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How to Qualify for Chapter 7 Bankruptcy in Redwood Falls, MN, With a High Disposable Income

Whether you’ve become overwhelmed with credit card debt, accumulated debts over the years that outweigh your income, or struggled financially for any other reason, filing for bankruptcy might be your best course of action. For most individuals, Chapter 7 bankruptcy is a popular option because it alleviates a large amount of debt and makes rebuilding credit possible for even the poorest scores. However, qualifying for Chapter 7 requires passing the Means Test, and if you have an income higher than the median Minnesota income for a household similar to yours, you may not qualify. Behm Law Group, Ltd. attorneys can help you determine if it’s possible to qualify for Chapter 7 bankruptcy in Redwood Falls, MN, even with your high income.

Despite how black and white the pass/fail system of the Means Test may seem, it is possible to find gray area when it comes to qualifying for Chapter 7 bankruptcy with a high disposable income. The Means Test is designed to weigh all the aspects of your financial situation, and as long as everything is documented correctly, it’s possible to qualify for Chapter 7 with a high income if your situation meets one or more of the following standards:

  • Your number of financial dependents is high enough to overbalance your income. More dependents to support means more money spent out of your income.
  • You owe child support, back taxes, overdue payments on car loans, attorney fees, mortgage, or other property.
  • Your car or mortgage payments are high and prevent your income from being high enough to work with a debt repayment plan through Chapter 13.
  • The majority of your debts are business related, not consumer related. This can include business and personal income tax debts, personal loans for business, and credit card debts accumulated from purchasing for your business.
  • You are currently on active duty or have been active within the previous 540 days for the National Guard or other military reserve.

These standards act to balance out your income with your financial obligations and debts. Even with a high income, aspects of your financial situation may mean that the money you earn is outweighed by the money you spend.

For more information about the Means Test and filing for bankruptcy in Redwood Falls, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.

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How to Know if You Quality for Chapter 7 Bankruptcy in New Ulm, MN

If you’re struggling with debt, filing for bankruptcy might be a great option to help you get back on your feet and recover financially. For most individuals—and even for some small businesses—filing for Chapter 7 bankruptcy is the most attractive option for alleviating debt and rebuilding credit. Not everyone, however, will qualify for Chapter 7, irrespective of how overwhelming the debts may be. Behm Law Group, Ltd’s bankruptcy attorneys can help you throughout the bankruptcy process and determine whether you qualify for Chapter 7 bankruptcy in New Ulm, MN.

Chapter 7, or liquidation bankruptcy, is a type of bankruptcy that is designed to discharge all your qualifying debts and liquidate your non-exempt assets to pay some dividend your creditors.  The bankruptcy code provides very generous bankruptcy exemptions which allow you to retain your property.  In most cases, the bankruptcy exemptions will be sufficient to allow you to retain all of your property.  Sometimes, the value of the property you own may exceed your allowable bankruptcy exemptions in which case the bankruptcy trustee administering your case would be required to liquidate or sell the non-exempt assets and divide the proceeds among your creditors.  In order to file for chapter 7 bankruptcy relief, you must first qualify by passing the Minnesota Means Test.

Means Test

The Means Test is an evaluation of your disposable income. By comparing your average monthly income during the six-months prior to the month in which you file for bankruptcy with the median income or state average income for a household of your size, the courts will decide whether your income is low enough for you to qualify for Chapter 7. To put it simply, if your income is lower than the state median or state average income for a household of your size, you qualify for Chapter 7. If your income is equal to or higher than the state median or state average income for a household of your size, you still must complete the Means Test in full, and the courts will decide if you qualify based on the balancing of your expenses and income.

Even if you qualify for Chapter 7 bankruptcy after taking the Means Test, there are some other aspects of liquidation bankruptcy to consider:

  • Only certain debts are discharged during the Chapter 7 process, while other debts, such as some tax debts, child support debts and criminal fines, are not subject to discharge and you must continue paying them after your case is concluded. If you have more debts that are non-dischargeable than those that are discharged, Chapter 7 may not be the best type of bankruptcy for your financial situation.
  • When you enter the process of Chapter 7 bankruptcy, your non-exempt assets will be liquidated by the bankruptcy trustee to pay a dividend your creditors, just as your debts are discharged to alleviate your financial burdens.

Chapter 7 may be the perfect choice to get you back on your feet. On the other hand, Chapter 13 or other financial actions might be a better option for your situation. Find out more about the paths that lie ahead of you, and contact Behm Law Group, Ltd. at (507) 387-7200 for more information about bankruptcy in New Ulm, MN.

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

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

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

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

 

Meeting of Creditors for Chapter 7 Petitions

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

 

Meeting of Creditors for Chapter 13 Petitions

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

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

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Collaborative Possibilities for Debtors Filing for Bankruptcy in Redwood Falls, MN

Handling financial troubles alone is trying, but when you fall into a situation where filing for bankruptcy would be your best option, the process can often seem inescapably daunting. For an individual filer, Chapter 7 bankruptcy is the most common and generally the best option for relieving debt. Behm Law Group, Ltd. can help you use your options to the greatest outcome when filing for bankruptcy in Redwood Falls, MN.

The U.S. Bankruptcy Courts understand that individual filers may need options beyond the standard Chapter 7 process, and thus there are bankruptcy mechanisms that allow for collaboration between debtors in similar financial situations.

 

Joint Administration, for example, is a method of processing two or more bankruptcy cases in U.S. Bankruptcy Courts in unison. The separate cases are combined into one and administered as such, meaning the collaborating debtors can join their resources, assets, and debts into one case representing the debtors as one party in the court. Cooperating debtors can also join together in hiring attorneys and credit counselors.

 

Substantive Consolidation goes hand-in-hand with Joint Administrations and defines the act of repaying all involved creditors with the combined assets of all involved debtors. Pooling assets alleviates the burden of liquidation that would be placed on a single creditor, but it must also result in equal benefits to all creditors.

 

Joint Petition allows spouses to file for bankruptcy in the state of Minnesota under the same petition. This means that all debts and assets are consolidated to represent the spouses as a single entity. Joint petitions are similar to Joint Administration proceedings, but they’re more beneficial for spouses because all asset liquidation and debt discharges are contained within the single household.

 

The collaborative possibilities that individual filers have when considering Chapter 7 bankruptcy may help them in the long run after debts are discharged and assets are liquidated. If you feel any of these options are right for your financial situation, contact Behm Law Group, Ltd. at (507) 387-7200 for more information about filing for bankruptcy in Redwood Falls, MN.

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Understanding Reaffirmation Agreements when Filing for Chapter 7 Bankruptcy in Mankato, MN

Like most individuals and business owners, many of our clients are new to the bankruptcy process.  Many people view the bankruptcy process as being a perpetual black mark on their credit and an indictment of their personal character. This couldn’t be further from the truth. In fact, bankruptcy is a legal process specifically designed to help those who have struggled financially for any reason. As you embark on the journey of filing for bankruptcy in Mankato, MN—especially with the legal advice and assistance of the attorneys at Behm Law Group, Ltd.—you will find that bankruptcy is a helpful, rehabilitative and, possibly, cathartic experience.

Chapter 7 (or liquidation) bankruptcy is the most common form of bankruptcy for individuals and small businesses. One aspect of filing for bankruptcy that allows you to alter the “black and white” situations occurring frequently in Chapter 7 bankruptcy is the subject of reaffirmation agreements.

 

What is a reaffirmation agreement?

A reaffirmation agreement is something that is unique to Chapter 7 bankruptcy.  A bankruptcy filing nullifies one’s legal, contractual obligations to pay one’s debts.  This applies to all debts, except those debts that may be exempted from discharge under 11 U.S.C. §523 such as child support debts, student loans, criminal fines and certain tax debts.  This means that one is no longer required to pay one’s credit card debts, medical debts, vehicle loans or home mortgage loans. However, one may wish to retain certain debts such as vehicle loans or home mortgage loans.  One does this by completing a reaffirmation agreement.  A reaffirmation agreement is an entirely voluntary agreement between a debtor and a creditor that recites the terms and conditions of the original loan or mortgage.  By signing a reaffirmation agreement a debtor and an impacted creditor agree that the terms and conditions of the original loan or mortgage will be exempted out of the bankruptcy process and will continue after the bankruptcy process has been completed.  They essentially agree that a debtor will continue to be personally liable for the loan or mortgage after the bankruptcy has concluded.  Reaffirmation agreements, in most cases, must be approved by a bankruptcy court.

 

Why are they beneficial?

Reaffirmation agreements allow you to work with creditors to keep some debts in place, letting you maintain that property or asset.  They allow one to retain debts on assets, such as a house or a vehicle, which may be essential for one’s financial rehabilitation going forward.  Reaffirmation agreements can have positive and rehabilitative credit rating implications because creditors will continue to report one’s ongoing payments to the three big credit reporting agencies – Experian, Transunion, and Equifax.  Positive and consistent reporting by creditors after a bankruptcy has concluded can cause one’s credit rating to rise.

 

How can they be dangerous?

Because you must sign a reaffirmation agreement before your debts are discharged, you have to be 100% sure that you can continue meeting payments for any debt you want to reaffirm. In fact, we often advise against signing reaffirmation agreements unless it’s certain you will meet regular payments without hardship after the bankruptcy process is complete. If you aren’t sure, you could add to your financial struggles even after other debts are discharged.  The signing of a reaffirmation agreement means that one will be personally responsible for a debt after a bankruptcy has concluded.  If one were to sign a reaffirmation agreement on a vehicle loan, for instance, and if one were not able to continue making payments on the debt, the creditor could repossess the vehicle and sell it.  If there was any remaining deficiency balance (i.e. the sale price of the vehicle was not sufficient to retire the entire debt), one would be fully liable on such debt and the creditor could pursue collection remedies against the person.

 

If you’re unsure whether choosing Chapter 7 or entering into a reaffirmation agreement is right for you, contact Behm Law Group, Ltd. at (507) 387-7200 for more information about bankruptcy in Mankato, MN.

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

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

 

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

 

Chapter 7:

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

 

 

Chapter 13:

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

 

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

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Home Equity, Homestead Exemptions, and Keeping Your Home When Filing for Chapter 7 Bankruptcy in Mankato, MN

In the U.S., there is often a negative shadow cast across the idea of going bankrupt. While the fear of struggling with extreme financial difficulties and being unable to pay back various debts is quite justified, bankruptcy is still stigmatized as the worst possible outcome. In reality, much of the anxiety about how bankruptcy will affect one’s life is either over-exaggeration or myth. Behm Law Group, Ltd. will help you by revealing the distinctions between reality and fallacy during the process of filing for bankruptcy in Mankato, MN.

 

One common misconception around the bankruptcy process is that the individual filer will lose everything, including their home. In fact, even under Chapter 7 liquidation bankruptcy, there are conditions that allow the filer to keep their home.

 

Home Equity

Your home or property can only be liquidated during the Chapter 7 bankruptcy process if it has equity. Home equity essentially means that the value of your property is higher than the value of your mortgage on that property. If you have a home valued at $300,000, and your mortgage is $200,000, you have $100,000 in equity, and a bankruptcy trustee could, theoretically, sell the home to pay off the mortgage debt you owe.

 

If you have no equity (your mortgage value is greater than your property value), your trustee will abandon the property and it will not be liquidated to pay debts.

 

Homestead Exemption

Even if you have home equity, there is still a way to keep your home with the Minnesota homestead exemption. If your homestead exemption can cover the value of your home equity (Minnesota allows exemptions up to $390,000 for homes in cities), you may protect the equity in your home and keep your home in the liquidation bankruptcy process.

 

Continued Payments

Although your mortgage creditor cannot target you as an individual during the bankruptcy process, payments must still be made to repay the debt on your mortgage. If you are able to continue payments on your mortgage during and after a Chapter 7 filing, your mortgage creditor will not take your home from you and the equity in your home will be preserved and protected for your benefit.

 

If you are balking at filing for bankruptcy because you fear you may lose your home, know that you will be able to protect the equity in your home with the Minnesota homestead exemption. For more information about filing for bankruptcy in Mankato, MN, contact Behm Law Group, Ltd. at (507) 387-7200.

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

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

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

This is simply not true.

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

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

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

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

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

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

 

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Mankato, MN Bankruptcy: The Basics

Behm Law Group, Ltd. provides assistance with Bankruptcy in Mankato, MN and surrounding communities

Under 11 U.S.C. §101(41), Bankruptcy can apply to debtors who are:

An individual, a partnership, or a corporation or other business entity

In plain English: ANYBODY. Yes, ANYBODY who has debt they can’t possibly repay can file for bankruptcy. BUT:

Under 11 U.S.C. § 109(g), an individual cannot file under chapter 7 or any other chapter, however, if during the preceding 180 days a prior bankruptcy petition was dismissed due to the debtor’s willful failure to appear before the court or comply with orders of the court, or the debtor voluntarily dismissed the previous case after creditors sought relief from the bankruptcy court to recover property upon which they hold liens.

TRANSLATED: If you filed for bankruptcy and didn’t show up for your bankruptcy hearing or didn’t follow court orders or if a creditor asked for relief from your bankruptcy case to repossess an asset and you, thereafter, asked that your bankruptcy case be dismissed, you can’t file for bankruptcy again for at least six months.

And:

Under 11 U.S.C. § 109(h), no individual may be a debtor under chapter 7 or any chapter of the Bankruptcy Code unless he or she has, within 180 days before the filing of the bankruptcy case, received credit counseling from an approved credit counseling agency either in an individual or group briefing.

TRANSLATED:

If you’re going to file for Chapter 7 bankruptcy or any other form of bankruptcy, plan ahead. If bankruptcy is in your future within the next six months, make a gesture of good will and attend credit counseling. You may find the counseling can’t help you remedy your current circumstances, but make the effort; it will help you in the future.

Filing for bankruptcy is a hard and difficult decision and bankruptcy is a highly nuanced and specialized area of the law.  To help you avoid any potential pitfalls and to get you through the process with peace of mind and with as little disruption to your life as possible, you should ask for help from someone who is educated, trained, and experienced in bankruptcy law. You shouldn’t try untangling bankruptcy law language on your own. Simple mistakes caused by a lack of knowledge can cost you a lot of money and time. Let professionals who understand the bankruptcy system make your case for you.

Behm Law Group, Ltd. has attorneys on hand who can help you make sense of bankruptcy. We have extensive experience serving the communities in and around the Mankato, MN, area and all of Southern Minnesota when it comes to bankruptcy. Call Behm Law Group, Ltd. today and let us help you regain your foothold on firm financial ground.

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Is Your Home Secure During Chapter 7 Bankruptcy?

Minnesota Bankruptcy Attorneys at Behm Law Group, Ltd.

One of the biggest fears people have about filing for bankruptcy is the belief that they will lose their home if they file. It’s a valid concern, but it’s a consideration that can be rather complicated and depends on your particular situation as well as the law as it applies from state to state.

When it comes to Chapter 7 bankruptcy, your home is generally considered “safe,” provided you’re current and up-to-date on your mortgage payments. Further, if you owe more on your mortgage than your home is actually worth, there’s no value or money readily available to the trustees by selling your home, something to keep in mind when considering Chapter 7 bankruptcy.

Declaring Chapter 7 bankruptcy does offer certain protections, but it’s important to remember that ultimately your mortgage lender still holds a security interest on your loan. Stay on top of your mortgage obligations, and you’ll be in a much better position to keep your home during Chapter 7 bankruptcy.

As with all bankruptcy laws, home security during bankruptcy carries a laundry list of legal stipulations and “legal speak” that’s best handled by the professionals. However, your home does carry with it certain bankruptcy provisions that you shouldn’t cast aside without proper consultation.

Behm Law Group, Ltd. specializes in bankruptcy protection for your home and other secured assets. If you’re located in Mankato, MN or Southern, MN or surrounding areas, and you’re facing bankruptcy and all the uncertainty it entails, you should call upon the bankruptcy attorneys at Behm Law Group, Ltd. to discuss your bankruptcy options. Don’t lose sleep about losing your home for one more night. Contact Behm Law Group, Ltd. today.