I try to make holidays special for my children, and if I can squeeze in a little bit of a history lesson around each American holiday, I give that a try. When it comes to Tax Freedom Day, though, I'm not sure they "get it", at least not yet.  But, for me as a bankruptcy attorney in Indiana, I do get the concept of
Tax Freedom Day, which marks the point at which the average American stops working to pay federal, state, and local taxes and starts working to pay all the other bills for self and family.

As a debt consolidation lawyer offering all sorts of bankruptcy information in Indiana, I know Tax Freedom Day has been getting later and later.  Who's measuring that? An organization called the Tax Foundation, which also calculates Deficit Day, the day when the federal government runs out of tax revenue and begins to use borrowed money. (That one's getting earlier and earlier, needless to say!).

My interest in all this, of course, is in providing Indiana bankruptcy help, along with the Indianapolis, Bloomington, Anderson, and Columbus bankruptcy lawyers who work in the various Zuckerberg bankruptcy law offices around the state.  The Tax Foundation reported that Indiana's Tax Freedom Day last year was April 8, with Hoosiers working, as a group, the first 98 days of the year to get all the taxes paid.

Since I often find myself explaining what bankruptcy can and can't do when it comes to tax debt, let me share with you what kinds of taxes Indiana residents actually pay, from biggest to smallest:

Individual income taxes                                               38 days' work
Payroll taxes                                                                27 days' work
Sales and excise taxes                                                15 days' work
Corporate income taxes                                                6 days' work
Property taxes                                                             12 days' work
Miscellaneous (motor vehicle licenses,
severance, estate taxes)                                               4 days' work

All statistics aside, I've devoted my career to offering Indiana bankruptcy help, student loan debt help, payday loan debt help, and help stopping foreclosure, I'm really interested in a different kind of Freedom Day.  I'm looking forward to wishing each of my Indiana clients and bankruptcy blog readers "Happy DEBT Freedom Day!

As part of providing bankruptcy information in Indiana, I like to use news stories to teach how the bankruptcy process works.  Just two years ago this week, I used headline stories about boy band producer Lou Pearlman to illustrate how important it is to tell the truth in bankruptcy court. (The new bankruptcy laws in Indiana are even stricter about disclosing assets than the old laws were.)

For those who don't recall the story, Pearlman was brought back from Europe to the U.S. to face charges of promoting illegal investment schemes and money laundering.  But, on top of all that, Pearlman made false statements in bankruptcy court.

Now, as all the Anderson, Bloomington, Indianapolis, and Columbus bankruptcy lawyers who work in the Mark Zuckerberg bankruptcy law offices well know, the bankruptcy judge in Pearlman's case looked upon that as the final straw.  When debtors exploit the bankruptcy safety net by lying about their assets or their income, they're cheating their creditors; the system cannot work for everybody's benefit unless all the facts are available.

In May of 2008, Pearlman was sentenced to twenty-five years in federal prison, after pleading guilty to making false statements during bankruptcy proceedings, in addition to conspiracy and money laundering.

The number twenty-five, has special meaning for me, because I've been a practicing bankruptcy attorney in Indiana for close to that length of time.  The most interesting lesson that I want to share with my Indiana bankruptcy clients and blog readers has to do with some recent news about producer Lou Pearlman's managing a band - from behind bars! www.bloggingstocks.com reports that "Operating from a federal prison cell in Florida, Sweet Lou is managing a southern rock band called Biteboy."  Why is this permitted? "It's in everyone's best interests for Pearlman to find some way to work.  For every million dollars he returns to his creditors, he gets a month off his sentence."

That's the message of this Indiana bankruptcy blog post in a nutshell: Bankruptcy isn't about punishment, not at all.  What it's about is taking a bad situation and, treating all parties as fairly as possible, making that bad situation at least a little bit better for all concerned!

 

The fact that, in the past two years, there's been a substantial increase in the number of people visiting the Mark Zuckerberg bankruptcy law offices in Anderson asking for Indiana bankruptcy help is no surprise, given the state of the economy in general and the state of the auto manufacturing in particular. 

But, as a debt consolidation lawyer offering bankruptcy information in Indiana, what has surprised me is the increase in the number of women who, in the last two years, have filed personal bankruptcy in Indiana.   In fact, in each of the Zuckerberg bankruptcy law offices, we've begun to offer a no-obligation, woman-to-woman talk as the start of the process.

Here's what my thoughts are about this female filing of bankruptcy in Indiana, and particularly in Anderson area:
 

• Many of the women are custodial parents, and some are working moms.  But, in many cases, the health insurance coverage was coming from the ex-husband's job.  With all the downsizing and layoffs in the Anderson automotive plants, many non-custodial dads lost jobs.  Some, even those with help from COBRA and unemployment benefits, have trouble keeping up with health insurance premiums for themselves and  their children. The moms then incurred credit card debt trying to keep medical bills paid.
• Divorced and single moms have a lot of difficulty finding affordable child care.  When the women herself is laid off, it's extremely difficult for her to keep up with a job search and still pay for child care.

I've had more than one women show me an article in MSN Money with advice they've tried to follow prior to coming to see me. called "15 Steps If Bankruptcy Is Inevitable".  I think there are some very good suggestions made in that article, some of which are ideas I stress with all my clients prior to filing personal bankruptcy in Indiana.

• Leave your retirement accounts alone.  401ks and IRAs are protected from creditors in bankruptcy, so you don't want to spend those down prior to filing bankruptcy.
• Make a list of what you owe. Not only will you need a complete list of debts for the paperwork that needs to be submitted to the bankruptcy court, just making the list will help you work with effectively with your Indiana lawyer for bankruptcy to prepare for the process.
• Start getting your paperwork together. Collect bank statements, account statements, and bills for the most recent few months, any lease contracts, and any legal documents or papers that have been sent to you. The more organized you are, the smoother a process bankruptcy can be. 

Since, as a Certified Consumer Bankruptcy Specialist in Indiana (one of only a dozen in our state), I helped draft the part of the new bankruptcy laws in Indiana that deals in exemptions,  today's blog reader question about jewelry is the kind I'm very used to answering.  However, I need to start by pointing out that there's one word in this blog reader's question that no debtor should even think about, and that word is "hide".  When bankruptcy fraud is committed by a debtor, it usually means there was an attempt to hide assets or income from the court in order to qualify to file bankruptcy in Indiana. The bankruptcy system can function well only when there is full disclosure of assets, including cash and jewelry, and all debts. 

The good news for bankruptcy clients is that, in Indiana, we have exemptions that allow debtors to keep certain kinds and amounts of assets and still file bankruptcy.  The amount of these Indiana exemptions was just raised as of March 1 of this year.  Exemption limits now include $17,600 of a personal residence and $9,350 for other real estate plus tangible personal assets. Wedding rings would fall in the category of "tangible personal assets".

One very important step in the legal process of bankruptcy is the Creditors' Meeting, and a very important part of my work and the work of the attorneys in the Mark Zuckerberg bankruptcy law offices in Anderson, Bloomington, and Indianapolis, and of course the work of the Columbus bankruptcy lawyers who work in my offices there is getting the paperwork ready for the Creditors' Meetings. These are information-gathering meetings, not trials, of course, but, if you're filing bankruptcy, you need to be there and you'll be answering questions under oath.

The court will want to know why you've chosen to file bankruptcy, and whether you plan to file a Chapter 7 or to file under Chapter 13 bankruptcy law in Indiana. As your Indiana bankruptcy attorney, I would have helped you prepare for the meeting, and be there at your side during the process.

As part of preparing your list of assets, if you do own jewelry, getting a certified appraisal of that jewelry would be part of the task of preparing for the bankruptcy hearing.

When thinking about bankruptcy, don't think "hiding" - think preparing!

This being tax season, it's no surprise that, as an Indiana lawyer for bankruptcy, I get a lot of questions about tax refunds. "Do I get to keep my refund if I file bankruptcy in Indiana?" (At least ten blog readers asked that very question, so I decided to devote today's blog post to how the new bankruptcy laws in Indiana relate to tax refunds.

There are two possible scenarios here: 

You file bankruptcy, already having received your refund.
(This  is an area where it's important to seek proper bankruptcy information in Indiana!)

a)   If you still have the cash from the refund, it becomes part of your assets, and must be listed in the bankruptcy paperwork.  You're entitled to keep a certain amount of cash, so it would depend on how much you have in total assets whether you got to keep the refund or whether it needs to go towards repaying creditors.

b)  You received the refund money before filing, and you've already spent the money. If the bankruptcy court finds you spent the money on luxuries and now are asking to have debts forgiven, the court will not look favorably on granting you a bankruptcy at all!   If you spent the money "properly", meaning on necessities such as making a mortgage payment, catching up on bills, or having medical or dental work performed, that will not count against you.


You've filed bankruptcy and expect the refund to come in soon.

At the Creditors' Meeting, the trustee usually asks debtors whether they're expecting any money to come in.  That's because the court wants to see if there are resources that can be used towards satisfying the debts.  It's possible that (beyond the exemptions, meaning cash and assets you're allowed to keep), the tax refund would be lost by becoming part of the bankruptcy estate (used to pay creditors).

One of the Columbus bankruptcy lawyers in the Mark Zuckerberg bankruptcy law offices there was asked a question about property tax debt.  First, property taxes aren't dischargeable in bankruptcy unless they became due more than a year ago.  But, even if property tax were to be discharged by the bankruptcy court, the property could not be sold until the lien was paid off (because there wouldn't be a clear title). The attorney is now discussing with this Columbus taxpayer whether or not filing bankruptcy might help stop foreclosure.

You know the old saying, "Timing is everything?"  That's something that comes to mind when it comes to tax refunds and bankruptcy.  You may have read this idea in my earlier blog posts, but it bears repeating: The timing of tax refunds and individual bankruptcy in Indiana is not a do-it-yourself decision!

Just as I said a year ago in this Indiana bankruptcy blog, bankruptcy and child support issues are joined at the hip. In fact, under the new bankruptcy laws of Indiana, as part of the bankruptcy process, the court trustee must notify state child support enforcement agencies so they can participate in the case.

I provide bankruptcy information in Indiana, and I often remind clients that as a general rule, child support obligations are not going to go away as a result of filing bankruptcy.  Bankruptcy can help, though, in one of two ways:
 

• Under Chapter 13 bankruptcy law in Indiana, bankruptcy buys time to catch up with back child support payments by spreading them out over the course of a three to five year debt repayment plan.
• If other debts can be discharged in bankruptcy, that frees up dollars for the child support.

Now it looks as if the law is about to go even further in terms of making sure parents live up to their child support obligations. Just weeks ago, the Indiana House's Public Policy Committee unanimously approved a bill forcing Indiana casinos to check a database of "deadbeat" parents and refuse to pay out winning to any person on that list who is behind more than $2000 on child support.  In talks the Indiana Casino Association had with state government, it was agreed that the casino was allowed to charge between $15 and $100 for each individual that falls in that category.

The Columbus bankruptcy lawyers who work in the Mark Zuckerberg bankruptcy law offices in that city and I agree: many of our clients are single parents, struggling to support their children. They depend on the support checks to help pay for child care so they can work. Even though the new system will probably be an inconvenience for the casino operators, it's worth trying to keep those child support payments flowing.

I read an interesting view about the new casino legislation (which has not yet been finalized into law) by the editor of a  blog called Pic-A-Group, who suggests barring deadbeat parents from casino gambling altogether, so that they don't gamble away money that needs to go towards child support.

I haven't involved myself in that particular political discussion.  What I have found, though,
as I continue to offer Indiana bankruptcy help, is that most of my clients who are noncustodial parents try very hard to keep up with their obligations.  But with many the victims of downsizing and job layoffs, those parents, despite wanting to help their own children, need help themselves!

All the politicians, all the radio talk show hosts, all the newspaper reporters, magazine writers, bloggers and television news anchors – they’re all talking about jobs and so am I, along with the Columbus bankruptcy lawyers who work in the Mark Zuckerberg bankruptcy law offices there. There is commentary about the jobless claims rate, the unemployment statistics, the job stimulus programs, the expansions, the closings, the hiring, and the layoffs. 

Everyone “gets the picture” by now, and everyone knows that times aren’t really going to be good again until the jobs are.  Thankfully, at least according to an RTT News report, there are some glimmers of hope on the horizon - first time jobless claims have begun to “fall more than expected.”

As a debt consolidation lawyer and bankruptcy attorney in Indiana, I know the term “jobless claims” refers to the number of people filing for unemployment benefits for the first time. Wall Street commentators had expected January claims to drop by 15,000 nationally; instead, there were 43,000 fewer claims, with the month’s total being 440,000 nationwide. This is the lowest level we’ve seen in a year and a half, so that’s good, although we have a long way to go. Knowing only too well that, even with the Indiana bankruptcy help I provide, without a supply of good jobs, my clients cannot keep up with their debt repayment plans according to Chapter 13 bankruptcy law in Indiana, I do my best to stay on top of every bit of news having to do with jobs in our state.

• RV maker Jayco is expanding in Middlesbury, creating 75 new jobs.
• WNDU-TV in South Bend expects to hire 50 new workers.
• Living Essentials in Wabash is expanding its energy drink company, creating up to 36 new jobs.

I wish all the news were positive, but I did hear a big negative item out of Ft. Wayne: The Fort Wayne Foundry Corporation is closing its plant in Columbia City, leaving 114 people out of work.  Still, the net numbers are turning in a positive direction.  According to WSCI Radio in Columbus, "Indiana is bucking the national trend with three straight months of declining unemployment.”

Meanwhile, I and my colleagues keep on working, offering payday loan debt help, negotiating with lenders to help stop foreclosure,  offering relief to the thousands and thousands of people drowning in financial problems that began with job loss.

As a debt consolidation lawyer and Indianapolis  bankruptcy attorney, I've always found foreclosure to be closely linked with bankruptcy.  Of course, legally speaking, these two issues are governed by two totally different sets of laws, but what I mean is this: when clients turn to me for help with financial problems, the threat of foreclosure on their home is invariably one topic they want to discuss along with exploring bankruptcy in Indiana.

If you've been reading my bankruptcy blog for the past few years, you know that my colleagues, the Anderson, Bloomington, Indianapolis, and Columbus bankruptcy lawyers in the Mark Zuckerberg law offices and I all help stop foreclosure by negotiating mortgage modifications.  I've been following closely all the different federal stimulus programs that help homeowners remain in their homes.

The latest program I read about actually isn't coming from the federal government, but from a private financial institution.  Citigroup announced two weeks ago a pilot program called Foreclosure Alternatives.  This program will not originally be available here in Indiana, only in Texas, Florida, Illinois, Michigan, New Jersey, and Ohio, where a combined 1,000 homeowners are expected to participate.  Then, depending upon the results, the program may be expanded to other states, including ours.

As part of providing bankruptcy information in Indiana, I often use the expression "buying time" when discussing bankruptcy, meaning time to organize a plan for handling debt.  The Citi plan offers time to homeowners threatened by foreclosure.  In a foreclosure, the lender takes control of the property and evicts the homeowner, usually within a few days. This foreclosure alternative plan is a form of deed in lieu of foreclosure, because Citigroup, the lender, takes control of the deed.  If no settlement is arrived at, homeownesr might still need to leave their homes, but:
 

• The program "buys" six months of additional planning time
• There is a less severe "hit" to the homeowner's credit report than a foreclosure might cause
• Citi is offering $1000 is relocation costs plus relocation counseling

Foreclosure alternatives are one form of "buying time", and buying time can mean getting help!

There’s a “not-to-do” list to follow before filing bankruptcy.  As I explained in Monday’s Indiana bankruptcy blog post, you don’t want the bankruptcy trustee using “lookback” on you and discovering you’ve hidden or transferred assets in the two years leading up to filing bankruptcy. As a bankruptcy lawyer in Indiana, I can tell you that the other thing not to do if you don’t want to be the victim of a “lookback” is to take cash advances totaling $750 or more from any one credit card in the 70 days leading up to your bankruptcy filing.

With close to twenty five years as a debt consolidation lawyer providing bankruptcy services in Indiana, I can add a very important item to the not-to-list list: Don’t expend emotional energy blaming anybody or anything for your financial troubles or, worse yet, blaming yourself.  If you’re like just about every other client (and I’ve helped tens of thousands of people file personal bankruptcy in Indiana), you’re a responsible adult coping with setbacks beyond your control, just trying your best to stay afloat and take care of your own basic needs and those of your family.

On the other hand, as an Indiana lawyer for bankruptcy,  I need to help clients work on their TO-do lists in preparation for filing personal bankruptcy in Indiana. Since it can be very important not only to do the right things, but to do those things in the right order, I always advise seeking legal help at the very first signs of a financial downslide.

Having helped to draft the new bankrukptcy laws in Indiana, the itemsI would include on my recommended pre-bankruptcy to-do list fall into four general categories:

Which bills to pay first, and in which order:

A big part of my work is helping debtors prioritize their bills. Those decisions are based on two considerations:

• The immediate-consequence category of bills, the ones where, if you don’t pay, you get hurt now because something gets turned off or taken away.  This would include utility bills, rent or mortgage.  Other immediate-consequences bills are federal tax bills, student loan, and child support.  The consequences of not paying those could be having assets seized or having wages garnished.

• Some kinds of debt are not dischargeable in bankruptcy, so those are bills you want to pay first.  Secured loans (mortgages and car loans), taxes, and child support and alimony payments would fall in this category.  If there’s a good chance a debt might be discharged in bankruptcy, you probably don’t want to use your remaining dollars to make payments on that debt now. If you need student loan debt help, I can discuss that with you, but those bills will most likely need to be paid even after you file bankruptcy.

Filing bankruptcy puts an immediate halt to all the pressures of collection efforts through the automatic stay, buying valuable time for debtors to gear up and organize their paperwork according to the new bankruptcy laws in Indiana.

So, whether it Chapter 13 banrkuptcy law in Indiana that you're considering, or filing Chapter 7 individual bankruptcy, be sure you’re making both pre-bankruptcy lists and “checking them twice”: the to-do list and the not-to-do list for filing bankruptcy in Indiana.

February is not only the snowiest month this Indianapolis bankruptcy attorney has seen in Indiana in a while, it marks the one-year anniversary of the Obama Mortgage Modification plan. 

As a debt consolidation lawyer and an Indiana lawyer for bankruptcy, I've always been involved in helping people with home mortgage-related problems.  And, even though it's true that foreclosures and bankruptcy are governed by different sets of laws, in my "real world" of practicing bankruptcy law (over my twenty-plus year career offering bankruptcy services in Indiana I've dealt with tens of thousands of individuals),  it seems that people who have concerns with debt are also concerned about keeping their homes.

Under the Home Affordable Modification Program (HAMP), it was decided, up to $75 billion could be spent.  The money was to go towards offering incentives to banks and lenders to renegotiate mortgages for three to four million homeowners, so that foreclosure could be avoided.  As of the end of 2009, according to Neil Barofsky, Special Inspector General for the TARP program, only a little more than $15 million has been disbursed. Only a little more than 66,000 homeowners nationwide have received permanent mortgage modifications, although there were more than 900,000 "trial modifications" in place.  RealEstateRama reports that 100,000 of these have been approved on the lenders' side for becoming permanent, awaiting approval by the borrowers.

When I say this month marks an anniversary, I really mean it.  For almost the entire year, I, along with the Anderson, Bloomington, Indianapolis, and Columbus bankruptcy lawyers who work in my bankruptcy law offices in each of those places, have been trying especially hard to help our clients negotiate with their lenders on mortgage modifications. 

In the meanwhile, all of us have been following the legislative debate about whether bankruptcy judges should be given the right to modify mortgages, a measure which, despite lengthy debate in both houses of Congress, failed to pass into law. Despite the frustration, I mentioned in one of my Indiana bankruptcy blog posts, Mortgage Modification Frustration Has Sunny Side, that, even when the lender has not granted a modification to a client, the very process of working with a legal professional to organize their financial information has often helped these clients gain greater control over their finances and positioned them to make wise decisions about both their mortgages and their debt problems in general.

Just about everyone who comes to see me to discuss filing individual bankruptcy in Indiana has had experience with debt collectors.  In most of those encounters, I’ve found, the debtors didn’t know what their rights were under federal law until it was too late.

Since the purpose of my blog is to provide helpful bankruptcy information in Indiana, I decided to devote today’s blog post to bill collectors and how to best deal with them. As I’ve explained in many prior blog posts, bankruptcy itself provides instant relief from harassment by bill collectors. But even during the days, months (and sometimes years) that go by until people make the big decision to actually file bankruptcy, knowing how to react to the collection process can make matters a lot less unpleasant.

We talked it over, the Columbus bankruptcy lawyers who work in the Mark Zuckerberg bankruptcy law offices and I, and we agreed: more debtors need to know about the Fair Debt Collection Practices Act. The FCDCP is a federal statute specifically designed to stop unfair and abusive practices by collection agencies. (If debtors don’t recognize practices that aren’t legal, they won’t report the collectors to the proper authorities, meaning the Federal Trade Commission or the Indiana Attorney General.

The first thing you need to know is that a debt collector is anyone other than the creditor who collects debts for that creditor. So we’re not talking about the actual employees of a credit card company, auto company or other business collecting debts on behalf of their employer. Basically, debt collectors are outside contractors hired to do a job for creditors.

Some of the rules debt collectors must follow are detailed in a brochure provided by the Indiana Legal Services, Inc.. These rules include:
 

• Within 5 days after first contacting you, the collector must send a written notice telling you the amount you owe, the name of the creditor, and what to do if you believe you don’t owe that money, or you believe that the amount is wrong.
• The collector may use mail, telephone, telegram or Fax, but may not contact you at an unreasonable place or time.
• The collector is allowed to contact other people about you – and only once - solely for the purpose of verifying your location, and is not permitted to discuss your debt with anyone but you or your attorney.

As a debt consolidation lawyer as well as an Indianapolis bankruptcy lawyer, I’ve often helped clients get relief from the extra stress of dealing with collection agencies by helping them compose exactly this kind of letter, reminding them to send it by certified mail with “return receipt requested”.

Certified Financial Planner Ken Clark, in his book Getting Out of Debt, provides a sample Cease and Desist letter in the book’s appendix. Here’s the general idea:

The letter begins by saying “This serves as legal notice under the provisions of the Fair Debt Collection Practices Act to cease and desist from all communication with me.”

The letter goes on to make two points:

a) If the debt collector fails to comply, the debtor will file a formal complaint with the Federal Trade Commission.
b) The debtor chooses to work directly with the original creditor, not with any collection agency.

Many collection agencies don’t stop their efforts even after the debt has been discharged through bankruptcy in Indiana!  Of course, according to law, once a debt has been discharged, collectors have no right to demand payment.  But, with debt being “sold” from creditor to creditor, it often happens that a company is unaware that the debt has been paid off or discharged.  In fact, paralegals in the Mark Zuckerberg bankruptcy law office need to spend valuable time working on cases where debt collectors are still going after our clients years after they’ve emerged from bankruptcy.

Still, getting your response to bill collectors down in black and white can often make a big difference in terms of “turning down the heat” and the pressure of harassment.

Since the main goal of this blog is to provide bankruptcy information in Indiana, whenever a blog reader poses a question I think will be of general interest, I want to be sure I include my answer in a blog post. It’s interesting that this particular reader is asking about “lookback” on assets in bankruptcy.

“Lookback” is a technical term, the type I and the Bloomington, Anderson, and Columbus bankruptcy lawyers who work in the Mark Zuckerberg bankruptcy law offices might use.  But even we bankruptcy attorneys in Indiana would use that term only infrequently. 

I say that because lookback generally doesn’t apply to bankruptcy, with one very important exception. The court generally bases its rulings on assets the debtor owns as of the date of filing bankruptcy.

The one big exception is this: if assets were transferred within the two years leading up to a bankruptcy in Indiana, that facts need to be disclosed to the court. Put another way, the court can “look back” two years to discover whether there were any fraudulent transfers of assets that might have been used to satisfy creditors. If the sale or transfer of any asset is judged by the court to have been solely for the purpose of keeping that asset outside the “bankruptcy estate”, the bankruptcy trustee has the power to do any or all of three things:

a) Cancel the sale and bring that asset back in to the bankruptcy estate so that it can be sold by the trustee, with the proceeds used to repay debt
b) Deny the bankruptcy petition altogether, dismissing the case.
c) Charge fines or even levy a prison sentence.  (Bankruptcy fraud is a felony.  Fines can be as much as $500,000, and, in the worst of cases, prison sentences of up to five years can be declared.

As a debt consolidation lawyer and Indianapolis bankruptcy lawyer for more than twenty years, a very large part of my work involves helping people prepare for the Creditors’ Meeting, which is one of the important steps in the bankruptcy process.
At this meeting, the bankruptcy trustee will generally ask the debtor four kinds of questions:

• Questions about the reasons for filing bankruptcy
• Questions about the assets listed on the paperwork submitted to the Court
• Questions about whether, within the two years before filing, any assets were transferred (given or sold) to family or friends. This is where “lookback” applies.
• Questions about whether any money is expected to be coming in (tax refund, inheritance, sweepstakes money already won, or accident settlement)

One other way in which the term “lookback” applies to bankruptcy has to do with cash advances on credit cards. If, within the 70 days leading up to when a bankruptcy case is filed, the debtor took cash advances of more than $750, (with money now gone and the debtor asking to have that debt discharged), that is considered to be nondischargeable debt.

So, while in general, the bankruptcy court makes its judgments based on assets owned as of the date of the filing, the court is allowed to “look back” to find fraudulent transfers that happened in the months and years preceding that date.

As I continue to offer bankruptcy services in Indiana, I often need to remind my Indiana bankruptcy clients and blog readers that the bankruptcy system is in place to offer responsible and honest individuals and business owners a chance to recover from financial setbacks too big to handle without help. But, for the system to work, creditors need to be treated fairly as well.

Two law school professors have concluded that the bankruptcy system in our country is far from functioning as effectively and helpfully as might be. Ronald Mann of Columbia University Law School and Katherine Porter of the University of Iowa College of Law have written a paper on the subject, called Saving Up For Bankruptcy, and many of the things Mann and Porter talk about are things I wrestle with every day as an Indiana bankruptcy attorney and debt consolidation lawyer.

The main problem that Mann and Porter find is that "only a few of those for whom bankruptcy would be economically valuable ever choose to file."  Through interviewing industry professionals (attorneys, trustees, and judges) and through gathering data from judicial filing records, the two professors try to answer two questions:

• What distinguishes those who file from those who don't?
• What determines the timing of when people file bankruptcy?

Mann and Porter found out two very interesting things:

• Creditor collection activity does not force people into filing an immediate bankruptcy. Harassment from creditors wears people down over time, "like water dripping on a stone".
• The primary factor that affects the date on which people file is whether they have saved up enough money to pay the attorney and filing fees.

Based upon these findings, the two professors have two recommendations for changing the system:

• Collection calls need to be stopped through a "do not call list" -type mechanism. This would eliminate many of the costs of debt collection and take the needless pressure off the debtors. Excessive collection efforts, according to the authors, lead to inappropriate filings, not well-thought out courses of action by debtors.
• Low-income, low asset filers (the ones who really need the bankruptcy remedy) would have access to a simplified administrative process without the costs of the full court process that is the only option available today.

Until such time as this kind of recommendation can find its way into law, I continue to offer Indiana bankruptcy help. I caution all my Indiana bankruptcy clients and blog readers about creditors who call…and call…and call.  Under the new bankruptcy laws in Indiana, you have rights.  What's more, in this state you're allowed to record a telephone conversation so long as one party gives consent (that could be you!).  So, if you believe a debt collector is violating the Fair Debt Collection Practices Act, you can use a recording device on your telephone to gather evidence you can turn in to the Indiana Attorney General's office.

My own experience in providing Indiana bankruptcy help for the past almost twenty-five years bears out what Mann and Porter say about clients waiting to file because they need to save up money for bankruptcy filing fees (approximately $3,800 for Chapter 13 and approximately $350 for Chapter 7).  Like them, I notice a bankruptcy filing "peak" around the time people receive tax refunds.

Saving Up For Bankruptcy is certainly a thought-provoking paper.  Bankruptcy law has evolved over the years since 1815, when it was first established. As a certified consumer bankruptcy specialist, I have been involved in some of the changes in Indiana bankruptcy laws over the years. But, until the new bankruptcy laws in Indiana change again, all I can do is keep helping Indiana bankruptcy clients navigate the existing bankruptcy system.  The Anderson, Bloomington, Indianapolis, and Columbus bankruptcy lawyers who are my colleagues help me offer the most up-to-date information and Indiana bankruptcy services,  one client at a time.

Just hearing about all the jobs coming to our state in the next year or two improves my mood!  As I help clients file individual bankruptcy in Indiana and help stop foreclosure on their homes, I feel more optimistic about their being able to take advantage of the fresh financial start available through the new bankruptcy laws in Indiana.

In just the first two weeks of this month of February, 2010, I learned that no fewer than a dozen sizeable corporations plan to hire new workers.  (The information I'll share with my Indiana bankruptcy clients and my blog readers today comes mainly from the Indianapolis Star, Inside Indiana Business, and the Indianapolis Business Journal.)

Because, as an Indiana lawyer for bankruptcy, I know that bankruptcy can spell relief only if my clients can earn income to rebuild their financial lives after emerging from bankruptcy, I'm constantly scanning the pages and surfing the Web to find news about employment in our state.

The Bloomington and Columbus bankruptcy lawyers who work in the Mark Zuckerberg offices there provide bankruptcy services in Indiana all the way to the southern border of the state, so I paid special attention to news of southern Indiana companies planning to hire.

• First, more than 2100 seasonal positions are being offered at Holiday World.  In fact, job fairs are being held this month.
• Mead Johnson is bringing 35 new jobs to Evansville.
• Berry Plastics is creating 250 jobs in Evansville.

In northern Indiana, there is good news as well.

• Morris Manufacturing and Sales, which makes auto components, expects to create 82 jobs near Ft. Wayne.
• Also in Ft. Wayne, Edy's Ice Cream is creating 120 new jobs.
• Vixen Composites, a recreational vehicle and commercial trailer company, is creating 34 new jobs in Elkhardt
• Seliga Plastics will have 150 new jobs to offer in Ligonier.
• Enert, Inc., parent company of Enerdel, is relocating to Elkhardt, bringing 415 new jobs.

In and around Indianapolis, there's good news, too. (Although I have bankruptcy law offices serving 38 different counties in Indiana, I operate primarily as an Indianapolis bankruptcy attorney.)

• Express Scripts pharmacy benefit management company is planning to add 182 jobs.
• Zipp-Speed Weaponry, which makes high-end bicycle components, is building a new center on the northwest side of Indy, bringing 105 new jobs.
• Bluefish Wireless in Zionsville is set to create 150 new positions.

A bit further away, there's good news from Brazil, and in the other direction, from Connersville,

• The Morris Manufacturing and Sales (in Brazil) will add 82 automotive component jobs.
• Carbon Motors' grant application to the U.S Dept. of Energy was deemed complete.  The potential is for 1,500 new jobs with that company.

Negative employment news seems to be taking up less space these days.

• Kmart is closing in Connersville, with 59 jobs scheduled to be lost.
• Ampcor metal casket company is closing in LaPorte, eliminating 50 jobs there.
• Radio manufacturer ITT Communications is cutting 60 positions.

The companies I mentioned in today's blog post are medium to large-sized firms.  But my more than 20 years providing bankruptcy information in Indiana have taught me that, when midsized and large firms expand, that's good news for my small business bankruptcy  clients in Indiana who are suppliers to those larger firms.

Let's keep that good news coming!

"Business Bankruptcies Rise More Than Individuals'", I read in Businessweek the other day. 

As an Indiana lawyer for bankruptcy these many years, I offer bankruptcy services and bankruptcy information in Indiana only, so I was curious to verify if those 2009 statistics are consistent with what happened in our state.

Based on information supplied by Bloomberg News, here's what I found out:

First, when it comes to personal bankruptcies filed per capita, our state ranked fifth of the fifty states last year. However, unlike the case nationally, the percentage increase of "commericial" versus "non-commercial" bankruptcies, in Indiana it was about the same (25% increase) percentage increase compared to 2008. Bloomberg counts a rise in individual bankruptcy in Indiana from 7,970 in 2008 to 9,283 last year, while "commercial" bankruptcies went from 566 in 2008 to 717 last year.

Talking about these numbers with the Columbus bankruptcy lawyers who work in the Mark Zuckerberg bankruptcy law office there, we agreed that problems in the auto manufacturing industry played a major role in Indiana's troubles, both directly and indirectly.  My own experience in dealing with small business bankruptcy in Indiana has shown me several interesting and sad aspects of the situation here: 

Indiana is home to many, many small businesses.  Many of those are tied to the auto manufacturing industry or to other manufacturing, perhaps as suppliers of parts or services to multi-national corporations.  According to recent federal data, there are more than half a million small businesses in Indiana.

It's very difficult to separate personal and business matters in small business bankruptcy in general, and I've found that to be definitely the case here in Indiana, with personal and business finances, more often than not, intertwined. Loans for the business were personally guaranteed, backed by owners' assets. Personal money was put into the business, and money was withdrawn from the business for personal use.  One result I've seen is that, while legally a business can file bankruptcy in its own right, in the real world the client is often forced into personal bankruptcy in Indiana along with his/her business.

This intertwining of "commercial" and "non-commercial" bankruptcy simply isn't stated or even directly reflected in any of the statistics I read.   Nevertheless, I believe the connection between personal finances of small business owners and the finances of the businesses they own is a key factor in explaining why the percentage increase in personal bankruptcy in Indiana and the increase in business bankruptcy in our state are just about neck-and-neck.

 

Suffering from the worst financial troubles you’ve ever faced? You’re not alone.  “There are several million families in situations not too different from your own,” says bankruptcy expert Elizabeth Warren (I quoted her book The Two-Income Trap earlier this week in my Indiana bankruptcy blog.

Should you end up reading the book yourself, you’ll find lots of valuable information. But, as an Indianapolis bankruptcy attorney and debt consolidation lawyer, I believe there’s one point discussed in Warren and Tyagi’s book that needs clarifying:

If you’re going to file bankruptcy, what is the best timing?

The authors suggest:  “If at all possible, wait until the crisis has passed before filing bankruptcy.  If you are out of work, wait until you have found a new job.  If you have a child who is seriously ill, wait until he is better and the health insurance has paid what it owes.”

The reasoning:  “If you wait, you minimize the risk that you will once again find yourself buried in debt after you file for bankruptcy… If you wait to file until the worst of your problems are over, you give yourself the best odds of getting exactly what you need from the bankruptcy judge – a fresh start.”

Along with the Anderson, Bloomington, Indianapolis, and Columbus bankruptcy lawyers who work in the Mark Zuckerberg bankruptcy law offices, I’ve been offering bankruptcy services in Indiana for almost twenty-five years.  I can certainly agree that filing bankruptcy is not something anyone is in a hurry to embrace.  At the same time, after working with tens of thousands of individuals and families over the years, I see people waiting too long to deal with their financial problems.

Instead of seeking expert help with mortgage modification to help stop foreclosure, I see people taking out subprime second mortgages or falling prey to foreclosure prevention scams.  Rather than reviewing their assets and debts with a legal expert, too many are taken in by debt consolidation scams or rapid refund tax scams.

Often, prior to coming to see me, folks cash out life insurance policies and withdraw money from their retirement accounts (types of assets they might have preserved because they’re exempt from creditors under the new bankruptcy laws in Indiana). Then, as bankruptcy begins to seem inevitable, people splurge on luxury items or transfer assets to family members or friends, hurting their chances of having their bankruptcy case approved by the court when they finally file.

Meanwhile, harassment by creditors increases the pressure, so that, with every passing day it becomes more difficult for debtors to make calm, reasoned decisions when it comes to bankruptcy in Indiana.

So I guess I disagree with the Warren/Tyagi advice about timing.  My own advice is for people to take the first step (a no-obligation frank talk with a board certified consumer bankruptcy specialist) at the first signs (of financial distress). The old saying about “Better late than never” might contain a grain of truth, but when it comes to bankruptcy in Indiana, early is best of all!

Can money borrowed through a business line of credit be discharged in a bankruptcy in Indiana? one blog reader wants to know. A second blog reader is asking the same question about corporate sales tax debt - can that be forgiven through a bankruptcy? he/she wants to know.
 
Let's talk first about business lines of credit.  In fact, this very week two debtors visited two of the bankruptcy law offices of Mark Zuckerberg seeking Indiana bankruptcy information about debts pertaining to small business bankruptcy and business lines of credit. In one case, the line of credit was being "pulled" by the lender; in the second, the business owner was behind on repayments.

• If a business is structured as a corporation or as an LLC (limited liability company), the business is able to file bankruptcy without the owner him or herself filing bankruptcy as well.
• If the business owner was asked to personally guarantee the line of credit or other loan, (which is the case in 90%+ of small business loans in Indiana), then, even if the line of credit is forgiven in the bankruptcy, the lender can go after the owner to collect on the debt.

Sales tax money is not technically, and never was a loan.  The business owner collected that money from customers on behalf of the state of Indiana.  The business owner is, in a manner of speaking, a trustee for the government, holding the money just long enough to process it and then remit it to the tax authorities of Indiana.  In other words, the money was never "lent" to the business for its own use. There are no creditors in this picture; the bankruptcy process simply does not apply. What might apply are penalties for not remitting money to the state that belongs to, and only to, Indiana.

There are different types of bankruptcy - and different combination strategies that need to be considered for each small business situation, as Fred Daily explains in Using the Bankruptcy Code to Handle Tax Debts and Stop IRS Collections.

My advice to small business owners experiencing severe financial difficulties  is the same as I always tell individual debtors;  the earlier you consult with an experienced Indiana bankruptcy attorney, the more Indiana bankruptcy help options will remain available. These have been some pretty hard times for small businesses - getting the help and advice you need is your smartest strategy going forward.  In fact, you might way the whole purpose of small business bankruptcy in Indiana is just that - halting downslide and going forward again!


 

The debate is old as the hills - well, old as the Bible, anyway. Years ago back in law school, as well as days ago in the offices of the Anderson, Bloomington, and Columbus bankruptcy lawyers who are Mark Zuckerberg bankruptcy law associates, the question is asked and asked over again: Is it moral to file bankruptcy and ask to have one's debts "forgiven" by the courts?

There's no question bankruptcy is legal - in fact, the bankruptcy court system in the United States and the U.S.  federal bankruptcy laws themselves have functioned for almost two hundred years.  In 1915 the Supreme Court wrote that bankruptcy laws were meant to give "honest debtors a chance to start afresh free from the obligations and responsibilities consequent upon business misfortunes."

What's the debate, then? Well, giving someone a second chance is definitely a value in American culture, but so is the idea of living up to one's obligations and keeping one's promises.

Harvard law professor Elizabeth Warren is co-author of a study on medical costs as a cause of bankruptcy, said in testimony before the Senate, "Most debtors are filing for bankruptcy not because they had too many Rolex watches and Gameboys, but because they have no choice."

As a bankruptcy attorney in Indiana for almost twenty-five years, I most definitely agree.  When debtors come to me seeking Indiana bankruptcy information, often it's months and even years they've been trying to deal with financial troubles caused by factors beyond their control.  These debtors are often filled with negative feelings about themselves, even though, in the majority of cases, they've been responsibly handling their money affairs for many, many years until an extended illness or layoff wrecked all their plans.

When it comes to student loan debt help. I find the same thing is true.  None of my clients who are filing bankruptcy in Indiana went to school planning to fail - they studied, often juggling full-time work schedules, family needs, and classes, in the hopes of building a better life.  (Another myth I often hear is that bankruptcy cannot be of any help with student loans. The truth is, while most student loan debt cannot be discharged in bankruptcy, I am often able to be of help negotiating with lenders on behalf of my clients.  Meanwhile, as other forms of debt are addressed through the bankruptcy, that can free up cash to make payments on student loans)

Back in the 1800's when the Supreme Court was debating whether to create bankruptcy laws in this country, they looked to the Bible, and particularly to Deuteronomy 15: 1-11: At the end of every seven years, you must cancel debts….

The Supreme Court recognized, from a practical point of view, that when you are swamped with debt, you are unable to provide for yourself and your family. You are a drain, rather than a contributing member, to our economy. As one attorney put it, "This latest recession showed us that the best-intentioned and smartest business people in the world can makefinancial mistakes or can suffer financially without fault." 

Miranda Marquit , in Many Christians are Faced With The Bankruptcy Option, writes, "After all, we have a moral obligation to be good stewards of what God has given us.  On the other hand, there are many circumstances beyond our control that can lead to crushing debt….It is important for Christians to carefully consider all their options….Ultimately, the decision is one you make between you and God."

As an Indianapolis bankruptcy lawyer and also a debt consolidation lawyer, I think all debtors, no matter what their religious beliefs, need to consider all their options. In fact, only after discussing all the options with an experienced legal professional can any person make the decision that's right for them.

As I tell everyone who is having financial difficulties, bankruptcy is definitely a remedy of last resort!

new Indiana bankruptcy laws

 

As an Indianapolis bankruptcy lawyer, I'm always reading up on tax matters, employee benefits, and financial planning.  My purpose in doing that is to offer the most up-to-date Indiana bankruptcy information to my bankruptcy clients and blog readers.

Usually, in these blogs, when I talk about tax, I'm referring to federal income taxes.  As a debt consolidation lawyer, I'm explaining that only certain types of tax debt can be discharged in bankruptcy in Indiana. Today, though, I want to share an interesting article by Dan Carpenter in the Indianapolis Star, having to do with Indiana state income taxes.

It seems a study done by the Center on Budget and Policy Priorities places Indiana as one of only six states that tax families who are in severe poverty.  The example given is a two-parent family with $16,500 in annual income.  That family would owe $200 in Indiana income tax!

The reason the Carpenter article is so interesting to me as a bankruptcy attorney in Indiana is what he says about the "cliff effect".  When families are trying hard to work their way out of poverty, an ironic problem arises.  As people begin to earn more, they lose benefits such as food stamps, Medicaid, and housing assistance.  That, Carpenter explains, is like falling off a financial "cliff".

How does this situation relate to the work I do (along with the Anderson, Bloomington, and Columbus bankruptcy lawyers who work in the different bankruptcy law offices of Mark Zuckerberg)? After all, families in severe poverty are not likely to have the kinds of credit card debt or even unpaid medical debt we see in middle to upper class situations as a result of divorce or layoffs.  Nor are families like the one in the example likely to need student loan debt help.

Could a $200 Indiana income tax bill be "the straw that broker the camel's back" for a family in extreme poverty?  Sure.  Suppose, in desperation, the breadwinner of that family took out - and then renewed and renewed again - a payday loan?  Suppose, on top of that, their one old car was repossessed because they couldn't make the payments. With close to twenty-five years' experience advising bankruptcy clients in Indiana, I can tell you the "cliff effect" can happen at any economic level.

The bankruptcy safety net can't change the Indiana income tax.  You might say, though, that the purpose of the new Indiana bankruptcy laws is to help people climb back out after suffering the "cliff effect", giving them a chance at a fresh financial start.

The times they are a’changin’, mostly for the better.  At least that’s how it appears from my vantage point as an Indianapolis bankruptcy attorney and debt consolidation lawyer. What I mean is that job opportunities in Indiana seem to be staging a comeback.  True, a good number of the jobs I read about are not available immediately. 

My Indiana bankruptcy clients who need to show income in order to qualify for a Chapter 13 bankruptcy debt repayment plan may not be helped by jobs coming later this year or into the next calendar year. Still, as I continue to provide bankruptcy information in Indiana, it’s important for me to keep my blog readers and clients up to date on the job markets in our state.

One positive development scheduled for Indianapolis (where the main bankruptcy law office of Mark Zuckerberg is located) in 2010 involves Ohio-based homebuilding Fischer Group.  Fischer expects to be offering 150 or so jobs here as it expands in the Indianapolis housing market.

Longer range positive news for Indianapolis comes from Stericycle, a medical waste disposal company planning to expand its operation by moving some of its other branches from other states into its facility near the Indianapolis airport.  Stericycle expects to create more than 100 additional jobs by 2011. Another company expanding in Indianapolis is insulin manufacturer Elona Biotechnologies.  The company expects to add 70 jobs in Greenwood.

With Indianapolis being home to so many different colleges and community colleges, one issue that often arises is that clients need student loan debt help.  Since student loan debt is almost never discharged in bankruptcy, it’s crucial that debtors have regular income coming in from employment to keep up with the student loan debt repayments.

The Columbus bankruptcy lawyers who work in my office there were happy to learn that Dorel Juvenile Group is expanding in Columbus and expects to create 100 jobs there by 2013.

Shorter-term, in Terre Haute, the good news is that Best Buy Co. is opening a new store, creating 80 new jobs. Again, because of the colleges and universities in western Indiana, these new jobs should be of advantage to people in need of help paying student loans.
But, speaking of Indiana State U., the university itself announced it will need to cut up to 100 jobs. Another piece of not-so-favorable news comes out of Plainfield, west of Indianapolis, where Duke Energy announced it will be trimming an unknown number of jobs.

Cities and towns north of Indianapolis are serviced by the bankruptcy law offices of Mark Zuckerberg in Anderson.  Some long-term good news is that B&J Specialty, Inc., a supplier of automotive molds and dies, plans to add 21 workers by 2012.

In a way, the most hopeful piece of hopeful news for employment is the furthest away from actually happening. A proposed ethanol pipeline reaching from South Dakota to New Jersey would create more than 7,000 jobs in Indiana, pending a loan guarantee from the U.S. Department of Energy.

Long-range or short-range, as an Indiana consumer bankruptcy specialist, I know jobs are a good thing, helping Indiana bankrutpcy clients emerge from bankruptcy and have a chance at a fresh financial start.