Category: Liqudation Bankruptcy

There are several ways in our economic system to find permanent relief from debts that are significantly compromising your quality of life. These solutions range from working out an agreement with your creditors to filing for court-administered bankruptcy relief. If you have the right kinds of debt and your income isn’t meeting your expenses, bankruptcy might be the most effective and fastest way to permanently rid yourself of several burdensome financial obligations that you will never be able to repay. For anyone considering filing a liquidation Chapter 7 bankruptcy in Jackson, MN or the surrounding areas, Behm Law Group, Ltd. can help. Our attorneys will work with you every step of the way, from the filing of your petition to the issuance of your discharge order by the bankruptcy court.

Liquidation Bankruptcy

Liquidation bankruptcy is also known as Chapter 7 bankruptcy. This chapter works to discharge your debts in exchange for the sale, or liquidation, of your non-exempt assets. However, it is rare that you lose property in a Chapter 7 case because most filers are able to protect important belongings like their home, primary vehicle, appliances, and furniture, from liquidation by asserting the available bankruptcy exemptions. Each state offers a different selection of exemptions in varying amounts. In Minnesota, filers can choose between federal exemptions propounded under the bankruptcy code or exemptions propounded under Minnesota state law.  They cannot mix and match between the two.

Learn more about qualifying for Chapter 7.

Generally speaking, if some or all of the following are true, it’s a good time for you to file for bankruptcy relief:

• Your dischargeable debt is $10,000 or more
• Your credit score is 600 or below
• Your property doesn’t have much value
• Your house is about to be foreclosed on
• Creditors are threatening wage garnishment, or threatening a levy on your bank accounts or threatening starting a lawsuit against you
• You would pass the Means Test with your income-to-debt ratio
• You wouldn’t be able to make your monthly debt payments and materially reduce your debt within the next year
• Your vehicle is about to be repossessed
• Your electricity is about to be shut off

Liquidation in Chapter 7 Bankruptcy

While a Chapter 7 case might be highly beneficial for finding debt relief, if these conditions describe your situation, there might be circumstances that make it best to wait to file your case. If the following is true, you may want to hold off on filing a case for the time being:

• Your income recently increased. The court will examine your last six (6) months of employment and income.  If your income is high, you may not qualify for chapter 7 bankruptcy relief.  However, if you have had high income and you were recently laid off, you may be able to qualify for chapter 7 bankruptcy relief by simply waiting a few months.  If you have low income during most of the six (6) month look-back period, you will be more likely to qualify for chapter 7 bankruptcy relief.
• You can’t protect assets with the bankruptcy exemptions.  Depending on the exemption format you need to use, there may not be an exemption for an asset that you have.   For instance, presume you recently received either an inheritance of $10,000.00 or a tax refund of $10,000.00 and you need to use the Minnesota state exemptions.  Generally, one is not able to fully protect such assets with the Minnesota state exemptions.  Sometimes, it is necessary for you to spend down such assets on food, furniture, vehicle repairs, home repairs, medical costs or other necessities before you file for Chapter 7 bankruptcy relief. In such a case, you absolutely need to keep receipts for how you deploy or use the money.  The trustee administering your bankruptcy case will ask you about how you used the money and you will want to have supporting documentation.   You must not repay debts to friends or relatives or buy things for friends or relatives or transfer assets out of your name.
• You predict you’ll have more debt in the near future. If you know you’ll have to take out another pay day loan or incur more utility debt or have significant medical expenses that you won’t be able to pay in the near future, you may want to wait to file for Chapter 7 bankruptcy relief.  You can only qualify for Chapter 7 bankruptcy relief once every eight (8) years.  It would be counter-productive for you to file for bankruptcy relief and discharge the debts you presently have and then, after your case concluded, incur new debts and be burdened with those debts for a full eight (8) years until you are able to qualify for Chapter 7 bankruptcy relief again.

Summary

If you’re wondering when the best time would be to file for liquidation Chapter 7 bankruptcy in Jackson, MN, Behm Law Group, Ltd. can help you prepare. Contact us today at (507) 387-7200 or stephen@mankatobankruptcy.com.

 

If your income is lower than the Minnesota state median or average income, either due to a low-paying job or a level of expenses that outpaces your income, you may qualify for Chapter 7 bankruptcy. This is the most common type of bankruptcy that individual consumers file in the U.S. Its purpose is to wipe out the majority of debts that filers would have to repay. This often includes credit card debts, medical bills, old utility bills, bounced checks, past due rent, personal loans, pay day loans and other debts. Debts that are secured to a property, such as your home or car, will be discharged if that property is repossessed or foreclosed and you do not wish to retain the property. If you’re considering filing for Chapter 7 liquidation bankruptcy in Owatonna, MN, Behm Law Group, Ltd. can help with legal protection and guidance. Our support will play a significant role in getting the most out of the debt discharge awarded to you in the bankruptcy process and protecting your property with the available bankruptcy exemptions. We can also help you work around any creditor objections to discharge that might arise.

Chapter 7 Liquidation Bankruptcy

In Chapter 7 liquidation bankruptcy, the trustee will liquidate (sell or auction) your non-exempt property and divide the sale proceeds among your unsecured creditors.  Where your property is collateral for a loan, such as a vehicle loan or a home mortgage, the vehicle lender or mortgage lender would be able to sell the vehicle or house and retire as much of the subject debt as possible.  Any debt that is remaining is discharged.  Unsecured debts, such as credit cards, medical bills, etc., are discharged as well. You can prevent the liquidation of most or all your property with the available bankruptcy exemptions.  In most cases, the available bankruptcy exemptions are more than enough to protect all your property. Learn more about exemptions.

Creditor

If a debt is scheduled to be discharged, the creditor for that debt might object to the discharge if it believes that you incurred the debt through fraud or misrepresentation.  Typically, a creditor will not object to the discharge of a debt unless it’s clear that someone has acted in obvious and excessive bad faith.  The creditor bears the burden of proof to show why a debt should not be discharged.

Types of Objections to Discharge

• The debtor owes a debt because of malicious damage. For example, if a renter damaged their apartment purposefully before moving out and owed a debt for repairs to their landlord.
• Excessive charges on a line of credit that were made 90 days prior to filing a bankruptcy case or large cash advances that were taken within 70 days of filing.
• Debts related to damages or death caused while operating a vehicle under the influence of alcohol or drugs.
• They committed some fraudulent action, such as perjury, destroying property or documents, lying to the trustee, or failing to obey a court order.

Liquidation Bankruptcy

Creditors can objection to the discharge of a debt in two ways: filing a motion or filing an adversary proceeding. When creditors file a motion to object discharge, they must do so within 60 days of the meeting of creditors. Adversary proceedings work more like an actual lawsuit and also must be filed within 60 days of the meeting of creditors.

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

Several types of bankruptcy are available to individuals and businesses. For individual consumers, Chapter 13 and Chapter 7 are both potential options. Chapter 13 works to reorganize debts into a three-to-five-year repayment plan suited to your income and reasonable and necessary monthly living expenses. Chapter 7, on the other hand, is a liquidation bankruptcy where non-exempt assets are sold/liquidated in exchange for the discharge of debts. This latter chapter is the most common form of bankruptcy for individual and small business bankruptcy filers.

Bankruptcy Attorney

If you are considering filing for bankruptcy through either chapter, you need to be aware of the level of detail that will be required in your petition. The bankruptcy court will require your bankruptcy attorney to review documentation concerning your income, assets, debts, and other particulars of your financial situation. Because of the strict documentation requirements that are necessary to adequately and completely draft a bankruptcy petition, we recommend getting help from a professional. Behm Law Group Ltd. attorneys provide legal guidance, protection, and support throughout reorganization and liquidation bankruptcy in Pipestone, MN, and the surrounding areas.

Liquidation Bankruptcy

When you file for any kind of bankruptcy, your debts will be classified and treated differently depending on their status as secured, unsecured, or priority. For liquidation Chapter 7 bankruptcy, these different debts are handled in the following ways:

1. Secured debts are secured to a property, such as a home or car. Debts that are secured to an asset can be discharged in liquidation bankruptcy.  The secured creditor can take and sell its collateral and apply the sale proceeds against the debt you owe.  If the sale proceeds are insufficient to pay off all the debt, the unpaid balance is discharged and you are not responsible for paying it.  Alternatively, many people want to retain their house or their car and they want to retain the debts that are secured by those assets.  In many cases, people will reaffirm the debts with the secured creditors by entering into a reaffirmation agreement.  A reaffirmation agreement is a document that memorializes the terms and conditions of the original mortgage or vehicle loan.  By signing it, a filer agrees to continue being liable on those debts after a bankruptcy case has concluded.  Essentially, a filer can preferentially treat those secured debts and exempt them out of the bankruptcy process.  Any equity or value that a filer has above the debt against a house or a car is protected from one’s creditors by asserting one of the many exemptions that are provided under state or federal law.  Exemptions are allowed in varying amounts. The exemptions also change over time as market values fluctuate (some current important exemptions for Minnesota).

 

1. Unsecured debts are not tied to or secured by a property. Some of the most common unsecured debts include credit cards, medical bills, overdue utility bills bounced checks, and personal loans. In chapter 7 liquidation bankruptcy, these debts are completely discharged. However, there are unsecured debts that are considered priority, and these are treated differently than general unsecured debts.

 

1. Priority debts are usually excepted from a chapter 7 discharge. General Common priority debts include alimony, child support, tax debt, criminal fines and penalties and debts for personal injury caused through intoxication and wrongful death claims.  Like all debts, they must be disclosed or listed in a bankruptcy.  There are some nuanced exceptions to the general rule that priority debts are not discharged.   One exception for instance is 1040-type tax debt that is dated/ old.  For instance, presume that you owe $5,000.00 for the 2010 tax year because your employer did not withhold enough out of your paychecks.  Presume further that you duly filed your 2010 state and federal tax returns by April 15, 2011.  Presume still further that you filed for chapter 7 bankruptcy relief on August 21, 2021.  This sort of dated/old tax debt would very possibly be discharged in your chapter 7 bankruptcy case.

In every bankruptcy case, all debts are handled in complex ways that vary depending on the situation. However, overall, the secured, unsecured, and priority debts will likely be addressed as previously described. To learn more about filing for chapter 13 reorganization or chapter 7 liquidation bankruptcy in Pipestone, MN, and the local region for long-term debt relief, contact Behm Law Group Ltd. by calling (507) 387-7200 or by emailing stephen@mankatobankruptcy.com.