When You Can’t Afford Your Payments

You’ve heard it stated time and time again until it repeatedly drones in your head like a mantra; just make a budget and live within your means. At Behm Law Group we agree that everyone should live within their means and that keeping a budget makes financial sense. It sounds simple enough – just spend less than you make. But for some folks, through no fault of their own, it isn’t just that simple. What do you do when you add up all of your expenses and find your income is simply not enough? How do you decide between paying a bill, buying groceries, or getting a prescription refilled? Who can you turn to when an unexpected medical situation puts your thousands of dollars into debt? These are serious problems, but there are options you can pursue if you find yourself in these situations.

There are organizations that can negotiate with your creditors to reduce your payments and interest. However, you have to be careful that the organization you choose is legitimate. Also, depending on the amount of money you owe, the newly negotiated terms might still be more than you can afford, assuming that your creditors are willing to negotiate. While this option works for some people, it isn’t for everyone.

Another option is to file for bankruptcy. Bankruptcy might be the last thing you want to do but the only viable option available to help you emerge from beneath a mountain of debt. At Behm Law Group we understand that bankruptcy is not something you should enter into lightly. However, bankruptcy law was created for people such as yourself―people in a bad situation who need a fresh start.

No matter how frugally you live, your bills can still overwhelm you. Getting out of your financial distress is not as simple as repeating a mantra. Sometimes you need help from someone who cares. At Behm Law Group, LTD, we limit our practice to bankruptcy law. Our Minnesota bankruptcy attorneys will treat you with the respect you deserve.

Can I File Bankruptcy Without a Lawyer?

Simply answered, yes you can. If an individual meets the eligibility requirements of filing bankruptcy in the state they reside in, one can file bankruptcy themselves. That being said, bankruptcy laws are complex and change frequently, and the process can be challenging to navigate without guidance from an experienced bankruptcy lawyer.

If you attempt to pursue bankruptcy on your own, in addition to interpreting and understanding bankruptcy laws, individuals must gather specific required documents within defined timeframes before even filing for bankruptcy. Some of these documents are fairly easy to obtain. Others may require more in-depth research, such as requesting information from the IRS. If these requirements are not specifically followed, or if any of the documents are missing, the individual will not be allowed to file for bankruptcy.

The requirements become further complex when a spouse, family member or friend is impacted by the filing. In these cases, additional documentation is required and those friends and family members may find themselves involved in the filing.

Declaring bankruptcy can be an emotionally devastating process. Many individuals feel humiliated, defeated and overwhelmed. In such a state, the added stress of interpreting bankruptcy laws and complying with the complicated filing process can sometimes be more than a person can handle. Small mistakes during the filing process may create huge and costly complications in the future. How can you best protect yourself and your financial well-being?

At Behm Law Group, we limit our practice exclusively to bankruptcy. As experts in this field, we stay abreast of the latest developments in bankruptcy law and guide our clients through the requirements and process every step of the way. Behm Law Group understands that this is an extremely sensitive decision, one which was not made lightly, and we extend our expertise with compassion to all of our clients. To obtain more information on the bankruptcy requirements and process, please contact Behm Law Group for a free consultation.  We will answer any questions you may have and provide you with peace of mind.

Can Taxes be Discharged in Bankruptcy?

If you have oppressive tax debt that is only metastasizing larger, like a cancer, because of interest and penalties assessed by the IRS, you may have abandoned all hope that you will ever be rid of them. Indeed, many people believe that tax debt is something that is next to eternal — something that will be with someone throughout one’s entire life. In bankruptcy, some tax debts are not subject to discharge but many are subject to discharge as long as certain criteria are met.

Under 11 U.S.C. §523 (Exceptions to Discharge), certain taxes are not discharged in bankruptcy if they are deemed “priority” tax debts under 11 U.S.C. §507 (Priorities). In other words, a particular tax debt must have certain characteristics that cause it to fall within one of the priority categories enumerated in §507.

Consider for instance debt stemming from property taxes. In order to be given priority status in bankruptcy under §507 and, therefore, not be subject to discharge in bankruptcy, a property tax debt must be incurred prior to the start of a bankruptcy case and last payable, without penalty, after one year before the filing date of  a bankruptcy. This means that if a property tax was incurred and last payable, without penalty, more than one year before the filing of a bankruptcy it can be discharged.  Consider that someone has a property tax debt for tax year 2009 and that the debt would have been payable, without penalty, by December 31, 2009. Consider also that the same person files for bankruptcy relief on January 1, 2011. Under these circumstances, the property tax debt would be subject to discharge in bankruptcy because it was incurred in 2009 and last payable, without penalty, by December 31, 2009, more than one year before the filing of the bankruptcy on January 1, 2011.

Consider also tax debt that arises from someone not withholding sufficient funds out of one’s paycheck to satisfy the appropriate tax liabilities for one’s particular level of income. Such tax debt is typically referred to as “1040 tax debt.”  Even this kind of tax debt can be and is discharged in bankruptcy as long as certain criteria are satisfied.  Under 11 U.S.C. §§507 and 523, 1040 tax debt will be priority debt as long as the tax is for a tax year ending on or before the filing of a petition AND:

a. Stems from a tax return or an equivalent report or notice that is due less than 3 years before the filing of a bankruptcy case;
b. Is assessed within 240 days of the filing of a bankruptcy petition;
c. The tax return or an equivalent report or notice for the tax debt is filed less than 2 years before the filing of a bankruptcy case.

So, let’s say that someone owes 1040 taxes on a return for tax year 2000 and let’s further assume that the person files for bankruptcy on January 1, 2011.  The tax returns for 2000 would be due by April 15, 2001. Let’s assume still further that the person duly files the tax returns by April 15, 2001.  In this circumstance, the 1040 tax debt would be discharged in bankruptcy because it stems from a tax return that was due on April 15, 2001 which is more than three years before January 1, 2011. Upon the filing of the tax return on April 15, 2001, the tax debt owed for tax year 2000 would be deemed “assessed” as of that date. The date of the assessment – April 15, 2001 – would be more than 240 days prior to January 1, 2011. Since the person filed tax returns on April 15, 2001, the third part of the above rule would also be satisfied because April 15, 2001 is more than 2 years before January 1, 2011, the filing date of the hypothetical bankruptcy petition.

Be advised, however, that the discharge of tax debt in bankruptcy is a highly nuanced and complicated area. There can be ways to discharge tax debt but an experienced, highly qualified and specialized attorney is required to get it done right. Contacting and scheduling a free appointment with a knowledgeable and reputable bankruptcy attorney who can offer expert advice and customize a path towards true financial freedom is only the first step.

Top 10 Bankruptcy Do’s and Don’ts for Those Contemplating Bankruptcy

If you are contemplating filing for bankruptcy relief, you need not be afraid of the bankruptcy process.   However, the filing of a bankruptcy should not be perceived as being “easy.”  In short, serious problems may arise if you do not approach the process with due care and respect.   There are some things that you want to avoid which could make the process a lot more complicated than it needs to be.  Conversely, there are things that you can do that could make the process a lot more simple and uncomplicated.


1.  Don’t transfer or give any of your property to friends or relatives.

2.  Don’t “pay off” any debt to any friend or relative thinking that you then will not have to include that person in your bankruptcy.

3.  Don’t pay off  friends’ or relatives’ debts for them.

4.  Don’t sell any of your property for less than its fair market value.

5.  Don’t invest any of your limited time, energy and resources with any so-called “debt settlement companies” who will only take your money and make false promises about being able to “settle” with your creditors.

6.  Don’t incur new debt on your credit cards and do not use them to gamble at casinos or otherwise.

7.  Don’t rely on or put faith in much of your own research that you may have done on the internet because a lot of the information is just flat wrong, even from the sites of attorneys who claim to be “experienced.”

8.  Don’t believe the threats and fear-mongering collection agents and creditors may be giving you because they can’t do what they may be threatening at all or for a very long time.

9.  Don’t cash in life insurance policies or 401k plans to pay off or pay down creditors.

10. Don’t use one credit card to pay off another or to pay your taxes.


1.  Do retain a qualified and truly experienced bankruptcy professional and thoroughly investigate anyone whom you are considering hiring because there are a lot of attorneys who are actually very new to the practice of bankruptcy law but who purposefully misrepresent themselves as “experienced” or “highly qualified.”

2.  Do make sure that all of your state and federal tax returns have been filed.

3.  Do disclose ALL of your property for your attorney and expect your attorney to explain why you need to disclose ALL of your property and how you are to disclose it in your bankruptcy petition and related schedules.

4.  Do understand that bankruptcy is nothing to be afraid of but that it merits a very healthy respect because the bankruptcy petition and related schedules that you complete with your attorney are not just “forms”; rather, they are legal pleadings that you and only you sign subject to penalty of perjury.

5.  Do expect your attorney to be knowledgeable about the bankruptcy process, to be able to thoroughly explain the bankruptcy process to you, to timely answer all of your questions, to return your telephone calls and to get you through the bankruptcy process with as little disruption to your life as possible.

6.  Do disclose ALL of your creditors, including student loans, friends and relatives, criminal fines, overdraft fees, medical bills, tax debts, child support debts, past due utility bills and ALL other creditors and all other parties who MAY have any legal claims against you, such as via a motor vehicle accident or damage to property.

7.  Do maintain documentation concerning your debts and assets including, but not limited to, billing statements, state and federal tax returns, mortgages and vehicle purchase agreements,  title certificates for your vehicles, boats, ATV’s, etc., deeds and property tax statements concerning land in which you may have an ownership or possessory interest, 401k statements, life insurance policies, savings bonds, homeowners insurance policies, divorce decrees, and jewelry appraisals.

8.  Do understand that bankruptcy DOES nullify or discharge your legal and contractual obligations to pay most of your creditors’ claims but that it DOES NOT necessarily make your debts go away or disappear and that some claims, such as criminal fines, survive bankruptcy.

9.  Do accept the reality that sometimes people can and do lose property in bankruptcy but that this is the exception rather than the rule.  Sometimes the loss of property is unavoidable and one must accept that but keep in mind that a truly competent bankruptcy professional can minimize such a consequence and can even, sometimes, prevent it from happening.

10.  Do consult with parents or friends or relatives (you do not have to tell them why) about whether they have listed you in a will or put your name on their land or on any of their bank accounts.

Keep in mind that you WILL  get bankruptcy relief as long as you follow the road map which is the bankruptcy code.  Your case will be approved as long as you are honest and forthright in your bankruptcy petition and related schedules.  The key to a successful bankruptcy proceeding is to disclose, disclose, disclose in your bankruptcy petition and related schedules and to testify truthfully at your bankruptcy hearing.   Know that bankruptcy may not be right for everyone.  Sometimes, the best option is not to file a bankruptcy at all.  However, hiring a competent and qualified bankruptcy professional will make all the difference.  Any truly skilled professional will help determine whether the bankruptcy process could be either a benefit to you or a nightmare.