New Bankruptcy Laws Indiana

Immediately after my article appeared last week discussing minors filing personal bankruptcy in Indiana, the phone started ringing at two of the Zuckerberg bankruptcy law offices.  Several Bankruptcy in Indiana readers were calling about situations involving a minor child, but another wanted to know whether an adult who is legally incompetent and who has a guardian can file individual bankruptcy in Indiana as well.

The answer is yes.  In fact, in all my years practicing Indiana bankruptcy law, I’d say filing on behalf of legally incompetent individuals is more common than filing on behalf of minors.

By way of setting the stage for explaining how the new bankruptcy laws of Indiana apply to debtors who are legally incompetent, let me offer some basic facts:
 

• The U.S. Bankruptcy Code itself does not specifically define “incompetency”.
   
• However, the Code does talk about “legal capacity” in discussing the credit counseling that is required in order to file.
   
• When it comes to incompetent debtors, it will make a difference what type of bankruptcy is being filed. If an incompetent debtor is filing bankruptcy Chapter 7 in Indiana (using a representative), the same rules would apply as would normally be the case. 
   
• However, if the incompetent were to file under Chapter 13 bankruptcy law in Indiana, things would be more problematic.  That’s because a Chapter 13 three to five year debt repayment plan would be dependent on the debtor having continued income from work to support the payments.

Just as readers wanted to know how it could come about that a minor would incur enough debt to file personal bankruptcy in Indiana, I’m sure some questions are in your mind about legally incompetent filers.  Imagine this scenario…

A year ago, “Bob” had a job and was making regular mortgage and car payments, also paying a little more than the minimum monthly payments on his three credit cards.  Then an auto accident left Bob severely disabled, both mentally and physically; he can no longer work.  He’s being sued by the owner of another car involved in the accident.  Bob’s own medical bills exceed his insurance coverage, and he’s fallen behind on his mortgage payments.  Bob’s short-term disability insurance has run out.  Bob is not married, and his brother has just been appointed his legal guardian.

Filing personal bankruptcy in Indiana cannot restore Bob’s health, but it can stop collectors from making Bob’s brother’s life more of a burden.  Filing bankruptcy can “clean up” the financial picture, so that Bob’s brother can focus on getting Bob the ongoing care he will need. In other words, bankruptcy can help legally incompetent individuals “buy time” to put together the pieces of their shattered lives.

You wouldn’t suppose the words “minor” and “bankruptcy” would appear very often in the same sentence.  But, according to many of the good bankruptcy attorneys in Indiana who work in the Zuckerberg bankruptcy law offices, they do.

And, while I’ve not found very often that the debtor is a legal minor during my 25 years as a debt consolidation lawyer and Indianapolis bankruptcy lawyer, it does happen.

The U.S. Bankruptcy Code defines a debtor as “a person that resides or has a domicile, place of business, or property in the U.S”.  Even so, as one of my Columbus bankruptcy lawyer colleagues points out, a minor (and the age of majority differs from state to state) must use a representative in order to file bankruptcy.  A guardian ad litem appointed by the court, a conservator, or a parent could be that minor’s representative in filing individual bankruptcy in Indiana.

How can it come about, you might wonder, that a minor has incurred so much debt as to need to file personal bankruptcy in Indiana?  I asked all my colleagues to look back over their records to find instances of bankruptcy Chapter 7 in Indiana or (this would be much rarer) of a minor who filed under Chapter 13 bankruptcy law in Indiana.

Here’s what came back:
 

• Anderson lawyers for bankruptcy: Minors were involved in car accidents that injured someone else who’s suing.

• Bloomington bankruptcy attorneys: High school or college students were running businesses that incurred huge liabilities.

• Columbus bankruptcy lawyers: College students applied for and were given a lot of credit cards and failed to keep up with the payments.

• Indianapolis bankruptcy lawyers: Child who was emancipated legally incurred a lot of student loan debt that he or she could not repay.

Despite all these real life examples, I want to remind Bankruptcy in Indiana readers that these are still rare instances among the tens of thousands of people helped at the Mark Zuckerberg law offices.

While it’s relatively rare for minor children to file, it’s very common for children to feel the effects of parents’ bankruptcy in Indiana.

Although I’ve been watching the news about municipal bankruptcies in other states, in all of the twenty five years I’ve practiced as a debt consolidation lawyer offering bankruptcy services in Indiana, there has never been a provision in our state for a city or town, much less the state, to file Chapter 9 bankruptcy. 

As I was explaining to one of the Columbus bankruptcy lawyers who works in the Zuckerberg bankruptcy law offices, one of the reasons I’m interested is that I would like to be involved in the process if ever our law changed and allowed municipal bankruptcy.  More important, though, is that writing about bankruptcy in other states allows me to help readers better understand

• how the bankruptcy process works in general
   
• how filing small business bankruptcy in Indiana can bring financial relief and allow some businesses to rebuild.
   

One city whose story I’ve been sharing over the past few years is Vallejo, California, which became the nation’s largest city to declare bankruptcy.  A recent headline declared “Vallejo begins to recover from bankruptcy”. Let’s look behind the scenes: municipal bankruptcy forced Vallejo to create a more realistic budget and to learn to live within that budget. Some public projects needed to be postponed and some services needed to be cut.  But, just as happens with bankruptcy Chapter 7 in Indiana, or with folks filing personal bankruptcy in Indiana under Chapter 13 bankruptcy law, Vallejo’s new way of managing finances is sustainable.

Just this month, a judge cleared the way for an Alabama county (the one where Birmingham is located) to file municipal bankruptcy.  This is even larger than the Vallejo bankruptcy, with the main problem being all the borrowing the county needed to do for its sewer system. Jefferson county, as one of my Columbus bankruptcy lawyer colleagues reminded us, actually filed the bankruptcy back in November, but there were claims that Alabama’s state law did not allow the case to be filed. The lesson here that I want to emphasize is that the reason the judge approved the bankruptcy is that “Jefferson County is insolvent and negotiated in good faith to repay its debts.”

In the case of Jefferson County, the problems stemmed from a mix of outdated sewer pipes and a bad economy.  When it comes to personal bankruptcy in Indiana, it’s typically a mix of factors such as job loss, divorce, and medical costs. That statement is true whether people are filing bankruptcy Chapter 7 in Indiana, filing individual bankruptcy under Chapter 13 bankruptcy law, or filing small businss bankruptcy in Indiana.

As sure as my name is Mark Zuckerberg, the purpose of bankruptcy law in general is to help honest debtors (who’ve tried everything they can to keep repaying what they owe but whose circumstances simply don’t allow them to catch up) to have the chance for a fresh financial start.
 

Having just last week answered one Bankruptcy in Indiana reader’s question about exemptions in our state, I couldn’t help feeling a bit jealous of residents of the state of Massachusetts who file personal bankruptcy there.

Since I’ve served as a debt consolidation lawyer and bankruptcy attorney in Indiana for more than twenty-five years, and since I actually was called upon to help write the exemptions portion of the new bankruptcy laws of Indiana, I shouldn’t complain.  Fact is, the vast majority of the tens of thousands of individuals whom I’ve helped file bankruptcy Chapter 7 in Indiana at the four Zuckerberg bankruptcy law offices did not have any of their assets liquidated in order to pay creditors.

Still, as my colleague the Columbus bankruptcy lawyer pointed out, in Massachusetts the exemption numbers are far more generous than the ones we deal with when debtors file individual bankruptcy in Indiana.
 

• The Homestead Exemption in Indiana is $17,600 per person (double that if spouses co-own the home). Compare that to a $500,000 exemption in Massachusetts. A large part of my work involves help to stop foreclosure.
   
• For automobiles, which have no specific exemption in Indiana (just part of the Wild Card Exemption), Massachusetts gives a $7,500 exemption. Another big part of my work is helping people recover automobiles that have been repossessed. Remember, a car loan is a secured loan and cannot be discharged in bankruptcy the same way unsecured loans are.
   
• For wages, in Indiana, debtors are allowed to keep only $350 a month in income (over approved expenses); in Massachusetts they’re allowed to keep 85% of income.

Another difference is that, in Massachusetts, debtors are allowed to choose between the federal exemptions and the exemptions in their state.  Here in Indiana we use only the state exemptions.

When it comes to public benefits, interesting enough, Indiana bankruptcy exemptions (for either bankruptcy Chapter 7 or under Chapter 13 bankruptcy law) are more liberal than Massachusetts law.  Massachusetts law exempts 100% of five types of public benefits:

1. Public assistance benefits
2.  Workers’ compensation benefits
3.  Unemployment compensation benefits
4. Aid to families with dependent children benefits
5. Veterans’ benefits

The new bankruptcy laws of Indiana, by contrast, provide exemptions for all of these five, plus crime victims’ benefits, and benefits for police officers, sheriffs, and state teachers.  In addition, the Wildcard Exemption, which all good bankruptcy attorneys in Indiana find very useful on behalf of clients, does not exist in Massachusetts.

So, after all these years offering bankruptcy services in Indiana, do you see me packing my bags and moving to Massachusetts? Not a chance!

As the third Bankruptcy in Indiana reader question of the week, I was asked “What are the Indiana bankruptcy exemptions for a joint bankruptcy?”

That is actually an “educated” question, because not many people know that although the federal bankruptcy code provides a list of exemptions, and although in many states debtors have the choice of using their state law of these federal rules, in this state the law requires those filing personal bankruptcy in Indiana to use the exemptions found in Indiana state law. (As a longtime debt consolidation lawyer offering bankruptcy services in Indiana, I was privileged to have helped write that list of Indiana exemptions.) Beginning with the year 2010, by the way, our Indiana exemptions are set to be adjusted for inflation every six years. 

Going back to our reader’s question about filing a joint bankruptcy, I have several comments:

• The exemptions apply to each debtor separately.  That means that when two people joint personal bankruptcy in Indiana, it’s generally true that the exemption amounts can be doubled.
   
• Most good bankruptcy attorneys in Indiana will agree that, in actual practice, they find that almost all people facing bankruptcy own only the kind of property that is exempt.
   
• As debtors filing personal bankruptcy in Indiana, if either one of you  separately - or if together - you own any asset that is worth more than the exemption amount (the equity you have in it),  the exemption will apply, but the bankruptcy trustee could still force the sale of that asset, giving creditors whatever amount of the proceeds exceeds the exemption.  In other words, exemptions protect only the equity you have, not the entire value of each asset.
   
• The Homestead Exemption in Indiana is $17,800 (make that double if spouses are co-owners of the home. For other real estate owned, the Indiana exemption is $9,350, or $18,700 for jointly owned property. (This is called the Wild Card Exemption.) $350 is exempt for each of you for non-tangible property such as bank accounts or tax refunds.

One of the most pervasive myths about bankruptcy, claims one of the Columbus bankruptcy lawyers who works in the Zuckerberg bankruptcy law offices, is that if you’re married, you must both file bankruptcy.  I wanted to be sure and tell our reader that’s not necessarily true.  Certainly, in cases where husband and wife have a lot of debt, it could save money for them both to file, but they don’t have to do that.  Deciding whether to file jointly or not can be complicated, so it’s best to get good legal advice early on. Remember, you’ll want to take maximum advantage of those Indiana exemptions!

This is my week for answering questions posed by Bankruptcy in Indiana readers.  With tax season approaching, many visitors to the Zuckerberg bankruptcy law offices are getting protective about the tax refund dollars they’re expecting. “If I file personal bankruptcy in Indiana” this week’s reader asks, “Will my refund dollars be seized by the bankruptcy court?”

Before I can answer that question, I would need to ask this reader a question of my own: Which of these three describes your situation?

a) You’ve already gotten your refund and you still have the money.
When you file individual bankruptcy in Indiana, the tax refund money must be reported as part of your assets on the bankruptcy paperwork I help you file with the court.  It will be up to the court to decide whether you get to keep it to pay living expenses or not.

b) You’ve gotten your refund and already spent the money or will have spent it before you file.
The bankruptcy court will need to know how you spent that money – did you use it for essentials or on luxuries? If it was luxury, the court will not look favorably on your petition, saying you should have used the money to pay your debts.

c) You’re expecting a tax refund, but will not have received it by the time you file Indiana bankruptcy.
The bankruptcy court will need to know you’re expecting the money and will decide if you can keep it for essentials or insist you use it towards your debts.

Looking at your situation from a different vantage point, I want to share with you that, after 25 years as a debt consolidation lawyer offering bankruptcy services in Indiana, I’m used to seeing clients wait for their tax refund in order to be able to pay the legal fees for filing personal bankruptcy in Indiana. Without that money, they couldn’t afford to file!

Even if that describes your situation, I’d still urge you not to wait, but to go ahead and have an exploratory meeting with an experienced bankruptcy attorney to get a plan of action in place.

As my Columbus bankruptcy lawyer colleagues are fond of saying, taxes and bankruptcy are definitely related, but it’s a complicated relationship.  Things will work a whole lot better if you have a plan!
 

From time to time, Bankruptcy in Indiana readers will pose questions on matters I believe other readers will want to know about. So, this week, I’m devoting all three of my articles to answering readers’ questions.

Today’s question relates to wage garnishment in Indiana, but it’s especially timely, because the reader is worried not about his paycheck from work being garnished, but about the unemployment benefits he’s been receiving since he lost his job. I’ve been hearing a lot about this lately.  In fact, one of the Columbus bankruptcy lawyers who works in the Zuckerberg bankruptcy law offices there tells me she’s hearing just this question, just about every day.

Generally speaking, under the new bankruptcy laws of Indiana, income that can be garnished includes:

• Salary
• Commissions
• Hourly wages (or daily or weekly wages)

Now, as I tell clients when they come to me for Indiana bankruptcy help, not all of your pay can be garnished.  The most that can be taken is 25% of your income OR whatever amount of disposable income that is more than 30X the federal minimum hourly wage.  (Whichever of these two numbers is greater is the maximum that can be garnished.)

Going back to our reader’s specific question about whether unemployment benefits can be garnished, the general answer is “No”.

But, as all good bankruptcy attorneys in Indiana know, there are several important exceptions to that “no” answer when it comes to wage garnishment and even when it comes to the garnishment of unemployment benefits:

• Child support debt
• Alimony debt
• Debts owed to the state of Indiana
• Criminal fines

Filing individual bankruptcy in Indiana is a way to put a halt to all collection efforts, including garnishment.  For those without work who are collecting unemployment benefits, the most common form of personal bankruptcy they can file is bankruptcy Chapter 7.  That’s because, under Chapter 13 bankruptcy law, the debtor must have enough income to sustain a debt repayment plan.

The bottom line answer to today’s reader question about whether he’s lose his unemployment benefits is “Probably not!”.

Valentine’s Day has come and gone, but the many myths about couples and money persist throughout the year.  In fact, one of the questions most asked of all good bankruptcy attorneys in Indiana is this:

Must married couples both file bankruptcy, and should they file together or separately?

So, even though weeks have passed since Valentine’s Day, I’ve decided to devote today’s Bankruptcy in Indiana article to couples and their credit, debunking some common myths about marrieds who file personal bankruptcy in Indiana.

 

As Constitution Guru explains, “When a married couple face bankruptcy, they can file jointly, one can file while the other one doesn’t, or they can file separately at the same time.”

And, as one of my Indianapolis bankruptcy lawyer colleagues stresses to our clients,  there is a legal theory called “joint and several liability”.  What that means is that when a married couple have joint debts (such as a credit card in both names), each one is liable for repaying the total debt.

For my part, as a debt consolidation lawyer offering bankruptcy services in Indiana for so many years, I often need to explain that, when a married person files individual bankruptcy in Indiana and any debts are discharged (forgiven) by the bankruptcy court, that discharge will apply only to that person’s separate debt, not to jointly held debts.

A related myth that Sandra Block writes about in USA Today is that if husband and wife keep their finances separated, then one’s poor credit history won’t have any effect on the other person.  The fact is, Block explains, while credit scores don’t get merged when you get married, “lenders will look at both spouses’ credit reports from all three credit bureaus.”

The Indiana lawyers for bankruptcy in all four Zuckerberg bankruptcy law offices deal with situations where only one spouse is filing personal bankruptcy in Indiana.  Especially when it comes to cases filed under Chapter 13 bankruptcy law, they know the non-filing spouse’s income needs to be included in the bankruptcy paperwork.

Along with the many myths concerning married couples filing bankruptcy Chapter 7 in Indiana, there is one misunderstanding that my Columbus bankruptcy lawyer colleague tells me she’s asked again and again: Is it better to file bankruptcy prior to a divorce or after the divorce is final? That’s going to have to be the subject for another Mark Zuckerberg article, but suffice to say that divorce may break up a couple legally, but financially they are still tied to each other when in comes to filing either individual bankruptcy or small business bankruptcy in Indiana!
 

“Nation refuses to Read Headline” is one headline that got the attention of one of my Columbus bankruptcy lawyer colleagues.  In fact, all of the Indiana bankruptcy attorneys who work in the Zuckerberg bankruptcy law offices spent a good part of the day talking about it!  The Washington Post headline began:

                             “4-Year-Old Girl Forced To…”

Millions of Americans, according to a feature writer from The Onion, confirmed they quickly closed their laptops or folded away their newspapers because “there was no possible ending to the headline they could tolerate.” Readers simply could not bear to go about their day with the sort of horrifying news hinted at in that headline.

In my more than twenty-five years as a debt consolidation lawyer offering bankruptcy services in Indiana, I know the psychology.  We humans don’t like to confront ugly realities, particularly when those realities involve us and our finances.  In my profession, I see proof of this every single day.

For every one hundred people, for example, who come to see me to get help stopping foreclosure or student loan debt help or payday loan debt help, I know there are five hundred others who aren’t asking for the help they desperately need. Not only are those folks not coming to my bankruptcy law offices, they’re not coming to anybody’s office to get advice! It’s as if they can’t deal with the rest of the “headline”.

Now, that news about the 4-year-old whose adorable photo was next to the Washington Post headline, awful as it was, had to do with somebody else other than the reader who closed his or her laptop or who folded up his or her newspaper.

But for all those people for whom filing personal bankruptcy in Indiana could be their only ticket to a fresh financial start, it’s their own story they’re refusing to “read”. The pre-bankruptcy symptoms are there, but we refuse to heed the all-too-obvious diagnosis and take steps to obtain debt relief.

When debt overwhelms, don’t just continue with your day, hoping the problems will disappear. At the Zuckerberg bankruptcy law offices, we aim to help you continue with your LIFE!

With all the effort to help stop foreclosure coming out of the four Zuckerberg bankruptcy law offices, I could really relate to the paragraph I read in the New York Times the other day:

“While the entire process of seeking a mortgage modification is complicated and time- consuming, few elements are as maddening as the inability to get through to a representative…’I just keep getting passed from one person to another,’ complained one homeowner. ‘Nobody is willing to talk to me.’”

Well, as debt consolidation lawyers with more than twenty-five years’ experience, my Indiana bankruptcy lawyer colleagues and I are not only willing to talk to you, we’re willing to help you talk to your bank or mortgage servicing company!

Unfortunately, as New York Times reporter Nelson Schwartz observes, there is “doubt whether a settlement will eliminate mortgage ills” (referring to new government standards for how mortgage companies deal with consumers). From my vantage point as a lawyer for bankruptcy in Indiana, there’s good reason to doubt.

Using Chapter 13 bankruptcy law, many homeowners can prevent foreclosure.  But the longer they wait to take action, hoping against hope for a mortgage modification from their lender, the narrower a range of choices they have. As one of my Columbus bankruptcy lawyers pointed out, the late fees and penalties that pile up during the wait make it difficult to “cure” the arrearage on mortgage payments through a Chapter 13 debt repayment plan.

Time is of the essence as we work to help stop foreclosure.  And, when medical debts pile up along with late mortgage payments, even those with good jobs may find themselves in need of payday loan debt help or student loan debt help.

So, even as “government officials prepare to unveil new standards for how banks treat millions of Americans facing foreclosure,” this Indianapolis lawyer for bankruptcy has plenty of doubts remaining about how much help those standards will prove to be.

“The promise of a single point of contact has emerged as a crucial element in the settlement,” explains the New York Times article.  Perhaps, I might suggest, the best guarantee of a “single point of contact” might be attorney Mark Zuckerberg!

This week I’m taking Bankruptcy in Indiana readers to court.  Not actually, of course.  I’m sharing lessons from actual court cases as summarized in a recent issue of Consumer Bankruptcy News.

Today’s cases illustrate one very important principle of bankruptcy: the importance of telling the truth. After twenty-five years as a debt consolidation lawyer in Indiana, I can tell you that the entire bankruptcy process is based on compromise.  The new bankruptcy laws of Indiana are designed to treat everyone, debtors and creditors alike, as fairly as possible.  And while none of the parties is likely to get everything on their “wish list”, the idea is that no one party is supposed to get favorable treatment at the expense of another party.

Now, in any situation, for real compromise to take place, everyone has to have the same information, and that information needs to be correct and honestly portrayed. It’s the same with bankruptcy in Indiana.  Whether someone is coming to one of the four Zuckerberg bankruptcy law offices for help to stop foreclosure, or payday loan debt help, or simply to file personal bankruptcy in Indiana, the first and most important task is to gather all the information that will be needed for the bankruptcy petition.

If less than full disclosure of the facts is what is served up, and the bankruptcy court finds out, there cannot be a happy ending to that story.
 

• One New Jersey debtor, C., after pleading guilty to giving false testimony in his bankruptcy case and misusing a Social Security number that was not his own, was sentenced to twelve months in prison.
   
• In Louisiana, R., a local businessman, was indicted by a federal grand jury for concealing nearly $2 million in assets from his creditors at his bankruptcy hearing.

Now, I’ve helped more than 30,000 people file bankruptcy in Indiana, and I can tell you that most of them have no intention of lying or of concealing assets – they just need relief from debt and the chance for a fresh financial start.  But, because they don’t know how to properly fill out the bankruptcy paperwork, (and of course they’re tense and upset after months of suffering under the burden of their financial problems) they leave out important information.  They haven’t kept good records, they’ve been dealing with medical problems or perhaps a divorce – there are many reasons. The bottom line is they need a lawyer for bankruptcy to make sure the needed information is submitted in the needed way..

Today’s lesson from the court is simple: When people exploit the court system by lying about their assets, they are cheating creditors of their rights, and the bankruptcy system can’t work properly.
 

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

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

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

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

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

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

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

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

Twenty five years is a long period of time. Over all those years in practice as a debt consolidation lawyer offering bankruptcy services in Indiana, I’ve been doing a lot of learning – and a lot of teaching. I lead courses for Indiana lawyers for bankruptcy, lecture all over the country, and helped write a portion of Indiana bankruptcy law.  And what I’ve found through all of this is that there’s nothing like true life stories to get a point across.

That’s why, this week I’m devoting all my Bankruptcy in Indiana articles to actual court cases as summarized in a recent issue of Consumer Bankruptcy News.

When an individual or perhaps a married couple visits one of the Zuckerberg bankruptcy law offices, they usually want our help filing personal bankruptcy in Indiana or possibly small business bankruptcy in Indiana.  The question these clients came to discuss typically begins with the word “should”  (“Should we file?”)  Rarely do potential filers consider the possibility that the court might not LET them file bankruptcy in Indiana!  In today’s true life story, we learn about that…

Facts of the case:

• Pennsylvania debtors Mr. & Mrs. W. intended to file under Chapter 13 bankruptcy law.
   
• One of their creditors, a Mr. D., tried to prove to the court that the W’s did not deserve to have the debt they owed him discharged through bankruptcy.  Mr. D. wanted to sue the couple directly.

The “tests”:
Just as happens in cases of individual bankruptcy in Indiana, the court applied a number of “tests” to help decide if the couple should be allowed to gain bankruptcy relief.

• Were the debtors living extravagantly?  The answer was “no”, so they “passed” that test.
  
  (One function my Columbus bankruptcy lawyer colleagues and I serve is helping our clients gain better control of their budgets, not only in order to qualify for Indiana bankruptcy, but so that they can successfully emerge from bankruptcy and get onto a better financial path.)
   
• Did the debtors fully and accurately disclose all their financial affairs?  The court found that the wife had “passed the test”, but that the husband had made some less than truthful statements and had concealed some information.
   
• The court then looked at the most important “test” of all - fairness. Realizing that the couple did not have enough money to pay Mr. D. even if he were to be allowed to sue them, and realizing that Mrs. W. would suffer if her husband did not also receive a bankruptcy discharge, the court decided that fundamental fairness is the most important principle of all, and the bankruptcy was allowed to proceed.

After having offered Indiana bankruptcy help to literally tens of thousands of people, there are two things I know to be true:

1. Justice, as we’re fond of saying, isn’t perfect.

2. The new bankruptcy laws of Indiana are designed to offer debtors the chance for a fresh financial start while treating both debtor and creditor as fairly and equally AS POSSIBLE!

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

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

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

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

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

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

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

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

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

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

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

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

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

 Here’s the general sequence of events:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

For twenty five years I’ve been helping Indiana debtors seek protection.  You see, protection is the whole point of the new bankruptcy laws of Indiana – they’re designed to protect honest debtors from harassment by creditors.

I polled all the Indiana bankruptcy attorneys who work in the Zuckerberg bankruptcy law offices to see what they see as the main point of personal bankruptcy in Indiana.

• Anderson bankruptcy lawyers chose: 
  Buying time for debtors to recover from problem situations beyond their control.
  
• Indianapolis bankruptcy lawyers chose:
  Offering debtors a chance for a fresh financial start.
  
• Columbus bankruptcy lawyers chose:
  Protecting honest debtors from harassment by creditors.

So, what exactly makes the difference between creditors just trying to get what’s due them and those who break the law? I thought it might be useful to my Bankruptcy in Indiana readers to present this list of “no-no’s” – things debt collectors are forbidden to do:

Creditors can’t “inflate”. In other words, they can’t ask for more than you owe, or add extra fees onto the sum.

Creditors can’t “pester”.  They can’t call before 8AM or after 9PM or on Sunday, and they’re not allowed to call you at work if you’ve asked for that not to happen. (And here’s an important one for after bankruptcy:) They can’t call twice, once they’ve been told the debt has already been discharged in bankruptcy.

Creditors can’t be violent.  They can’t do intentional damage either to your possessions or to your reputation.

Creditors can’t threaten.  They can’t hold over your head promises to sue, to garnish wages, or to wreck your credit score.

Creditors can't “gossip”. They can’t disclose your debt to a third party.

If these things are happening despite the law, your next step might be to inform the Indiana Attorney General’s office or the Better Business Bureau.  But, if that doesn’t help, it’s time to call a bankruptcy attorney in Indiana. And it doesn’t matter if you used a bankruptcy lawyer for filing individual bankruptcy in Indiana or if you took the do-it-yourself route.

If a creditor is breaking the law, it’s time to strike back.  After all, you filed bankruptcy to gain protection from creditors, protection you’re not getting.  When the courts discover that rules are being disregarded and disrespected, you might even qualify for financial damages. 

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

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

The bankruptcy discharge “recipe” calls for:

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

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

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

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

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

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

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

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

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

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

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