Behm Law Group, Bankruptcy Attorneys

Bankruptcy News & Recent Cases

Priority Claim Treatment for Debts Resolved With Bankruptcy in Worthington, MN

March 29th, 2018 · No Comments

If you’re an individual struggling financially in the United States, you have several options to resolve your debts effectively. These options include bankruptcy, which in many cases is a far more beneficial option than other remedies such as debt settlement or debt consolidation. Individual bankruptcy options commonly take the form of asset liquidation/debt discharge or debt reorganization, known respectively in bankruptcy terms as Chapter 7 and Chapter 13. If you choose to file for bankruptcy in Worthington, MN, Behm Law Group, Ltd. provides legal advice and assistance in navigating the process from start to finish.

With either bankruptcy chapter, any individuals, companies, or organizations to which you have debt obligations are categorized into types of creditors based on the kind of debt owed. These categorizations will determine how your debts are handled and how your creditors may be paid in your bankruptcy case.

One type of debt that is commonly encountered in bankruptcy cases is priority, unsecured debt. This kind of debt is generally treated more preferentially than general, unsecured debts.  Priority creditors will often file proofs of claim regarding the debts you owe.  In a chapter 7 bankruptcy case, priority, unsecured debts will not be discharged and a debtor will remain liable on those debts after a chapter 7 bankruptcy case is concluded.  In a chapter 13 bankruptcy case, priority, unsecured debts must be paid in full in order for a chapter 13 repayment plan to be approved by the bankruptcy court.

Creditors with priority claims will often have debts that are directly linked to the well-being of another person or organization. This includes debts owed to employees, child support and other spousal support obligations, contracted amounts owed in return for promised services, taxes, and settlements for injuries caused by intoxicated or substance-influenced motor vehicle accidents.

These claims are treated in accordance with the chapter regulations that delegate how all other debts are handled in a case.

Chapter 13: Priority claims in a Chapter 13 case determine in part how the filer’s repayment plan will be structured. In most cases, these debts will be handled in a process similar to secured debts. This means filers might be required to repay priority debts in full during their 3 to 5-year repayment plan period.  However, unlike secured debts, priority claims are not paid interest.

Chapter 7: In a Chapter 7 case, debts are processed in terms of discharge and exceptions to discharge.  As indicated above, the claims of priority, unsecured creditors will not be encompassed by the discharge issued by the bankruptcy court at the end of the case.

If you’re considering filing for bankruptcy in Worthington, MN, it’s important to understand how your creditors will be defined and what options they might have in the process. Behm Law Group, Ltd. provides counsel and support for both Chapter 13 and Chapter 7 cases. Contact us at (507) 387-7200 today for more information.

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Preference Claims and Transfers with Chapter 7 Bankruptcy in Marshall, MN

August 25th, 2017 · No Comments

In most cases, individuals and small businesses fight against filing for bankruptcy until it becomes clear that it is the most sensible option. In many cases, before the decision to file for bankruptcy is made, the filer attempts to meet or repair debts in many ways. Payments or money transfers are common occurrences before bankruptcy petitions are filed, but in some situations, those transactions might be reversed after your case is filed. Behm Law Group, Ltd. offers legal advice and assistance to help you understand how your case will unfold when you file for Chapter 7 bankruptcy in Marshall, MN.

In a Chapter 7 bankruptcy case, the bankruptcy trustee is a fiduciary for creditors and the trustee is obligated by the bankruptcy code to ensure that the person filing for bankruptcy is forthright and honest and that he or she has listed all of his or her creditors and listed all of his or her assets. The trustee is also tasked with making sure that the process is fair for all creditors and making sure that all creditors are treated equally.

One responsibility of a trustee in the trustee’s role of making sure creditors are treated fairly and equally is to identify and recover any preferential transfers in a bankruptcy case.

Preferences 

If you have multiple unsecured creditors (creditors that do not have collateral securing the debts) in your case and, within the ninety days prior to the filing of your case, you have made payments or transfers to any one creditor totaling $600.00 or more, this is considered an avoidable preference.  This means that you have preferred one similarly situated creditor over another creditor who may not have received any payment.   If a trustee finds that you preferred one creditor over another, the trustee will be obligated to avoid the preference by demanding a refund of what you paid from the preferred creditor.  The trustee will then distribute that amount equitably among all of the similarly situated creditors.

Preference claims can either be voluntary payments you made or involuntary garnishments from your pay checks or bank accounts. For creditors labeled “insider creditors”, such as your friends or family, any payments totaling $600.00 or more made within a year of the date that your case is filed will be deemed a preference.  If you pay a friend or relative more than $600.00 within a year before your case is filed, the trustee can and will demand a refund and disburse it among all creditors.  For other creditors, such as credit cards and medical debts, known as “arms-length creditors”, payments of more than $600.00 within ninety days before your case is filed will be deemed preferential.

Strong Arm

To reverse any claims deemed to be preferences, the trustee has the right to use his or her “strong arm” powers under the bankruptcy code and undo the transactions.

If you suspect you may have made a preference payment, or if you have other concerns about your situation, you should not try to undo or reverse it.  Behm Law Group, Ltd. can help you throughout the process of filing for Chapter 7 bankruptcy in Marshall, MN. For more information, please contact us at (507) 387-7200 today.

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Claiming Excessive Exemptions and What You Can Buy Before Filing for Bankruptcy in New Ulm, MN

May 24th, 2017 · No Comments

Making prudent use of the financial help that filing for Chapter 7 bankruptcy can provide is one of the smartest things you can do if you’re overwhelmed by accumulated debts and financial obligations. Chapter 7 was designed to help people recover from crippling debt and get back on their feet financially. The U.S. Bankruptcy Courts have to treat each case with fairness to debtors and creditors alike, so Chapter 7 works as a balanced process. Behm Law Group, Ltd. helps filers with legal advice and assistance throughout the process of filing for Chapter 7 bankruptcy in New Ulm, MN.

To keep things balanced between creditors and debtors, Chapter 7 bankruptcy works to discharge your debts while simultaneously liquidating your nonexempt assets, if any, to repay your creditors.  Most cases, however, are “no asset” cases which means that all of one’s assets are exempt and creditors don’t get paid anything.  It’s your job as a debtor to claim your own exemptions to prevent assets from being unnecessarily liquidated. The flipside to claiming exemptions, however, is that it’s possible to claim too many for your case.

Excessive Exemption Planning

Generally speaking, exemption planning—taking assets you may not be able to keep in bankruptcy and liquidating them and using the money to pay down your mortgage or purchase assets that you would be able to keep so you can maximize your exemptions—can be a tricky process. In fact, it can be considered fraudulent behavior and can be a basis for the dismissal of a bankruptcy case or a denial of all and any debt relief. That being said, there are times when exemption planning is possible when it comes to making purchases before filing for bankruptcy.

Purchasing Before Bankruptcy

Many purchases you make on credit before filing for bankruptcy can be construed as fraudulent use of credit and can render the subject credit debt non-dischargeable. For example, any debts you gather within 90 days before filing for bankruptcy that exceed $675 in total can be considered non-dischargeable. This applies to “luxury goods,” a term that covers most purchases that are not necessary to your household like televisions, furniture, trips to Hawaii or Europe. Purchases that you are allowed to acquire credit debt for within the 90-day period before filing for bankruptcy includes necessities like food, gas, rent, and auto care. These debts may still be petitioned for discharge.

Your spending during the 90-day period prior to filing for bankruptcy is flexible. If you make some bad choices, however, by “maxing out” your credit before filing for bankruptcy, many of your debts may not be discharged, and your case may even be dismissed. Behm Law Group, Ltd. can help you navigate exemption planning and purchasing before you file for bankruptcy in New Ulm, MN. For more information, contact us today at (507) 387-7200.

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Priority, Secured, and Unsecured Claims and How These Types of Debts are Treated With Bankruptcy in Mankato, MN

January 20th, 2017 · No Comments

If you find yourself in a position where filing for bankruptcy is the most logical course of action for you and your family or for your business, you will also find that you have creditors to who will fall into different categories and that creditors in the different categories have different rights.  When you think of creditors in bankruptcy, you should think of them being listed in their different categories as on a totem pole.  Behm Law Group, Ltd. provides legal assistance to help you throughout the process of filing for bankruptcy in Mankato, MN, and to protect and direct you in the face of your creditors.

When you file for bankruptcy, your creditors must file proofs of claim with the bankruptcy court to show, as a matter of public record, the type or category of debt that you have with each of them and how much you owe to each of them. These claims can fall into the following three categories.

Secured Claims: These claims should be viewed at the top of the totem pole.  When your creditor has a lien on your property (or a security interest), they can file a secured claim. Mortgages and car loans are common examples of debts with security interests attached. If you default on these types of debts, your creditors can enforce their liens and reclaim the property (i.e. house, vehicle, washer/dryer) securing their liens. Chapter 7 filers must specify in a bankruptcy form called the “Statement of Intention” whether they want to surrender property/collateral to a creditor or continue making debt payments and retain the property/collateral. Chapter 13 filers can continue paying off the debt secured by the property/collateral with their established repayment plan and in some cases even eliminate the lien their creditors have on that property/collateral.

Priority Claims: These claims should be viewed in the middle of the totem pole.  Where unsecured claims are on dischargeable debts with no secured collateral, priority claims are non-dischargeable debts with no secured collateral. “Non-dischargeble” means that they are not subject to being wiped away or discharged.  These debts are unsecured debts but they are debts that Congress, for certain public policy reasons, determined should not be subject to discharge.  For example, child support debts, some tax debts, and criminal fines are generally not subject to discharge in a Chapter 7 case. Creditors to whom you owe these types of debts file priority claims when you file for bankruptcy relief. Because these debts are not discharged, you must keep paying them even if you file for Chapter 7, and they must be completely repaid with your chapter 13 repayment plan if you file for Chapter 13. Creditors with priority claims will be repaid before those holding unsecured claims, but after those with secured claims.

Unsecured Claims: These claims should be viewed at the bottom of the totem pole as they have a lower priority than secured claims and priority claims.  These claims are only applicable to debts with no secured collateral. Most frequently, these debts include medical bills, personal loans, and credit card debt and are almost always discharged with a Chapter 7 case. With Chapter 13 cases, your non-exempt assets and your disposable income determine the repayment plans for these debts. Creditors with unsecured claims are often paid last and paid least.

If you are considering filing for bankruptcy in Mankato, MN, and you would like to learn more about how Behm Law Group, Ltd. can help you throughout the process, contact us today at (507) 387-7200.

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How Natural Disasters Influence Bankruptcy Claims in Mankato, MN

April 28th, 2014 · No Comments

Filing for Bankruptcy in Minnesota | Tips from Behm Law Group, Ltd.

Since Hurricane Katrina, there have been changes and adjustments to bankruptcy laws. This is especially important for people that have been the victim of a natural disaster and lost all of their possessions and potentially their income. With the recent tornadoes and weather events in the South, Behm Law Group, Ltd. wanted to revisit the nuances of bankruptcy for disaster victims.

When an enormous weather event, such as Hurricane Katrina, strikes, the government may relax some of the laws associated with bankruptcy. In the instance of Katrina, the strict rules of Chapter 7 bankruptcy were relaxed to take into account the increased expenses and loss of property and income that disaster victims and their families experienced. Chapter 7 bankruptcy allows for debts to be completely erased. If the looser rules were not put into place after such large events, some families with higher income than the state’s median may have to repay their debt over a five year period.

Of course, these exceptions are due to extreme cases, like natural disasters and other events that impact an entire geographic area. It is still applicable to residents of Minnesota that sometimes experience tornadoes and flooding statewide.

To help you navigate the intricacies of bankruptcy law, call Behm Law Group, Ltd, your local bankruptcy attorneys based in Mankato, Minnesota. Filing for bankruptcy, whether Chapter 7 or Chapter 13 is never an easy decision, and it certainly isn’t a simple process. We are here to help you through the hardest times in your life, whether they are naturally occurring or caused by a natural disaster.

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How Businesses Filing Bankruptcy in Fairmont, MN, Affect Local Creditors

April 25th, 2019 · No Comments

Our economy is a complex system that affects even simple business formats. Businesses of all shapes and sizes can thrive or fail depending on a wide variety of economic circumstances. When economic factors cause financial changes to a business, they have consequences for everyone involved, including owners, investors, customers, and employees. Failing businesses often have the greatest consequences to all parties involved in them, in addition to consequences to the economy as a whole. If you find yourself affected by a business filing bankruptcy in Fairmont, MN, Behm Law Group Ltd. offers guidance and counsel for those filing for Chapter 7, Chapter 13, and Chapter 12 cases.

 

If you are considering filing for a business bankruptcy, Behm attorneys can represent and support you throughout the case. However, we believe it’s important for all involved to understand how the prospect of a business bankruptcy will affect them. One recent example of how a business bankruptcy negatively affected parties involved more dramatically than the typical bankruptcy is the case of Colleen’s Consignment Stores in Las Vegas, NV.

 

In this case, the owner of the business may have created more detriment to creditors than would have been necessary. As small furniture consignment shop, Colleen’s Consignment Stores bought used furniture for resale. The company did not pay for the furniture bought from sellers within the weeks leading up to the company’s bankruptcy filing, and so those sellers became involved in the case as creditors.

 

The nature of this case caused much backlash from those who were involved unexpectedly as creditors and for the employees of the company who were given no warning of the bankruptcy. Some creditors were unaware of the bankruptcy until they were called to the required meeting of the creditors. Many were unsettled by the fact that their goods may be sold during the liquidation process and many were upset about the fact that the company bought furniture while potentially considering filing for bankruptcy.

 

In a nutshell, the effects of this bankruptcy case on the creditors were the following:

 

  1. An automatic stay was placed on their ability to collect payment for their furniture.
  2. They had to submit a proof of claim to retain any chance of receiving payment for their goods.
  3. Their goods would likely be sold in the liquidation process and they would not receive payment.
  4. They had to attend a meeting of creditors and sacrifice additional business and personal time throughout the case resolution.

 

Overall, this bankruptcy case had a less-than-favorable outcome for many creditors and employees involved with the consignment shop. However, this is an exception to the many bankruptcy cases that provide positive results for all parties involved. Bankruptcy is often an effective way to resolve debts for the filer and to provide some form of recompense for the creditors.

 

With the help of Behm Law Group, you can file a bankruptcy case that will steer away from issues such as those in the consignment store case and offer better results for all involved. To learn more about filing bankruptcy in Fairmont, MN, contact us today at (507) 387-7200.

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How to Handle Becoming a Creditor Involved in a Chapter 7 Bankruptcy in Owatonna, MN

April 11th, 2019 · No Comments

As a firm of bankruptcy attorneys, Behm Law Group, Ltd. is often most concerned with how a bankruptcy case affects and works out for the people and businesses filing it. However, we believe it’s important to provide information for everyone involved in the case if they’re unfamiliar with the process in any way.

 

There’s an unfortunate standard of thinking in bankruptcy that there are two sides of a battle with the creditors on one side and the filers on the other, while the bankruptcy trustee oversees the fight. The truth is that everyone is in it together, and a bankruptcy process is designed to provide as fair a treatment as possible for all those involved. If you’ve found yourself involved in a Chapter 7 bankruptcy in Owatonna, MN in any capacity, Behm Law Group, Ltd. can provide the advice and guidance you need.

 

Creditors of anyone who has filed for bankruptcy know that the process is a difficult one for each and every lender who is now facing the possibility that they won’t be repaid in full. In more cases than not, a bankruptcy has several creditors who don’t typically provide loans and may not know what to do when their lendee can’t repay a debt.

 

Suddenly a Creditor

The creditors that have the hardest time handling a bankruptcy case are those who’ve never dealt with this situation or given a loan before, such as:

  1. Friends and family who have given the bankruptcy filer a personal loan.
  2. Customers who have prepaid for a service from a business that is now going bankrupt.
  3. Customers who are financing a product (a car, for example) and the provider has gone bankrupt.
  4. Companies with services/products given to any party on Net 10, 15, 30, or 60 terms.

If you’re listed as a creditor in a bankruptcy case, there are certain actions you must take if you want debt repayment in any capacity. If you’ve received a “Notice of Bankruptcy Filing” and are listed as a creditor, you may have to file a proof of claim to avoid losing any chance of repayment. Filing a claim is simple, but requires specific documentation. To accurately file a claim, you must fill out U.S. Bankruptcy Court forms included in a Proof of Claim. While your repayment might not be in full, you’re entitled to some debt accommodation or repayment as a creditor.

 

If you’re caught up unexpectedly in a Chapter 7 bankruptcy in Owatonna, MN as a creditor or considering filing for bankruptcy as an individual or business, Behm Law Group, Ltd. can help. Contact us at (507) 387-7200 to learn more today.

 

 

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Navigating through Bankruptcy Delays with the Help of a Bankruptcy Attorney in Marshall, MN

April 3rd, 2019 · No Comments

Bankruptcy can be a highly effective way to find the financial relief you need for long-term stability. It can also be one of the most emotionally difficult legal processes you ever go through. Because bankruptcy is such a legally-nuanced process, it can be one of the most trying court-administered procedures for individual consumers to face—especially if they choose to start a case without the help of a knowledgeable bankruptcy attorney. If you are struggling to meet debt payments, but are hesitating to take the leap into filing for bankruptcy for fear of the difficulty and emotional toll it may take, it may be time for you to seriously think about how a lawyer can help. Behm Law Group Ltd. provides the legal counsel, advice, and comprehensive guidance you need from a bankruptcy attorney in Marshall, MN, and the surrounding area if you plan to file.

Whether you choose (and qualify for) Chapter 7 liquidation bankruptcy or decide to restructure your debts into a three- to five-year repayment plan with Chapter 13 bankruptcy, Behm attorneys can navigate each step of the process as well as advise you on the best bankruptcy choice before you even have to make a decision. When you enter a bankruptcy case, lots of information is thrown your way. While this can be overwhelming, our bankruptcy attorneys are here to tell you what everything means and how to proceed.

One part of bankruptcy many past filers have found difficult to work through is the occasional delay the court may have to pause action on your case.

 

Delays

Bankruptcy case delays occur for a number of reasons, some of which may be your responsibility and some of which may not. While there are many types of delays to a case that can occur out of unusual circumstances, the most common types of delays include:

  1. Missing information: If you have information the court needs that is not a part of a standard petition, your case may be put on delay while you gather the necessary documents and during the court’s review of them.
  2. Creditors’ requests for information: If creditors request information about your case, the court may put a pause on the proceedings until the creditors are informed in full.
  3. Creditors’ claims: Sometimes, creditors may have grounds to claim an asset is their property or that their debt is non-dischargeable. This may occur for a wide range of reasons, but if it does, it’s incredibly important to have the protection and assistance of a bankruptcy attorney.
  4. Your income: If you have initially filed for Chapter 7 and your income changes before you start your case (with a new job, for example), the court may delay your case while it decides whether you qualify for a Chapter 13 bankruptcy.

 

If you are considering filing for bankruptcy, don’t underestimate the necessity of a bankruptcy attorney in Marshall, MN, and the surrounding area. Contact Behm Law Group Ltd. at (507) 387-7200 to learn more today.

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Secured Tax Debt and Filing for Bankruptcy in Worthington, MN

April 1st, 2019 · No Comments

Around this time of year, we all take a look at our past 12 months of finances. Filing taxes forces us to recount our incomes, debts, and overall monetary matters. On top of all our typical credit card debts, medical bills, car loans, and other debts, we can all be susceptible to tax debts.

 

If you’re struggling to pay tax debts in addition to meeting your other debt obligations, it might be time to look at debt relief options. When the point comes where your debts are severely affecting your quality of life, it’s important to take positive action to find balance for your finances. With the help of Behm Law Group, Ltd., you can gain the many advantages that debt relief through filing for bankruptcy in Worthington, MN provides.

 

Filing for bankruptcy can help you resolve many types of debt in two ways: discharge or reorganization. If you file for Chapter 7 bankruptcy, the majority of your debts will be discharged and you can claim exemption amounts to protect your property from liquidation. With a steadier income, you can choose to file for Chapter 13 bankruptcy and have your debts reorganized into a repayment plan limited to three to five years, and some of your debts will be discharged at 0-100%.

 

While many debts are discharged and reorganized in the process of bankruptcy, there are some priority debts that are exempt from all types of bankruptcy cases. For many, this includes tax debts. Some tax debts can be discharged in Chapter 7 bankruptcy or included in a repayment plan under Chapter 13.

 

Though some tax debts are not discharged through the bankruptcy process, there are other tax debts that can be treated in bankruptcy, including income tax debts secured by the government. Put simply, secured tax debts are debts that the IRS has placed a lien on your property to protect their right to repayment. This typically occurs when a debt has been left unpaid for an extended period or when the government foresees your inability to pay a tax debt.

 

Liens on tax debts turn into levies when collection action is taken. You can prevent collection action by filing for bankruptcy and getting an automatic stay placed on all creditor action – including the IRS. Additionally, you may be able to completely dissolve the lien and the debt in your bankruptcy case. In fact, most secured tax debts that qualify for the bankruptcy process can be resolved with the best outcome for you.

 

Understanding the difference between priority and non-priority tax debts is important for all bankruptcy cases that involve tax debts in any capacity. If you suspect or know for sure your tax debt is considered a secured debt by the IRS, contact Behm Law Group, Ltd. at (507) 387-7200 to learn more about its treatment in bankruptcy. If you’re ready to start filing for bankruptcy in Worthington, MN today, the advice and assistance of Behm attorneys is important to building a successful case.

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Understanding More about Debt Cramdown with Chapter 13 Bankruptcy in Fairmont, MN

February 15th, 2019 · No Comments

A common misconception about bankruptcy is that filers will lose all their property in the process. This could not be further from the truth. While there are some  Chapter 7 bankruptcy cases in which assets are liquidated, there are many more occasions when filers can claim exemptions to protect their property from liquidation. Additionally, the process of Chapter 13 bankruptcy works to restructure filers’ debts into a repayment plan suited to their income without bringing liquidation into question. If you are considering filing for Chapter 13 bankruptcy in Fairmont, MN, Behm Law Group, Ltd. offers counsel and protection from start to finish to help you get the most out of your case.

 

One aspect our bankruptcy attorneys work to promote in certain cases is helping filers successfully petition for debt cramdown. When you owe more debt on a property than the value of that property, you are considered to be “upside down” on that debt. If this is the case, you are eligible for debt cramdown in certain circumstances.

 

How It Works

 

Cramdown is a process available for several types of secured debts, but because of the fast depreciation of vehicles, cramdowns are applied mostly to auto loans. If your debt is upside down, you can use a cramdown to reduce the debt amount. For example: You took out an auto loan of $15,000 to finance a car of the same value, and you repaid $3,000 of that loan over the course of three years. After those three years passed, your car’s value decreased to $10,000. However, you still owe $12,000 on your auto loan.

 

When you file for Chapter 13 bankruptcy and request a cramdown, the repayment plan will include only the current value of your car as secured debt. In this example, you would have the $10,000 value of your car loan rolled into your plan as secured debt, while the remaining $2,000 you would pay outside of bankruptcy is rolled into your plan as unsecured debt. This cramdown process may not eliminate all of your debt, but because Chapter 13 plans don’t often require you to repay unsecured debt in full, you can significantly decrease the debt you pay in the end.

 

Additionally, most cramdowns allow you to reduce your interest rates on the remainder of the secured debt included in your plan. Auto loans that qualify for cramdown must also have been taken out more than 910 days before you file for bankruptcy.

 Find Professional Help when Filing for Chapter 13 Bankruptcy

If you’re considering filing for Chapter 13 bankruptcy in Fairmont, MN, and think you may be eligible for a cramdown, Behm Law Group Ltd. can offer you advice and assistance in the process. Contact us at (507) 387-7200 to learn more or to get started on your petition today.

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