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Bankruptcy News & Recent Cases

Authors, Artists, and Other Creatives Filing for Chapter 7 Bankruptcy in Redwood Falls, MN

July 15th, 2019 · No Comments

For the majority of creators and others working in the arts, finding a source of steady income is often a difficult part of the vocation. From visual and performance artists to authors and musicians, work is hard to come by, and these jobs are highly competitive.

 

Because of this hardship, it’s understandable that there are several cases of bankruptcy a year filed by creatives. Even famous artists are not safe from financial struggles, as told by the 2009 circumstances of famed photographer, Annie Leibovitz. If you’re struggling to make ends meet as a creative, Behm Law Group, Ltd. provides guidance and support to help you file a successful case for Chapter 7 bankruptcy in Redwood Falls, MN.

 

For the most part, artists filing for bankruptcy don’t have a steady income to qualify for Chapter 13 reorganization. Because of this, Chapter 7 liquidation is the most common type of bankruptcy for those relying on their art, writing, performance, or other creative abilities for income. Chapter 7 bankruptcy provides a valuable debt discharge process overseen by a bankruptcy trustee, with fair treatment of both the filer and the creditors.

 

Assets in Chapter 7 Bankruptcy

For the most part, Chapter 7 bankruptcy is the same process for creatives as it is for those making a living from more typical vocations. The trustee sells off non-exempt property and distributes the sale proceeds to the creditors involved.  In most Chapter 7 bankruptcy cases, however, filers are able exempt and they retain all of their property; typically, the only things they lose are their creditors.  Priority debts such as child support debt and tax debt have to be listed in the Chapter 7 bankruptcy proceeding but, for certain public policy reasons, those types of debt are more difficult to get discharged.

 

For artists, there may be some differences in the Chapter 7 asset liquidation process. Specifically, any income you make from your work is counted as an asset. If you’re a painter, for example, unsold paintings created at any point before you file for bankruptcy are considered business inventory that must be disclosed. Typically, there is a “tools of the trade” and a “wildcard” exemption with which such business inventory and brushes, canvasses and other “tools” used to produce the paintings can be protected.

 

As a writer, if you have intellectual property rights to a book or a play you’ve written, any income from the sales of that book or from the royalties of your work will be included in the bankruptcy process. If you can’t exempt all of that intellectual property, you may lose some of the rights to it and to some of the future income it may provide.  Your creditors may benefit from the non-exempt values or portions of those rights and future income.   This is commonly seen with musicians filing for bankruptcy. The intellectual property will go to the purchaser of that asset (to a record label, for example).

 

In a nutshell, if your art, craft, or other creation is providing you with income but you still need to file for Chapter 7 bankruptcy, those creations can be included in and are relevant to the Chapter 7 process.

 

To learn more about filing for Chapter 7 bankruptcy in Redwood Falls, MN, as an artist, author, musician, or other creative, contact Behm Law Group, Ltd. at (507) 387-7200 today.

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When Corporations, LLCs, and Other Businesses File for Chapter 7 Bankruptcy in Mankato, MN

July 10th, 2019 · No Comments

Running a business is a difficult venture, and even with support systems in place, the enterprise can go wrong. Whether it’s sudden or gradual, debts can overcome a business income and leave no other option than some form of debt relief. Debt relief options vary, but the most effective solution for the long term is to file for bankruptcy. Corporations, LLCs, and other businesses that are not sole proprietorships or partnerships can file for two forms of bankruptcy: Chapter 11 (reorganization bankruptcy) or Chapter 7 (liquidation bankruptcy). Individuals and businesses alike can find guidance when filing for Chapter 7 bankruptcy in Mankato, MN, with the help of Behm Law Group Ltd.’s attorneys.

 

Chapter 7 works similarly for individuals and businesses, but with slight differences. The primary function of Chapter 7 is to liquidate the filer’s assets in exchange for debt discharge. Individual filers may claim exemption allowances to protect certain properties (e.g., the homestead exemption protects the filer’s home from liquidation), but businesses have no such exemptions to claim.

 

How Chapter 7 Bankruptcy Works

Corporations, LLCs, and business formats that are not tied to the owner’s personal debts can petition for Chapter 7 to discharge all of their business debt. Compared to an individual consumer Chapter 7 bankruptcy case, business bankruptcies are fairly cut and dry.

 

Filers work with an attorney to build their case, including all the required documents and financial records. When the petition is submitted to the court and all necessary bankruptcy fees are paid, the court appoints a trustee to handle the liquidation of the business assets. Properties, equipment, business accounts, and any other components of the bankruptcy estate are sold. Creditors are paid with the value of those sales, and the trustee takes his or her commission based on a percentage of the values received.

 

When the assets are liquidated and the trustee distributes the sale proceeds among the creditors of the business, the court will then discharge unsecured business debts, including credit card debt, utilities owed, lease obligations, loans, and other business debts. When this process is complete, the business filing is shut down, effectively ending operations.

 

Chapter 7 bankruptcy is a highly effective debt relief process for businesses, though it’s undeniable that your company will be closed down. Many large U.S. businesses, such as Lehman Brothers in 2008, have used Chapter 7 to rid themselves of debt and shut down. Lehman Brothers filed with $691 billion in assets and $619 billion in debt. This was a case that affected hundreds of employees, but for the long term, was a positive solution for all involved.  In many cases, after the bankruptcy process is completed, one can create a brand new business operation that does the same work as the business that filed for bankruptcy relief and one can operate much more efficiently and smoothly without all of the debts that encumbered the former business.

 

If your business is struggling to keep the lights on and hasn’t had success negotiating with creditors or finding other ways of resolving debt, filing for Chapter 7 bankruptcy may be the final option. Filing will release you from all your business debt effectively, though it will just as effectively close down your business operations.

 

To learn more about filing for Chapter 7 bankruptcy in Mankato, MN, as a business or individual, contact Behm Law Group Ltd. at (507) 387-7200 today.

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Filing for Chapter 13 Bankruptcy in St. Peter, MN, When Self-employed

July 6th, 2019 · No Comments

Self-employment is often a rewarding way to create income for you and your family. However, self-employment doesn’t always guarantee a regular income, especially if you work in an industry that has fluctuations in demand. If you are self-employed and have found it difficult to meet debt payments each month, you have several options for debt relief, including bankruptcy. For those with a steady self-employed income who also want to keep their home and other properties, filing for Chapter 13 bankruptcy in St. Peter, MN, is a realistic and highly effective option. With the help of Behm Law Group Ltd., self-employed filers can build a successful case and start a repayment plan that fits their financial circumstance.

Filing for bankruptcy, especially Chapter 13 bankruptcy, requires a collection of financial documents, income verification, expense reports, and much more. These documents can sometimes be difficult for some people to track down and organize, particularly for those who are self-employed.

The help of an expert bankruptcy attorney is often critical for self-employed filers to compile a case with a repayment plan proposal that the court and bankruptcy trustee can accept. Many self-employed filers are required to provide more extensive documentation of income and expenses when they file for Chapter 13.

 

Income Verification

Verifying your income received from self-employment can be tricky depending on the nature of your work. Tracking your income carefully, even if you don’t plan on filing for bankruptcy, is a good idea for those who are self-employed. This tracking can include:

  1. Check Stubs: When your clients, customers, or other parties who commissioned your work pay by check, saving those checks from the last 12 months is an excellent start to income documentation.
  2. Invoices: If you request payment in the form of invoices, filing those invoice documents (digital or physical) is also key.
  3. Contracts: Contracts are legal proof of your work with a client. Without that proof, you may have a difficult time explaining forms of payment such as checks, cash, or transfers.
  4. Tax Returns: Records of your self-employment income and the yearly taxes paid on it is also required for a Chapter 13 bankruptcy petition.
  5. Bank Statements: Deposits, withdrawals, credit card transactions, account records, interest, and most other bank statements are necessary to build a strong Chapter 13 case.
  6. Signed Statements: In many cases, unconventional, random, or odd signed statements can often also prove up a contractual agreement. These signed statements are frequently required for your bankruptcy case, and missing the information they provide might break, rather than make, your case.

 

Overall, the more financial information self-employed filers can provide their attorney and the court, the better. Every transaction you encounter that connects to your income as a self-employed individual as far back as a year may be involved in your case.

 

To learn more about gathering the necessary financial information and building a strong case for Chapter 13 bankruptcy in St. Peter, MN, contact Behm Law Group Ltd. at (507) 387-7200 today.

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How Bankruptcy Debt Relief Can Stop Legal and Illegal Creditor Debt Collections in Jackson, MN

July 2nd, 2019 · No Comments

Whenever you take a loan, whether it’s in the form of a mortgage, car loan, credit card, or otherwise, you become a debtor, and the loan provider becomes a creditor. The relationship between you and your creditors is generally a perfectly amiable, professional one if you’re able to meet your monthly payment requirements. If you find yourself in a position of being unable to meet those monthly payments, that relationship may start to change to something less amiable, and in some cases, less professional. With the protection of Behm Law Group, Ltd. attorneys, you can put a stop to creditor debt collections and find debt relief in Jackson, MN by filing for bankruptcy.

 

Anyone who has been in the position of being unable to repay their debts may know something about just how ugly creditor debt collection practices can get. Filing for bankruptcy can quickly resolve any issues you may be facing from your creditors’ collections attempts as well as provide a long-term solution for debt relief. Whether you file for Chapter 13 bankruptcy and have your debts reorganized into a repayment plan that is suited to your financial circumstances, or for Chapter 7 bankruptcy and have your non-exempt assets liquidated in exchange for a discharge of your debts, you receive the benefits of an automatic stay.

 

The moment you file for any type of bankruptcy, the court automatically places a stay on your creditors’ ability to collect debt. This stay, with the additional protection of a bankruptcy attorney, should put a stop to any creditor debt collection attempts, legal or illegal.

 

Legal Creditor Actions 

Before you file for bankruptcy and receive automatic stay protection, creditors are allowed to collect debt according to the Fair Debt Collection Practices Act (FDCPA). This means they can directly attempt collections and negotiations with you for the first six months you are delinquent. After that time period, your creditors can bring in a third-party collection agency. These collectors can communicate with you directly unless you have attorney representation, in which case that agency must work with your lawyer. If your original creditor sells your debt, the buyer of the debt must also abide by the FDCPA laws.

 

Illegal Creditor Harassment

The moment your creditors or collection agents attempt to collect outside of the laws the FDCPA outlines, they enter harassment territory. Illegal harassment actions include anything from calling you repeatedly at inconvenient times or places, calling you when they should be calling your lawyer, contacting your family members, threatening you, misleading you about their identity, threatening you with jail time and much more. Learn more about illegal debt collection here.

 

Illegal and legal debt collections alike are halted with an automatic stay that goes into effect the moment you file for bankruptcy. For more information about bankruptcy and debt relief in Jackson, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.

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What You Can Learn from Public Listings of Bankruptcy in New Ulm, MN

July 1st, 2019 · No Comments

In the U.S., the majority of court cases are put on public record. This includes all bankruptcy filings which are often listed in local newspapers and are always available on the government-administered online database PACER (Public Access Court Electronic Records). The listings available on PACER are not easily accessed by any individual, but they are available to bankruptcy attorney, creditors involved in bankruptcy proceedings, bankruptcy trustees and bankruptcy judges.

 

If you’re struggling to meet debt payments and think that bankruptcy might be right for you, it’s important to understand why and how your case may be listed publicly and could be accessed by a limited number of parties. If you are considering filing, Behm Law Group, Ltd. can provide the guidance and assistance you need when working through bankruptcy in New Ulm, MN.

 

Bankruptcy is given a poor image both in financial and social terms, but the fact is that it’s a vital process for those who are unable to recover from severe debt. For many, bankruptcy is the best way to debt relief and long-term financial recovery.

 

Those planning on filing for bankruptcy can learn some of the basics of the process just from looking at listings local to their area. If your local newspaper lists monthly bankruptcies, it’s likely they will be written out like this:

  • Name of filer
  • Name of any joint filers
  • Address of filer
  • Chapter they filed
  • Date they filed
  • Their assets
  • Their liabilities

 

This is what you can learn from this listing:

  • The name of the filer may tell you if it was a business or individual.
  • The joint filer names tell you that either a spouse or a business partner filed jointly.
  • Their address tells you what region they filed in, and may give you some more information about the financial demographics of that area if there are multiple bankruptcy filings. If you live in the same region, it may give you some peace of mind to know you’re not alone.
  • The chapter they filed for will give you an idea of the bankruptcy process (i.e. whether it was liquidation or reorganization).
  • The date they filed may give information about fluctuations of increases or decreases in bankruptcy cases throughout the year.
  • Their asset amount tells you how much their properties and accounts were worth. This includes physical property, bank accounts, stocks, retirement funds, and any other sources of income.
  • Liabilities represent a blanket term for debts and other unpaid financial obligations. This amount tells you just how much debt might have been resolved through bankruptcy, and it gives you a good comparison of asset to debt ratios.

 

Overall, public postings of local bankruptcy cases give you a great way to compare your own situation with those who found recovery through the bankruptcy process. Generally speaking, Minnesota newspapers choose not to list local bankruptcy filings.  However, newspapers in North Dakota and Iowa do choose to list local bankruptcy filings.  For many reasons, including the possibility of identity theft, newspapers are becoming much more circumspect about listing local bankruptcy filings.  If you believe filing for bankruptcy in New Ulm, MN, might be the right choice for you, contact Behm Law Group, Ltd. at (507) 387-7200 today.

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Understanding Your Role According to the Bankruptcy Code in Worthington, MN if Your Landlord Goes Bankrupt

June 21st, 2019 · No Comments

If an individual or business seeks debt relief in the form of bankruptcy, creditors, employees, tenants, and others around them are affected. If a landlord files for bankruptcy, for example, their tenants will be involved in the filing process to a certain extent. If you are a landlord struggling with debt, Behm Law Group, Ltd. offers counsel in filing for bankruptcy. On the other side of that coin, Behm Law Group, Ltd. also offers advice for tenants with a bankrupt landlord, providing important information regarding their role according to the bankruptcy code in Worthington, MN.

Landlords filing for bankruptcy will either file Chapter 7, Chapter 11, or Chapter 13 bankruptcy. For those that qualify for the asset liquidation process in return for debt discharge, Chapter 7 is the most common option. Both Chapter 11 and Chapter 13 offer a debt reorganization bankruptcy structure. Chapter 11 is designed to reorganize the debts of landlords that are not sole-proprietorships or partnerships (e.g. apartment complexes with multiple locations owned by a corporation). Chapter 13 bankruptcy, on the other hand, provides debt reorganization to many landlords who have a sole proprietorship or a partnership operation.

 

What to Expect as a Tenant

If your landlord files for bankruptcy, they have to inform all their tenants. When any bankruptcy case is opened, the court puts an automatic stay on collections from creditors, but it doesn’t mean you can stop paying rent. However, it does mean that if the property your landlord rents out is in foreclosure, that process is halted and your landlord retains ownership of the property. Because of this, you should continue to pay your landlord until you are notified by the bankruptcy trustee or the mortgage creditor itself that ownership of the property has changed. This change can occur in several ways:

 

  1. Your landlord’s mortgage lender can file a motion with the bankruptcy court to lift the automatic stay for that debt. If the motion is successful, the trustee or the mortgage lender itself will let you know who to pay rent to.
  2. If the case ends and your landlord’s property is liquidated, the ownership may change to the party that has purchased the property. If this occurs, the trustee will provide the information you need about your new landlord.
  3. If no one purchases the property, you will make payments to the trustee in the meantime.

 

If your landlord retains the property in their case, you will continue to make payments to them. If they do not retain it and another buyer plans to use the property for other purposes, you may be forced to move. You will be given fair warning and 90 days, or some other mutually agreeable time period, to find a new living situation.

 

The bankruptcy code can be difficult to navigate for all involved. In most cases, a bankrupt landlord will not affect tenants drastically, but it’s important to be aware of their financial status and the bankruptcy code in Worthington, MN. To learn more about filing for bankruptcy as a landlord, contact Behm Law Group, Ltd. at (507) 387-7200 today.

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Escrow Accounts and Chapter 13 Bankruptcy in Owatonna, MN

June 18th, 2019 · No Comments

Anyone with a mortgage or other large loan either has an escrow account or knows about the function of one. Escrow accounts are set up with a third-party agent or broker who manages and distributes the money in that account. The account works as a consolidation system for a mortgagor, holding values required to make a single payment for the monthly loan, interest, taxes, and insurance. Escrow amounts will change over time based on the cost of property taxes, insurance rates, and other taxes. If you have an escrow account and you find yourself in a situation where you must file for Chapter 13 bankruptcy in Owatonna, MN, Behm Law Group Ltd. can help you understand how it will affect the account and guide you through the process of filing bankruptcy overall.

 

Chapter 13 bankruptcy works to reorganize your debts into a three- to five-year repayment plan. The reorganization plan is an extremely valuable option for those with a steady income who don’t want to work through the asset liquidation process of a Chapter 7. A repayment plan typically takes priority, secured, and unsecured debts, and rolls them into a single monthly payment made to a bankruptcy trustee.

 

While large portions of your unsecured debts are discharged in a chapter 13 repayment plan, your priority debts, such as tax debts, child support debts and alimony, and secured debts on assets that you want to retain, such as vehicles and houses, must be repaid. Because your mortgage is a secured debt, it must be paid in full but typically you will continue making the regular monthly mortgage payments directly to the mortgage lender rather than through the chapter 13 trustee. In many cases, the debt leading up to a bankruptcy and a Chapter 13 plan itself can affect mortgage escrow in two ways:

 

  1. Pre-petition arrearage: If you have been unable to meet full escrow payments even before you file for bankruptcy, you will have an escrow shortage, and therefore, be in arrears. In this case, the court will treat the shortage like a typical mortgage arrearage and require it to be repaid in full throughout the repayment period. Unlike a mortgage, however, the shortage amount does not incur interest.
  2. Post-petition arrearage: When you enter a repayment plan, you have to meet escrow payments as a part of the consolidated monthly payment that’s due. If you can’t meet this payment and you become short on escrow, you may be in danger of a case dismissal if you do not take steps to propose and work through a repayment plan adjustment.

 

The three to five years you are working through a Chapter 13 plan require you to be conscious of your finances and to maintain a strict adherence to your budget. The financial struggles that put you into the position of filing for Chapter 13 bankruptcy must be put behind you, and the court expects you to understand the responsibilities of a repayment plan.

 

That said, there will be room for adjustments to be made throughout the repayment period depending on your income and your costs of living. If you are considering filing for Chapter 13 bankruptcy in Owatonna, MN, contact Behm Law Group Ltd. at (507) 387-7200 today.

 

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When Filing for Bankruptcy in Mankato, MN Is Your Best Option

June 14th, 2019 · No Comments

If you are facing financial difficulties, you are not alone. Individuals in all types of circumstances can find themselves deep in debt because of numerous factors. In fact, the chance of severe debt is not an impossibility for anyone, and you should not feel shame for having financial troubles or for considering bankruptcy as an option for debt relief. If you are wondering whether you should file for bankruptcy in Mankato, MN, Behm Law Group Ltd. can help you answer any questions that you might have as well as counsel you throughout your case.

 

Bankruptcy is an excellent option for finding your way out of serious debt. It can resolve your debts in a liquidation process through Chapter 7 bankruptcy or in a reorganization process through Chapter 13 bankruptcy.

 

Although bankruptcy is a highly effective solution for many debtors, it is not always the best solution for certain financial circumstances.

 

 

How to Know When to File

To determine whether filing for bankruptcy is the best option for your financial circumstances, you need to ask yourself some questions:

  1. Are you unable to meet debt payments or are you meeting them with a severe detriment to your necessary living expenses?
  2. Are most of your debts treatable in the bankruptcy process? (There are some types of debts that are not subject to discharge.)
  3. Are you able to pay the bankruptcy fees and an attorney fee?
  4. If you plan to file for Chapter 7 bankruptcy, will you satisfy the Means Test?
  5. If you plan to file for Chapter 13 bankruptcy, are you prepared to be responsible for a repayment plan for up to five years?
  6. Do your debts fall into the accepted limitations for bankruptcy? (For example, debt limits in chapter 13 cases.)
  7. If you plan to file for Chapter 7 bankruptcy, will you be able to protect the properties you want to keep with the allotted exemptions?
  8. Are you prepared to attend credit counseling and meet other pre-bankruptcy requirements?
  9. Are you able to organize, with the help of a Behm attorney, all the necessary documents of your finances and property for the bankruptcy petition?
  10. Do you understand and accept the effect that bankruptcy will have on your credit?
  11. Do you accept the fact that a  your bankruptcy filing could be known by the general public?
  12. Do you have a long-term rehabilitation plan for your finances after you file for bankruptcy, and are you willing to work with a Behm attorney to assist you in that regard?

 

If you can answer all of these questions and still believe that you could benefit from bankruptcy, then it’s likely that filing will provide a valuable opportunity for debt recovery. To learn more about filing for bankruptcy in Mankato, MN, contact Behm Law Group Ltd. at (507) 387-7200 today.

 

 

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Long-Term Financial Effects of a Government Shutdown and Getting Help from a Bankruptcy Attorney in Marshall, MN

June 3rd, 2019 · No Comments

Starting in December of 2018 and ending more than a month later, the recent government shutdown was the longest in U.S. history and impacted more government employees across the country than any other shutdown before. The ripple effects of the shutdown grew by the day and had severe effects on many employees’ finances. The lack of income for government departments, programs, organizations, and employees alike caused, for many, a rapid decline into debt.

 

If you were affected financially by the recent government shutdown and are facing unmanageable debts because of this, filing for bankruptcy is a viable option to receive government-sanctioned debt relief. Behm Law Group, Ltd. can help you file a strong case with the guidance and counsel of an expert bankruptcy attorney in Marshall, MN.

 

Reports of shutdown-related debts and expenses have come from all kinds of sources. All types of government employees suffered financially from the shutdown. A month without a paycheck can lead quickly to all kinds of poor financial conditions simply due to an inability to pay bills. Government employees found that they were unable to make payments on a wide range of common bills or debts including:

 

  • medical bills and health insurance
  • utilities, including water, electricity, and gas
  • rent or mortgage
  • car payments or car repairs
  • automotive and related insurance
  • life insurance
  • retirement plans
  • student loans
  • credit cards
  • taxes

 

Businesses and organizations that relied on government funding also suffered badly, and the individuals employed by these businesses and organizations experienced a range of difficulties such as not receiving a paycheck and benefits or being laid off. Though the shutdown only lasted for a month, the long-term effects will last for years. Recovery from unexpected, sudden, and complete cutoff from an income and government support for an unknown amount of time is still causing a real struggle today for many U.S. citizens and businesses.

 

In comparison with the 2013 government shutdown, for example, the recovery process has proved to be more difficult and longer simply due to the suddenness, time frame, and nature of the 2018-2019 shutdown. The lack of structure and planning in this recent shutdown created an outcome resembling an economic recession that was crammed into a 30-day period.

 

In times like these, it’s important to remember that consulting a bankruptcy attorney is a real option that you should consider seriously. If you were unable to pay your bills because of the government shutdown and are still trying to overcome the negative effects, bankruptcy may provide realistic, long-term recovery from debt.

 

To learn more about filing for bankruptcy and how an expert bankruptcy attorney in Marshall, MN, can help you get back on your feet after the shutdown, contact Behm Law Group, Ltd. at (507) 387-7200 today.

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Understanding a Potential Congressional Reform of Chapter 12 Bankruptcy in Luverne, MN

June 1st, 2019 · No Comments

Across the Midwest, family-owned farms are still struggling to make ends meet after a difficult start to the growing season. Farmers and fishers in the region are facing large debts without an income to match the required monthly payments. Because of these financial difficulties, more and more families are filing for bankruptcy or seeking other forms of debt relief. If you’re a family farmer or fisher and have been unable to make payments on your debts, bankruptcy might be the right path to take. With the help of Behm Law Group Ltd., you can file a successful case for Chapter 12 bankruptcy in Luverne, MN, and find your way out of debt without sacrificing your family business.

In the 1980s, the U.S. government devised a bankruptcy chapter specifically suited to treat the debts of family farmers and fishers. This chapter was based on the bankruptcy laws set up for fishers and farmers in debt during the Great Depression. Today, Chapter 12 works to reorganize debts into a repayment plan tailored to debtors’ income and expenses. This process is similar to Chapter 13, but it’s specific to the debts and expenses of family farmers and fishers.

 

For many purposes, current Chapter 12 laws have worked well to protect family farms and fishing operations while ensuring fairness to their creditors. However, in the face of current farm debts, Congress has introduced a potential reformation of Chapter 12 bankruptcy.

 

Why the change?

Farm debts have been around since farms have existed, but farms themselves have changed even since the 1980s when Chapter 12 standards used today were established. The average size of family farms and fishing operations have increased dramatically in the past 40 years, and the debt amounts have increased accordingly. However, the amount of debt allowed to file for Chapter 12 bankruptcy instead of liquidation bankruptcy has not increased alongside farm sizes and debt amounts. To continue protecting farms from liquidation, some aspects of Chapter 12 need to change.

 

What might change?

Primarily, Congress is proposing increased debt limits for those looking to file for Chapter 12. Family farmers and fishers are currently allowed up to $4.153 million in debt to qualify for Chapter 12, but average debts today are more than double that. Increased costs for property, equipment, supplies, facilities, and fuel all lend themselves to higher debts for farms with lower income overall. To allow more farms to reform with the structure of a Chapter 12 repayment plan, the debt limits need to be raised.

 

With several members of Congress supporting plans for Chapter 12 reform, more family farmers and fishers may be given a chance to repay debts and stay in business for the long term. If you think filing for Chapter 12 bankruptcy in Luverne, MN, or the surrounding area might be the right choice for your farm, contact Behm Law Group Ltd. at (507) 387-7200 today.

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