F.A.Q.


WHAT IS BANKRUPTCY?

Bankruptcy is a legal proceeding in federal court which allows a person with a large amount of debts to be released or discharged from the debts (or most of them). The person with the debts is called the debtor, and the people or companies the debtor owes money to are called creditors. In every chapter 7 or 13 bankruptcy case a person is appointed by the court to administer the estate. This person is called a trustee in bankruptcy and is paid a commission from the money distributed to creditors as set forth under 11 U.S.C. Sec. 326 of the bankruptcy code.


ARE THERE DIFFERENT TYPES OF BANKRUPTCY?

There are four main types of proceedings in bankruptcy – Chapter 11 (for big corporations), Chapter 12 (for family farmers and fishermen), Chapter 13 (wage-earner, debt repayment, debt reorganization) and Chapter 7 (liquidation). These types are referred to by their chapter numbers in the bankruptcy code.


WHO CAN FILE FOR BANKRUPTCY?

In general, any person or business can file for bankruptcy. There is no minimum amount of debt required. In most cases, however, a person who files owes considerably more in debts than he or she can pay.


WILL I HAVE TO GIVE UP ALL MY PROPERTY?

No. The law recognizes that some items are necessary for a person and his or her family and protects those items from creditors. Among the protected items are a home and some value in a car, furniture and certain other basic items. The exact items protected from creditors depend on individual circumstances. If a loan is secured by your home, car or other basic items, it must continue to be repaid, if you want to retain the home or car. Creditors may ask that debts be reaffirmed. To reaffirm a debt is to promise to keep paying on it. In order to reaffirm a debt, a reaffirmation agreement must be made with a creditor and a hearing must be attended and presided over by a bankruptcy judge.


WILL ALL OF MY DEBTS BE DISCHARGED?

No. There are some debts which are not discharged in bankruptcy such as certain child support and spousal support obligations, certain tax debts, debts incurred for damages caused driving while intoxicated and in many cases, student loan debts. However, whether any particular debt can be discharged depends on the type of case you file so there are many factors to be considered before it can be determined whether or not any particular debt can be discharged. An attorney at Behm Law Group can help determine which, if any, of your debts might not be subject to discharge in bankruptcy. You will have to continue to pay these debts whether or not you declare bankruptcy.


CAN I FILE FOR BANKRUPTCY MORE THAN ONCE?

Yes, but there may be time restrictions on how soon you can file. Those restrictions depend on which type of bankruptcy was previously filed.

Chapter 7 Bankruptcy

For chapter 7 bankruptcies, eight years must pass from the date your previous chapter 7 bankruptcy was filed before filing another chapter 7 bankruptcy. For instance, if a chapter 7 bankruptcy was filed on January 1, 2000, then another chapter 7 bankruptcy could be filed on January 2, 2008.

Chapter 13 Bankruptcy

For chapter 13 bankruptcies, two years must pass from the date that your previous chapter 13 bankruptcy was filed before you can file another chapter 13 bankruptcy. For instance, if a chapter 13 bankruptcy was filed on January 1, 2008, then another chapter 13 bankruptcy could be filed as early as January 2, 2010. Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, it is possible to qualify to file a second Chapter 13 Bankruptcy even before your first Chapter 13 Bankruptcy is completed. Chapter 13 bankruptcy proceedings typically last 3 to 5 years. This means that you can file a chapter 13 bankruptcy and then receive your discharge 3 to 5 years later and then immediately file a second chapter 13 bankruptcy.

First Bankruptcy Case and Second Bankruptcy Case Are Different

If your first bankruptcy was filed as a chapter 7 bankruptcy and you now need to file a chapter 13 bankruptcy, you must wait 4 years from the date that your chapter 7 bankruptcy was filed in order to file for a chapter 13 bankruptcy. For example, if you filed a chapter 7 bankruptcy on January 1, 2008, you would need to wait until January 2, 2012 to file a chapter 13 bankruptcy.

If your first bankruptcy was filed as a chapter 13 bankruptcy and you now need to file a chapter 7 bankruptcy, you must wait 6 years from the date that your chapter 13 bankruptcy was filed in order to file a chapter 7 bankruptcy.


DO I HAVE ANY CHOICES BESIDES BANKRUPTCY?

Yes. Bankruptcy is not the only way to deal with debt problems. If you have only a few debts you and one of our attorneys can contact your creditors and try to work out a payment plan with them. Sometimes you can find help in avoiding bankruptcy by contacting a local social service or consumer credit counseling agency. However, many non-bankruptcy options (in fact, the vast majority of them) are simply scams aimed at draining you of your money so you must be exceedingly careful. Many companies which purport to assist you with your debts are sponsored and funded by credit card companies and debt collection agencies.


HOW CAN IT TELL WHETHER OR NOT I SHOULD FILE FOR BANKRUPTCY?

The legal solution to the problem of too many bills can be complicated. Filing for bankruptcy is a very serious step that could affect you for the rest of your life. If you feel bankruptcy may be necessary, you should consult a lawyer. An attorney at Behm Law Group can help explain to you how the process works and can evaluate your exemptions and non-dischargeable debts. We will help you make an informed decision about whether bankruptcy is your best alternative, and if so, under which chapter you should file. When you consult us, you should bring a detailed list of all of your debts, including the amount of the outstanding balance in cash and a list of all of your property. It is important that all of your bills and property be listed so that the best solution to your problem can be arranged. Every circumstance is different. Only by going over all of the facts can we help you avoid any problems that could interfere with bankruptcy.


HOW WILL BANKRUPTCY AFFECT MY CREDIT RATING?

Bankruptcy may appear on a person's credit record for at least ten years. It may make it difficult to obtain credit for a while. A person considering bankruptcy may already have a poor credit rating. In some cases, bankruptcy may actually improve the ability to get credit, since many of the debtor's former debts are discharged. Your local credit bureau may be able to provide information about the policy of lenders and creditors in your area with regard to the effect of bankruptcy on a person's ability to obtain credit. Also, the law prevents certain governmental units and agencies from discriminating against persons who have filed for bankruptcy. An attorney at the Behm Law Group can give you expert guidance in this area.

As indicated above, bankruptcy can actually improve your ability to get credit. The issuance of a discharge order by the bankruptcy court is the start of a new credit beginning – a fresh start, if you will – for you. This debt relief is the "product" that you purchase by filing a bankruptcy. Typically, you will receive many credit solicitations after your case is concluded. At Behm Law Group, we call this the "Pinocchio Effect" because you will have little or no "debt strings" after your case has concluded. New creditors will send you solicitations because they will no longer have to compete with your previous creditors who were discharged in your bankruptcy.


WILL MY BANKRUPTCY BE APPROVED?

Yes. You will qualify for a bankruptcy. You may qualify for a chapter 7 liquidation bankruptcy or you may have to file a chapter 13 debt-reorganization bankruptcy if your yearly projected household income is higher than the state average projected household income for a household of your size. The only way your bankruptcy will not be approved is if you are not truthful about the information in your bankruptcy petition and related schedules. Honesty and complete disclosure of your debts and assets in your bankruptcy schedules is an absolute must. If you fail to list all of your assets and creditors, your bankruptcy case will likely not be approved and you could be subject to prosecution for bankruptcy fraud. You must be completely forthright and honest and direct with your attorney about your financial circumstances.


WILL MY BANKRUPTCY BE LISTED IN THE PAPER?

While bankruptcy filings are matters of public record, personal bankruptcy filings are not published in papers in Minnesota. Do not confuse bankruptcy filings with foreclosure notices. Foreclosure notices must be published in papers in order to comply with foreclosure notice provisions provided under Minnesota law. While bankruptcy filings, as matters of public record, could be published in papers and while they are published in papers in North Dakota, South Dakota and Iowa, they are not published in Minnesota papers, unless the person who filed is well-known.

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