What Is Bankruptcy?
Over the many years we've spent working with General Mills employees and retirees, we always try to inform our clients about what should happen if they need to file for bankruptcy, as it is always good to be prepared. Bankruptcy refers to a set of laws and court processes that allow individuals and businesses to manage burdensome debts. Bankruptcy law is federal statutory law contained in Title 11 of the United States Code. Bankruptcy proceedings take place in special federal bankruptcy courts (there are no state bankruptcy courts), and are governed by the Bankruptcy Rules.
Typically, bankruptcy is voluntary; a debtor files a petition for relief. In rare cases, bankruptcy is involuntary; creditors petition the court to order a debtor into bankruptcy. Once a petition is filed, creditors generally cannot pursue the debtor or the debtor's property outside of the bankruptcy proceeding. Most collection activities must stop, including foreclosures, repossessions, wage garnishments, telephone calls, and dunning letters.
There are two general types of bankruptcy proceedings: liquidation and reorganization. A liquidation proceeding involves selling a debtor's non-exempt property, distributing the proceeds to creditors, and discharging remaining debts. Reorganizations allow debtors to keep their property, and pay past-due debts in installments over time.
In most bankruptcy cases, a trustee is appointed to administer the case and take legal possession (but usually not physical possession) of the debtor's non-exempt property, which is referred to as the bankruptcy estate. Exempt property is property debtors are allowed to keep in liquidation proceedings. Liquidation proceedings are governed by Chapter 7 of the Bankruptcy Code, while reorganizations are governed by Chapter 11, Chapter 12, and Chapter 13.
Tip: Chapters 7 and 13 are specifically designed for individuals and will be useful for our General Mills clients to know about. These are often referred to as personal or consumer bankruptcies.
Types of Bankruptcy Filings
Chapter 7
First, we'd like to discuss with our General Mills clients about Chapter 7. Chapter 7 is a liquidation proceeding, sometimes referred to as straight bankruptcy. Both individuals and businesses can generally file under Chapter 7. Businesses that file under Chapter 7 typically cease operations — otherwise, they file under Chapter 11.
Individuals who qualify for Chapter 7 get to keep exempt assets, while non-exempt assets are sold to repay creditors. In reality, most Chapter 7 cases are 'no asset' cases; there are no non-exempt assets and debts are simply discharged, with some exceptions (e.g., most taxes, domestic support obligations, and student loans). Chapter 7 typically takes four to six months to complete, and is often said to give debtors a 'fresh start.'
Caution: It's important that our General Mills clients are aware that t he Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 , also known as the Bankruptcy Reform Act (2005 Bankruptcy Act), imposed a means (income) test on Chapter 7 individual debtors (with primarily consumer debts). The result is that more debtors are ineligible for Chapter 7 and must file under Chapter 13 for bankruptcy relief.
Chapter 13
Next, we will discuss Chapter 13 with our clients from General Mills. Under Chapter 13, a reorganization bankruptcy for individuals, debtors repay their creditors, either in full or in part, over a period of three to five years. Chapter 13 is sometimes referred to as wage-earners bankruptcy. The reorganization period gives the debtor time to get caught up on past-due payments. Debtors can keep their property, regardless of whether it is exempt or non-exempt. Debtors must file a reorganization plan shortly after filing the bankruptcy petition that either pays all debts in full or uses all the debtor's disposable income. Chapter 13 tends to do less damage to a debtor's credit history. If a debtor misses payments under the plan, the Chapter 13 case may be dismissed.
Caution: It's also important that our General Mills clients are i ndividuals with debts in excess of certain dollar limits are ineligible for Chapter 13 and must file under Chapter 11 to reorganize.
Chapter 12
We also like our General Mills clients to review Chapter 12. Chapter 12, a reorganization bankruptcy, is specially designed for family farmers and family commercial fishing operations. Individuals, corporations, and partnerships engaged in those businesses are eligible to file under Chapter 12 (as long as certain other requirements are also met). Those that do not qualify can file under Chapters 13 or 11.
Chapter 11
Chapter 11, a reorganization bankruptcy, is used primarily by corporations and partnerships who do not want to go out of business, but need protection from creditors to keep operating. In essence, Chapter 11 companies buy time to get back on their feet. In most cases, a trustee is not appointed; the company itself acts as trustee, giving the company (known as a 'debtor in possession') the ability to make day-to-day decisions without court approval. Instead, committees are created to represent the interests of creditors, investors, and other parties in interest. The company gets an opportunity to propose a reorganization plan, which must be approved by the committees and the court. If the company's plan is successful, the company comes out of bankruptcy; if not, the company typically liquidates.
Chapter 15
The 2005 Bankruptcy Act created a new set of laws, referred to as Chapter 15, Ancillary and Other Cross-Border Cases. This chapter replaced Section 304 of the Bankruptcy Code, which was repealed. This chapter is generally designed for foreign businesses with property or operations located within the United States or its territories (e.g., multinational corporations).
'Chapter 20'
There is no Chapter 20 in the Bankruptcy Code. However, some consumers have (1) filed under Chapter 7 to discharge as many unsecured debts as possible, and (2) immediately thereafter, filed a Chapter 13 case to obtain a favorable repayment schedule for secured debts such as mortgages and car loans. The name is derived from multiple filings (7+13=20). The 2005 Bankruptcy Act eliminated this strategy.
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Frequently Asked Questions
Will I Lose Everything?
Some of our General Mills clients may be wondering if they will lose everything when filing for bankruptcy, but you won't. Some of your assets are exempt. Both the federal government and the individual states have exemption laws. Some states allow debtors to choose between the two, while other states require debtors to follow the state exemption laws. In states where you have a choice, your decision should turn on which set of rules allows you to keep the most, or most important, assets.
Exemptions generally include amounts for your homestead (i.e., home equity), motor vehicles, life insurance, jewelry, tools of trade, and household goods, as well as certain retirement and education savings.
Can I Get Rid of All of My Debts?
Another question we receive from our General Mills clients in regard to bankruptcy is whether or not you can get rid of all your debts. The short answer is, probably not. Certain debts cannot be discharged in bankruptcy. A discharge releases you from legal liability for the debt. Liens, however, remain; secured creditors are still able to get property back. Non-dischargeable debts remain after the bankruptcy case ends, and include (under Chapter 7) most tax debts, most student loans, domestic support obligations, and debts incurred in connection with fraud, larceny, and driving while intoxicated. Chapter 13 has a more limited list of exceptions.
Do I Need to Use a Lawyer?
After reading this article, many General Mills clients may be curious to know if the use of a lawyer is necessary. No, you do not have to use a lawyer. You can file yourself (this is known as filing 'pro se'), or with the help of a petition preparer. However, bankruptcy can be a complex process, and filings must be precise. An experienced attorney can guide you through the process, and advise you about the potential consequences of your actions. Regardless of the fee, an attorney can help you save time, money, and stress.
Will I Have to Go to Court?
Yes. You are required to attend at least one meeting at the court shortly after you file (between 20 and 40 days). This is known as a Section 341 creditors meeting or first creditors meeting, and typically lasts less than 30 minutes. The purpose of the meeting is to give your creditors and the trustee an opportunity to question you about your financial affairs. However, creditors are not required to attend and often do not. It's important that these General Mills employees remember that you are required to answer any questions under oath.
Will My Utilities Be Cut Off?
No. Public utilities are not allowed to cut off your service because you filed for bankruptcy. They can, however, require you to pay a deposit for future service, and they can terminate service if you fail to make current payments after filing.
Will My Creditors Stop Harassing Me?
Yes. Once a petition is filed, an automatic stay goes into effect. While the stay is in effect, creditors must not engage in collection activities without permission from the bankruptcy court. Lawsuits, foreclosures, repossession efforts, wage garnishments, dunning letters, and bill collector calls all should stop.
Will My Credit Be Affected?
Yes. The bankruptcy will appear on your credit report for 10 years. However, you will likely receive unsolicited credit card offers, and you should still be able to get credit, though it may be at a higher rate of interest or require a co-signer.
Can I Keep My Credit Cards?
Yes, if the credit card companies agree. However, it's important that these General Mills clients keep in mind that if overextended credit card debt got them into bankruptcy, they should think twice about using them. You'll be unable to file bankruptcy again for several years.
Will Everyone Know That I Filed for Bankruptcy?
Maybe. Your bankruptcy case is a matter of public record; it can be reviewed by anyone making an inquiry at the clerk's office in the bankruptcy court where you filed.
How can employees of General Mills, Inc. maximize their benefits under the BCTGM Retirement Plan, and what factors are considered in determining pension amounts for those nearing retirement? This question aims to explore the intricate details of how General Mills, Inc. structures its pension benefits to support employees’ future financial stability. It's important for employees to understand the value of their years of service and how this affects their ultimate pension payout as they approach retirement.
Maximizing Benefits under the BCTGM Retirement Plan: Employees of General Mills can maximize their benefits under the BCTGM Retirement Plan by understanding how their years of service and negotiated benefit levels directly affect the pension they receive. The pension amount is determined by the length of service and a defined benefit formula based on the number of years of Benefit Service accrued. As employees approach retirement, they should consider whether they meet eligibility criteria for early or normal retirement, as these factors influence the ultimate pension payout(General_Mills_2024_Pens…).
What are the eligibility requirements for participating in the BCTGM Retirement Plan at General Mills, Inc., and how does this participation impact future retirement benefits? Employees should be well-informed about what constitutes eligibility to participate in the retirement plan. Understanding criteria such as service length, employment status, and union participation is crucial, as it directly relates to their ability to accrue retirement benefits.
Eligibility Requirements for BCTGM Retirement Plan: To participate in the BCTGM Retirement Plan, employees must be regular employees of General Mills covered by a collective bargaining agreement. Eligibility is automatic after completing a probationary period. Participation impacts future retirement benefits as employees begin to accrue pension benefits based on years of service, which contributes to their final payout during retirement(General_Mills_2024_Pens…).
In what ways does General Mills, Inc. ensure that benefits from the BCTGM Retirement Plan remain protected under federal law, and what role does the Pension Benefit Guaranty Corporation (PBGC) play in this? Knowledge of the protections available can significantly influence employees' assurance in the viability of their pension benefits. It is vital for employees to recognize how federal guarantees work in safeguarding their retirement benefits.
Federal Law Protections and PBGC's Role: The BCTGM Retirement Plan is protected under federal law, ensuring that employees’ retirement benefits are safeguarded. The Pension Benefit Guaranty Corporation (PBGC) insures vested benefits, including disability and survivor pensions, up to certain limits. This protection provides employees with assurance that their pensions are protected, even in the event of plan termination(General_Mills_2024_Pens…).
How does General Mills, Inc. address the complexities of vesting in the BCTGM Retirement Plan, and what can employees do if they are concerned about their vested rights? Vesting is a key concept that affects employees' access to benefits over their careers. Employees need to understand the vesting schedule outlined by General Mills, Inc. and the implications it has on their retirement plans.
Vesting in the BCTGM Retirement Plan: Employees vest in the BCTGM Retirement Plan after completing five years of Eligibility Service or upon reaching age 65. Once vested, employees have a non-forfeitable right to their pension benefits, which means they retain their pension rights even if they leave the company before reaching retirement age(General_Mills_2024_Pens…).
What options are available to employees of General Mills, Inc. if they experience a change in their employment status after being vested in the BCTGM Retirement Plan, and how might this impact their future retirement pensions? This question prompts discussion on the plan's provisions regarding reemployment and what employees should be aware of when considering changes to their employment status.
Impact of Employment Status Changes on Pension: If an employee's status changes after being vested in the BCTGM Retirement Plan, such as leaving the company, they may still be entitled to pension benefits. The plan outlines provisions for reemployment and how prior service years are counted toward future pension calculations. Employees who are reemployed may have their previously earned service restored(General_Mills_2024_Pens…).
How does the BCTGM Retirement Plan at General Mills, Inc. work in conjunction with Social Security benefits, and what should employees be aware of regarding offsets or deductions? This can encompass the interplay between corporate pension plans and governmental benefits, which is critical for employees to plan their retirement effectively.
Coordination with Social Security Benefits: The BCTGM Retirement Plan operates in addition to Social Security benefits. There are no direct offsets between the pension and Social Security benefits, meaning employees receive both independently. However, employees should be aware of how the timing of drawing Social Security and pension benefits may affect their overall financial situation(General_Mills_2024_Pens…).
What steps must employees of General Mills, Inc. take to initiate a claim for benefits under the BCTGM Retirement Plan, and how does the claims process ensure fairness and transparency? A clear comprehension of the claims process is essential for employees to secure their pension benefits. This question encourages exploration of the procedures in place to assist employees in understanding their rights and options.
Claiming Benefits under the BCTGM Retirement Plan: Employees must terminate employment before claiming their BCTGM Retirement Plan benefits. The claims process involves submitting the required forms, and employees must ensure they provide all necessary documentation for a smooth process. The pension is generally paid monthly, with lump-sum options available under specific circumstances(General_Mills_2024_Pens…).
How does the retirement benefit formula of the BCTGM Retirement Plan operate, and what specific factors should an employee of General Mills, Inc. consider while planning for retirement? Delving into the calculations involved in determining retirement benefits is important for employees to understand how their service years and other contributions come together to form their final retirement payout.
Retirement Benefit Formula: The retirement benefit formula is calculated based on the years of Benefit Service and a defined benefit level. As of 2024, for each year of Benefit Service, employees receive $87 per month (increasing to $88 after June 1, 2025). Planning for retirement involves considering how long they will work and the benefit level in place at the time of retirement(General_Mills_2024_Pens…).
What additional resources or support does General Mills, Inc. provide to assist employees in planning their retirement and ensuring they make the most of their benefits offered under the BCTGM Retirement Plan? Understanding the tools and resources available can empower employees to take proactive steps in managing their retirement plans effectively.
Resources for Retirement Planning: General Mills offers resources like the Benefits Service Center and online portals (e.g., www.mygenmillsbenefits.com) to assist employees with retirement planning. These tools help employees understand their benefits, calculate potential payouts, and explore options for maximizing their retirement income(General_Mills_2024_Pens…).
How can employees contact General Mills, Inc. for further information about the BCTGM Retirement Plan or specific queries related to their retirement benefits? This question is crucial so employees know the appropriate channels for communication and can seek clarification on any concerns they may have regarding their retirement planning.
Contact Information for Plan Inquiries: Employees can contact General Mills for more information about the BCTGM Retirement Plan through the Benefits Service Center at 1-877-430-4015 or visit www.mygenmillsbenefits.com. This contact provides direct access to support and answers to questions about their retirement benefits(General_Mills_2024_Pens…).