Category: Debt Assistance

People struggling with making monthly payments on any of their debts have likely looked into ways to resolve those debts in alternative ways. Bankruptcy is one of the ways that thousands of individuals use to find permanent relief from debts they would otherwise never be able to resolve each year. Individual consumer bankruptcy can permanently resolve credit card debt, medical bills, mortgages, car loans, and many other common kinds of debt. While bankruptcy can be extremely effective for debt relief, it does have several requirements for filers to qualify. If you’re considering filing for bankruptcy to find permanent and lasting debt relief in Marshall, MN, or the surrounding area, Behm Law Group Ltd. can provide legal guidance and protection throughout your case. Our attorneys can first determine if you will qualify for Chapter 7 liquidation or Chapter 13 reorganization bankruptcy.

Chapter 7 Qualifications

Chapter 7 bankruptcy works to liquidate filers’ non-exempt assets in exchange for the permanent discharge of their debts.  In most cases, people can fully protect or exempt all of their assets.

• Filers must pass the Means Test, which measures your debt-to-income ratio. If this ratio is lower than the state average or median for a similarly sized household, you can qualify for Chapter 7 bankruptcy. If you are married, you can measure you and your spouse’s income-to-debt ratio jointly.
• Filers who previously filed a Chapter 7 case, but had their petition dismissed for any reason, can’t file again for 181 days.
• Filers cannot have obtained a Chapter 7 bankruptcy discharge within the past eight years.
• Filers cannot have obtained a Chapter 13 bankruptcy discharge within the past six years.
• Filers must attend a court-approved credit counseling course within 180 days prior to the filing their case.
• Filers must pay all bankruptcy fees and submit a factually accurate petition to the court listing all of their debts and all of their assets.

Chapter 13 Qualifications

Chapter 13 bankruptcy works to reorganize filers’ debts into a manageable repayment plan that considers their monthly reasonable and necessary living expenses and their level of monthly disposable income.

• Filers who don’t pass the Chapter 7 Means Test can choose to file Chapter 13 instead.
• Filers cannot have unsecured debts over $419,275, including debts like credit cards and medical bills.
• Filers cannot have secured debts over $1,257,850, including debts like mortgages and car loans.
• Filers need to have sufficient monthly income that exceeds their monthly reasonable and necessary living expenses to be able to make the monthly payments outlined in their chapter 13 repayment plan.
• Filers must attend a court-approved credit counseling course within 180 days of filing their case.
• Filers must prove that they have filed all federal and state income tax returns for the past four years.

Generally speaking, filers for Chapter 7 and Chapter 13 should not have engaged in any fraudulent behavior, such as maxing out credit cards immediately before filing or hiding assets.

Debt Relief

To learn more about finding permanent debt relief in Marshall, MN, and the local area by filing a bankruptcy case, contact Behm Law Group Ltd. by calling (507) 387-7200 or by emailing stephen@mankatobankruptcy.com.

Under today’s bankruptcy laws, it’s very difficult to receive a discharge of student loan debt. While some lawsuits and proposed laws might signal a change in the way student loans are handled in individual consumer bankruptcy cases in the future, they are currently almost always excepted from discharge. In order to have a student loan debt discharged in your bankruptcy case, you need to be able to prove facts substantiating “undue hardship.” This means you’re facing severe difficulties, both financial and otherwise, that make it impossible or highly impracticable to repay your entire student loan. If you believe you are facing undue hardship or if you plan to use bankruptcy for other kinds of debt relief in Pipestone, MN, Behm Law Group, Ltd. can provide expert attorney legal services to support you every step of the way.

Student Loans

Along with the recent McDaniels v. Navient case and the proposed Covid-19 Student Loan Relief Act of 2020, there have been several recent bankruptcy cases that resulted in large portions of student loan debts being discharged. Over the past two to three years, Mis Loe, Katy Adams, Kevin Rosenberg, and Jamie Mudd all used bankruptcy to effectively discharge significant student loan debts.

Debt Relief

Mis Loe: Californian Mis Loe received a 98% discharge of her student loans that had accrued to over $350,000 in 2021. Loe faced health issues after starting her undergraduate degree in 1992, and her income halted with the 2020 pandemic. Her student loans had accumulated to $356,637.82. With an adversary proceeding in her Chapter 7 case, she was finally able to find debt relief from those loans.

Katy Adams:

Katy Adams of Texas found relief from her $41,509 in student loan debts. Adams worked as a public servant for over 20 years, but personal events forced her to leave that career. With several lower-income jobs making her incapable of making loan payments larger than the monthly minimum payments, Adams filed for Chapter 7 in 2019 to totally resolve the student loan debts.

Kevin Rosenberg:

U.S. Navy veteran, Kevin Rosenberg, owed six figures in student loans for over 15 years. In 2020, the New York Bankruptcy Court granted the discharge of his $221,385.49 worth of student loan debts. Rosenberg was an attorney, but after realizing that a law career wasn’t his calling, he left to become an entrepreneur with relative success. However, the recession and some personal issues caused an irreversible and significant drop in his income, leading to the increase of his student loans.

Jamie Mudd:

Nebraskan Jamie Mudd had almost $90,000 in student loan debt discharged in her bankruptcy case in 2019 with an adversary proceeding. After earning two Associate degrees and working multiple retail jobs, Mudd had also begun caring for her developmentally-challenged grandson. Because of these circumstances, she was unable to materially reduce her student loan debts which had amassed to $89,525.38.

These are just some examples of discharged student loan debts through bankruptcy. To learn more about finding debt relief in Pipestone, MN with bankruptcy, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatel:%20(610)%20431-3553tobankruptcy.com.

After the COVID-19 shutdowns and the peak of the pandemic, many individuals and small businesses faced financial difficulties. If you have debts you know you can’t repay, you’re not alone. There are many ways to work out that debt, from settlement to bankruptcy. For households with high unsecured debts, like credit card bills and medical expenses, in addition to common secured debts, like a mortgage and car loan, filing for bankruptcy will most likely be the best solution for long-term debt relief and financial stability. If you’re considering filing for bankruptcy for debt work-out in St. Peter, MN and the surrounding areas, Behm Law Group, Ltd. offers legal protection, guidance, and support throughout your case.

Debt Relief

We provide legal services for individual consumer cases through Chapter 7, 12, and 13, as well as small business Chapter 7 and Chapter 13 cases. Filing for bankruptcy can help resolve multiple debts, including your mortgage. About 45% of consumers in the U.S. have mortgage debt. Mortgages, along with credit card debt and student loans, are one of the most common types of debt included in bankruptcy.

Debt Work-out

If you use bankruptcy for debt work-out, your mortgage and home could be handled one of three ways:

1. Any pre-bankruptcy filing delinquency you have on your mortgage could be included in the reorganization of your debts into a three- to five-year repayment plan through Chapter 13. You will keep your home and end up repaying your reorganized mortgage in full after the repayment plan ends.
2. If you want, your mortgage debt may be discharged and the mortgage lender could foreclose on your home in a Chapter 7 bankruptcy. After your case concludes, you may have to eventually vacate the home, but you will no longer be responsible for the mortgage debt.
3. Your mortgage may be retained in Chapter 7 and you can keep your home from the chapter 7 trustee and from liquidation by protecting the equity (value that exceeds the amount of debt you owe) you have in the home with the Homestead Exemption. In Minnesota, this exemption applies to homes with equity or net value of $420,000 or less for houses in urban areas and $1,050,000 less for homesteads used primarily for agricultural purposes.  You could sell your house, payoff the underlying mortgages and retain any remaining sale proceeds.  This is somewhat common in Chapter 7 cases.

Forbearance

If the only debt you can’t meet monthly payments for is your mortgage, you might want to consider a forbearance (example) with your mortgage lender rather than a bankruptcy. A forbearance allows you to pause payments or make lower payments temporarily. This can be beneficial for a short time and prevents foreclosure, but you will still have to pay property taxes, make up the additional amounts later, pay a forbearance fee, and the interest amounts due may increase.

If you have debts in addition to your mortgage, filing for bankruptcy will resolve them together. To learn more about bankruptcy debt work-out in St. Peter, MN, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

 

A recent 2021 study revealed that American household debts reached $14.6 trillion. With over 80% of the country holding debt of some kind, you might feel less alone if you hold debt of your own. This doesn’t make dealing with the stress of debt any easier, though. While money can’t buy happiness, it’s undeniable that financial stability relieves a household from significant stress. For thousands of U.S. citizens annually, bankruptcy is a source of permanent debt relief from many kinds of creditors. Despite this, bankruptcy is still often regarded as a last-resort option. In reality, bankruptcy is an effective tool that’s unjustly stigmatized because of perceived social implications and its impact on filers’ credit. At Behm Law Group, Ltd., we’ve worked with clients in all different kinds of financial circumstances using bankruptcy as a permanent debt work-out in Worthington, MN and the surrounding area.

Debt Work-Out

The best way to use bankruptcy as a debt work-out tool is to stop looking at it as a last-resort option. Viewing bankruptcy as a last hope prevents you from seeing how much the benefits of filing outweigh the impact that it could have on your credit score. While it’s true that your credit will be affected and you likely won’t qualify for certain loans for a period of time after your case is concluded, bankruptcy has many other benefits and it resolves debt quickly and permanently.  To most creditors, a bankruptcy represents a point in time.  Before the filing date, one’s financial life is chaotic and disorganized.  After a bankruptcy has concluded, one’s financial life is much more stable, better organized and simplified.  After a bankruptcy has concluded, you are a very attractive credit risk to creditors irrespective of the fact that a bankruptcy filing is on your credit profile.  Creditors know that your financial circumstances are simplified and they know that they won’t have to compete with so many other creditors to get paid.  They also know that you won’t be able to file bankruptcy again for many years.  They figure that if you don’t pay them they will have a very long time to garnish your wages or levy on your bank accounts and there won’t be a thing that you will be able to do about it.

Bankruptcy

There are three main reasons why viewing bankruptcy as a last resort might do more harm than good:

1. Bankruptcy is often a better debt resolution system than other options. Because bankruptcy is stigmatized socially and creditors sometimes want their borrowers to avoid the process so they won’t lose money, other debt relief alternatives are pushed more frequently. Debt resolution options like settlement, consolidation, adjustment, and relief programs market themselves as a way to avoid bankruptcy and fix your debt. However, people always end up spending more money and more time with such programs and they almost never get their debts permanently resolved.  Even with attorney fees, bankruptcy is always cheaper and faster than other non-bankruptcy options.
2. You could lose years of income. With high interest rates, credit cards and other loans can suck away years of your income while you spend time repaying a debt. If you’re not able to pay off or materially reduce a debt in a timely fashion, the odds are that you will never fully repay that debt. Using bankruptcy sooner to discharge unsecured loans like credit cards and medical bills will save you significant time, money, and stress.
3. Bankruptcy is almost always not the filer’s fault. Bad things happen to good people. Bankruptcy is a way to permanently resolve those bad things. Most filers had debts that were out of their control. This often includes unexpected medical expenses, divorce, job loss, car accidents, and other unfortunate life events.

If you stop seeing bankruptcy as a last resort option, you can see how it will benefit you to use it as a debt work-out in Worthington, MN. For more information about filing, contact us today at (507) 387-7200 or stephen@mankatobankruptcy.com.

 

If you are facing debts you can’t repay, there are several options for individuals and businesses alike to permanently resolve those financial burdens. In many cases, filing for bankruptcy can be the most effective choice for people with common kinds of debt. For individuals, Chapter 7 and Chapter 13 are both very effective depending on the types of debt you hold, your income, and your ordinary, monthly living expenses. Behm Law Group, Ltd. attorneys offer expert legal advice and protection for individual consumers and businesses filing for Chapter 7, 12, and 13. We can work with you to determine if filing for bankruptcy will be the best way to find permanent debt relief in Windom, MN and the surrounding areas.

Bankruptcy Fraud

Since the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) was established in 2005, committing bankruptcy fraud has become more difficult. Three of the most famous cases of celebrity bankruptcy fraud after the BAPCPA was enacted were cases of tax evasion and asset hiding. Both illegal actions are common ways of using the bankruptcy process to deceptively protect assets while trying to obtain permanent debt relief.

Three famous cases attempted since the BAPCPA was passed in 2005 include:

1. Lenny Dykstra: In 2008, retired MLB center fielder Lenny Dykstra filed a Chapter 11 bankruptcy case. His petition listed less than $50,000 in assets and $10 million to $50 million in debt liabilities. He was quickly found to have hidden and sold more than $400,000 in assets. He entered a plea deal in 2009 and was sentenced to six months in a federal prison, 500 hours of community service, and a restitution fee of $200,000.
2. Joe and Teresa Guidice: In 2009, “The Real Housewives of New Jersey” star Teresa Guidice and her husband Joe Guidice filed bankruptcy. They reported over $10 million in debt and a liquidation auction was scheduled. They withdrew their petition before that date in 2010. In 2013, they were charged with conspiracy to commit wire, mail, and bankruptcy fraud, largely due to their failure to file tax returns for five years and their failure to report Teresa’s earnings from the housewives show. Teresa served 11 months in prison, and Joe completed his 41-month sentence in 2019. He is currently held in an ICE detention center awaiting deportation because he never acquired U.S. citizenship.
3. Abby Lee Miller: Dance studio owner Abby Lee Miller (whose studio was featured in the reality show “Dance Moms”) filed a Chapter 11 case in 2010. She was quickly charged with bankruptcy fraud after assets she had hidden were discovered. Her charges also included perjury in court. Miller was sentenced to one year in federal prison, two years supervision after release, a $40,000 fine, and a $120,000 restitution fee.

Debt Relief

All these cases of fraud are extreme examples, but they exemplify some of the most common methods of asset hiding, tax evasion, and falsification of forms. To learn more about using bankruptcy for legal permanent debt relief in Windom, MN, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

 

In the U.S., there are several ways that individuals can resolve debts. Debt settlement through a third-party program is often aggressively advertised as the “best” way to work out debts, but that route comes with many caveats, including significant additional fees. Other debt work-out systems include debt management plans through a credit counselor, debt consolidation, and, of course, bankruptcy. While a bankruptcy case might not be the right choice for resolving everyone’s debts, making the decision to file a petition can be one of the most effective, fastest, and longest-lasting ways to find debt relief. If you’re looking for the best kind of debt work-out in St. Peter, MN and the local regions, Behm Law Group, Ltd. can help. Our attorneys will work with you to determine if bankruptcy will be an effective option and which type of bankruptcy chapter to file. We provide guidance, support, and legal protection for all our clients from the start of their cases to the end.

Debt Work-Out

Debt work-out systems outside of bankruptcy have their uses, but they’re also heavily restricted in the debts they address, the individuals that qualify, and the debt amounts that are resolved. For example, when it comes to debt consolidation, debtors can only qualify if they meet rather strict credit score requirements.

How Consolidation Works

Debt consolidation processes take your debts and combine them into a single account. That account is then paid off slowly with your own monthly payments, or you may have the option to receive a consolidation loan. A consolidation loan is provided through a bank, credit union, or online lender. Those loans usually range between $1,000 and $100,000 and carry interest rates as high as 36%. That loan amount is used to repay your consolidated debts, and you begin to payoff that lender in single monthly payments. The amount of your consolidation loan depends on your credit. If your credit is too low, you may not be eligible for a consolidation loan at all.

Consolidation Problems

Using consolidation for debt work-out is usually only a good option for people with high credit (usually 650 or better) and specific debts (like credit card debts, mortgages, and medical bills). Debt consolidation systems are very complicated. They frequently incorporate nuanced methods of debt treatment like balance transfer cards, conversion of unsecured debts to secured debts, and other “loop-hole” processes. These methods can carry significant hidden fees and often have unexplained and unintended consequences. In addition to using complex systems with inaccessible fine print, debt consolidation programs will impact your credit in varying ways depending on the amount of debt owed, credit history, and the various types of your credit accounts.  In addition, debt consolidation programs are often funded and sponsored by various credit card companies.  Credit card companies don’t want you to file for bankruptcy relief and they often want to squeeze as much money as possible from you through debt consolidation programs.

Overall, debt consolidation is a tricky process that might leave you with more fees and headaches than the filing of a bankruptcy petition.

To learn more about using bankruptcy for debt work-out in St. Peter, MN and why it might be better than debt consolidation, please contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

Due to the pandemic, the past year has been difficult for many people. During the first shutdowns in the U.S. for the spring of 2020, the unemployment rate spiked from just above 4% to a staggering 15%. Over the following year, that number slowly decreased to around 6%. While that’s much better than 15%, things are still not back to normal. If you’re among that 6% of unemployed people, you might be finding it increasingly difficult to make debt payments on time. For those struggling financially, Behm Law Group, Ltd. can provide legal advice and guidance to file for bankruptcy and permanent debt relief in Jackson, MN. Even for unemployed individuals, bankruptcy can still be a viable option for debt resolution.

The bankruptcy code does not require bankruptcy filers to be employed, even for cases that are typically considered “wage earner” bankruptcy, like Chapter 13 reorganization. However, both your past and present income will affect your eligibility for certain chapters, and there are fees involved in bankruptcy that still need to be paid even though you’re only source of income is unemployment income.

That said, it’s still completely possible for unemployed individuals to find long-term debt relief through bankruptcy. In fact, many Chapter 7 filers are unemployed or are only employed part-time.

How Unemployment Affects Bankruptcy

The main aspect of unemployment and employment that affects bankruptcy is the question of income. To qualify for Chapter 7 bankruptcy, your debt-to-income ratio needs to be lower than the state median or average income of a similarly sized household. This ratio is determined through the Means Test, which examines your income from the past six months. That means if you recently became unemployed, you might not satisfy or pass the means test and be eligible for Chapter 7, even if your income has taken a nosedive.   However, even if you don’t pass the means test you might still be able to file for Chapter 7 bankruptcy relief if your recent job loss and loss of income is sufficiently explained in your bankruptcy paperwork.

If you don’t qualify for Chapter 7 with unemployment income, you can potentially file for Chapter 13 bankruptcy relief instead. Like with Chapter 7, much in Chapter 13 bankruptcy is dependent on your income. If you’ve been unemployed for a while, your Chapter 13 plan payments may be as low as $100.00 initially.  If you get another job and your income increases, your chapter 13 plan payments could increase.

Eligibility for either chapter all depends on the length of your unemployment relative to the past six months of your income.

Affording Bankruptcy While Unemployed

Bankruptcy court filing fees and the costs of an attorney might make it seem difficult to afford to file for bankruptcy on unemployment income. For those who can’t meet those costs, remember you can always apply to have some court filing fees waived, and there are many attorneys who offer sliding-scale prices for clients who are struggling financially.

Debt Relief

To learn more about finding permanent debt relief in Jackson, MN while unemployed, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

Anyone who has faced difficulties with their finances or finds they have debts they can’t repay understands the stress and complications of that situation. The wish to resolve those issues as quickly and as effectively as possible is a natural reaction to preserve one’s quality of life. There are several options for finding debt relief available to individuals and businesses alike. While each debt resolution method has its pros and cons, some are more effective than others. Overall, bankruptcy is the fastest, most cost-effective, and the only permanent way to finding debt relief. Behm Law Group, Ltd. can help you file a strong bankruptcy case for long-term relief and financial stability. In particular, we want those in debt to understand how programs for debt settlement in Mankato, MN and the surrounding areas work and why they might not be beneficial.

Debt Settlement Process

Debt relief/debt adjustment/debt settlement programs are third-party negotiators who supposedly work with your creditors to resolve a debt for a lower amount than what you actually owe. In such programs, you’re typically required to pay the settled amount in a lump sum payment right away. Other arrangements may provide for the monthly payment of lower amounts over a number of years.

The settlement party is paid with a flat fee or on a percentage of your overall debt that they resolve. They are also sometimes paid with a percentage of the settlement amount that you pay. This means that even though you’re receiving some form of debt relief, significant additional fees can be involved to pay the debt settlement company in addition to the creditors.

While the settlement is negotiated, you’ll start to make monthly payments to the third-party program.  The settlement company will place those funds in an account. When a settlement is finalized, the creditor is paid a lump sum out of the account.

Problems With Debt Settlement Companies

The main problem with working through a third-party settlement program is the significant additional costs that are involved. The fees paid to the debt settlement company average from 15% to 35% of the original or negotiated debt. These fees are usually first paid in full before any work is done for you.  This can add up quickly, and the amount of the settlement fees is always much higher than the cost of a bankruptcy attorney and bankruptcy court filing fees.

Another major issue is that settlement providers may require you to stop making payments to creditors while a debt is negotiated. This causes your credit standing to drop with each missed payment.

Settlement programs also take four to six years to resolve a debt negotiation (versus the three to four months of a liquidation bankruptcy case), and programs only handle specific debts. Bankruptcy addresses a much broader range of debts.

Another major problem is that you are taxed on any debts that are settled for you by the debt settlement company.  For instance, if you owe Discover Card $10,000.00 and the debt settlement company settles the debt for $3,000.00, the $7,000.00 that is not paid is taxed against you as ordinary income.

Another significant negative is that a creditor with whom a debt settlement company settles a debt will sell the portion of the debt that was not paid to a third-party debt purchaser.  Thus, the term “settlement” lavishly employed by debt settlement companies is a half-truth at best and an outright lie at worst.  For instance, if you owe Discover Card $10,000.00 and the debt settlement company “settles” the debt for $3,000.00, Discover Card will sell the remaining $7,000.00 to a third-party debt purchaser for 10% to 20%.  The third-party debt purchaser will then start collection activities against you for the remaining $7,000.00.

To learn more about the benefits of bankruptcy and the problems with debt settlement in Mankato, MN, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

 

Since the beginning of 2020, the United States has gone through a crisis unknown since the 1918 influenza pandemic spread throughout thousands of communities. The coronavirus not only created a huge public health issue, but it also resulted in many social and economic problems. The economic impact of the COVID-19 pandemic happened for many reasons. The state-mandated shutdowns and overall pause of nonessential operations was a large part of that impact, but many other trickle-down effects added to the nuanced conditions of today’s current economic situation. One way to look at the ways our country has coped with the unprecedented economic changes is to examine the patterns of unemployment and bankruptcy from 2019 to 2020. If you are among the many still struggling with debt and financial instability from the past year or any time before that, Behm Law Group Ltd. can help you file a strong bankruptcy case for long-term debt relief in Worthington, MN, and the surrounding areas.

Bankruptcy is a court-enforced and court-administered process that legally provides for the discharge or the reorganization of your debts. A bankruptcy case works to provide a level of fairness to all parties involved by significantly leveling the economic playing field for bankruptcy filers.  Bankruptcy allows bankruptcy filers to not only discharge their creditors’ claims but also significantly modify the terms of payment such as reducing interest rates, reducing amounts of debt, etc.  A bankruptcy case also provides fairness to creditors because creditors are still paid but are simply paid under adjusted terms.

While some impacts of COVID-19 on our economy were predictable, others were more unexpected.

Bankruptcy 2019–2020:

Two of the most important reasons why bankruptcies decreased during the COVID-19 pandemic were the federal stimulus checks and increases in federal unemployment benefits. In December 2019, bankruptcy cases were hitting a low point of around 53,000 nationally (both business and personal). Just before the real effects of COVID-19 in the United States hit home, March 2020 bankruptcies spiked by about 10,000 to around 62,800. This kind of increase typically occurs in the beginning of a year due to many aspects, but often is most attributable to the after-effects of holiday spending. By the time the pandemic was causing national shutdowns, the U.S. government had begun to issue stimulus checks, and debt, rent, utility, and other providers/creditors were offering more lenient repayment terms. At that time (April–May 2020) bankruptcies dropped dramatically to around 38,500.

Unemployment 2019–2020:

From February 2019 to February 2020, unemployment rates hovered at around 5.7 million U.S. citizens. From March to April of 2020, that number jumped up to over 23 million. The increase was almost entirely due to stay-at-home orders, but many people also lost their jobs because their employer couldn’t sustain a temporary shutdown and had to close its business permanently. After the country began to open up again in July 2020, unemployment rates decreased rapidly to around 16.3 million.

This general overview of bankruptcy and unemployment throughout the pandemic is basic, but it provides some indication of what can happen during such a difficult financial time. If you are still facing difficulties with your finances, contact Behm Law Group Ltd. by calling (507) 387-7200 or emailing stephen@mankatobankruptcy.com for more information about bankruptcy and debt relief in Worthington, MN.

Bankruptcy is a process available to individuals and businesses alike. If you’re struggling to meet monthly payments on time and debts are piling up, you can choose to use bankruptcy for long-term debt relief. The majority of individual consumer and business bankruptcies are filed voluntarily. If the filer is ready to pay the required bankruptcy fees and ideally is also able to pay for legal representation, they will file a voluntary case that is appropriate for their debts and incomes. However, there are instances when bankruptcy cases are involuntary. If you’re considering filing for voluntary bankruptcy to help with long-term debt management in Fairmont, MN, Behm Law Group, Ltd. can help.

Involuntary bankruptcy for individuals or businesses work similarly. If creditors bring involuntary bankruptcy legal proceedings to the court, you can be forced into a case that will work its way through the resolution of debts, for better or worse for any party involved.

An involuntary bankruptcy case occurs when creditors can prove that a debtor is able to repay their debts and is choosing not to do so for some reason. Creditors may believe they will not get repaid if an involuntary bankruptcy is not initiated.

Because debtors who can repay debts but choose not to often have value in nonessential assets that could be sold, involuntary bankruptcy cases are typically filed against businesses due to their more complex financial circumstances. There are several requirements that must be met before an involuntary bankruptcy can be filed.

Some of the main requirements for involuntary bankruptcy include:

• The case to be filed must be a Chapter 7 liquidation (individual or business) or a Chapter 11 reorganization (business)
• Involuntary bankruptcy debtors cannot be nonprofit organizations, family farmers or fishers, banks, credit unions, or insurance agencies
• Creditors filing must have a claim against the debtor that isn’t “contingent as to liability or the subject of a bona fide dispute as to liability or amount.” Whether a claim is part of a bona fide dispute varies greatly from case to case
• The debt load owed must be at least $16,750
• Creditors must be able to prove that the debtor is able to repay their debts
• If a debtor has fewer than twelve creditors for debts that will be handled in the bankruptcy, just one creditor needs to file for an involuntary bankruptcy proceeding
• If a debtor has twelve or more creditors, at least three creditors must each participate in the filing of the involuntary bankruptcy proceeding
• Debtors must respond to an involuntary bankruptcy filing within 21 days before the proceedings start.

Debtors that have an involuntary case filed against them do have the option to convert it into a voluntary case.

To learn more about involuntary bankruptcy proceedings and debt management in Fairmont, MN and the surrounding area, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.