Chapter 13 Bankruptcy Law Indiana

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?

When it comes to bankruptcy in Indiana, I’ve learned after 25 years offering Indiana bankruptcy help, it’s not a matter of “poor– it’s a matter of “debt”.

As a debt consolidation lawyer, I often find my advice being sought not by shabbily dressed clients driving rattletrap cars, but by people who are used to extremely luxurious lifestyles. Some combination of job loss, divorce, medical emergencies, and the drop in real estate values forced them to face up to their spiraling debt situation and to seek Indiana bankruptcy help.

Usually, visitors to the Zuckerberg law offices come in feeling they’re very much alone.  Actually, though, that’s far from the case. That’s why, in these Bankruptcy in Indiana articles, I find it useful to highlight stories of very famous sports figures, movie stars, and political leaders who filed personal bankruptcy not because they were “poor”, but because their debts got the better of them.

One of the Columbus bankruptcy lawyers who works in the Zuckerberg bankruptcy law offices brought in an interesting story about something that happened only last month. A tycoon once called the richest man in Ireland was declared bankrupt by the High Court in Dublin. Sean Quinn, whose real estate fortune was valued at $6 billion just a few years ago, now has debts of approximately $3 billion.

This Sean Quinn saga makes for an interesting tidbit, to be sure, but is the story really valuable to “regular folks” in Indiana who need me to help stop foreclosure on their homes or who need student loan debt help? Here’s why I'm including this article as part of providing bankruptcy information in Indiana:

• The new bankruptcy laws of Indiana are designed to offer a chance for a fresh financial start, and that means every honest debtor regardless of the number of zeros after the numbers.

• Sean Quinn became a billionaire by taking risks in business. As every business person – and every Indiana small business bankruptcy lawyer – knows, not always do risks pay off as hoped.

There’s little pleasure in Sean Quinn’s bankruptcy,” remarks irishcentral.com, explaining that Quinn’s “downfall was as unexpected as it was dramatic.”  As all good bankruptcy attorneys in Indiana would agree, though, there may be no pleasure in ANY bankruptcy, but what there is, is RELIEF!

For years now in these Bankruptcy in Indiana articles, I’ve been reassuring readers that, contrary to popular myth, bankruptcy does not spell d-e-a-d-b-e-a-t.  In other words, filing personal bankruptcy in Indiana is not necessarily (and not even most of the time) the result of careless handling of one’s finances.  In fact, every one of us lawyers for bankruptcy in Indiana who works in any of the four Zuckerberg bankruptcy law offices is used to seeing just the opposite: bad things happening to very good, very financially responsible people.

In order to provide the very latest Indiana bankruptcy information to readers and clients, as you know by now, I read a lot – journals, magazines, newsletters, websites, books – you name it. And, just two weeks ago, I happened on the most amazing headline in Investment News:  “CFP Board Eases Up on Advisers Who Go Bust.”

I really hope that, once you “get” what this headline means, you’re going to find it as reassuring and comforting as I did.  Why? Well, for one thing, the very last people you’d imagine would be irresponsible with money are financial planning professionals, especially those who’ve devoted years of extra study to earn the CFP® (Certified Financial Planner) mark in order to offer even more comprehensive and thorough advice to their clients.

Up until now, as one planner explained to one of the Columbus bankruptcy lawyers who is my colleague, if planners filed individual bankruptcy in Indiana (or small business bankruptcy in Indiana, for that matter), they would have lost their CFP® certification.

As you may imagine, someone like me who’s been offering Indiana bankruptcy help for 25 years would be gratified to learn that situation is about to change. The CFP Board realizes that everything from unexpected medical expenses, a spouse’s job loss, or divorce to a general business downturn can negatively affect even the most responsible and financial savvy individuals. (I know this very well as I work to help stop foreclosure for very good people!)

The latest proposal is that, while a CFP® certificant must report a bankruptcy, there will be no disciplinary proceedings for a first bankruptcy.

Bankruptcy in Indiana, as I’ve always stressed to clients, readers, and even to my own colleagues, was never designed to be an escape hatch for deadbeats.  Quite the contrary, the bankruptcy safety net is for situations “when bad things happen to good people”. I’m so glad the CFP® Board has come around to seeing the same thing!

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!

Sometimes even we bankruptcy attorneys in Indiana need reminding – in business, enterprise isn’t always given its just reward. My colleagues in the Zuckerberg bankruptcy law offices were passing around an article the other day.  Mental Floss magazine was telling the story of Charles Goodyear, inventor of vulcanized rubber.

In these Bankruptcy in Indiana articles I’ve sometimes listed movie stars and famous sports figures who’ve filed bankruptcy.  While I and my colleagues the Anderson, Bloomington, Indianapolis, and Columbus bankruptcy lawyers practice only in central and southern Indiana, and “only” for the past 25 years, I still thought the story of Charles Goodyear would help readers realize that sometimes businesses fail because of small, understandable mistakes, and because of forces beyond business owners’ control.

The Goodyear story goes back to the 1830’s, when there was great consumer demand for rubberized goods.  The problem was that, as the weather changed, the rubber would either become rock hard in the cold or melt into a sticky mess in the heat.  Charles Goodyear discovered a way to combine sulfur with the rubber to stabilize it.  But because he failed to file a patent quickly enough, he did not benefit financially from his discovery and ended up in debt.

What can we learn from this today?  Small business bankruptcy in Indiana has understandably increased. After all, Indiana is home to well over half a million small businesses. And the one question Indiana lawyers for bankruptcy are asked again and again is this:

Can I file business bankruptcy in Indiana without filing personal bankruptcy as well?

The answer is probably “no”.  Why?

• 90% of small business loans are personally guaranteed by the owners.
  
• In most cases owners have put personal funds into their business and also withdrawn money from the business for personal use.
  
• Often, business owners have related money problems made worse by the business issues, such as needing student loan debt help.

Was that a “mistake”?  No, it was just what the owner needed to do at the time.  Charles Goodyear made a “mistake” in failing to protect his invention right away.  But sometimes, even patents that were filed right away are infringed, with small business owners lacking the funds for a legal battle.

After 25 years offering Indiana bankruptcy help, I know that small business owners do the best they can.  Often, though, that’s not enough.  At the Zuckerberg bankruptcy law offices, our purpose is to help even when life just hasn’t been fair!

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!

In high school we were taught that multiplying two negative numbers gets a positive number. That particular tidbit came to mind the other day in a discussion I was having with one of the Columbus bankruptcy lawyers who works in the Zuckerberg bankruptcy law offices.

We were actually talking about the drop that has been taking place in asset values – home values are depressed and investment asset values are down.  In short, the value of people’s “stuff” has dropped significantly over recent years.  What’s not down is the debt people have accumulated just trying to keep up. So, as a debt consolidation lawyer offering bankruptcy services in Indiana, what I’m seeing more and more of is negatives, starting with those negative asset values.

The second big negative that we lawyers for bankruptcy in Indiana are seeing is the difficult job market.  With layoffs and downsizings, and with restaurant chains and stores closing every day, lots of income that people need to pay expenses is being reduced or lost altogether.

So, can these two negative factors possibly be turned to advantage, becoming a positive? In a way, yes.  Since I've served as an Indiana lawyer for bankruptcy for 25 years, and in fact helped write the exemptions portion of the new bankruptcy laws of Indiana, I couldn't help thinking that California attorney Cathy Moran hit on something when she asks “Is Bankruptcy Your Best Investment?” Moran lists several reasons why filing personal bankruptcy during not-so-good economic times can be a very good idea, and one of those reasons is the drop in asset values I’ve mentioned.

In these Bankruptcy in Indiana articles, I’ve often explained why the idea of “losing everything” when you file personal bankruptcy in Indiana (or even file small business bankruptcy in Indiana) is simply a myth.  And the reason it’s a myth is bankruptcy exemptions. There is a list of property that debtors are allowed to keep, assets that do not need to be sold to pay back creditors. Fact is, it’s very, very rare for clients to lose any assets at all, because there are exemptions that help protect your house, your car, your truck, your household goods and furnishings, your IRA and other retirement plans, your life insurance, and your wages.

Going back to that high school math lesson I alluded to earlier about negatives adding up to a positive, what attorney Moran was alluding to when she said bankruptcy might prove a “good investment” was the fact that when exemptions are applied to assets that are way down in value because of the economy’s downturn, while at the same time income levels are down, the end result is people keep more of their assets..

No, filing individual bankruptcy in Indiana may not be anyone’s idea of a positive.  But the combination of a down economy and Indiana bankruptcy exemptions can work to the advantage  of debtors, becoming a positive force in their fresh financial start!

Student loans are making headlines again, and, as a debt consolidation lawyer who’s been offering Indiana bankruptcy help for almost 25 years, I know that’s not good.

“The amount of student loans taken out crossed the $100 billion mark for the first time, and total loans outstanding will exceed $1 trillion for the first time this year” (meaning 2011), reported USAToday.

To the bankruptcy attorneys in Indiana who work in the Zuckerberg bankruptcy law offices, these scary statistics mean that of the hundreds of Indiana residents who file personal bankruptcy in Indiana in the coming year, an unprecedented number will need student loan debt help.   

The way reporter Alex Pareene puts it, “This is unprecedentedly awful for an entire generation of young people just entering adulthood.” Why so awful?  Pareene predicts that graduates will need to use their earnings towards debt repayment rather than towards buying homes and building up savings.

Under the new bankruptcy laws of Indiana (and under the U.S. bankruptcy code), the only circumstance under which a student loan can be “discharged” is when the loan imposes “undue hardship”.  The courts interpret this to mean that it would literally be impossible for the debtor to repay the student loans and still maintain even a minimal standard of living.  Unlike the case with other kinds of unsecured loans, filing personal bankruptcy in Indiana will typically not provide direct relief to student loan debtors. That rule holds true for both private student loans and government-backed loans.

One question that the bankruptcy lawyers in Columbus, in Bloomington, in Anderson, and in Indianapolis are often asked is whether it’s hopeless for student loan debtors to even file individual bankruptcy in Indiana. The answer is a resounding “No!” 

• The collectors of student loans who are harassing you for overdue payments will be put “on hold” for up to five years. (That won’t make either the debt or the interest accruing on the debt go away, but it will give you some breathing room.)
  
• Some of your other debts could be discharged through bankruptcy, freeing up money for repayment of student loans.

As a longtime lawyer for bankruptcy in Indiana, I stay involved in efforts to change bankruptcy laws of Indiana to allow for forgiveness of student loans. While, so far, these efforts have been unsuccessful, my colleagues and I have been very successful in using bankruptcy to help people gain overall relief from debt, so that they can fulfill their student loan obligations over time.

By way of using these Bankruptcy in Indiana articles to provide insights into the way the bankruptcy process works, I like to discuss real-life examples from bankruptcy cases in other states. One of my Columbus bankruptcy lawyer colleagues found this Illinois story in Consumer Bankruptcy News:

The debtors, Mr. and Mrs. S., had filed under Chapter 13 bankruptcy law. (Apparently they had wanted to help stop foreclosure on their home.)  Some of their unsecured debt had been discharged (forgiven) by the court, and now the couple had begun their three year debt repayment plan, making monthly payments of $200 to their creditors through the bankruptcy court.  As a 25-year veteran debt consolidation lawyer practicing Indiana bankruptcy law, I’ve helped thousands of people through this exact process. In this case, however, something fairly unusual happened – Mrs. S received an inheritance.

Now, at all four of the Zuckerberg bankruptcy law offices, we deal with Indiana debtors only.  It’s obvious to me, however, that Mr. & Mrs. S. got good advice from their bankruptcy attorney, because they promptly reported the inheritance to the bankruptcy court.

The interesting thing about this case is that the inheritance was actually large enough to repay all the unsecured creditors in full. Normally, in a case of individual bankruptcy in Indiana, the court would have demanded that the money go to pay creditors. But not all of those unsecured creditors had filed claims with the bankruptcy court!  Once the deadline had passed for filing claims, the trustee asked the court whether he could file claims for them. 

Here’s the part I want to share with my readers: The court ruled that the trustee could not file on behalf of the creditors!  The couple had done everything they were supposed to do – they had made payments on time. They had reported the inheritance. They had put the money into their debt repayment plan.  In short, this couple had done everything that any good Indianapolis bankruptcy lawyer would have advised.

But ALL the players needed to do their part. The creditors who had not filed claims did not get any more money than was arranged for in the original Chapter 13 debt repayment plan.  “The debtors are entitled to finality,” ruled the court.

Indiana bankruptcy Lesson #1 – Because the debtors worked under the guidance of their lawyer for bankruptcy and followed his advice, the dispute ended in their favor (they were able to keep the remaining inheritance).

Indiana bankruptcy Lesson #2 – In bankruptcy (in Indiana or elsewhere), debts are measured as of the day of filing.  On the other hand, any change in your financial circumstances must be reported to the court.

As every good bankruptcy attorney in Indiana knows – the system is meant to treat all parties fairly.  But the parties have to do their part fairly, as well!

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!

You may or may not have ever attended a 341 Creditors’ Meeting, but I’ve got you beat.  In my 25 years as a debt consolidation lawyer offering bankruptcy services in Indiana, I’ve attended tens of thousands of them.

Any meeting held at a court house may seem scary to a first timer.  After all, the meeting involves taking an oath to tell the truth before answering questions about your personal finances. Even the name is intimidating, because the creditors in question are people and companies to whom you owe money!

Since one aspect of my work is preparing clients for these meetings as part of offering Indiana bankruptcy help, I can tell you that the process is surprisingly fast and smooth.  Many 341 meetings are over in less than half an hour and (most surprising of all to Indiana bankruptcy filers), in most cases the creditors themselves don’t bother showing up!

All the Indiana bankruptcy attorneys who work in the Zuckerberg bankruptcy law offices have had the same experience – showing up for a creditors’ meeting and finding no creditors there!  So, who IS there? Well the meeting is run by a court-approved bankruptcy trustee (typically a local attorney employed by the court).  You’re there, and your attorney is there.  If you’ve filed bankruptcy jointly with your spouse, then he or she is there along with you.  If it’s a small business bankruptcy in Indiana and you have partners in that business, they would come to the meeting as well.

The trustee asks you questions about the bankruptcy documents I’ve helped prepare, detailing your assets, your income, your financial obligations, and your debts. 

Have you read the document?  Is everything correct on it? Have you listed all your creditors?  Are you expecting any sort of prize, cash award, or inheritance?  Have you given away assets within the past six months? 

If creditors’ have come to the meeting, they are allowed to ask you questions as well.

Once the trustee if satisfied that all the information is in your documents and that you’ve answered truthfully, the meeting is over and the first stage of the bankruptcy process is complete.

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!

“While other businesses struggle to stay afloat, the debt-settlement industry is flourishing,” notes SmartMoney.com. It should come as no surprise to regular Bankruptcy in Indiana readers that, as a debt consolidation lawyer, I’d say all that flourishing comes at the expense of people who can least afford the additional pain and financial worry.

As bankruptcy attorneys in Indiana, all the lawyers who work in all four Zuckerberg bankruptcy law offices see the aftermath of what SmartMoney correctly calls the “hefty price” of debt settlements, with fees often running into thousands of dollars.  In fact, SmartMoney cites an example of someone with a $50,000 debt load who was charged as much as $10,000 in fees. “Those fees need to be paid before the consumer can start paying off the settlement itself,” points out the reporter. 

After 25 years offering Indiana bankruptcy help, including bankruptcy Chapter 7 in Indiana, Chapter 13 bankruptcy and small business bankruptcy in Indiana, I’ve seen more than my share of clients who, after paying those hundreds and even thousands of dollars in fees, were unable to complete the debt settlement program and ended up filing personal bankruptcy in Indiana anyway (which would have been the less costly and quicker solution from the start!).

By way of providing importantIndiana bankruptcy information, I wanted to share one very important judgment SmartMoney offered:  Besides the loss of money and time, debt settlement entails a real risk.

“Since debt settlement companies instruct consumers to stop paying their bills while they’re saving for a settlement, their balances continue to swell with interest and late fees and credit scores plummet.  In order to get paid, creditors may even sue.”

One of my Columbus bankruptcy attorney colleagues becomes especially enraged on behalf of her clients when she learns that they’ve been charged debt settlement fees without the banks or credit card companies who are their creditors having promised to settle anything!

“Debt settlement is sometimes confused with debt consolidation, in which borrowers are offered one big loan to pay off their smaller debts,” says Money.msn.com. “But debt settlement is a different animal.  Instead of offering a loan or repayment plan, debt settlement companies typically advise their clients to stop paying their bills and instead save up cash, which the company then will use to negotiate lump-sum settlements,” continues Money.msn.

As I’ve seen over and over again in my Indiana bankruptcy law practice, the creditors are not holding their breath or waiting politely for that settlement negotiation to take place.  In the true story highlighted by Money.msn, for example, the debtor was receiving what he called “brutal calls” every 15 minutes!

The fact is, only bankruptcy comes with an Automatic Stay.  Only bankruptcy stops those brutal phone calls cold and halts legal actions against a debtor.  Whether it’s bankruptcy Chapter 7 in Indiana or Chapter 13 bankruptcy law in Indiana we’re talking about, the bottom line is that only bankruptcy buys time to breathe!

Far too often, debt settlement does nothing but make matters worse!  Whether you need help to stop foreclosure or just help to stop creditors from calling or your wages from being garnished, individual bankruptcy in Indiana is the best tool for making a fresh financial start!