Category: Bankruptcy Code

For individual consumers and businesses, several different types of bankruptcy are available. Individuals can file Chapter 7 liquidation cases that discharge debt in exchange for the sale of non-exempt property (in most cases, a person’s property is fully exempt and one does not lose property), or they can file Chapter 13 reorganization cases that restructure debts into a 3 to 5 year manageable repayment plan fitting their particular income and reasonable and necessary living expenses. Individuals who gain the majority of their income from a family-run farming or fishing operation can also file Chapter 12 reorganization bankruptcy. You need help with the complex bankruptcy code.

This bankruptcy is similar to Chapter 13, but offers some benefits specific to family farmers and fishers. All types of businesses can file Chapter 7 liquidation, but this chapter generally forces the company to shut down operations. To file bankruptcy and maintain business operations, sole proprietorships or partnerships can file Chapter 13, while limited liability companies and corporations can use Chapter 11 reorganization to repay their debts in a structured plan. For Chapter 7, 12, and 13 in Windom, MN, and the local region, Behm Law Group Ltd. provides trusted legal protection and guidance through the complex bankruptcy code.

Chapter 11 Case

Not only does the bankruptcy code affect the filer, attorney, and court process, it can also impact other third parties involved, especially in large Chapter 11 cases. One recent example of a complicated situation came with the Chapter 11 bankruptcy of Express Grain, a Mississippi-based grain elevator and biodiesel refinery.

Bankruptcy Code

Express Grain was forced into an involuntary bankruptcy by UMB Bank due to its $70 million in loans. The bank is collecting grain harvest sales proceeds as collateral for the debt. However, there are many farmers who sold their grains to the Express Grain and have not yet been paid. In cases like this, farmers are often not paid for their labor and harvest until after the collateral grain silos are liquidated. The problem is that the farmers cannot sue Express Grain due to its September 2021 bankruptcy petition.

Rather than take action against Express Grain, three farmers (representing almost 100 farms across the Mississippi Delta) named as plaintiffs have filed a class action lawsuit against UMB Bank. The farmers’ lawsuit claims that the bank was well aware of Express Grain’s significant debt and potential collapse, but kept the agricultural company afloat through the 2021 harvest season in loans.

Bankruptcy Code Used by Express Grain

When the season ended, the bank forced Express Grain into bankruptcy while its grain silos were full. This meant the bank could liquidate the full silos for a much better repayment than it would receive if it had not supported Express Grain through the harvest. Express Grain was also able to mislead farms in the region of its financial stability by using UMB Bank loans to pay salespeople to convince farmers across the Mississippi Delta to sell their harvested crops to it.

Summary

No matter what the outcomes of this lawsuit and the bankruptcy will be, the situation has impacted the lives of many family farmers. To learn more about how farmers can use the bankruptcy code in Windom, MN, to their benefit, contact Behm Law Group Ltd. by calling (507) 387-7200 or emailing stephen@mankatobankruptcy.com.

Bankruptcy can be a highly complex legal process.  However, it can and will help you permanently resolve debts you can’t repay. Understanding the nuances of bankruptcy law typically requires a law degree and extensive experience. While it’s possible to file for bankruptcy without the help of an attorney, it’s certainly not recommended. The bankruptcy court will require you to provide information about all your finances, including income sources, debts, and living expenses. There will also be pre-bankruptcy filing and post-bankruptcy filing documentation requirements in addition to having to provide the bankruptcy fees. Behm Law Group, Ltd. attorneys will support and guide you through the entire process of filing your bankruptcy petition and they will work with you through the rest of the nuances of the bankruptcy code in Waseca, MN.

Bankruptcy Code

There are many terms outlined in the bankruptcy code that might be unfamiliar to someone who has never filed for bankruptcy relief. Some basic bankruptcy terms include:

Trustee:

The bankruptcy trustee is a court appointed official, who is usually an attorney, who oversees and administers your case. The trustee collects and examines your paperwork concerning your bank accounts, tax returns, etc. The trustee is a fiduciary for your creditors, particularly your unsecured creditors.  The Chapter 7 trustee administers your bankruptcy estate and liquidates your non-exempt properties and distributes the resulting value to your creditors.  A Chapter 13 trustee receives your monthly chapter 13 plan payments and divides the monthly payments up among your unsecured creditors.  The Chapter 13 trustee also reviews your chapter 13 plan repayment proposal to ensure that the terms of your chapter 13 plan comply with the requirements of the bankruptcy code and are fair to your creditors.

Credit Counseling:

Credit counseling is a pre-bankruptcy requirement that must be done through a court-approved counseling agency within 180 days before the filing of your bankruptcy petition. The counseling will address the budget issues/problems that you have been experiencing and it will examine the reasons that forced you to file for bankruptcy relief.

341 Hearing:

The 341 hearing, also called the meeting of creditors, is an administrative hearing that is usually conducted thirty (30) days after a bankruptcy petition is filed. At the 341 hearing, you and your attorney meet with the trustee administering your bankruptcy case.  The hearing usually lasts only ten (10) minutes or so and the trustee asks you various questions about your financial situation and about your bankruptcy petition to ensure that you have disclosed all your assets and creditors.  You are sworn under other oath and you must answer the trustee’s questions truthfully.  Your creditors may also attend the hearing and ask you various questions about your assets and liabilities.  In most cases, however, no creditors attend the hearing and it is just you, your attorney and the trustee discussing your financial situation.

Secured Property:

Any debts tied to a property are considered secured. This typically includes home mortgages, car loans, financing on furniture and appliances, and mortgages on other real estate, such as business properties and rental properties.

Unsecured Property

: Debts that are not tied to property are considered unsecured. Most individuals have unsecured debts like credit cards, medical bills, personal loans, tax debts, student loans and more.

Means Test:

The Means Test is a mathematical formula that calculates your income-to-debt ratio. If this ratio is lower than the state median or average income for a similarly sized household, you can qualify for Chapter 7 bankruptcy. If it’s higher, you may have to file for Chapter 13 bankruptcy relief instead.

Automatic Stay:

When you file any type of bankruptcy petition, the automatic stay is immediately in effect. This stays most creditor collection activities while your case is being processed. After you file a bankruptcy case, creditors can’t continue collecting on debts that you owe and they can’t harass you with nasty telephone calls or abusive and threatening letters.

To learn more about bankruptcy terms to help you understand if you need to file for bankruptcy and to obtain more information about the bankruptcy code in Waseca, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today or stephen@mankatobankruptcy.com.

Bankruptcy is a debt-resolving process that can help with common unsecured debts, like credit card bills and medical expenses, several secured debts, including mortgages and car loans, and many other miscellaneous debts, like some tax debts. When you file for bankruptcy, you also get the benefits of the automatic stay, which forces your creditors to stop existing collection actions, including the halting of wage garnishments, evictions, foreclosures, and the assessment of late fees.  The automatic stay can also prevent creditors from starting legal action against you for the collection of debts. If you’re considering filing a petition, Behm Law Group Ltd. can help you navigate the complexities of the bankruptcy code in Mankato, MN, and the surrounding areas.

Automatic Stay

If a creditor continues to pursue legal activities against you after you file a bankruptcy case, the creditor can be sued and the bankruptcy court can sanction it quite severely.  While the automatic stay in the U.S. bankruptcy code is a very powerful tool for filers, there are limitations. There are some types of lawsuits and legal activities that the automatic stay will not stop.

For example, the following are some of the most common legal proceedings that are typically not stopped by the automatic stay:

Criminal cases:

The automatic stay will not stop criminal cases from moving forward. Assault, battery, larceny, and even driving on a suspended driver’s license are just some of the common criminal cases that the automatic stay will not stop.

Divorce proceedings and child support cases:

The filing of a bankruptcy case will not stop your spouse from filing a divorce proceeding.  The filing of a bankruptcy case will also not stop a court proceeding to determine whether you owe child support or alimony.  Divorce cases are handled in state family court, and they almost always involve issues concerning child support and/or alimony. Both child support and alimony debts are not discharged in bankruptcy.  However, obligations concerning property division settlements could be addressed and discharged in a Chapter 13 bankruptcy.

Personal injury cases:

If you could receive money from filing a lawsuit for personal injuries caused in a vehicle accident, etc., the legal proceedings could continue even after a bankruptcy has been filed.  However, the trustee administering the bankruptcy case will usually be very involved in such proceedings because there may be some money available from the settlement of such proceedings that the trustee could distribute for the benefit of creditors.

Cases where a motion to lift the automatic stay is granted:

In some cases where creditors could sustain significant losses or damages regarding their collateral, they may file motions with the bankruptcy court to lift the automatic stay.  By filing such motions, the creditors will request permission from the bankruptcy court to collect, secure and store their collateral to prevent the collateral from being damaged.  For example, presume your mortgage creditor has a validly perfected mortgage to your homestead.  Presume further that it is wintertime, that you no longer live in the homestead and that the power has been shut off by the utility company.  In such a case, the mortgage creditor could suffer additional financial losses because the water pipes in your homestead could burst and the house could be entirely flooded.   Accordingly, the creditor would file a motion for relief from the automatic stay and would reinstitute foreclosure proceedings after the bankruptcy court granted its request.  The mortgage creditor would then gain access to the homestead and would be able to secure it to prevent further financial losses.

In addition to these lawsuits, there are some other limitations of the automatic stay, including some tax determination proceedings and criminal sentencing processes.

To learn more about lawsuits and other aspects of the bankruptcy code in Mankato, MN, contact Behm Law Group Ltd. by calling (507) 387-7200 or emailing stephen@mankatobankruptcy.com.

The two main types of individual consumer bankruptcy are Chapters 7 and 13. Chapter 7 is a liquidation process that liquidates your non-exempt assets in exchange for the discharge of your debts. You are allowed to claim exemptions to protect certain properties, such as your home and car and other property.  In fact, in most chapter 7 cases, people only lose their debts and they don’t lose any property.  Chapter 13 is a reorganization bankruptcy that restructures your debts into a manageable repayment plan suited to your monthly income and your reasonable and necessary living expenses which lasts three to five years. Your unsecured debts, like credit card bills and medical expenses, will be discharged 0-100%, but your secured debt could be included in your chapter 13 plan for payment under adjusted terms that are more favorable to you. At Behm Law Group Ltd., our attorneys help you navigate the process of filing for Chapter 7 or 13 bankruptcy. Another filing that can occur is informally referred to as Chapter 20 bankruptcy. Let’s talk about what this actually means for the bankruptcy code in Redwood Falls, MN.  To be clear, Chapter 20 is not a separate and distinct chapter of the bankruptcy code like Chapter 7 and Chapter 13.  Rather the informal term “Chapter 20” simply refers to a situation where a person first files for Chapter 7 bankruptcy relief and then files for Chapter 13 bankruptcy relief after the Chapter 7 bankruptcy case has ended.

Bankruptcy Code

Chapter 7 bankruptcy has strict eligibility requirements that were written into the U.S. bankruptcy code through the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). In addition to several other changes, the BAPCPA established the Means Test requirement, which measures your debt-to-income ratio.

To qualify for Chapter 7, your household income needs to be at or lower than the state median or average income for a similar sized household. If your income is higher than that median, there may be a basis for you to still file for Chapter 7 but it is more likely that you would have to file for Chapter 13 bankruptcy relief instead.

Chapter 20 bankruptcy happens when individuals file for Chapter 7, discharge all their unsecured debts, like credit cards, medical debts, etc., end their case, and then immediately file for Chapter 13 bankruptcy to cure or pay back a delinquency on the mortgage for their house.   The Chapter 20 bankruptcy can have several benefits, but sometimes the bankruptcy court will not approve these cases if it determines that people are using them to game or take advantage of the bankruptcy system.

Benefits of Chapter 20 Bankruptcy

Chapter 20 can help you work through the repayment of priority debts, such as tax debts and child support debts, that were not discharged in your chapter 7 bankruptcy case.  So, presume that you had $20,000 of tax debt that was not discharged in your chapter 7 bankruptcy case.  After your chapter 7 case ended, you could file a chapter 13 case and pay that tax debt through a chapter 13 plan over 36 to 60 months.  The filing of a chapter 13 case after a chapter 7 case has concluded, can have benefits for your secured debts such as vehicle loans or mortgage debts.  For instance, presume that there is a vehicle loan of $10,000 and that there is an interest rate of 15%.  If you retained that debt by reaffirming it in your chapter 7 case, you could conceivably file a subsequent chapter 13 bankruptcy case and payoff the $10,000 at a lower interest rate over 36 to 60 months.  If you’ve filed for Chapter 7 relief to discharge unsecured debts before filing a chapter 13 bankruptcy, all your monthly payments in the chapter 13 case would be dedicated to paying only secured and priority debts.

The potential disadvantages of a Chapter 20 bankruptcy is that it could lead to accusations of bad faith and it does not allow you to use lien stripping to strip off wholly unsecured mortgages from your homestead.

To learn more about Chapter 20 as well as about the bankruptcy code in Redwood Falls, MN, contact Behm Law Group Ltd. by calling (507) 387-7200 or emailing stephen@mankatobankruptcy.com.

In the past few years, a lot has changed for bankruptcy law. Even before the coronavirus pandemic rocked the world, Congress had put some significant changes in bankruptcy law into effect. In response to COVID-19, more changes had to be quickly put into place. Since the worst of the pandemic is hopefully behind us, there may be even more interesting additions and adjustments to how the bankruptcy code in New Ulm, MN and the rest of the country is handled. For those considering filing a petition now, Behm Law Group, Ltd. attorneys can guide and protect you from start to finish in a Chapter 7, 13, or 12 case. We work primarily with individuals filing for liquidation or reorganization bankruptcy, but we’ve also helped small businesses file for liquidation and reorganization bankruptcy in the local region. There are many benefits to hiring a bankruptcy lawyer to work on your case, including the prevention of dismissals, potential audits, appeals, delays, statutes of limitations, creditor violations, judgments, navigating the ever-changing bankruptcy laws, and much more.

Bankruptcy Code

Since 2019, there have been some significant adjustments to the bankruptcy code. Some were put into place to improve our system, while others were in direct response to the COVID-19 pandemic and the subsequent lockdowns. The two most significant changes that have been enacted include:

SBRA

1. SBRA in 2019: The Small Business Reorganization Act was signed into law in February of 2019. This law lowered the debt amount required to file Chapter 11 business reorganization bankruptcy. Unless a small business is owned as a sole proprietorship or partnership, Chapter 11 is the only option for bankruptcy reorganization. By lowering the debt requirements, many smaller businesses could reorganize instead of having to possibly shut down by having to file a Chapter 7 liquidation bankruptcy. This law created a subchapter of Chapter 11 allowing businesses with under $2,725,625 in debt to file a faster and easier reorganization case.

CARES

1. CARES in 2020: In response to the economic shutdown of coronavirus, the Coronavirus Aid, Relief, and Economic Security Act was enacted in March of 2020. With regard to the bankruptcy code, the CARES Act expanded the faster and easier subchapter of the SBRA Chapter 11 bankruptcy debt limit to $7,500,000 for one year (this expired in March of 2021). It also allowed some Chapter 13 repayment plans to extend up to 7 years (rather than the usual 3-5 years). All stimulus income from the other provisions of the CARES Act is exempt from bankruptcy liquidation.

In addition to the changes made when these laws were put into place, there are potential adjustments in the code that have been introduced and others that might be on the horizon. For example, the Student Borrower Bankruptcy Relief Act (SBBRA) might allow student loans to be discharged more easily in bankruptcy. Changes to Chapter 12 bankruptcy might be coming too.

To learn more about changes to the bankruptcy code in New Ulm, MN contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

When you file for Chapter 7 bankruptcy as an individual, some of your non-exempt assets may be liquidated in exchange for a discharge of your debts. While this is always a possibility, in most chapter 7 bankruptcy cases people don’t lose anything other than their debts.  This is because part of filing for individual consumer bankruptcy relief is taking advantage of various generous bankruptcy exemptions provided either under the federal bankruptcy code or under state law to protect your property.  Exemptions are allotted value amounts that can be used to protect the equity or value you have in your property.

Bankruptcy Code

In Minnesota, filers can choose either the Minnesota state exemptions or the federal bankruptcy code exemptions, but they aren’t allowed to mix and match between the two. For some filers, Minnesota exemptions might be more beneficial than the federal exemptions and vice versa. If you’re considering filing any kind of individual consumer petition, Behm Law Group Ltd. can help you navigate the nuances of the bankruptcy code in Luverne, MN, and the local area to build a strong case. Our attorneys provide legal protection and aid so you can effectively find long-term debt relief through bankruptcy.

Commonly Claimed Exemptions

There are many ways individual asset exemptions can apply in a chapter 7 liquidation process, but the most commonly claimed exemptions include:

• Homestead: The homestead exemption protects your primary place of residence. Currently, the exemption amount in Minnesota is a maximum value of $420,000 for non-agricultural land. Agricultural land of up to 160 acres can be exempted up to $1,050,000 if it’s being used for farming purposes.  A rental property, such as an apartment building that you may own, can also be exempted if you are using part of it as your primary place of residence.  Under the federal bankruptcy exemptions, a person is allowed $25,000 to protect one’s primary place of residence.  If two married people file for bankruptcy relief, and provided they both are listed as owners of the homestead, each one would be able to claim $25,000 for a total of $50,000.
• Motor vehicle: For vehicles that are the primary household car, such as one you use to drive to work or drive your children to school, you can exempt $4,600 per person. You can also exempt up to $46,000 if that vehicle has been adapted to accommodate disabilities. Under the federal bankruptcy exemptions, a person is allowed $5,000 to protect the value in a vehicle.
• Personal property: Additional personal items like clothing, furniture, appliances, and food can be exempted in varying amounts. In Minnesota, for example, you can exempt appliances and furniture up to $10,350 and wedding rings up to $2,817. Under the federal bankruptcy exemptions, each person is allowed $13,400 to protect one’s personal property and $1,700 for one’s jewelry.
• Tools of the trade: Farm equipment and other “tools of the trade” can also be exempted given your occupation. If a certain portion of your income is from your trade, the court wants you to protect the necessary tools from liquidation so you can continue using them to make a living. For farm equipment, Minnesota allows $13,000 to be exempted and $11,500 for any other non-farm tools of the trade. Under the federal bankruptcy exemptions, a person is only allowed $2,525 to protect one’s tools of the trade.
• Wages: If you file for bankruptcy, some of your wages may be at risk of liquidation. For unpaid wages, the State of Minnesota exemptions allow you to protect 75% or 40 times the federal hourly minimum wage. Your wages will be exempted up to three times those amounts (whichever is greater).
• Wildcard (federal): The Minnesota state exemptions don’t offer a wildcard exemption provision, but if you claim federal exemptions, you could be allowed $13,900 for a wildcard exemption that you could use to protect any asset. That amount may be dependent on what you choose to apply the exemption to. Learn more here.

To learn more about the bankruptcy code in Luverne, MN, and about filing a bankruptcy case, contact Behm Law Group Ltd. by calling (507) 387-7200 or by emailing stephen@mankatobankruptcy.com.

There are several types of business ownership in the United States, from large corporations to sole proprietorships. When it comes to the bankruptcy code, each type of business is handled in a specific way. For almost every type of business, the owner’s debts are separated from the business bankruptcy case. However, because sole proprietorships are owned by one person or jointly by spouses, the business debts and personal debts are rolled into one bankruptcy case. If you own a sole proprietorship and are considering filing for bankruptcy, Behm Law Group Ltd. can help you navigate your case when facing the complex bankruptcy code in Waseca, MN, and the surrounding area.

Many types of businesses are commonly owned as sole proprietorships, typically they include:

• Bookkeepers and financial planners
• House cleaners
• Landscapers
• Home healthcare providers
• Caterers
• Hair stylists
• Computer repair providers
• Freelance writers
• Tutors
• Electricians

Of course, in addition to these common ones, there are many other types of businesses that can be run as sole proprietorships, and they will also have their debts as well as their owners’ personal debts included in a bankruptcy case. Those people who own a sole proprietorship and cannot repay their debts generally have two options for bankruptcy: Chapter 7 or Chapter 13.

Chapter 7 bankruptcy works to liquidate both business and personal non-exempt assets in exchange for the discharge of business and personal debts. Filers can claim exemptions to protect their assets from liquidation, including exemptions of a homestead, a motor vehicle, tools of the trade, and a wild card exemption that can be applied to miscellaneous property. In any Chapter 7 case, unsecured debts, like credit card debts, medical debts, debts to suppliers of material/products will be discharged in full. With secured debts (debts secured/guaranteed by collateral such as vehicle loans and mortgage loans), creditors can sometimes claim/take their collateral or a filer will simply agree to surrender the collateral back to them.  Any debt that remains after the collateral is liquidated or sold will be discharged.  For instance, if you owe $5,000.00 on a vehicle loan and the vehicle serving as collateral is worth only $1,000.00, the creditor could not pursue you for the $4,000.00 difference after it liquidated or sold the vehicle.   Sole proprietorship business owners who have filed for Chapter 7 can often protect most or all of their business equipment/machinery with their bankruptcy exemptions and can resume operating their businesses with considerably less debt.

Chapter 13 bankruptcy is a debt reorganization process. Business and personal debts are restructured into a repayment plan suited to the person’s income and lasting three to five years. While you work through your plan, you can continue to run your business, and you will even have some options to relegate funds for new equipment or repairs on facilities or tools that are necessary to continue normal business operations.

Whether you file for Chapter 7 or Chapter 13 bankruptcy as a sole proprietorship, be prepared for your business debts and your personal debts to both be included in your case. To learn more about filing for bankruptcy and the bankruptcy code in Waseca, MN, call Behm Law Group Ltd. at (507) 387-7200 or email stephen@mankatobankruptcy.com.