Good information helps save things.  Good medical information can help saves lives.  As an Indiana bankruptcy lawyer, I've found the same principle holds true with saving homes.

I'm going to offer information in this Indiana bankruptcy blog post on three programs, each of which can be of help in saving homes from foreclosure.

Foundation Source allows foundations to provide no-interest loans to homeowners who are threatened with foreclosure.  Under the program, private family foundations, in addition to providing hardship assistance for medical costs, can now pay up to $25,000 directly to a lender to save a home from foreclosure.

The Indiana Foreclosure Prevention Networkis a group of lenders (FIfth Third Bank is one of several of these) who, working together with Momentive consumer counseling agency, sponsors a hotline that homeowners can call to ask for help and advice.  The network also helps banks in their efforts.  Fifth Third has created a mobile classroom in the form of a bus staffed by counselors and bankers that travels to different cities to meet with people.  Homeowners behind on their payments receive notice of when the bus will be in their area.

Of course, my work as a bankruptcy attorney in Indiana often deals with helping homeowners avoid foreclosure.  First of all, if a foreclosure is imminent, you can put a stop to the proceedings immediately by filing bankruptcy, because you will trigger an automatic stay. If you have enough income to file a Chapter 13 bankruptcy, you'll be able to spread out the payments of the arrearage (the payments you missed), all late fees, and any foreclosure fees that your lender might have already incurred. Also, if there is a second mortgage on the property, there is a good chance that debt can be discharged (totally written off) in the bankruptcy.

As I said, having the right Indiana bankruptcy information can be key to saving your home from foreclosure!

By way of offering Indiana bankruptcy information, I comment on the news. One part of President Obama's stimulus package was meant to provide strong medicine when it comes to medical debt, but the stimulus benefit doesn't apply in all cases. The American Recovery and Reinvestment Tax Act of 2009, signed into law February 17, has a lot to say about COBRA.  Since medical expenses constitute one of the three leading causes of bankruptcy, I make every effort to stay current on news about medical costs and medical insurance, in order to provide the most up to date advice to my Indiana bankruptcy clients.

COBRA is an acronym standing for Consolidated Omnibus Budget Reconciliation Act, which is a law about health insurance through employers. COBRA requires employers to offer employees who have been laid off the option of continuing health insurance for up to 18 months. COBRA applies to all employers with 20 or more employees (even if layoffs have reduced the number, COBRA still applies if the company had 20 or more on at least half its business days during the preceding calendar year). The problem is that, according to national nonprofit organization Families USA, the average monthly cost for family COBRA coverage is $1000, beyond the means of individuals who have lost their employment. 

The new Act offers a subsidy to help fund the cost of COBRA health insurance premiums. This subsidy is paid by the employer who is then reimbursed by the government. The original subsidy was 65% of premium costs.  Then a Trade Adjustment Assistance Health Coverage Improvement Act raised the amount to 85%.

A different sort of question arose about retirees whose former employer filed bankruptcy - are those retirees eligible for COBRA benefits? The answer was determined back in 1986, and that answer is "yes".  If an employer declares Chapter 11 bankruptcy, qualified retiree beneficiaries will be covered under COBRA.

Medical bankruptcies are on the rise.  What I see every day is Indiana families who are finding it extremely difficult to keep up with debt payments, expenses, and health costs. Meanwhile, medical providers are becoming less flexible about payment plans and turning over delinquent accounts to aggressive debt collection agencies. "Can You Cope Without Health Insurance?" asks Roxanne Hawn of Bankrate.com. 

My sincere hope is that, with the new SCHIP benefit for children and the COBRA subsidy under the American Recovery and Reinvestment Tax Act of 2009,  there will be more people who won't have to!

People are fond of saying "Surgeons will always recommend cutting, and bankruptcy attorneys will always recommend filing!"  I don't think that's true in either case, but I want to use this space to talk about my own work with small business owners, and how I always try to help them explore all their choices before deciding to file bankruptcy.

In one of my very first blogs I talked about how many people imagine that, when debts pile up for a small business, there's only one ending to the story -  bankruptcy.  The problem with that perception is that people have heard so much false information about bankruptcy, they put off facing financial decisions.  Often a business owner continues in denial for so long, he or she loses the opportunity to make choices other than bankruptcy!

In "Got Bills? You've Got Choices As Well!", I mentioned some things that can be explored by individuals to avoid bankruptcy or at least to buy time, including taking out a new loan to pay bills, refinancing a home, and enrolling in a consumer credit program.  I talked about the some of the advantages and about the drawbacks of each of these tactics.

Sometimes I think small business owners have the biggest challenges of all.  The chief one, I'm told, is collecting their accounts receivable.  They've done the business, but they have to wait, often for months, to collect the money owed.  Sending notices and making phone calls is expensive and unpleasant. Meanwhile, the small business must keep up with its own payroll and pay its own suppliers!  This can feel like being squeezed in a vise, business owners complain to me all the time.  Of course, for most small business owners, their personal finances are tied up in their business as well, so they and their families are suffering, too.

In addition to all the alternatives I discuss with individuals, one strategy I discuss with small business owners is factoring the business' accounts receivable.  Factors are companies that provide cash in exchange for taking over some of or all of the invoices of a business.  As with any strategy, there are plusses and minuses for the business owner. 

If the business needs cash in a hurry to pay its own bills and buy time to create a longer-term strategy, factoring could solve that issue.  If a factor accepts the application, money could be available very quickly.  Business owners need to understand that factoring costs much more than a short term bank loan, since the factor is buying the accounts receivable at a big discount from the total amount actually owed by the customers.  Also, the factor might pay the business owner only part of that discounted amount up front, with the other part dependent on collecting from the customers paying their bills to the factor.  But if a business was turned down for a bank loan or a line of credit, and the main goal is keeping the doors open, factoring may be the only choice.
 
In fact, factoring may turn out to not be a choice for some small businesses.  For instance, the factor may be looking to finance only a minimum dollar amount per month and the business might be too small to interest the factor.  Or, the list of accounts receivable may include too many "deadbeat" customers from whom the factor doesn't think it could collect money.

It's not my purpose to either promote or knock any one strategy for a small business.  The point I want to make is simply that my function as a small business bankruptcy attorney in Indiana is to help people debunk myths and explore options - all  options.  From there the business owner can select the right strategy or combination of strategies that seems to best fit that situation.  Whatever the decision, I'm there to help.

   The more I think about that old country song "Looking For Love In All The Wrong Places", the more it reminds me about how people overwhelmed by money problems try to get help in some of the wrong places.  As a bankruptcy attorney in Indiana for so many years, I know these poor people are merely postponing and avoiding facing up to their problems, rather than taking the action steps to turn things around.

      In a former blog I talked about Debt Settlement Agencies, and why these are almost never a good solution or even a good first stop.  A second type of place many people turn to when they need debt help is a credit counseling  service.  In fact, whenever I tell someone at a social or business gathering what I do for a living, namely that I'm an Indiana bankruptcy attorney , the next question out of their mouths is often "Isn't it better for someone to first try a credit counselor before filing bankruptcy?"

      I need to remind you that I never deal in absolutes, saying one solution fits all people who need debt help. And so, rather than getting all excited about why one course of action is "the best", I always stop and realize that the person asking the question probably doesn't understand what credit counseling actually is.  Credit counseling agencies are supposed to offer education about good financial habits, advising folks on sticking to a budget, being faithful about paying bills on time, and the like.  What is supposed to be secondary, but often is the main kind of advice offered (for a fee, I might add), is negotiating with creditors in the same way that debt settlement agencies do.  In other words, the counseling agent talks to the credit card company to try to get that company to settle for a lower monthly payment or even a lump sum that is less than the amount really owed.

      It's important to know, by the way, that credit counseling agencies were examined recently by the IRS (you can read about this on the IRS website at www.irs.gov) and largely found to have failed to do the public enough good to qualify as tax-exempt agencies.   The investigators found that many agencies were too closely tied to for-profit credit companies and were more interested in benefiting them than the clients.  However, even if a credit counseling service does a good job, it may still not be the best place to go, for two reasons:

      First, people with serious debt problems need to know all their options, and that includes legal options which only a bankruptcy attorney is qualified to discuss!  An experienced bankruptcy attorney can offer counseling on managing money and budgeting, but a credit counseling service is not allowed to offer legal advice.  They can't talk about Chapter 7 or Chapter 13, about lawsuits people are facing or even about foreclosure on a home.  Only attornies can offer complete bankruptcy information and bankruptcy services.

      The second important reason is time.   When late fees and penalties are piling up by the day and creditors are calling you at home and at work, time is of the essence.  It's crucial that you get legal advice quickly and select a course of action.  This may or may not include filing a bankruptcy petition, but if you had gone first to a credit counselor and paid a fee, precious time would have elapsed, closing off some options.

      Real life statistics bear out what I'm saying about avoiding delay.  The majority of people in Indiana who come to me considering bankruptcy are not financially irresponsible people. They never have been.  "Life happened" to them.  Either a serious illness in the family occurred, with tens and sometimes hundreds of thousands of dollars in hospital and treatment bills, a breadwinner was laid off from work, and sometimes there is an unexpected and expensive divorce going on.  Very often it's a combination of more than one of these things.  Counseling on how to manage a budget isn't really going to help in these cases, and meanwhile, the bills are mounting every day.

      So, what I really want to say to people is this: Don't look everywhere before coming back to where you should've started in the first place.  As bankruptcy attorneys in Indiana, I and the other attorneys in my office are first and foremost counselors. That's precisely what we do every day of the week.  But, unlike debt settlement agencies or credit counseling bureaus, we can help you look in all the right places for a plan that fits you and the situation you're in, and we can help you do it right now!