As someone who's been providing bankruptcy services in Indiana for close to twenty-five years, I know better than most that Indiana bankruptcy help can take any one of a number of different forms.  That's true not only when it comes to filing personal bankruptcy in Indiana, but also impacts small business bankruptcy clients here.

When I'm dealing with small business bankruptcy in Indiana, the typical business is advised to file bankruptcy Chapter 7 in Indiana, or to file under Chapter 13 bankruptcy law in Indiana.  A third valuable tool, though, is Chapter 11.  One of the Columbus bankruptcy lawyers who works in the Mark Zuckerberg offices there likes to explain that Chapter 11 is meant for businesses whose financial problems are expected to be temporary.

Today I want to share with my Indiana bankruptcy blog readers and clients some recent news from Evansville, Indiana, where Regent Communications, the owner of five Evansville and two Owensboro, Kentucky radio stations, has filed Chapter 11.  The news story calls this bankruptcy a "consensual financial restructuring".   So who's doing the consenting here?  Well, it's a case of lenders and debtors working together to save the company.

Details include:
 

• Regent bondholders will convert their bonds into stock in the company.
• Stockholders will receive cash for each share they own.
• The company will file Chapter 11 bankruptcy and execute their plan under the supervision of the court.
• There will be no change in senior leadership.
• The company will continue to pay vendors and employees.

As a debt consolidation lawyer and Indianapolis bankruptcy lawyer, I think this consensual Chapter 11 is a great example of one thing bankruptcy in Indiana is meant to accomplish - buying time for businesses to work through their plan.  When I read that "the move is not expected to impact day-to-day operations at Regent-owned stations," I was reminded of that wonderful line from the Hokey Pokey - "That's what it's all about!"

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!

Everyone's hoping that 2010 will be better than 2009 (anything would be better!), and Creditcards.com agrees.  In keeping track of bankruptcies per capita for each state for 2009, the website puts Indiana at a per capita rate of 5 - 5.9 bankruptcies filed for each 1,000 residents.

While we're far behind Nevada, with 11 bankruptcies per 1,000 residents, that's no comfort for any Hoosier, least of all for me. As a bankruptcy attorney in Indiana for close to 25 years, I know that 5 in 1000 translates into far too many bankruptcy filings.

A fellow attorney commented that, "earlier in the decade, if you had an economic problem, you could mortgage your way out of it."  I have to agree - that kind of "solution" doesn't seem to be available today, what with the collapse in home prices and the decrease in the number of available jobs (which serve as the basis for qualifying for home equity loans).  We're all seeing this change, the Anderson, Bloomington, Indianapolis, and Columbus bankruptcy lawyers who work in the Zuckerberg bankruptcy law offices in each of these Indiana locations - you just can't mortgage your way out this time!

As a debt consolidation lawyer for so many years, I'm used to seeing home equity lines of credit being used to reduce credit card debt.  Instead, nowadays, I'm working to help stop foreclosure by negotiating mortgage modifications for my Indiana bankruptcy clients.
Creditcard.com reports on other changes on the national bankruptcy landscape as well, showing that the percentage of consumers filing bankruptcy Chapter 7 is increasing, while the number qualifying under Chapter 13 bankruptcy laws is dropping.

In order to offer the most up-to-date Indiana bankruptcy help, I try to read everything I can about real estate, financial planning, taxes, and employee benefits.  When it comes to real estate, forecasts are far from rosy. More foreclosed properties are predicted to hit the market this year.

So, while bankruptcy will continue to offer relief from harassment by creditor and to buy time for individuals and small businesses to plan how to handle financial problems, one thing is all too plain: We won't be able to mortgage our way out of this one!

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!

 

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!

It's no secret - scams make my blood boil.  Here I am, working for close to twenty-five years to help people facing severe financial challenges.  Along with the Columbus bankruptcy lawyers who work in the Mark Zuckerberg bankruptcy law offices there, I work to help stop foreclosures on my Indiana bankruptcy clients' homes.  Then we run up against foreclosure consultant scammers preying on vulnerable homeowners - it's enough to make anyone outraged!

Then, as an Indianapolis bankruptcy attorney, I encourage debtors to rebuild their credit step by step after emerging from bankruptcy.  Then I learn of identity theft schemes of every kind that can so easily sabotage all the debtors' best efforts.  Talk about blood boiling!

The most recent scam warnings issued by the Federal Trade Commission have to do with the cruelest kind of all - online job scams. These just really get to me.  Job losses, mind you, have always been one of the three leading causes of bankruptcy, along with divorce and medical bills. But, during the past two years, with the job situation being so very difficult, it's extraordinarily cruel to target the unemployed.  The scams typically begin with job placement ads or work-at-home schemes. 


The FTC warns the public not to fall for online offers such as:

• Job listings in return for a fee
• A business "opportunity" in return for an up-front investment
• Ads seeking to hire people to use their own PayPal accounts to facilitate transactions with foreigners (It typically turns out there are no real foreign customers, and the US middlemen victims are hit with penalties and fees from PayPal and the credit cards).

As Pam Dixon, executive director of the World Privacy Forum explains, "help wanted" scams work "because unemployed people are vulnerable." I'm hoping that my Indiana bankruptcy clients and bankruptcy blog readers get the message loud and clear.  In today's economy, a lot of people need the help of a debt consolidation lawyer and Indianapolis bankruptcy attorney.  What they don't need is online job scammers!

 

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!

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.

Barry Corbin's name is not nearly as well-known as Nicholas Cage's, but Corbin just joined the list of celebrities who've filed bankruptcy. Far from rejoicing that another of the rich and famous is suffering from financial setbacks, I talk about stars' troubles only for purposes of illustrating how the bankruptcy safety net works.

Needless to say, as a bankruptcy attorney in Indiana, I must observe client confidentiality for the tens of thousands of clients whom I've helped with filing personal bankruptcy in Indiana, as well as for the thousands of clients who have filed small business bankruptcy in Indiana. When there's already a story in the news about a celebrity bankruptcy, by contrast, I am permitted to comment in my bankruptcy blog posts.

Barry Corbin, you might remember, was "Uncle Bob" to John Travolta in the movie Urban Cowboy, and played on TV in both the Dallas and Police Academy series.
It's interesting that just a year ago, I was writing about Michael Vick filing bankruptcy and using that news story to illustrate the different steps in the bankruptcy process, including the Creditors' Meeting.  Then, just a couple of months ago I was writing blog posts about Nicholas Cage filing bankruptcy, and, from my vantage point as a debt consolidation lawyer and someone who's been offering Indiana bankruptcy help for almost a quarter century,  analyzing some of the factors that led to that actor's troubles.

One factor common in all three of these celebrity bankruptcy stories is real estate.  When discussing Chapter 13 bankruptcy law in Indiana, I always explain that foreclosure and bankruptcy are two separate legal processes, even though in most client situations, both seem to play a part in the financial troubles.
 

• In the Michael Vick case, one of the biggest assets that was put up for auction in order to pay creditors was a luxury home he owned in Atlanta.
• Nicholas Cage had already lost two homes in New Orleans to foreclosure and needed to sell other properties at a big discount to raise money to pay creditors.
• Barry Corbin is trying to reduce costs by selling his home in Texas, using the proceeds to pay creditors.

In all three cases, the fact that real estate values have dropped has delayed the sale of the homes.  The drop in home prices is affecting many Indiana residents who are trying to downsize and keep their bills paid, but who are being forced to consider bankruptcy.

A second factor, tax debt, played a part with Nicholas Cage, but doesn't appear to be the issue with Barry Corbin. (According to Forbes, Nicholas Cage owes more than $800,000 in back taxes and penalties.)

The thing about the Barry Corbin case that really resonated with me (in fact, I was discussing this very thing the other day with the Columbus bankruptcy lawyers who work in the Mark Zuckerberg law offices there) is something Corbin's lawyer said about the reason Corbin needed to file bankruptcy:

"The types of movies that he is used to making, they are not making anymore."

In the course of my work as an Indianapolis bankruptcy attorney, it's very, very rare that I deal with a celebrity case.  The vast majority of my Indiana bankruptcy clients are everyday working people and small business owners. When most of these business owners first seek my help, they admit they are upset and even ashamed that their businesses are in trouble. Yet, as I learn more about their stories, I usually find these troubles were caused by changes in their industry that were beyond their control.

Things change, even when we most wish they would remain the same. Sometimes, they're "just not making them any more!"  That's when good people need society's help in the form of bankruptcy to give them a fresh financial start.

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!

As a debt consolidation lawyer in Indiana, one of the many things I do is help stop foreclosures.  Well, one evening while driving home, I tuned into the Howard Clark Show on WIBC, and heard him discussing short sales and foreclosures.  Howard was offering a special tip to listeners who were interested in buying distressed real estate, so that banks wouldn't "demolish their credit scores."

Clark's tip was referring to credit checks. When investors wanted to bid on a home being sold in a short sale or on one being sold by a lender after a foreclosure, the banks would run a credit check on every bidder, and do that every time they bid.  That resulted in a lot of credit inquiries showing up on bidders' credit reports.

As an Indianapolis lawyer for bankruptcy, I often give clients who have emerged from bankruptcy the same kind of advice when they're shopping for a car:  Avoid multiple credit inquiries.  I recommend to the Bloomington, Anderson, and Columbus bankruptcy lawyers who work in the Mark Zuckerberg bankruptcy law offices in those cities that they tell their bankruptcy clients the same thing.

Here's what I mean.  If you take a look at your own credit report, you'll probably see multiple credit inquiries listed on it.  Businesses you never heard of might be thinking of trying to get you as a customer.  Prospective employers might have checked your credit report.  An insurance company might have inquired.  Or you might even have requested a check on your own report.  None of these are any problem.  The only inquiries that can negatively affect your credit score are the ones generated when you apply for new credit.

That's why Clark Howard was warning would-be bidders on distressed property about the potential damage to their credit ratings. He explained to listeners that, until their bid was actually accepted, there was no legitimate reason for the bank to check their credit score.  For the same reason, in offering Indiana bankruptcy help, I advise clients who have filed and emerged from individual bankruptcy in Indiana to bring along a copy of their own credit report when they visit different auto dealerships to try to find a car.  That way, they won't have multiple potential lenders all make inquiries with the credit bureaus.  And that way, their credit scores won't be "demolished". 


 

Usually, whenever I or one of the Anderson, Bloomington, Indianapolis, or Columbus bankruptcy lawyers in the Mark Zuckerberg bankruptcy law offices is advising clients on mortgage matters, it's for the purpose of negotiating a mortgage modification with a client's lender. But, as more and more seniors are being forced to consider bankruptcy in Indiana, the subject of reverse mortgages has been coming up frequently is we meet with our clients.

By way of quick review, homeowners over the age of 62 can use a reverse mortgage to convert their home equity into cash they can use. As long as the homeowner continues to occupy the home, repayment is not due; the bank is repaid only when the house is sold.  Seniors are allowed to choose among three ways to receive money out of their home equity:

 

• A line of credit from which the homeowner can draw as needed.
• A monthly fixed amount for a fixed period of time.
• A monthly fixed amount for life. (This is calculated based on seniors' age at the time and the amount of equity they have in their home.

It appears today's bankruptcy blog reader chose to receive a fixed monthly payment out of his reverse mortgage.  His question is: How would filing individual bankruptcy in Indiana affect those monthly payments?

As a bankruptcy attorney in Indiana and also as a debt consolidation lawyer, I've been handling bankruptcy and foreclosure matters for decades. When a reverse mortgage is involved, though, matters become a bit more complicated. So the very first thing I want to emphasize to this blog readers is how important it is for him to seek expert legal advice on reverse mortgages before moving forward with an individual bankruptcy in Indiana.

Some of the factors that the bankruptcy court will be considering include:

• If a debtor's equity in his/her home doesn't exceed the Indiana exemption of $15,500, he or she can keep the home, even in a Chapter 7 bankruptcy.
• In the case of a reverse mortgage, the "equity" is the unused income that has yet to be paid out to the owner.
• Filing bankruptcy does not constitute a default against the reverse mortgage, so foreclosure is not an issue.

About the income:

• As part of filing bankruptcy, the homeowner must report all sources of income.  That would include the reverse mortgage payments.
• In a Chapter 13 bankruptcy, that income would be considered in created a debt repayment plan.

Every bankruptcy situation is different.  Designing the right strategy for each client is part of the skill required of a certified consumer bankruptcy specialist, and is what makes my work so interesting after all these years of practice.

"For many people owning a small business and being financially independent is what the American dream is all about," begins a paper about the causes of small business bankruptcy by Professors Bradley and Cowdery of the University of Central Arkansas.

I and my colleagues who are bankruptcy attorneys in Indiana's four Mark Zuckerberg law offices couldn't agree more.

Yesterday, in my Indiana bankruptcy blog, I shared statistics from Bloomberg News comparing the percentage growth in business bankruptcy and individual bankruptcy in Indiana.  While composing that blog, I got to thinking about the thousands of Indiana small business bankruptcy clients with whom I've worked over the years and what I've learned about the way entrepreneurs operate. 

First, while not a single one of those clients went into business even considering "failure" as an option, reality is that a large majority of small businesses do end up failing.   Given how devoted to the success of their businesses my clients all seemed to have been, why was it,  I often asked myself, they were now being forced to consider bankruptcy?  Just as with clients to whom I offer individual bankruptcy help in Indiana, I came to the conclusion that these small business failures were often due to factors beyond the owners' control.

As an Indianapolis bankruptcy attorney and debt consolidation lawyer, I was interested in reading the results of a research project conducted more than ten years ago by the U.S. Small Business Administration about the reasons small businesses fail.

In response to a survey, business owners offered the following factors leading to business failure and small business bankruptcy :
 

• Outside business conditions (competition, costs of doing business)
• Financing (loss of capital, inability to secure loans)
• Inside business mistakes (management mistakes, poor location, loss of clients, poor recordkeeping)
• Tax problems
• Disputes:  (lawsuits, contract disputes)
• Personal: (illness and divorce)
• Calamities: (fraud, theft, natural disasters, accidents)

Every one of these problems, often several in combination, is something I've found in the stories told to me by my own small Indiana business bankruptcy clients. In the recent recession, financing problems have been particularly acute, with customers "slow-paying" their invoices, with suppliers on the other hand demanding timely payment, with increased costs of inventory, plus the lack of available capital to expand and adapt to new technology - small business in Indiana has been "squeezed".

After so many years (coming up on 25 !) of offering bankruptcy services in Indiana to both individuals and small businesses, the picture that comes to my mind when I  think of small business bankruptcy in Indiana is this:  a mini-car being pushed from three sides by "semi trucks". 

From one direction, you have the big businesses that are downsizing and even closing, thus offering fewer and fewer opportunities for the small business to supply parts and services to those big businesses.  In another direction are the customers who are hurting financially themselves and can't make timely payments to the small businesses. Yet a third kind of pressure is coming from the lenders, who are calling credit lines and refusing to offer new credit.

Add to all of this the fact that in the vast majority of small business situations, the personal finances of the business owner are mixed in with the business finances, and it's easy to see why, especially here in the state of Indiana, small business is big, but also, in many cases, in big trouble!

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!

Over my many years dealing with personal bankruptcy in Indiana, there have been many changes in the economy, as well as changes in the form of new bankruptcy laws in Indiana.  As 2010 begins, I’ve been reading what different news services are predicting about bankruptcy trends, and paying attention to what the Indianapolis, Anderson, Bloomington, and Columbus bankruptcy lawyers who work in the Mark Zuckerberg law offices in each of those places are seeing, hearing, and reading. 

“The number of Americans filing for personal bankruptcy rose by nearly a third in 2009,” says the Wall Street Journal. Since I offer Indiana bankruptcy help, I was interested in the statistics quoted in WSJ from the National bankruptcy Research Center comparing the different states. Because of the recession, bankruptcy was up in every state (2009 compared to 2008), with Arizona showing the greatest increase (79%), and Nebraska the least (12.2%).  Indiana was in the middle with a year-over-year increase in the number of bankruptcies filed of 32.8%.

The nonprofit Institute For Financial Literacy that provides bankruptcy-related counseling and education added that “the housing crisis and high unemployment have prompted more people to file for bankruptcy who may never have considered the option before.”

As an Indianapolis bankruptcy attorney and debt consolidation lawyer, I’m experiencing that exact thing, with more middle to upper class people filing bankruptcy in Indiana.
Richmondbizsense in Virginia says bankruptcy lawyers there used to see a lot of single parents filing for bankruptcy, but now they’re seeing more middle and upper-middle class families prepare bankruptcy filings,“folks with a good income, maybe two folks working and one loses the income..”

Christine Wilton of California, in Bankruptcy Trends for 2010, predicts “We will see continued high numbers of filings throughout 2010.” Wilton expects more small business bankruptcy to occur as well this year “as this sector continues to tailspin from the economic recession ripple effect”.

Wilton concludes her article by saying “Bankruptcy will be the new “black’ for many Americans seeking financial freedom from debt.” Whether that prediction is borne out in reality this year or not, my plan is to continue offering bankruptcy help in Indiana, including student loan debt help and payday loan debt help, one family, one individual at a time.

In The Two-Income Trap, Harvard Law School professor and bankruptcy authority Elizabeth Warren, together with co-author Amelia Warren Tyagi, write about guilt-free default in bankruptcy.

Now, there’s a question that comes up all the time in the course of my work as an Indianapolis bankruptcy attorney and debt consolidation lawyer – Is there such a thing as guilt-free default? My associates who work as my Columbus bankruptcy lawyers and those who work in the Anderson and Bloomington Mark Zuckerberg bankruptcy law offices deal with this issue every day of the week  as well:
 

• What about all my bills that will never get repaid?
• These companies lent me money, so aren’t I obligated to pay them back?? (This is where all the self-blame and guild rear their heads…)

I’ve been offering Indiana bankruptcy help for almost twenty-five years and dealing with personal bankruptcy in Indiana, so these are no new questions for me, but I like the way Warren and Tyagi handle this issue in ther book, by offering a few reassurances and a warning.
 

• Lenders (credit card companies and banks) took a calculated risk when they lent you money.  Every lender hopes to make money on every loan, but they know a certain percentage of loans will default. “The interest charges and penalty fees are designed to cover those risks.”
• Debtors have no need to worry about never being able to obtain credit again.  “Within six months of filing for bankruptcy, 84% of families surveyed received unsolicited offers for new credit.

• “Whatever you do, don’t reassume any old debts that were discharged by the courts.” According to Warren and Tyagi, one in four families signs on to reassume debts that were discharged by the bankruptcy court, mostly out of fear of having purchased goods repossessed.

So, if your debts have been discharged under the new bankruptcy laws of Indiana, you might ask, What about the guilt? If you borrowed money, aren’t you morally (even if no longer legally) obligated to pay it back?

Maybe, say Warren and Tyagi.  “If everyone had stayed healthy and you hadn’t lost your job, you would have paid your debts… But that didn’t happen.”  You were obligated, yes, they explain.  But you’re also obligated to keep a roof over your head and your family’s head, put food on the table, and get the medical care you need. 

The bankruptcy safety net was created to give honest debtors like you a chance to rebuild. Elizabeth Warren and Amelia Tyagi agree:  “Give yourself the best odds of getting exactly what you need from the bankruptcy judge – a fresh start!”

 

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!