies widely from position to position and department to department. Bankruptcy trustees are not employed by the United States Department of Justice.  However, they are private attorney’s appointed by the United States Department of Justice and assigned to bankruptcy cases through the United States Trustee Program.  Working with the bankruptcy trustee assigned to a particular bankruptcy case can often be nuanced. Behm Law Group, Ltd. works with both our clients and the bankruptcy trustees to successfully handle bankruptcy cases in Luverne, MN.

The help of a bankruptcy firm and attorneys such as those here at Behm Law Group, Ltd. is often key to meeting the optimal outcome in a bankruptcy case. Your bankruptcy trustee is responsible for administering your bankruptcy estate.  The bankruptcy estate is a legal entity separate and distinct from the person filing for bankruptcy relief.  It consists of any property that you are not able to keep or exempt in your bankruptcy case.  In chapter 7 cases, trustees sell or liquidate any non-exempt assets and use the proceeds to pay something to your various creditors.  Not only do they work to distribute any liquidated assets in a Chapter 7 case to your creditors, they also work with you and your creditors in a Chapter 13 case.  In a Chapter 13 case, you make one monthly payment (a payment that you can afford that is determined with the supervision of the trustee) to the chapter 13 trustee, pursuant to a restructured debt payment plan, every month for 36 to 60 months.   The chapter 13 trustee then splits that payment up among your various creditors each month for 36 to 60 months.

Additional responsibilities of a trustee are numerous, but in short, they work to oversee your case, detect fraudulent behavior with all parties involved, and ensure accuracy.

A trustee’s compensation can depend on several situations within a bankruptcy case.

Chapter 7: In a Chapter 7 case, your bankruptcy trustee takes a $60.00 fee from the $335.00 filing fee you pay to the court. If you have no assets, that’s all your trustee will receive from your case. If you do have assets, your trustee receives percentage from the collected amount after non-exempt assets are liquidated and before anything is paid to your creditors. The amount taken is determined by a sliding scale, under 11 U.S.C. §326. For the first $5,000.00 collected by a trustee, the trustee will take 25%. For the next $45,000 the trustee will take 10%, and for the following $950,000 the trustee will take 5%. For anything collected by the trustee that exceeds $1 million dollars, the trustee would take 3%. Trustees can also recover costs from the bankruptcy estate with court approval.

Chapter 13: In a Chapter 13 case, your repayment plan decides the amount of your trustee’s compensation. In all cases, your trustee cannot take more than 10% of all total payments in your plan. For instance, if your chapter 13 plan payment is $500.00, the trustee would receive $50.00 of every payment you make.  Most trustees handling Chapter 13 cases are also paid a yearly salary through the federal government.

It’s important to understand the function and duties of a trustee.  Having an attorney on your side can help you understand this. If you’re considering filing for bankruptcy in Luverne, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.

Posted on

The Difference Between Disposable Income and Discretionary Income During Your Repayment Plan With Chapter 13 Bankruptcy in Windom, MN

A common misconception about bankruptcy is that it’s a financial endgame, halting aspects of your economic and personal life.  With Chapter 7, however, your finances are given a fresh start, free from most debts you faced before filing. With Chapter 13 your options are even broader to keep your life as unaffected as possible throughout the case. When you file for Chapter 13 bankruptcy in Windom, MN, especially with the help of Behm Law Group, Ltd., you can easily integrate your bankruptcy case and repayment plan into your everyday finances.

Chapter 13 bankruptcy is designed to offer you a fresh way to handle your debts while keeping the situation fair to you and your creditors alike. With the system of reorganizing your debts that Chapter 13 provides, you can keep your financial situation manageable and still provide your creditors with the debts they are owed. During the structuring of a Chapter 13 repayment plan, your income is broken down into two basic types: discretionary and disposable.

Disposable Income

With any household, certain amounts of the total income from wages are taken automatically from paychecks and salaries as income taxes. After income tax requirements are met, remaining net income values are considered disposable income. This income can be used for any household necessities and payment obligations such as loan installments and rent.

Discretionary Income

After all household necessities and financial obligations outside of income taxes are met, the remaining income amount is considered discretionary income. This amount can be used to save, spend, or invest based on the household choices.

For example, if you make a salary of $85,000 and you file “Married Joint” on your tax forms, you will have an income tax percentage of 7.85% in the state of Minnesota. That means you will have a disposable income amount of $78,327.50. If you take 75% of that to pay bills, purchase food, fill your gas tank, and meet any other debts and tax requirements, you will have a remaining discretionary income of $19,581.87. You can choose to save, spend, or invest that amount as you wish.

Discretionary vs. Disposable in a Repayment Plan

These described options for disposable incomes and discretionary incomes are viable in a household that is not currently filing for Chapter 13 bankruptcy. How these incomes are treated in a household working through a Chapter 13 repayment plan period are very different. After income taxes and basic household necessities are met, your discretionary income is considered your only disposable income. In a Chapter 13 repayment plan, you must dedicate all your remaining disposable income to paying back your unsecured creditors.

To determine what your disposable income amount may be and to find out more information about the structure of repayment plans with Chapter 13 bankruptcy in Windom, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.

Posted on

Understanding Executory Contracts During Chapter 7 Bankruptcy in Pipestone, MN

If you’re considering filing for bankruptcy and your financial obligations outweigh your income, it’s likely you’ll qualify for Chapter 7 bankruptcy. This form of bankruptcy allows you to liquidate your assets to repay creditors and discharge certain crippling debts. The benefits of Chapter 7 bankruptcy can be significant.  Some who need to file for bankruptcy may have certain legally binding contracts in their name, such as a vehicle lease or a lease for the purchase of real estate (i.e. a contract for deed). Behm Law Group, Ltd. can help you determine how these different contracts will be treated during a petition in Chapter 7 bankruptcy in Pipestone, MN.

One kind of legal contract commonly considered during a bankruptcy case is an executory contract.

What is an executory contract?  

A lease or other contract that is active during the filing process and to which parties are still obligated is titled as an executory contract in a bankruptcy case. These contracts are different from other kinds of legal documents under the filer’s name, such as a vehicle loan, mortgage or tax debt, and they are treated differently during a Chapter 7 bankruptcy case.

Some common examples of executory contracts include car leases, apartment leases, long-term rental agreements, business contracts, real estate sale contracts, insurance agreements, timeshares, and docking agreements.

The main difference between an executory contract and other types of contracts during liquidation bankruptcy is that the agreement is current and in effect.

What happens during Chapter 7 bankruptcy?

Because an executory contract is in effect at the time the filer petitioned for Chapter 7 bankruptcy, it must be addressed during the case with a decision that will be beneficial for the filer and for the creditors. This decision can be made by your bankruptcy trustee, if there is equity or value in the executory contract (i.e. if the value of the contract exceeds any debt or other obligations associated with it).  If there is no value for the trustee, she would abandon the executory contract and you would make this decision.  Basically, either the trustee or you can choose one of two options: assume or terminate. If the executory contract is assumed, you or the trustee would be obligated to continue making payments on that contract, unless it is sold to another party. However, because there may often be no equity or value to the executory contract, it’s more often the case that the executory contract will be terminated. If the contract is terminated, the owner will repossess any leased property and you’ll no longer be obligated to make any payments.

If you’re in current binding contracts or leases and would like to know more about how they’ll be treated during a Chapter 7 case, contact Behm Law Group, Ltd. at (507) 387-7200 for information about filing for Chapter 7 bankruptcy in Pipestone, MN.

Posted on

Judgment Creditors and Your Assets with Chapter 7 Bankruptcy in Mankato, MN

If your debts and financial obligations put you in a position where you may qualify for Chapter 7 bankruptcy, it’s important to consider that option before one or more of your creditors place a judgment against you in court. If you stall in meeting debts payments but refuse to use bankruptcy options to recover from heavy financial obligations, your creditors have options to take matters to court. At Behm Law Group, Ltd., we encourage you to use the system set in place by the United States Congress to your advantage and file for Chapter 7 bankruptcy in Mankato, MN, if you qualify before your debt obligations lead to a more drastic situation.

Bankruptcy is a complex system of laws in place designed to protect debtors from being unable to resurface from drowning debts. However, that system is also designed to protect creditors, and it offers them several ways of regaining debts owed to them from debtors who do not or cannot meet scheduled payments. One of those options is by acting as a judgment creditor to use the courts approval in regaining what is owed to them.

What is a judgment creditor?  

If your creditor files a successful lawsuit against you and receives a money judgment, that creditor becomes a judgment creditor. Creditors cannot place judgment against secured debts, but any unsecured debts and nonpriority debts are susceptible to a judgment creditor. That title allows a creditor to find information about your assets and offers them more collection techniques than a normal creditor. A judgment creditor can forcibly take up to 25% of your net wages, collect from your bank account and other deposits, repossess certain items such as motor vehicles, and place liens against your properties and assets.

How do they gain information about your assets?

If your creditor has kept records of your debt to them over time, it can often be simple for them to find out what assets and properties you hold. Loan applications to your creditor, for example, give information about your name, address, employer, and certain asset information. The DMV can also provide information to judgment creditors about your registered vehicles including boats, cars, and recreational vehicles. Any real estate you own can also be easily searched on public online records.

If you’re struggling with multiple debts, it may be just a matter of time before your creditors file judgments against you. Filing for bankruptcy before then might save time and money and reduce the stress of legal action taken against you. For more information and to find out if you qualify for Chapter 7 bankruptcy in Mankato, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.

Posted on

Doubling Exemptions With Chapter 7 and Chapter 13 Bankruptcy In Windom, MN

Many of the Chapter 13 and Chapter 7 cases we work with are either individuals or households filing for bankruptcy. For those struggling financially with debts accumulated over the years, bankruptcy is often a beneficial option. When it comes to a family in need of bankruptcy help, it can actually be a good thing for married couples to own joint property. Owning property with your spouse plays a big role in a household’s ability to double exemptions. Behm Law Group, Ltd. provides expert legal advice and assistance to help a household work with exemptions and petitioning for bankruptcy in Windom, MN.

Exemptions

Exemptions are allotted amounts that depend on variables like federal or state regulations and the total of a debt. You may apply exemptions to certain properties during the bankruptcy process to prevent some or all of the value of those properties to be used for debt repayment.

Using your exemptions during a Chapter 7 case can significantly increase the amount of your property you may keep. In Chapter 13, more exemptions equal less paid back to unsecured creditors during your repayment plan.

 Doubling

If you’re married, you might have the option of filing for joint bankruptcy with your spouse. A joint case, however, is only applicable if you have debts that are in both of your names, meaning you jointly owe a debt such as jointly obligated on a house mortgage. If you and your spouse both have your names on the assets that would be subject to the bankruptcy process, you can then double your exemptions on those joint assets.

Doubling your exemptions in a joint case means you and your spouse are each able to claim the amount you would claim as an individual filer. In Minnesota, filers are able to choose between federal exemptions and state exemptions, depending on their debt amounts and abilities to double an exemption.

For example: The Minnesota Motor Vehicle Exemption allows up to $4,600 of an for people who own motor vehicles. If you and your spouse are both listed on the title of a vehicle worth $9,200, you both have an ownership interest in and to that vehicle.  In order to protect and keep it in a bankruptcy proceeding each of you could assert your independent $4,600 exemptions and stack them together ($4,600 x 2 = $9,200) and protect the entire $9,200 value of the vehicle.

If you and your spouse are considering filing for bankruptcy in Windom, MN, keep in mind that you can jointly file and, if you both own the subject property/assets, double or stack your bankruptcy exemptions. For more information about your options with joint bankruptcy, contact Behm Law Group, Ltd. at (507) 387-7200.

Posted on

Selling in Foreclosure and Automatic Stay in Chapter 7 Bankruptcy in Pipestone, MN

Owning a home with a mortgage is a major expense, and often, mortgage debts and foreclosure play a large part in filing for Chapter 7 bankruptcy. If you own a home and are having difficulty meeting mortgage payments, choosing to file might be the best course of action to recover from financial harm. Behm Law Group, Ltd. provides legal assistance to homeowners filing for Chapter 7 bankruptcy in Pipestone, MN.

If you’re facing foreclosure on your home, Chapter 7 bankruptcy can actually turn your troubles concerning mortgage debt around. However, that result all depends on a few things.

  1. Your home equity and Homestead Exemption: The method of Chapter 7 bankruptcy is to liquidate assets to repay your creditors and discharge debts. This process is much more complex in practice. In fact there are several steps in determining which properties can be liquidated and which debts can be discharged. Your home equity and the home exemption amount you can claim decide how your mortgage and home will be treated in Chapter 7.
  2. Your bankruptcy trustee’s commission: In cases where your home qualifies for liquidation in a Chapter 7 case, your trustee is incentivized with a commission from the sale. Starting with the difference of the sale against the debt owed, your trustee will take 25% on the first $5,000 made, 10% on the next $50,000, and 5% on the remainder below $1 million.
  3. How long Automatic Stay lasts: When you enter into the bankruptcy process, the court issues an automatic stay, which immediately prevents your creditors from collecting. If your home is in foreclosure, your debts will still be placed under the automatic stay for some or all of the time it takes to process your case. If your creditors press the court to lift automatic stay, you may be faced with continuing to make payments to them even while you’re in the process of filing for bankruptcy. However, if the automatic stay lasts for a month or two, you can still save a significant amount from keeping those monthly mortgage payments.
  4. If you will keep your home: Whether or not you will keep your home depends on the exemption you can claim and your unprotected equity. If your home is not in the situation to provoke liquidation, you can keep your home after bankruptcy, and if you negotiate terms with your lender before filing, you can change payments on your mortgage. If your equity and exemption amount trigger a sale, selling in foreclosure can also be beneficial because your mortgage debt will be discharged and you may gain tax advantages.

 *Determining your unprotected equity can be done with the following equation:

(Market Value of Home) – (Homestead Exemption) – (Trustee Commission) – (Cost of Selling the Home) – (Mortgage Debt) – (All Non-Mortgage Liens on the Home) = (Your Unprotected Equity)

For more information about how foreclosure affects your mortgage and home status during Chapter 7 bankruptcy in Pipestone, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.

Posted on

Protecting Your Money and How Filing for Chapter 7 Bankruptcy in Owatonna, MN, Affects Your Bank Accounts

If you’re struggling financially, your debts and obligations may seem looming and unmanageable, but for many, the idea of bankruptcy is even more alarming. At Behm Law Group, Ltd., we find that many of our clients have had no reason to become familiar with the process of bankruptcy in the past and have unwarranted fears of how bankruptcy may impact them. If you’re balking over filing for bankruptcy because of an apprehension of negative side effects, let us help you. Bankruptcy is designed to help debtors regain their financial footing, and with Chapter 7 bankruptcy in Owatonna, MN, you can get the fresh start you need.

Many individuals hesitating at the thought of bankruptcy have worries about how the process will impact their credit and properties. For example, the fear of how your bank account will be handled is a common source of anxiety during bankruptcy.

These fears, however, are unnecessary nearly 100% of the time. In fact, for the vast majority of individuals filing for bankruptcy, a case in itself will not affect your bank accounts in any way. Checking, savings, and other types of bank accounts are left untouched in the typical individual consumer Chapter 7 bankruptcy case.

When Your Bank Account is Impacted

Although most of the time an individual filer’s bank accounts will not be touched during a bankruptcy case, there are a few unusual circumstances that may affect the status of an account or the value within. These circumstances include:

  • If a debtor has a total balance across all accounts that is greater than the exemption allowances they are allowed with which to protect property
  • If a debtor owes funds to the bank or credit union where their accounts are held
  • If a debtor owns accounts with banks or organizations that freeze accounts during a Chapter 7 case (e.g. Wells Fargo or Union Bank or Bank of the West)

Except for these uncommon circumstances, a Chapter 7 bankruptcy case does not generally impact bank accounts.

Protection with Exemptions

When filing for Chapter 7 bankruptcy in Minnesota, individual filers may choose to use state exemptions or federal exemptions. In the case where your bank account funds are not exempt from the process of liquidation, those funds are considered assets and are surrendered to the bankruptcy trustee. If your funds can be protected by an exemption, however, they will remain untouched during the bankruptcy case.

Exemptions that protect your bank account funds vary from case to case depending on how you choose to use certain transferable exemptions, such as the federal wildcard exemption.

The fear of losing the money in your bank accounts should not prevent you from filing for Chapter 7 bankruptcy in Owatonna, MN. For more information about how your bank accounts are impacted during the bankruptcy process and for bankruptcy consultations, contact Behm Law Group, Ltd. at (507) 387-7200 today.

Posted on

Understanding Non-Dischargeability Complaints When Filing for Chapter 7 Bankruptcy in Luverne, MN

Filing for bankruptcy throws one’s debts into question in front of a Bankruptcy Court, one’s attorney, and one’s creditors. If one has passed the Means Test and is qualified to move forward with Chapter 7 bankruptcy, the dischargeability of one’s debts is generally not in dispute. Throughout the process of bankruptcy, however, questions and concerns are can arise from all parties involved. Behm Law Group, Ltd. provides legal advice and assistance to those filing for Chapter 7 bankruptcy in Luverne, MN.

In some chapter 7 bankruptcy cases, non-exempt assets (assets one is not able to protect with one’s bankruptcy exemptions) are liquidated and the sale proceeds are used to pay some dividend to one’s creditors.  The good news is that, in most cases, all of one’s debts are discharged, leaving one permanently free of many crushing financial obligations. However, sometimes creditors may have a legal basis to file a non-dischargeability complaint against a debtor under 11 U.S.C. §523.  This means that sometimes a creditor has a good reason to ask a bankruptcy court not to grant a debtor debt relief as to a particular debt.

Non-Dischargeability Complaints

A complaint filed about the legitimacy of the discharge of one’s debt is technically a lawsuit and it is labeled an “adversary proceeding”. If a creditor files a non-dischargeability compliant, one will be given a summons and the process will take place partially by mail and partially in the bankruptcy court. The complaint is served on the defendant and the defendant has the right to respond in his or her own defense (and with the help of an attorney).  Some examples of grounds justifying a non-dischargeability complaint are:  1.) One has incurred significant debt on a credit card within a short time before filing a bankruptcy; 2.) One has misrepresented one’s financial condition, either verbally or in writing, to a lender and the lender has made a loan relying on the misrepresentations; 3.) One has willfully and intentionally caused financial injury or physical injury to someone.

If a creditor has filed the complaint without proper legal standing, or if the complaint is unclear to one as a debtor, one may file a motion to dismiss the claim or force the creditor to provide a complaint with more specificity. Complaints filed against fraudulently incurred debts or other scenarios, as listed above, must be identified correctly and clearly or one may file a motion to dismiss the complaint.

Responding to a clearly defined complaint against the dischargeability of a debt requires an answer to each paragraph of the compliant provided by the creditor. The help of a bankruptcy attorney during this response time is crucial for one to have optimal access to legal information and to assert one’s rights as a defendant. If one does not respond to the complaint, the case will proceed by default, and the debt in question will be excepted from discharge.

For more information about a non-dischargeability complaint and why it’s important to take advantage of the help an attorney can provide during this time, contact Behm Law Group, Ltd. at (507) 387-7200. You can also count on us for advice and assistance if you are considering filing for Chapter 13 bankruptcy or Chapter 7 bankruptcy in Luverne, MN.

Posted on

Getting Rid of Tax Debts with Chapter 7 Bankruptcy in Mankato, MN

Tax debts are a common problem for most struggling with accumulated financial burdens. Because taxes are so varied and ultimately required of every U.S. citizen able to work and own property, the debts associated with taxes are equally varied and unavoidable. While most of the time you cannot discharge tax debts with bankruptcy, there are times when it’s possible to treat those debts with Chapter 7 bankruptcy. Behm Law Group, Ltd. can help you determine if and how your tax debts can be cleared when filing for bankruptcy in Mankato, MN.

Although possible, it can be difficult to discharge your tax debts with bankruptcy. Only when your case meets several requirements can your tax debts be discharged.

Requirements for Discharging Tax Debts:

  1. Your tax debts must be income tax debts. While you may have several other types of tax debts, only your income tax debts can be discharged with Chapter 7 bankruptcy.
  2. Your tax debts must be three or more years old. If your tax debt was due at least three years before you petition for bankruptcy, these debts can be considered for discharge.
  3. You must have filed a return for your tax debt at least two years prior to filing your bankruptcy petition. This return must have been filed on time, your extensions cannot have expired at the time of filing, and the IRS cannot have filed a substitute return for you.
  4. You cannot have committed any purposeful fraud or evasion on your tax return at the time of the incurred tax debt. If courts determine you have used any means of illegal tax fraud, you cannot qualify for tax debt discharge.
  5. You must have your tax debt examined by the IRS 240 days before filing for Chapter 7 bankruptcy. This is called the 240-day rule, and is designed to determine whether your tax debt qualifies for discharge based on the previously listed rules. Your tax debt may also qualify for the 240-day rule if it has not yet been assessed before the time of your bankruptcy petition.

If, and only if, your tax debts meet ALL of these conditions can they be discharged with Chapter 7 bankruptcy. If you’re planning on filing for bankruptcy to rid yourself of primarily tax debts, be aware of the strict conditions. Behm Law Group, Ltd. can help you through the process of filing for Chapter 7 bankruptcy in Mankato, MN. Contact us today at (507) 387-7200 for more information.

Posted on

What to Do When Creditors Harass You After Your Chapter 7 Debt Settlement in Windom, MN

Those who have accumulated debts they can’t handle alone often find rescue in filing for bankruptcy. Today’s U.S. Bankruptcy Code is designed to protect individuals and businesses from falling into even more critical financial situations. The idea of being bankrupt can leave a bad taste in one’s mouth and, while one might not enjoy having to go through bankruptcy process, there are many benefits. Filing for Chapter 7 bankruptcy alleviates debt and opens the door to a fresh start financially. Behm Law Group, Ltd. can help you through the process of filing for bankruptcy and completing your debt settlement in Windom, MN.

Chapter 7 bankruptcy is designed to discharge the majority of your debts and allow you to retain your assets. With this form of bankruptcy, you will have a clear beginning, middle, and end of the process.

Do debts still matter?

When you file for Chapter 7 bankruptcy, your debts are addressed, and when the process is over, your debts won’t come back into your life. They are permanently discharged.  The only lingering effect of Chapter 7 bankruptcy is that your case will stay on your public credit profile for 3 to 6 years. After filing for Chapter 7, the debts that were discharged are gone forever.  You will not have to handle other financial consequences from the debts discharged in your case.  Paradoxically, you will be more of an attractive credit risk for creditors than you were before your case was filed.  This is because future creditors know that the creditors discharged in your bankruptcy are gone for good and that they will now be able to be first in line for payment from you going forward and will not have to be in competition with your previous creditors.

In short, the debts addressed in a Chapter 7 case don’t matter anymore. You don’t continue making payments, and you won’t be in contact with your creditors again.

Why are my creditors still harassing me?

But if your debts don’t matter after you file for Chapter 7 bankruptcy, why are your creditors still in contact with you, and in many cases, still harassing you? There are several reasons why this might be happening. Most of the time, your creditors haven’t heard that you’ve entered into the bankruptcy process yet. Even if your case is not completed, your creditors are legally obligated to stall collections. However, it can take up to two weeks for your creditors to be notified that you’ve entered into the process. If it’s been over two weeks and your creditors are still harassing you, they may be trying to get away with illegal collections. Creditors may try to take advantage of your lack of knowledge about the nuances of bankruptcy by telling you that you filed for the wrong kind of bankruptcy, that your debts aren’t covered by your case, or that you still have to pay interest on a settled debt. Behm Law Group attorneys protect our clients from this fraudulent behavior as we work with you through the bankruptcy process.

If you’re considering filing for Chapter 7 bankruptcy and you’re concerned about your debt settlement in Windom, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today for a consultation.