Bankruptcy Chapter 7 Indiana

There’s nothing like a true life story to get a point across, and that’s why this week I’m devoting all my Bankruptcy in Indiana articles to actual court cases as summarized in a recent issue of Consumer Bankruptcy News.

As part of providing Indiana bankruptcy information, I need to stress that exemptions make up a very, very important part of the new bankruptcy laws of Indiana. I know, because, back a number of years ago, I (as a longtime debt consolidation lawyer in Indiana) was called upon to help write that exemptions portion of the law in our state. When an asset is “exempted”, that means the debtor is allowed to keep it, and that resource does not need to go towards repaying creditors.

Well, in one Wisconsin bankruptcy case, an interesting question arose about an exemption.

• A young woman named V. was injured in an auto accident. She suffered no permanent damage, and did not lose any wages.  However, she could not pay the medical expenses of more than $6,000.
   
• While V. had filed a personal injury claim which she valued at $10,500, she could not be sure she’d ever get that award.
   
• Meanwhile she was being harassed by her creditors, so V. decided to file personal bankruptcy under Chapter 13 bankruptcy law, five months after her accident.
   
• The question before the bankruptcy court was whether the projected proceeds of the personal injury claim should be included in V’s projected disposable income (in figuring out how much she could afford to pay on her debt repayment plan.)
   
• The court ruled in favor of allowing V. to proceed with filing individual bankruptcy.
   

My colleagues in the four Zuckerberg bankruptcy law offices understood the reasoning behind this decision, but I want to explain to readers of Bankruptcy in Indiana what this is all about.
Anyone seeking Indiana bankruptcy help must understand that the facts about one’s financial situation need to be set out in the bankruptcy paperwork.  All of the known facts must be included in that bankruptcy petition – what assets you have, what debts you owe, what money you have coming in from income or investments, or rentals – ALL income. The dispute here centered around whether V. $10,500 from the personal injury settlement should have been included.

In this case, though, as one of my Columbus bankruptcy lawyer colleagues pointed out, V. had applied for a settlement, but really had no way of knowing how much, if any, of that money she would actually receive.  That’s why the court did not penalize her for not including the settlement money.

Bankruptcy law, for both individual bankruptcy in Indiana and small business bankruptcy in Indiana, can be complex, but today’s highlighted “lesson from court” is rather simple:

It all centers around providing accurate, complete, and honest information to the bankruptcy trustee.  In fact, a very large part of the work I do in both bankruptcy Chapter 7 in Indiana and in cases like V.s involving Chapter 13 bankruptcy law, lies in gathering, organizing, and presenting facts!  Just the facts.  ALL the facts..

It’s bad enough for anyone when family medical bills are spiraling out of control while they can’t work or can’t find a job, and they’re trying desperately to help stop foreclosure on their home. .   But what really makes me indignant is when that happens to veterans who deserve better after having served our country.  And, when it’s senior citizens who are the veterans showing up at the Zuckerberg bankruptcy law offices, it’s an even sadder situation.

That’s why I, a debt consolidation lawyer offering bankruptcy services in Indiana, want to remind readers of one very important benefit that not every veteran knows about. The program I’m highlighting today in Bankruptcy in Indiana is called Aid and Attendance Pension Benefit, and, as one of my Columbus bankruptcy lawyer colleagues reminded me, goes all the way back to 1952, when Congress created the Department of Veteran Affairs.

Why, you may ask, does it fall to a lawyer for bankruptcy in Indiana like me (and to elder law attorneys and financial planners) to spread the word that these benefits are available to veterans and to their surviving spouses?  Why isn’t the VA telling people about them?

Well, as someone who makes a tremendous effort to spread Indiana bankruptcy information, I was just plain shocked to learn the answer to that question: Fact is, the VA has a “non-information” policy.  Even though the VA must set aside funds every year, they are under no obligation to inform potential recipients that they qualify for benefits!

So here I am, dealing with veterans needing payday loan debt help and sometimes student loan debt help, desperately in need of more income, and I learn that, nationally, $22 BILLION a year in veterans’ pension money goes unspent because many vets are complete unaware the program exists!

That’s just one more big reason I hope that Hoosiers (and disabled or senior veterans in particular) will consult with an Indiana bankruptcy attorney at the very first signs of financial difficulty, and not wait until things have gotten so bad they can’t stand it any more!

When I’m helping clients prepare to file either bankruptcy Chapter 7 in Indiana, or to file using Chapter 13 bankruptcy law, a good number of the decisions I discuss with them center around income. And that’s precisely where the VA Regular Aid and Attendance pension could play such an important role.  Here are some general features of the program:
 

• It’s meant for veterans (or their surviving spouses) who need another person in their home to help them with activities of daily living, such as help with eating, bathing, dressing, handling financial affairs, taking medications, etc.. The program also covers blind people.
  It’s easy to see how such a pension might help veterans who file Chapter 13 bankruptcy to keep up with their 3-5 year debt repayment plans and successfully emerge from bankruptcy.
   
• The veteran or spouse is in an assisted living facility or nursing home.
   
• The benefit is a monthly pension to help with non-service-related disabilities (in other words, they don’t have to have sustained the damage in the course of serving in the military).
  It’s easy to see how having this kind of income can save homes and help stop foreclosure!
   
• The veteran can have served in World War I or II, the Korean War, the Viet Nam war, or in the Persian Gulf war.
   
• In 2012, the benefit can be as high as $1703 per month (tax-free) per veteran (as much as $2019 for a married veteran).

Anyone can see how these monthly pension amounts could make an enormous difference to veterans struggling with debt.  Fortunately, the good bankruptcy attorneys in Indiana have no “non-information” policy!

One lesson that’s become clear over my years as a debt consolidation lawyer and bankruptcy lawyer in Anderson is that each situation is different. The new bankruptcy laws of Indiana set out the general rules, but sometimes bankruptcy judges need to make adjustments in order to fit the circumstances.  And what I’ve found is that telling the stories of these unusual rulings helps my Bankruptcy in Indiana readers and my clients understand the way the bankruptcy process works.

Ninety nine times out of a hundred, when a client who owns a home visits one of the Zuckerberg bankruptcy law offices, that client will want us to help stop foreclosure on the home. (Whether that is going to turn out to be the best tactic in that situation is up for discussion, but homeowners’ first instinct is to do everything they can to keep the house).

So, it was very unusual and interesting when one of the Columbus bankruptcy lawyers who is my colleague read about an interesting case where a debtor was actually begging the court to have the bank foreclose on her home!

To help readers understand what happened here, I need to offer a reminder:
A home mortgage is a secured loan.  The house itself is the collateral for the money the bank lends you.

 Here’s the general sequence of events:

• Sheryl’s home was damaged in a flood.
   
• S. filed bankruptcy Chapter 7 and most of her debts were discharged.
   
•  She moved into a new home.
   
•  Meanwhile, the mortgage lender on house #1 changed the locks, posted “No trespassing” signs, but did not officially foreclose. 
   
• The homeowners’ association fees were not being paid, and late fees were being charged.
   
• Sheryl sued the lender, demanding that it either foreclose or sell the ruined property.

Here is where the unusual part comes in:  The bankruptcy judge ruled that Sheryl’s case could be re-opened so that the trustee could sell the property and pay the homeowners’ association. The court reasoning was that Sheryl was being asked to make payments on a debt to which she no longer had any real connection, she was unable to make a fresh financial start (which is what bankruptcy is all about)!

All good bankruptcy attorneys in Indiana  know that this outcome is very, very rare.  The new bankruptcy laws of Indiana, for example, do require the owner of any home to remain responsible for homeowners’ association fees.  Plus, as I said earlier, homeowners who want to help stop foreclosure need to try and qualify under Chapter 13 bankruptcy law, not bankruptcy chapter 7.

I certainly can’t guarantee that all bankruptcy judges will provide such unusual interpretations of the law. But, as a longtime practitioner of Indiana bankruptcy law, I was gratified to learn about this one case of individualized attention!
 

As you might imagine, a debt consolidation lawyer like me who also offers Indiana bankruptcy help has seen both the good and the bad side of credit and loans.

Today, I thought I’d share with my Bankruptcy in Indiana readers my thoughts about four types of credit.  #1, #2, and #3 can all have a place in your budget, and all three are probably tools you used responsibly before things began going wrong.

#1   Non-installment credit. This is the kind of credit available in some stores, especially the kind you visit frequently, and in country clubs.  Several of the attorneys who work in the Zuckerberg bankruptcy law offices, for example, have lunch with clients or friends at their club, signing a receipt each time, then getting one bill at the end of the month for all their purchases during the past month.

#2   Installment credit.  This is the sort of loan you’d used to buy, say, new furniture or new appliances.  As both a consumer and as an Indiana attorney for bankruptcy, I've seen lots of people taking advantage of no-payments-for-six-months type offers.  Then, if you pay the entire amount before the due date, there’s no interest charged.

#3   Revolving credit. Most credit cards use revolving credit. You’re given a limit, and you can use the credit to buy anything you like at any point in time up to that limit.  You have to make periodic payments, and with each one of those, you’re replacing that credit.

#4 Payday loans.  People who come to our offices needing payday loan debt help from an Indiana bankruptcy lawyer are usually in the worst kind of trouble.  On the surface of things, payday lending sounds like a great idea – you borrow just enough cash to tide you over until your next paycheck.  The way payday loans work is, you write a personal check payable to your lender for the amount they’re advancing you plus a fee. But the reason my  colleagues the Anderson, Bloomington, Indianapolis, and Columbus bankruptcy lawyers and I so strongly caution against payday loans is that the extensions tend to be absolutely disastrous for borrowers, with annualized rates on some payday loans going as high as 400%!

Don’t for a moment assume that, after 25 years helping tens of thousands of residents file personal bankruptcy in Indiana, that we oppose all borrowing. Exactly the opposite is the case.  Credit and loans have an important place in your budget.  In fact, one important aspect of emerging from individual bankruptcy in Indiana (and I mean either bankruptcy Chapter 7 or filing under Chapter 13 bankruptcy law in Indiana) is to re-establish credit.

No, it’s not #1, #2, or #3 type credit I’m worried about – it’s #4. You’ve tried your best to handle credit responsibly, but your financial pressures have been mounting. You think perhaps a payday loan might be a convenient way “hang in there until things turn around” – please don’t. 

I offer help to stop foreclosure, student loan debt help, and help filing bankruptcy in Indiana.  But when it comes to payday loan debt help I often say – Watch out for payday lenders. They’re the ones getting paid and you’re the one going into deeper trouble! 
 

Author and financial planner Leslie Greenman poses an interesting question to single Baby Boomers: Should you go out with someone who’s filed bankruptcy?

As a debt consolidation lawyer with twenty five years’ experience offering Indiana bankruptcy help, I’m not sure I want to get into offering advice to the lovelorn.  However, I thought Greenman has some valuable observations to offer:

• “Given the past few rocky economic years, personal bankruptcies have mounted….And one offshoot is that some of the people who cross into your dating radar may be card-carrying members of the Chapter 7 bankruptcy club.”

Good call.  Even considering only the clients of the Zuckerberg bankruptcy law offices, where we’ve helped tens of thousands of individuals file personal bankruptcy in Indiana, some of those are certainly single, and some are bound to connect with each other.
 

• “When a large corporation files for Chapter 11 bankruptcy, it’s business as usual without a cloud or taint hanging overhead…But personal bankruptcy says something else.  It says ‘loser’….or, at least, it used to.”

Correct.  One of the common myths about bankruptcy in Indiana is that only deadbeats file bankruptcy.  Of course, readers of these Bankruptcy in Indiana articles know better. Most filers are far from losers, having handled their finances responsibly until some combination of divorce, job loss, and medical costs became too much to handle without help.

• Greenman goes on to concede that very point. “Are they damaged goods who should be avoided, or just someone who…deserves a second chance?” she asks. “What matters,” she concludes, “are the circumstances that led to your suitor’s financial mess.” She’s ready to forgive people if illness and medical expenses were the underlying reasons behind a bankruptcy. She has little patience for “those who lived high on the hog until bill collectors caught up with them.”

At the Zuckerberg bankruptcy law offices, of course, we’re here to help no matter WHAT the underlying causes are the practice of bankruptcy law in Indiana, the vast majority of those filing individual bankruptcy in Indiana were NOT “high on the hoggers”!

In discussing Greenman’s comments with my colleagues the Columbus bankruptcy lawyers, we all agreed with her that “The ideal date in the bankruptcy pool is someone who owns up to the problem and has a plan to move forward.”

In fact, we concluded, that might be the perfect description for the ideal bankruptcy client – someone who owns up to his or her problems and is ready to take action to move forward!

There’s a law against post-bankruptcy discharge debt collections, but some creditors still don’t get the point. After 25 years helping tens of thousands of debtors file personal bankruptcy in Indiana, I’m finding more and more that it’s not always over when it’s over.

The way it’s supposed to work is that, after you’ve emerged from individual bankruptcy in Indiana and some or even all of your debts have been discharged, creditors are required to report zero debt.  That allows your credit report to recover, and allows you to make that fresh financial start that Indiana bankruptcy is all about.

The bankruptcy discharge “recipe” calls for:

• You’re released from liability on any debt for which you received a discharge.
  
• Creditors are barred by legal order from making any collection efforts.
  
• Creditors are not allowed to harass or threaten you.
  
• Creditors can’t sell your already discharged debt to another collection agency.
  
• Creditors can’t give a negative report about you to a credit bureau.

OK, as all of us attorneys in the Zuckerberg bankruptcy law offices are often asked, so what if that’s not what happens? What are we supposed to do next, debtors ask?

 First, contact those creditors in writing, informing them that the debt was discharged in your bankruptcy proceedings.  If that doesn’t work, call your lawyer for bankruptcy in Indiana! This is what you should do whether or not you used the help of an Indiana bankruptcy lawyer to file in the first case, because, now that your creditor has broken the law, it’s time to get serious.

My colleagues the Columbus bankruptcy lawyers have been following creditor harassment cases around the country, reporting that courts are taking a very strong stand against creditors who break the rules.  In fact, it’s not unusual, they report, for courts to award  damages to debtors for lost wages, attorneys’ fees, and even “emotional harm”.

The new bankruptcy laws of Indiana (including both bankruptcy Chapter 7 and Chapter 13 bankruptcy law) are designed to bring your old financial life to an end and offer you a chance to start over on a better track.  When that doesn’t happen, the Fair Debt Collection Practices Act gives you legal rights to sue debt collectors who threaten, intimidate, or harass you.

I help debtors – I help stop foreclosure, offer payday loan debt help and even student loan debt help, all under the bankruptcy laws of Indiana.  But, when those very laws are being broken by creditors that threaten to undo all the good work I’ve done, I’m ready to take up arms!

I’m always happy to share glimpses of good news with my Bankruptcy in Indiana readers.  That goes double when it comes to news about jobs. Believe me, as a debt consolidation lawyer offering Indiana bankruptcy help, I’ve gotten real up close and personal with the effects of the recession.  Plain and simple, successfully emerging from individual bankruptcy in Indiana (whether we’re talking about bankruptcy Chapter 7 in Indiana or about people filing under Chapter 13 bankruptcy law) is all about having income from jobs.

• Sunshine Manufacturing, producer of tanning products, is relocating from Arizona to Indianapolis (my Indianapolis bankruptcy lawyer colleagues are thrilled about this), moving into a plan that will employ 220 full-time workers.
  
• Alcoa will be greatly expanding its aluminum-lithium alloy plant near Lafayette, Indiana.

But, you Bankruptcy in Indiana readers might ask, does that mean our unemployment rate has fallen?  Well…actually, no, not really yet. We’ve still got a long, long way to go to get everyone working who wants to and needs to work.

Whatever the number, though, the new jobs mean that at least some debtors will be able keep up their three to five year debt repayment plans under Chapter 13 bankruptcy law in Indiana.  At least some debtors who’ve filed bankruptcy Chapter 7 in Indiana will be able to regularly pay their bills and set aside an emergency fund.  For some debtors, their new jobs will mean I can help stop foreclosure on their homes.  For some debtors, it will mean that, with debt discharged through bankruptcy, they’ll have enough income, and that will let me offer student loan debt help. 

For this bankruptcy lawyer in Indiana, it’s been a long, long haul watching good workers lose jobs.  There may not be enough new jobs, but let me tell you, new jobs offer new hope for those emerging from bankruptcy in Indiana!  

You’ve all heard the expression “Less is more”, often in connection with fashion accessories or home décor.  Well, the means test for personal bankruptcy in Indiana is one example where less is a lot better than more!

The first step for moving forward with bankruptcy Chapter 7 in Indiana is meeting the “means test”.  “If you have too many means,” as Steve Bucci explains in Credit Repair Kit for Dummies, “you can’t declare Chapter 7.”

As a longtime debt consolidation lawyer offering Indiana bankruptcy help, one of the very first things we do with visitors to the Zuckerberg bankruptcy law offices is measure income, starting with look at the latest tax returns.

Next, as every lawyer for bankruptcy in Indiana knows, family income must be compared to the median income for families that size here in Indiana.

As the third step in the means test, we determine if you have “excess monthly income” (money coming in over and above allowable expenses as specified by the IRS).  If that excess is more than $166.66 per month, it’s too high for you to qualify for Chapter 7 bankruptcy. Why $166.66? Because that’s how much it would take to pay off $10,000 of debt over a five-year period of time.  Again, less is better, if what you want to do is qualify for bankruptcy Chapter 7.

Now, if you “passed” that third part of the means test (your excess income was NOT as high as $166.66 per month), the fourth step measures whether you have at least $100 per month excess income, and then whether that $6,000 ($100 a month for five years) would pay off 25% or more of your debt.  Once again, less is more.  Only if you cannot eliminate 25% of your debt by paying $100 per month will you qualify to file Chapter 7 bankruptcy.

If it doesn’t look as if you can quite pass the means test, I and my colleagues the Anderson, Bloomington, Indianapolis, and Columbus bankruptcy lawyers might advise you to try one other tactic that is allowed under the new bankruptcy laws of Indiana – giving charity. The law allows you to donate up to 15% of your income to your place of worship and to count that as a regular expense.  Sometimes that pushes the income down enough to satisfy the means test.

Whoever coined the phrase “Less is more” must have had the Indiana bankruptcy means test in mind!

What’s ahead when it comes to bankruptcy in Indiana?   In fact, what’s going on around our country?  (It’s easy to understand why I, as a debt consolidation lawyer offering Indiana bankruptcy help would be interested in statistics about bankruptcy, but why would you, readers of these Bankruptcy in Indiana articles, care about anybody else’s bankruptcy but your own?)

Well, for a number of reasons.  Remember the “ripple effect” I’m always discussing, the one where a company has financial problems and lays off employees?  Those employees then have no money to buy stuff, so the small business owners in the area are hurt.  Problems – and solutions to problems – are contagious.  Knowing what’s going on around you keeps you prepared to deal with whatever life dishes up. That’s why I think it’s so important for me, in these Bankruptcy in Indiana articles, to stay on top of news from around the globe and to encourage all my colleagues the Bloomington, Anderson, Indianapolis, and Columbus bankruptcy lawyers to read everything they can get their hands on and then share information.

Take the item from the Milwaukee Business Journal, for example, reporting that eastern Wisconsin bankruptcy filings declined by 7% in 2011, while at the same time quoting a local attorney who believes filing personal bankruptcy will increase in 2012, because people remain underemployed and because many homeowners will not be able to arrange mortgage modifications on their homes.

In our own four Zuckerberg bankruptcy law offices, we work hard to help people negotiate mortgage modifications, but the fact remains that Chapter 13 bankruptcy law in Indiana has proven to be a much more effective tool to help stop foreclosure.

A second article out of Washington State also notes that bankruptcy filings appear to have slowed down a little, but that a future jump is expected as bank try to recoup their losses from some of the foreclosures.

The statistics tell us there were 22754 cases filed in Southern District of Indiana in 2011, compared with 27394 the prior year.  But, as someone who’s helped tens of thousands of Indiana debtors make a fresh financial start by filing individual bankruptcy in Indiana, I believe we’re not nearly out of the woods yet.

An Indiana University study says that 46 million Americans are living below the poverty line, and that those numbers will continue to rise.  Although the recession is officially over, the scarcity of well-paying jobs will have the effect of increasing poverty levels.

Predictions won’t help you individually, but what I’m hoping is that knowing how widespread the problems are will help you realize that time is on your side only if you, early on, seek help in exploring different options. No, you may not be ready to actually file personal bankruptcy in Indiana or small business bankruptcy in Indiana, but, are you ready to get your own personal statistics (your “ducks”) in a row, ready to handle whatever the new year brings?

Just two weeks ago, I gave Bankruptcy in Indiana readers a Mark Zuckerberg tip-off – a piece of Indiana bankruptcy information that had to do with a tax break.

I’ve been a debt consolidation lawyer practicing Indiana bankruptcy law for 25 years, but only in the last five of those years has there been this tax break when it comes to foreclosure.  To us in the Zuckerberg bankruptcy law offices, the reason we're interested is that we Indiana bankruptcy attorneys have worked very hard, within the new bankruptcy laws of indiana, to help stop foreclosure on clients' homes.

Knowing how important it is to many single moms and parent couples to keep their children from having to change schools, we do our best to negotiate mortgage modifications.  But, as one of the Columbus bankruptcy lawyers who is my colleague puts it, there’s nothing simple about that process!

The other day I read in USA Today how every government program designed to help Americans keep their homes “has fallen far short of goals.”  HAMP, which was supposed to help 3-4 million people, has resulted in only 800,000 modifications.  One of my Bloomington  bankruptcy lawyer colleagues quoted the Federal Reserve Government officials, who plan on fining mortgage servicers because they’re doing such a poor job. We KNOW they are – our own efforts to help stop foreclosure are being met with lost paperwork and incompetent customer service. Very occasionally, the very fact that an attorney is involved helps hurry things along a bit.

The silver lining, though, is this tax break I’ve referred to.  Yes, Chapter 13 bankruptcy in Indiana can itself help stop foreclosure.  But, even in a worst-case scenario where a foreclosure cannot be prevented, the tax forgiveness which applies to mortgage debt during calendar years 2007-2012 only means that debt discharged through foreclosure (like debt discharged through bankruptcy Chapter 7 in Indiana or under Chapter 13 bankruptcy law) will not be considered taxable income.

In short, because of this temporary “break”, the combination of Indiana personal bankruptcy AND foreclosure in 2012 can increase the level of assets you’re allowed to keep.  The overall goal of bankruptcy in Indiana, remember, is for debtors to have a chance at a fresh financial start!

Not everyone qualifies to file under chapter 13 bankruptcy law in Indiana. But, as BankruptcyAction.com points out, there are several reasons why people choose Chapter 13 over Chapter 7 when given the choice.  As for me, a debt consolidation lawyer offering Indiana bankruptcy help, whenever it’s important for a client to save a home and help stop foreclosure, I choose Chapter 13 bankruptcy as the perfect tool for the job.

Here are just a few of the situations when you as a debtor might opt for Chapter 13:

• You think it’s the “right thing to do”, to make every attempt to pay your own debts – you just need more time.
  
• You’re behind on your mortgage or car payments and need time to make up the missed payments without late fees and interest making that ever more impossible. This is one piece of bankruptcy information in Indiana I believe is so important to convey to consumers, and that’s why I keep coming back to this idea in these Bankruptcy in Indiana articles.
  
• You have valuable pieces of property (could be a home or it could be other property that is not exempt under bankruptcy Chapter 7 in Indiana).
  
• You filed a Chapter 7 within the past eight years.
  
• You have a big federal tax debt.

All of the Columbus bankruptcy lawyers who are my colleagues, along with the Indiana bankruptcy attorneys who work in the Zuckerberg bankruptcy law offices in Indianapolis, Bloomington, and Anderson, Indiana use Chapter 13 to accomplish things that cannot be accomplished under bankruptcy Chapter 7 in Indiana.  Chapter 13 is sometimes referred to as the “bill consolidation: version of bankruptcy or the “wage earner’s bankruptcy plan”.  Under the new bankruptcy laws of Indiana, one of the main things that Chapter 13 accomplishes is saving homes. 

How does Chapter 13 help stop foreclosure? When you’re behind on house payments, sooner or later (unfortunately it’s usually sooner), your lender or mortgagor is going to take legal action to collect what you owe, or threaten to evict you from the house and take the property back.  If you can file individual bankruptcy in Indiana using Chapter 13 bankruptcy law, and if you do it prior to the sheriff’s sale of your home, the bankruptcy court can cancel your mortgage debt (this is particularly true of a second mortgage or home equity loan) or give you the opportunity to stop the foreclosure and make the missed back payments over time.

Can you see why, over my 25 years practicing Indiana bankruptcy law, I consider myself as part of the Chapter 13 home rescue squad?

Over the 25 years I’ve served as a longtime debt consolidation lawyer offering bankruptcy services in Indiana, I’ve seen many changes in the law, many political figures’ rise and fall, and debates going on in national, state, and local politics. It’s been only in recent months, however, that so much debate has centered around military benefits for U.S. veterans


Every good lawyer for bankruptcy in Indiana has been faced with the realization that serving our country can lead to a fight for veterans’ financial life once they’re back home. Finding well-paid employment and good housing, plus managing debt repayments are all issues for many veterans and their families.

The big debate raging in Congress for the past half year has been about cutting the deficit. Now, even though I’ve actually appeared before Senate subcommittees to discuss bankruptcy law, my intention in this Bankruptcy in Indiana article is not to get involved in politics, but to make readers aware of the very-much-in-the-news debate about military benefits.

As my colleagues the Anderson, Bloomington, Indianapolis, and Columbus bankruptcy lawyers all know, there’s been a big increase in the last few years in military foreclosures. This is happening despite many special protections that are in place for active service members and for veterans, including lowering the interest rates on their mortgages and reducing their monthly payment amounts. Our bankruptcy laws make special allowances for veterans, allowing them to have higher incomes and still qualify to file Chapter 7 bankruptcy in Indiana, for example.

The headline issue we’re reading about these days is not about those special benefits, but about thelifetime health care, called TRICARE, now provided to veterans. Due to the budget crunch, there is now talk of having veterans pay more for these health benefits.

Where do I weigh in on all of this? For all these years of practicing Indiana bankruptcy law, I’ve made it a mission to prevent service members from being evicted from their homes, and provide payday loan debt help (that trap is particularly prevalent among service members). I continue to try to guard the financial interests of Indiana Guardsmen and their families.

At the four Zuckerberg bankruptcy law offices, we continue to fight the good fight on behalf of veterans, grateful for the safety net of bankruptcy in Indiana!

Even with thousands of copies of my book “Top Ten Myths About Bankruptcy in Indiana”  circulating around the state, when people have financial troubles, they don’t always think straight, I realize.

So when one of the Anderson bankruptcy lawyers who works in the Zuckerberg bankruptcy law offices there emailed me a newsletter from Palm Harbor, Florida, warning against common mistakes people making before filing bankruptcy, I decided my Bankruptcy in Indiana readers needed a review “lesson”.


Palm Harbor Patch Bankruptcy “No-No” #1: Transferring property to family and friends, expecting to get it back when you’re done with the personal bankruptcy in Indiana. Fact: if you transfer property to anyone, the bankruptcy trustee can go after that person.  What’s more, as all good lawyers for bankruptcy in Indiana know, the “look-back” can go back to the four years leading up to the bankruptcy.

Palm Harbor Patch Bankruptcy “No-No” #2:  Max-ing out all your credit cards right before bankruptcy. If the bankruptcy court realizes you’ve borrowed money with no intention or ability to repay that money, it may hold you responsible for those debts even after the bankruptcy is over!  That principal holds true for bankruptcy Chapter 7 in Indiana, as well as for Chapter 13 bankruptcy law.

Palm Harbor Patch Bankruptcy “No-No” #3: Cashing in your IRA or 401K to pay bills, hoping to avoid filing bankruptcy.  “Your IRA and 401(k) are among one of your most protected assets in a bankruptcy proceeding. In almost all circumstances,” explains Palm Harbor Patch. Your 401(k) is exempt from the bankruptcy estate — you get to keep it after bankruptcy. Your basic IRA is exempt up to $1 million.

There are many common misunderstanding and mistakes, but those are three of the more common no-no’s.  The most important thing is to ask for help – help to stop foreclosure, student loan debt help, payday loan debt help, or help figuring out which type of individual bankruptcy in Indiana best fits your situation. 

At the Zuckerberg bankruptcy law offices, consultations cost nothing.  Mistakes?  Now THOSE can be very expensive!

At the four Zuckerberg bankruptcy law offices, many of the questions we’re asked center around income and credit ratings. People are worried about the effect filing individual bankruptcy in Indiana might have on their credit score.

As a debt consolidation lawyer for 25 years, I've learned that many clients find it hard to believe - income basically isn’t even considered as part of a credit score! Lenders use credit scores, of course, to decide whether to loan money to you, and whether to charge you whatever the standard interest rate is at that time, or to charge more.

The FICO score developed by Fair Isaac program, depends on information Fair Isaac gathers from the three main credit bureaus, Experian, TransUnion, and Equifax. The basic weighting formula is this:

• Payment history accounts for 35% of the rating.
  
• Length of credit history accounts for 15%.
  
• New credit, types of credit used, and debt totals account for 10% each.

As WorldBookandNews.com notes, “Income is not a factor”.

By contrast, as all good bankruptcy attorneys in Indiana know, income is a very big factor when it comes to filing bankruptcy, particularly if you’re filing under Chapter 13 bankruptcy law in Indiana.  In offering bankruptcy services in Indiana, I need to be sure my clients have sufficient regular income coming in to make monthly debt repayments over a three to five year period of time.

Let’s face it – for most people who decide to seek Indiana bankruptcy help, their credit rating has probably already suffered. One of my Columbus bankruptcy lawyer colleagues often shocks clients by saying “Want to fix your credit?  Start with a bankruptcy!”  What she means is that filing personal bankruptcy in Indiana can turn out to be the first step in rebuilding credit, not overnight, to be sure, but over the next few years.

How can that be? Well, to put yourself in a position where you can demonstrate you’ll be able to pay back new loans, you must get rid of some of the debt you already have. Bankruptcy in Indiana helps you do that.  Bankruptcy Chapter 7 in Indiana, if you qualify, is the fastest way to get rid of unsecured debts. But even using the new Chapter 13 bankruptcy laws in Indiana, some of your debt can be forgiven, freeing you to devote your income to getting rid of the rest

Income may not directly affect your credit score, but when it comes right down to it, income is pretty important in rebuilding credit after emerging from bankruptcy in Indiana!

Sharing Indiana bankruptcy information sometimes involves using examples from other states.  And even though the Zuckerberg bankruptcy law offices serve only Hoosier debtors and their families, bankruptcy laws are constantly being refined as different situations come up across the country.

In fact, that’s one of the reasons all good bankruptcy attorneys in Indiana read professional journals.  The other day, one of the Columbus bankruptcy lawyers who is my colleague called my attention to an article in Consumer Bankruptcy News, about a bankruptcy court that dismissed a bankruptcy Chapter 7 case on the grounds that the couple did not qualify to file that kind of bankruptcy.

These debtors owed an awful lot of money - millions of dollars, actually, in unsecured debt.  The issue – they also had a lot of money coming in from their joint medical practice and lived a very high lifestyle (at least, in the judgment of the court). Since my goal in these Bankruptcy in Indiana articles is not only providing Indiana bankruptcy information, but also giving readers a better understanding of the whole idea behind the bankruptcy system, I thought this particular Michigan case would help in that regard.

As a longtime debt consolidation lawyer offering Indiana bankruptcy help, I realized right away that the couple in this real-life story, Dr. M. and Dr. A, had done several things “wrong”, which explains why the bankruptcy court rejected their petition.

• They didn’t disclose all the facts.  For instance, they did not put down in their bankruptcy paperwork that their medical practice provided them with two cars.  They didn’t tell the court about the $1000 per month payments they were making to support their niece.
  
• They didn’t show the court that they were trying to reduce spending. The bankruptcy judge noted that they needed to take steps to reduce their year expenditures, so that the money could go towards paying down their debt. 
  
• They mixed their business affairs with their personal affairs.  The debtors claimed that most of their debt was related to failed real estate investments, and that those were business debts. Therefore, they argued that they shouldn’t be expected to reduce their personal lifestyle to pay those debts.

As a longtime lawyer for small business bankruptcy in Indiana, I find this error in thinking is common.  There is no protection from creditors, no separation when it comes to legal matters (such as bankruptcy in Indiana)  when business owners mix their financial affairs with those of their business.

The court’s recommendation to the couple was that they reduce their personal spending by 50%, file a five year Chapter 11 bankruptcy plan that would pay their creditors at least a significant portion of what was owed.

Filing personal bankruptcy in Indiana is probably on no one’s Favorite Things To Do list, but, under certain circumstances, it might actually make sense to do it twice!

With four Zuckerberg bankruptcy law offices serving 60 different counties, my colleagues the Anderson, Indianapolis, Bloomington, and Columbus bankruptcy lawyers and I encounter all sorts of situations.  So, when does it make sense to file one type of individual bankruptcy in Indiana and then, not too long afterwards, to file another?

To answer that question, we first need to look at the one main purpose for each bankruptcy.  There may be more than one benefit to be gained under the new bankruptcy laws of Indiana, but most debtors who file bankruptcy Chapter 7 do it to get debt ”discharged” or forgiven by the court.

However, debtors could file bankruptcy just for the “stay of it”.  One immediate effect of filing bankruptcy is the Automatic Stay, which halts all legal and debt collection actions, buying time for debtors to catch their breath, to plan and strategize.  In fact, after 25 years as a debt consolidation lawyer offering Indiana bankruptcy help, I can tell you that all my clients report that the relief they feel when the harassing phone calls and letters stop is enormous.

When I talk about two bankruptcy filings by the same debtor, that usually means bankruptcy Chapter 7 first, then, after that’s concluded, filing under Chapter 13 bankruptcy law in Indiana.

What’s the point of the “double”? Debts over certain limits can disqualify a person for Chapter 13 bankruptcy.  Yet only Chapter 13 can help stop foreclosure.

Here’s where having an experienced attorney on your side can make a big difference, fitting the tactic to the situation.  Through Chapter 7, unsecured debts can be discharged, bringing debt levels down enough to qualify for a Chapter 13.  That, in turn, could allow for a longer-term solution to the mortgage problem. 

This is where the TV announcer would warn viewers “not to try this at home”. It takes very detailed knowledge of both the debtor’s situation and of Indiana bankruptcy law to suit the two-bankruptcy strategy to the individual situation.

Given the right circumstances, two can in fact be better than one!

Since I’m a debt consolidation lawyer, clients will often ask for my help with their financial affairs.  That’s true even if they aren’t planning to file personal bankruptcy in Indiana.  Quite often, though, I find it necessary to issue an important caution:

If you get to the point where filing individual bankruptcy in Indiana does appear to be your only viable option, you’d better avoid borrowing money for six months before you file.

It’s counter-intuitive, I know.  People don’t want to get to the point of filing bankruptcy, so they keep trying to keep their financial “boat” afloat by using credit cards to pay for everyday expenses and even get to the point of needing payday loan debt help.

The problem is (and every good bankruptcy attorney in Indiana knows this one well) – in most cases, debt incurred during the six months preceding a bankruptcy filing can be excluded from being discharged or forgiven through bankruptcy (if the creditor can prove fraud).

Obviously there are extenuating circumstances.  One of the Columbus bankruptcy lawyers in the Zuckerberg bankruptcy law offices recently worked with a single mom who’d bought a new washer and a new bed for a child.  Two months later, the mother lost her job.  She became so stressed out that she fell and broke a bone.  Now she had medical costs she couldn’t handle. She couldn’t make the minimum payments on the credit card she’d used for the washer and some of the hospital bills. However, the debt she incurred through the purchase of the washer and the payments to the hospital were allowed to be included in her bankruptcy (since at the time of the purchase there was no fraudulent intent - the mom didn't know she would lose her job or fall!).

The point I’m trying to drive home to Bankruptcy in Indiana readers is how crucial it is to seek the help of an experienced Indiana lawyer for bankruptcy at the first signs of financial trouble. 

That way, if filing either bankruptcy Chapter 7 or filing under Chapter 13 bankruptcy law is in the cards, you won’t have sabotaged your own case by making borrowing mistakes!

Often, in these Mark Zuckerberg Bankruptcy in Indiana articles, I refer to the “bankruptcy court” or the “bankruptcy judge”. 

Truth is, though, that of the tens of thousands of people to whom I’ve offered Indiana bankruptcy help over the past 25 years, only a handful ever got to see a bankruptcy judge or “go to court” in the way we see in criminal cases on TV.  As all my colleagues in the four Zuckerberg bankruptcy law offices will confirm, most of your contact is with your Indiana lawyer for bankruptcy.

As your Indiana bankruptcy attorney, after I’ve helped you complete your financial statements and you’ve signed them, I submit those to the court on your behalf.  The only time you yourself would expect to be anywhere near an actual courtroom is at the bankruptcy creditors’ meeting, which might not even be held at the courthouse itself. (I’ll be explaining more about what happens at the creditors’ meeting in my next article.)

I can assure you, based on my experience as a debt consolidation lawyer offering bankruptcy services in Indiana, that even at the creditors’ meeting itself, you will not be facing a judge. Instead, the meeting is run by a trustee.  If you’re filing bankruptcy Chapter 7 in Indiana, the person in charge is called an Interim Trustee; if you’re filing under Chapter 13 bankruptcy law in Indiana, there will be a Standing Trustee.

The trustee is going to be in charge regardless of whether you're filing because you need payday loan debt help, help to stop foreclosure, help with medical debt, or even student loan debt help.  I will be working with you to prepare the petition, but the process itself is very standard.

The trustee is generally an attorney from the local community, working under the supervision of a U.S. Trustee connected with that region.  As an Indianapolis lawyer for bankruptcy, for example, I work within the Southern Indiana Bankruptcy District.
Once your bankruptcy petition has been approved, the trustee will be managing and overseeing the process.  You no longer need to deal with your creditors, who will be notified that you’ve filed personal bankruptcy in Indiana, and that they are to halt all collection efforts against you.  All that is handled by the trustee.

So, with whom can you expect to “hobnob” during the process of filing bankruptcy in Indiana? Briefly, with the bankruptcy trustee who is managing your case.  Most of the time, you’ll be dealing with an Indiana lawyer for bankruptcy like me!

At the Zuckerberg bankruptcy law offices, we’re all about people and about numbers, in just that order.  While statistics can sometimes be of help to me in understanding trends and in predicting how a bankruptcy Chapter 7 petition is likely to be received by the court, the  truth is each couple, each individual, each small business is unique.

I think the main reason it’s important for me to share statistics about individual bankruptcy in Indiana is so that clients won’t feel they’re the only ones that are going through financial difficulties.  The reason that’s important, in turn (I’ve learned over 25 years of practicing Indiana bankruptcy law), is so you’ll stop wasting energy on “shame and blame” and get down to business.  You’ll move forward, I hope, with the decisions that will lead you towards that fresh financial start you need and deserve.

“Who” statistics:
Statistics published by the Administration Office of the United States Courts show that debtors who file personal bankruptcy represent all age groups, from under 20 years old to seniors, with the majority being in their 40’s. In my own 25-year long practice of Indiana bankruptcy law, I’ve helped tens of thousands of debtors, with many being older, some much older than 50.

“Why the problem” statistics:
Yahoo!Finance lists the “top 5 reasons people go bankrupt”:

• Medical expenses
• Job loss
• Excess use of credit
• Divorce or separation
• Unexpected expenses, including theft, accidents, natural disasters

Actually, these same reasons account for many instances of small business bankruptcy in Indiana, I’ve found.
http://finance.yahoo.com/news/pf_article_109143.html

“Why the people” statistics:
NewJerseybankruptcycenter.com lists more top reasons people choose to file:

• To help stop foreclosure
• To prevent repossession of a car
• To restore utilities or prevent shutoff
• To provide student loan debt help
• To stop wage garnishment
• To deal with a lawsuit

Bankruptcy statistics are not the happiest of numbers, that’s for sure, although this year’s numbers are looking somewhat better than last years in the Southern Bankruptcy District of Indiana (in which I, along with my Anderson, Indianapolis, Bloomington, and Columbus bankruptcy lawyer colleagues practice). Overall bankruptcy in Indiana decreased 14% this year, making us #7 in the nation in overall 2011 filings, #6 in the nation for filing  bankruptcy Chapter 7 in Indiana.

There may be solace in statistics in that you’re hardly alone.  The only numbers that matter, though, are your numbers, and the only thing that matters is turning negatives into positives – for you – in filing personal bankruptcy in Indiana!.
 

If you’re a handyman (or woman), you know how important it is to use the right tool for the right job. Chapter 13 bankruptcy law in Indiana is a tool designed to help stop foreclosure.

Do you go straight for that tool at the very first sign of a problem keeping up with your mortgage? Of course not.  This is my 25th year as a debt consolidation lawyer offering Indiana bankruptcy help.  You can be sure that, especially in recent years, every one of the Indiana bankruptcy attorneys who works in the Zuckerberg bankruptcy law offices tries negotiation first. 

In fact, ever since the beginning of the housing downturn, we’ve all become experts in negotiating mortgage modifications.  When that process has proven unsuccessful (with most of the problems being on the creditors’ end, not ours!), it’s only then we reach for the blockbuster tool which Chapter 13 bankruptcy represents.

Just like bankruptcy Chapter 7 Indiana, filing under Chapter 13 bankruptcy law immediately triggers the Automatic Stay, putting a halt to almost all collections efforts and legal actions against you (child support , tax and legal obligations are examples of exceptions to this rule).

The reasons Chapter 13 is the perfect tool to help stop foreclosure, and the reason that I, a longtime bankruptcy lawyer in Indiana always explore this possibility with clients who want to file personal bankruptcy in Indiana  include:

Chapter 13, as Bankruptcy action.com explains, consists of a debt repayment plan.  In most cases, foreclosure is put off while the homeowner works out a plan to catch up with the back payments over time (three to five years).

One other aspect of Indiana bankruptcy imformation it's important to share is that other, unsecured, debts can be discharged (forgiven) under Chapter 13 bankruptcy law, freeing up money to keep up the payments on the mortgage.

If there is a second mortgage or home equity loan, but the home is “underwater”, meaning there’s more money owed than the home is worth on the market, the second mortgage might be discharged through bankruptcy.   As the Bloomington and Columbus bankruptcy lawyers who work with me point out, that takes a lot of pressure off the homeowner!

If you’re a handyman, knowing your neighbor has a problem and knowing you’ve got just the right tool to help him fix that problem, you’d want to tell him or her, right? You can readily understand, then, why an Indianapolis lawyer for bankruptcy like me wants to pass along this information about Chapter 13 bankruptcy – the perfect tool to help stop foreclosure!