Behm Law Group, Bankruptcy Attorneys

Bankruptcy is a highly effective debt relief option available to individual consumers and businesses alike. It’s a system that is designed to protect the economy on varying scales from the oversaturation of debtors unable to continue making regular payments. It’s also designed to protect debtors from destitution while maintaining fair treatment for any creditors involved. If you are considering choosing bankruptcy as a long-term debt relief option, it’s important to understand how difficult it could be to file without professional experience, knowledge, and guidance. With the help of Behm Law Group Ltd, you can work through the nuances and complexities of filing for bankruptcy in Fairmont, MN, and build a strong, successful case.

While bankruptcy is an efficient tool for debt relief, it doesn’t necessarily wipe out all debts. Unsecured debts like credit card debt or medical bills are almost always discharged, but other debts like some taxes or priority obligations like child support are largely exempt from discharge in bankruptcy. Like those debts, not all legal debts like lawsuit judgments, fines, or other debts are always discharged in a bankruptcy.

Embezzlement judgments, for example, may or may not be discharged in your bankruptcy. If you have committed embezzlement fraud and have gone through the legal processing of that crime, you will most likely have a criminal fine or restitution on your record. Criminal fines or restitution fall into the category of priority (non-dischargeable) debt and they will not be discharged in your bankruptcy. However, you may be able to have that debt discharged if it is only classified as a civil judgement.

Civil judgments are claims against you that fall into the category of debts owed for “fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny.” If your debt for embezzlement is a civil judgment rather than a criminal fine or restitution, the creditor you owe that debt to must request that the court declare it non-dischargeable. To do this, they must take action early on in your case, specifically, within 60 days of the date set for the 341 meeting of creditors.

To request this, a creditor will have to file an adversary proceeding (i.e., lawsuit) with the court. In this proceeding, the creditor must prove that your embezzlement actions were fraudulent, that you were not authorized by the company or by the law to take the money or property, and that the property taken was held in trust for another party (i.e., the company or person embezzled from). If a creditor files a successful adversary proceeding, your civil judgment debt will not be discharged in bankruptcy.

If you are considering filing for bankruptcy in Fairmont, MN, and want to learn more about how different debts will be affected, contact Behm Law Group Ltd. at (507) 387-7200 or via email at stephen@mankatobankruptcy.com today.

The holidays are a wonderful time of year for many households. It can be a time when love and kindness pair with quality family time and a break from the regular work schedule. However, because it’s also the time of year when we spend the most money, it can be one of the most difficult times for some who have little to spare.

Food, gifts, decorations, and travel expenses make up the bulk of most consumer’s spending from October to January. The time from Halloween to the New Year fills a quarter of the year when spending can be out of control. At Behm Law Group, Ltd., we understand the financial pressure you may experience during the holidays, and we know from experience with other clients that post-holiday debt is a perfectly valid reason to file for Chapter 13 bankruptcy in New Ulm, MN.

Chapter 13 bankruptcy works to restructure your debts under the administration of a bankruptcy trustee. This restructuring turns your unmanageable debts into a repayment plan that fits your income and benefits you and creditors alike.

The primary way most individuals pay for holiday expenses is with a credit card. As many know, credit cards have some of the highest interest rates compared to any other debts you can incur. With the amount most people spend around the holidays, it’s inevitable that large credit card debt amounts are vastly increased from October to January across the country. Annual post-holiday debt surveys show that the average consumer spends upwards of $1,000 during the holidays, and many predict that amount will increase each year.

While it’s easy to get carried away with holiday spending, it’s much harder to come back from credit card debt in the long-term. Struggling with the weight of excessive interest rates can be remedied with a Chapter 13 repayment plan.

Chapter 13 bankruptcy is a highly effective process for those with a steady income, a family to support, and a desire to protect all their properties from the liquidation that occurs in a Chapter 7 case. When you file a Chapter 13 bankruptcy petition, your creditors have an automatic stay placed on their ability to collect debt, and you can begin building an appropriate repayment plan that will last three to five years.

The debts involved in your repayment plan are treated based on the loan agreements you made with your creditors (secured, unsecured, or priority). Because credit card debt is unsecured debt, it is most likely to be discharged up to 100% in a repayment plan.

Find Professional Help when Filing for Chapter 13 Bankruptcy

Holiday spending is hard to avoid, but a reasonable amount of spending that fits into your budget can be a great way to add cheer to your holiday season. However, if you find yourself struggling with post-holiday debt on top of other debts, filing for Chapter 13 bankruptcy in New Ulm, MN might be the right choice for you. To learn more about bankruptcy, contact Behm Law Group, Ltd. at (507) 387-7200 today.

If you own a small business anywhere in the U.S., your livelihood depends on countless factors ranging from market competitors to economic recessions. Maintaining a business with a steady flow of income and output of products or services is difficult, even with a strong foundation. No matter how old or young your business is, it’s possible to face financial struggles. If you’re having a hard time making debt payments from month-to-month, Behm Law Group, Ltd. can help you decide whether filing for business bankruptcy in Luverne, MN, is the right choice for your business.

Filing for business bankruptcy is a highly effective way to recover from severe debt. When you file for a business bankruptcy, you can choose Chapter 7 and liquidate your assets (shutting down your business in the process), or you can file for Chapter 13 bankruptcy and propose a restructuring of your debts into a manageable repayment plan (allowing your business to continue operating as you repay debts under the supervision of a bankruptcy trustee).

Whichever type of bankruptcy you file for, your trustee will rigorously examine your case for information about your past finances, business format, debts, income, living expenses, and contract agreements with your creditors. This examination determines how your assets will be liquidated and your debts discharged or restructured. Once your trustee has all the necessary information submitted with your petition and you have met all pre-bankruptcy requirements (credit counseling, bankruptcy fees, Means Test, and 341 hearing), the liquidation process will being in a chapter 7 case or you will propose a repayment plan in a chapter 13 case.

Behm attorneys can work with you to draft a repayment plan taking into account all your debts (priority, secured, and unsecured) and determine which debts you are liable to repay in full or have discharged in part from 0%-100%. One concern many business owners have in bankruptcy is whether they’ll be personally liable for the debts their business cannot repay. In the majority of cases, you will be personally responsible to pay debts your business can’t because it’s likely you made a personal guarantee agreement with your creditor when the loan was given.

Personal Guarantee: When you make a business loan agreement, the creditor needs to know they are protected in the event you cannot repay that debt. To resolve this issue, most creditors will not extend loans to businesses without requiring the owner to sign a personal guarantee agreement stating they are responsible as an individual to repay that debt in the event their business can’t meet payments.

Personally Liable: In short, you will be personally liable for your business debt when you file for Chapter 13 bankruptcy if:

1. You have a sole proprietorship
2. You have a partnership
3. You made a personal guarantee on a debt

To learn more about filing for business bankruptcy in Luverne, MN, or to find out about personal guarantees and debt liability, contact Behm Law Group, Ltd. at (507) 387-7200 today.

When you work with a lender to enter into a property loan agreement, you will most likely have a voluntary lien built into that contract. Property liens are effective methods for lenders to secure the loan value they give you in case of bankruptcy or other inability to repay. All liens act to protect the lender, but they can take many different forms in addition to the common car lien or mortgage lien. If you are struggling to meet debt payments on a lien regarding secured debt and you choose to file for bankruptcy in Mankato, MN, Behm Law Group, Ltd. offers the legal advice and professional counsel to help you build a strong case and understand how your lien-secured property and debts will be handled.

While the common types of liens often deal with homes, cars, and other properties most individuals and businesses own, there are specialty liens that come into play for specific situations. One the more unusual liens you may encounter is a Mechanic’s Lien.

How it Works

Like other liens, a Mechanic’s Lien protects the lender if a borrower can’t repay the loan. These liens are sometimes called construction liens because they come into play for contractors and construction crews as well as mechanics, suppliers, designers, and professional builders. A Mechanic’s Lien is a legal document that gives a mechanic or other specified professional who signs and files the lien the right to collect payment. If you hire a contractor to remodel your kitchen, for example, that contractor is allowed to do several things if you refuse payment for services. First, they are allowed to file a lawsuit against you for the amount owed, and second, they can contribute to forcing you into bankruptcy if you have other creditors you’ve also refused or been unable to pay. Whatever action they take, they will have to file a Mechanic’s Lien to be guaranteed repayment.  They are secured as to the asset that they perform services on.  For instance, if a roofer installs a new roof on your house, the roofer could obtain a mechanic’s lien against your house as security for repayment.

How it Works in Bankruptcy

If you file for bankruptcy, voluntarily or otherwise, the creditors involved in your case that hold a lien over your property—a Mechanic’s Lien, or any other type of lien—are considered secured creditors. This means they will come first in line (along with priority creditors, such as tax debts and child support or alimony debts) for repayment in the event your assets are liquidated, or you propose a repayment plan. In a Chapter 7 case, secured creditors receive the value gained from liquidating your assets that serve as their collateral before any other creditors, and in a Chapter 13 case, secured creditors are either repaid the value of their collateral securing the amount you owe or you must surrender that collateral.

Whether you file for Chapter 7 liquidation or Chapter 13 reorganization, your secured creditors will receive the highest payment priority in your case, including those who file for a Mechanic’s Lien. To learn more about liens and the role they play when you file for bankruptcy in Mankato, MN, contact Behm Law Group, Ltd. today.

The seasons of winter and spring in Minnesota are the most difficult times for farmers who support their households with income from agricultural sources. In fact, it’s a time when bankruptcies filed by family farmers spike across the country. In 1987, Chapter 12 bankruptcy was added to the bankruptcy code to help family farmers recover from extreme financial difficulties through the process of debt restructuring and debt consolidation. Behm Law Group, Ltd. offers legal advice and assistance for farmers who are considering filing for Chapter 12 bankruptcy in Jackson, MN.

The process of Chapter 12 bankruptcy is similar to that of Chapter 13 reorganization bankruptcy, but offers specific benefits tailored to fit the financial circumstances of a family farming household. The process of Chapter 12 takes a filer’s debts and restructures them to create a new payment plan that can last 3 to 5 years. This plan requires a full repayment of priority unsecured debts, such as tax debts, and, generally, a specific percentage (0%-100%) repayment of all other debts.

The outcome of a Chapter 12 bankruptcy case can be decided in one of five ways:

1. Converted: If your household income is low enough to pass the Means Test and you have either failed to propose a repayment plan or your proposed plan was not confirmed by the bankruptcy court, you can have your case converted to a Chapter 7 liquidation case.

2. Confirmed without discharge: If your repayment plan proposal is accepted, your plan will be confirmed or approved by the bankruptcy court. Depending on the amounts you owe and the types of debts you have, you may not actually receive a discharge of your debts and you may only need the assistance of a chapter 12 bankruptcy proceeding to simply restructure or consolidate your debts.

3. Confirmed with discharge: The most common outcome for approved Chapter 12 cases includes a repayment plan that is confirmed by the bankruptcy court and provides for the restructuring or consolidation of some debts and for the discharge or other debts. Debts that are often discharged in a Chapter 12 bankruptcy include medical bills and credit card debts. This is the optimal outcome of a Chapter 12 case.

4. Dismissed before confirmation: If your Chapter 12 case is filed in bad faith, or if you have engaged in other fraudulent behavior either before or after your case is filed, your bankruptcy case could be dismissed before you begin the chapter 12 plan confirmation process.

5. Dismissed after filing: If you engage in fraudulent behavior within the 3 to 5-year repayment plan period, your plan can be dismissed, even after you successfully get the bankruptcy court to approve or confirm your chapter 12 plan. This can result from a number of different circumstances, for example, if you hide additional income or attempt to convert your case to Chapter 7 in bad faith.

If you’re a local family farmer and struggling to meet debt payments and daily financial obligations, Chapter 12 bankruptcy might be a way to recover. Contact Behm Law Group, Ltd. at (507) 387-7200 today for more information about filing for Chapter 12 bankruptcy in Jackson, MN.

Almost all U.S. citizens hold one or more forms of debt in their day-to-day financial obligations. This includes anything from mortgages to credit card debts, and most individuals find ways to work those debts into their budgets. If you’ve found yourself struggling to do this, however, you might consider bankruptcy. If you choose to file for bankruptcy, Behm Law Group, Ltd. offers legal support to help you navigate through the process when you file for bankruptcy in Owatonna, MN.

If you have debts, the individuals, companies, or organizations that loaned you those debts are your creditors. Even with personal loans from family members or employers or friends, the lenders are considered your creditors until those debts are fully repaid. When you file for bankruptcy, the status of your creditors is determined based on the type of debts you owe to them.

This categorization of creditors can impact how your debts are repaid in bankruptcy. For a Chapter 7 bankruptcy, this means one creditor may not collect a higher return over another creditor. In a Chapter 13 plan, this categorization of creditors determines the percentage of debt you will repay throughout your repayment period.

These are the types of creditors involved in a bankruptcy case: 

1. Secured: Any debt that involves a tangible property (i.e. mortgages or car loans) is considered secured, and the lenders of those debts are secured by that property, even in the event of a bankruptcy filing. Chapter 7 secured creditors will take back any collateral that secures their claims. In a Chapter 13 repayment plan, the secured creditors are generally repaid the present value, plus reasonable interest, of the assets securing their claims.
2. Unsecured: Virtually every other type of debt not involving a property is an unsecured debt, and the creditors of those debts are also unsecured in repayment if you file for bankruptcy. For example, credit card debts, personal loans not involving property, medical bills, and certain older tax debts are all unsecured. The creditors of these debts will often only receive small partial repayments in a Chapter 13 plan and, often, will not receive any payment in a chapter 7 bankruptcy case.
3. Priority: Priority creditors are, in fact, unsecured creditors much like credit cards or medical debts. However, for certain public policy reasons, the drafters of the bankruptcy code wanted to make it much more difficult to discharge or get rid of these debts.  Some examples of priority creditors are unpaid employees of the debtor, spouses with unpaid child support or alimony, or children of the debtor with certain unpaid obligations, tax debts, and criminal court fines and restitution awards.

These creditors are involved in most bankruptcy cases. Behm Law Group, Ltd. offers protection and counsel throughout your case. Contact us at (507) 387-7200 today for more information about filing for bankruptcy in Owatonna, MN.

If you’re struggling to meet debt payments and financial obligations with your income, you’re most likely eligible for Chapter 7 bankruptcy. The two main types of bankruptcy, reorganization and liquidation, are designed for individuals and businesses with very different financial situations. Reorganization bankruptcy (Chapter 13) is an option for those with higher incomes who want to keep their property in the process of filing. Liquidation bankruptcy (Chapter 7), however, is more suitable for those with lower incomes and debts that can be discharged in the process of filing. At Behm Law Group, Ltd., we can help you understand why you might benefit more from Chapter 7 bankruptcy in Mankato, MN, given your situation.

While the risk of loss of some property is higher in Chapter 7, Chapter 7 is generally your best option for recovering financially and getting a fresh start quickly, even with a low income. The following outlines the several reasons why you might not be eligible for Chapter 7 bankruptcy.

Income: To qualify for Chapter 7 bankruptcy, you must pass the Means Test, which determines your income level based on the median Minnesota income level of a household similar to your own. To pass this test and file for Chapter 7, your income must be lower than the Minnesota median income level for a household of your size.  Your income includes any sources of monetary gain except, generally, income tax refunds and Social Security benefits.  Income from inheritances received and retirement accounts that may have been cashed out also may sometimes be excluded from the calculation because such income sources would not constitute regular sources of income.

Repayment: Under 11 U.S.C. §707(b)(2), if your income is higher than the state median income for your household size, you might still be eligible for Chapter 7 under the condition that your income, as determined by this provision, would pay less than 25 percent of your nonpriority unsecured debts or $6,000.00, whichever is greater, or $10,000.00.

Failure to Meet Requirements: Before you can petition for Chapter 7, you must meet several requirements. First and foremost, you must attend a credit counseling course with an approved credit counseling agency within 180 days prior to filing. You must also complete certain paperwork and pay certain filing fees. Our expert attorneys can guide you through these sometimes-complicated requirements.

Previous Bankruptcy: If you filed for bankruptcy within the last 180 days and your case was dismissed for willful failure to abide by orders of the bankruptcy court, for acts of fraud, abuse, or by your own request or following the filing of a request for relief from the automatic stay by one of your creditors under 11 U.S.C. §362, you will not qualify for Chapter 7 bankruptcy.  Under 11 U.S.C. §109(g), you must wait 180 days after the dismissal of your previous case to qualify for Chapter 7 again.

Previous Discharge: If you filed for bankruptcy relief and received a discharge in Chapter 7 in the past eight years or if you filed Chapter 13 bankruptcy and received a discharge in the past six years, you will not be eligible to receive a discharge in a new case in Chapter 7 bankruptcy.

Fraud: Of course, in any bankruptcy case, your petition will be dismissed, and you will not be eligible for any form of bankruptcy if you’re found to exhibit fraudulent or abusive behavior relevant to your case.

To learn more about your eligibility and how filing for Chapter 7 bankruptcy in Mankato, MN, can give you a fresh start, contact Behm Law Group, Ltd. at (507) 387-7200 today.

While Chapter 7 bankruptcy is designed to help individuals and small businesses with low incomes and dischargeable debts, Chapter 13 is more beneficial to those who may have higher incomes yet still struggle with financial obligations. Because in most cases you cannot qualify for Chapter 7 bankruptcy with an income higher than the Minnesota median income level, Chapter 13 can be your saving grace for relieving debt and restructuring your finances in a manner that is suited to your income. If you’re considering filing for Chapter 13 bankruptcy in Waseca, MN, Behm Law Group, Ltd. can offer legal advice and assistance throughout the process.

The process of debt reorganization that takes place during a Chapter 13 case requires the examination of your different debts to determine how they can be handled. One aspect of your debts and your property that is analyzed is the subject of liens your creditors may have on your house, vehicle or other property.  Creditors with such liens have debts that are secured or collateralized by your property.  If you don’t pay the creditors, they can take their collateral, sell it and use the sale proceeds to retire the debts you owe them.

If your creditors have a secured liens on your property, you’ll have to continue repaying those debts directly to those creditors during your Chapter 13 repayment plan. However, there are some ways you can strip secured liens from the property serving as collateral, thereby turning them into unsecured debts. In most Chapter 13 repayment plans, only small percentages of unsecured debts are paid back.

Strippable Liens

 If there is a “junior” lien on an asset you own, you may remove that lien and turn the secured debt into unsecured debt.  A common example of a junior lien is a second or third mortgage on your house.  For example, if you own a house that has a market value of $150,000.00 and there is a first mortgage with Creditor A in the amount of $155,000.00, a second mortgage with Creditor B in the amount of $25,000.00 and a third mortgage with Creditor C in the amount of $10,000.00, you have total mortgage debt in the amount of $190,000.00 against an asset that is worth $150,000.00.  The house is collateral for all three mortgages.  However, the mortgages with Creditor B and Creditor Care junior liens to the mortgage held by Creditor A.  They are lower in priority with regard to foreclosure rights or collection rights to the property.  The mortgages with Creditor B and Creditor C are wholly unsecured mortgages because the entire market value of the house is less than the amount of the mortgage held by Creditor A.  If Creditor A were to foreclose its mortgage on the house, Creditor B and Creditor C would get nothing because the entire foreclosure sale proceeds would be extinguished through payment on the mortgage held by Creditor A.

When you have wholly unsecured junior mortgages or junior liens on your house, such liens can be stripped off of your house through the Chapter 13 bankruptcy process.  When a junior lien is stripped, the subject mortgage debt, is treated as an unsecured debt.  It is no different than a credit card debt or a medical debt.  This means that you do not have to fully repay the debt.  It will be completely discharged when your chapter 13 bankruptcy is concluded.

Understanding when you can and cannot strip a junior lien can be difficult without the guidance of a qualified legal professional. Take advantage of the expert counsel our bankruptcy attorneys provide for your bankruptcy case. Contact Behm Law Group, Ltd. at (507) 387-7200 today for more information about filing for Chapter 13 bankruptcy in Waseca, MN.

Bankruptcy in the U.S. is designed to give debtors methods of working through their financial obligations in a way that offers more leniency and payment options when repaying accumulated debt. Whether you file for reorganization or liquidation types of bankruptcy, you’ll be given a set of options that will help solve your debt case. However beneficial bankruptcy is to the filer, the process must also be equitable to the creditors involved. Behm Law Group, Ltd. offers legal advice and assistance that will help you navigate through your petition for Chapter 7 or Chapter 13 bankruptcy in Fairmont, MN.

If you file for reorganization bankruptcy, it’s likely you’ll be filing for Chapter 13. In this case, you’ll be working with a bankruptcy trustee to establish a repayment plan. The results of this plan will allow you to reorganize how you repay your debts, changing the amount that must be repaid and the time period in which it’s repaid. Your plan can make your debts vastly more manageable given your financial situation, but it’s required to also meet the best interest of your creditors.

Whether your repayment plan is fair to your creditors or not is a status determined by the Best Interest of Creditors Test.

Best Interest of Creditors Test

In a nutshell, you must repay priority debt creditors, such as tax creditors or child support creditors, the full amount you owe. This is a standard for all Chapter 13 cases. What varies from case to case is the amount you’ll repay to your non priority unsecured creditors, such as medical debts and credit card debts. This is where the Best Interest of Creditors Test comes into play. What the test measures is how much you’re repaying to your creditors, and if that amount is fair. The bottom line is that your repayment plan must repay, at minimum, the amount that creditors would have received from your liquidated assets if you had filed for Chapter 7 instead. This in turn depends on your property values and the exemptions you can claim.

Not only does the test decide whether you’re meeting your creditors’ best interests, but it also partially determines how much you’ll pay to priority unsecured creditors in your repayment plan.

The Best Interest of Creditors Test is most effective in determining if you’re meeting the minimum requirement for amounts repaid to nonpriority unsecured creditors. It doesn’t take your disposable income into account, but that amount will be considered outside of the test to determine the maximum amount you must repay. For legal help with your repayment plan and working through filing for Chapter 13 bankruptcy in Fairmont, MN, contact Behm Law Group, Ltd.at (507) 387-7200 today.

Welcome back scholars in the Mankato Minnesota area! Today, we’ll be completing our study guide of thirteen facts about Chapter 13 bankruptcy.

Before we get started, let’s have a brief moment to review. Chapter 13 bankruptcy is often called a “wage earner’s plan” because debtors are offered the opportunity to repay debts. This gives them approximately 3-5 years to repay creditors and, during that time, they must typically be employed.

So, now, let’s learn a little bit more about Chapter 13:

1. Q: Other than the creditor and debtor, who else is involved in filing for Chapter 13 bankruptcy?
A: Typically, a neutral trustee must be involved in the filing.

2. Q: Are co-debtors protected under Chapter 13?
A: Yes, co-debtors are protected. Creditors are restricted from collecting “consumer debt” from anyone liable on a debt with the individual debtor. A creditor can get relief from the bankruptcy court to pursue a co-debtor if good cause warrants such relief.

3. Q: What is “consumer debt,” exactly?
A: The term “consumer debt” refers to individual debts acquired for personal, familial, or household reasons.

4. Q: What are the types of claims related to Chapter 13 bankruptcy?
A: There are three types of claims involved:
• Priority claims: These claims have a special status within bankruptcy law, and they include claims regarding taxes and filing costs.
• Secured claims: Creditors who have these claims have collateral securing the debts that they can take from a debtor if the debtor does not make payments.
• Unsecured claims: Creditors who have these claims do not have collateral securing the claims that they can take if a debtor does not make payments.

5. Q: What happens if a debtor is unable to pay?
A: Their Chapter 13 filing may be converted to a Chapter 7 filing instead or it may be dismissed.

6. Q: Can a debtor be discharged from Chapter 13 after repaying debts?
A: Yes, but only if the debtor has completed all payments required under the debtor’s chapter 13 plan, if the debtor has not received a chapter 13 discharge within 2 years before the present case was started, and if the debtor has taken a course in financial management.

Well, this concludes our two-week course in Chapter 13 bankruptcy! If you live in the Mankato Minnesota area and believe all this studying has prepared you for your own filing, contact the professionals at Behm Law Group Ltd. today.