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Discharging Debts in Bankruptcy

While filing for bankruptcy can give you a chance at new start by offer some relief from your debts, it will not apply to all of your obligations. With the different types of financing schemes being offered by lending institutions today, there are now a lot of types of “uses” for money, not to mention many more types of debts to be incurred.

 

If your financial situation is that bad and you are eyeing filing for bankruptcy as an option, you have to know what debts can be discharged by pursuing this course. Here are some of the common types of debts that can be discharged through bankruptcy.

1.    Credit card debt

 

Majority of Americans carry that little piece of plastic around with them all the time. It is easy to pull out and use, there is very little fuss except to sign the receipt and any transaction you make is a done deal. It doesn’t matter if you are buying coffee, groceries or even a car. This convenience and ease of use is the reason why credit card debt is the most common type of debt people have today. However, the good news is that bankruptcy usually eliminates all credit card debt so you can get the fresh start you need.

 

2.    Medical bills

 

Another common bill is the medical bill. Who hasn’t gotten sick or hasn’t been taken to the hospital for any medical emergency? Majority of people have been seriously ill at least once in their lives. And with today’s economy doctor’s rates don’t come cheap anymore, not to mention the whole lot of other items that find their way into the bill. Again, the good news is medical bills are also covered under bankruptcy.

 

3.    Mortgage debt

 

When you mortgage a house or any piece of property or land, you are offering that house, property or land as a guarantee so you can borrow money from any lending institution. This is often a risky move as people have lost homes and property taking on debts they thought they could pay but couldn’t. With the bankruptcy option, the outstanding mortgage debt, plus any default fees and other charges on top of your mortgage account, is discharged through bankruptcy once you relinquish the property.

 

4.    Vehicle Loans

 

These days private transport is a must for many individuals, and that’s why many people opt to get car loans. The bad news is not all who get loans can pay them, but the good news is that car loans are also covered for discharge if you file for bankruptcy. However, like the mortgage, the vehicle loan, plus any default fees and other charges, will only be discharged once you surrender the vehicle.

 

5.    Unpaid tax debts

 

Contrary to popular belief, some unpaid tax debts can be discharged under bankruptcy. However, some requirements in the bankruptcy code have to be met for this to happen.

 

6.    Personal Loans

 

Personal loans are those provided based on the signature of the borrower alone. Since this type of loan is unsecured, which means you did not have to put up property as a guarantee to pay it, you risk losing no property to lending institutions.

What Your Bankruptcy Lawyer Should Know First…and Fast

If you have made up your mind about bankruptcy then there is no more turning back. You have to commit to this path wholeheartedly. Success in filing for a bankruptcy means the difference between a fresh start or sinking even deeper into debt through re-filing due to false or obsolete information, even new expenses you have to pay to settle a fraud case.

What are the things your bankruptcy lawyer has to know?

 

Your real reason for filing bankruptcy – We all know the main objective of your filing bankruptcy is to get out of debt and have a fresh new start. But being specific about what you want will help your lawyer decided what type of bankruptcy to file for, not to mention how to go about it.

 

The circumstances leading to bankruptcy differ with each individual, the more your lawyer understands your case the more he or she can be able to help you.

 

All your assets and liabilities – In your list you may be tempted to hold out information about what you have or what you owe. You should trust your lawyer with this information, otherwise why get a lawyer? Better your lawyer find out about what you have and what you owe from you, and not from the bankruptcy trustee.

 

If you have sold or given away any property in the past few years – This is standard question that will be asked during the creditors meeting. It’s better your lawyer hear the answer first.

 

Your monthly expenses and other expenditures – Another standard question that will be asked during the creditors meeting and one that your lawyer should know the answer to first.

 

Changes/improvements in your status – If there is any change or improvement in your finances between the time you met your lawyer and before the creditor’s meeting, he or she has to know. Again, better your lawyer find out from you than only learning about it during the meeting.

 

Any change in your finances might also drastically alter your strategy in filing for a bankruptcy.

 

What to ask your lawyer

 

There are also questions you should ask your lawyer, just to clarify some things.

 

Whether or not you should file for bankruptcy - If you want to get rid of cold feet once and for all then let this be your first question. This goes without saying it helps to apprise your lawyer of your current situation.

 

What the pros and cons of filing for bankruptcy are – This obviously cannot be answered completely here, but your lawyer will be sure to fill you in on both the pros and cons.

 

Remember that filing for bankruptcy will have its consequences and repercussions; if your lawyer is a good one he or she will be able to explain them further for you.

 

What information is needed to get started – Once your mind is truly made up, it’s time to take the plunge, ask your lawyer what you need to get the ball rolling. For sure you will need lots of documents and you will have to spend time getting more documents, attending hearings and other such activities. Remember: Consequences and repercussions.

Alternatives to Bankruptcy for Indiana Business Owners

While many financially troubled businesses are opting for Chapter 11 to help them restructure their business so they can keep their business going and retain their business assets, Chapter 11 bankruptcy reorganization may not be the right solution for all businesses. Business owners who are not planning on staying in business and want to liquidate business assets without added time delays and costs under formal bankruptcy may opt for an assignment for benefit of creditors instead.

 

What You Should Know About Assignments for Benefit of Creditors

Here is what you should be aware of if you do choose an assignment for benefit of creditors:

  • An assignment for benefit of creditors is not for owners who want to stay in business.
  • It does not stay creditors from attempting to collect a debt against you.
  • It does not discharge any debt until you have repaid the debt in full.
  • What it does allow you to do is avoid filing a formal bankruptcy.
  • The assignment for benefit of creditors is a vehicle for you to transfer title and control of your assets to a trustee/assignee, who is a neutral third party.
  • The assignment gives the trustee/assignee the power and authority to sell your assets and pay off your creditors.
  • Any judgments or liens filed after the assignment cannot attach to the assets that are held in trust by your designated trustee/assignee.
  • If the trustee/assignee believes that operating your business for a short time is the right thing to do to increase the value of the assets, the trustee can do so. Such determinations may depend upon whether the trustee/assignee needs any state licenses to operate or to liquidate business assets.

How it Works

At the time of the assignment, the business owner must turn over all business investment records and books listing assets and liabilities as of the date of the assignment, a list of creditors and their contact information and any other outstanding debt to the trustee/assignee. The trustee/assignee must record the assignment with the Clerk of the Circuit Court in the county where the business is located or the business owner resides. The trustee/assignee must publish a notice for three consecutive weeks in a newspaper of general circulation in the county where the proceeding has been filed notifying creditors of the appointment of the trustee/assignee.

 

It is the responsibility of the trustee/assignee to notify all your creditors and other parties of interest including government taxing authorities. The trustee/assignee must have the business assets appraised, including any real estate, and prepare an accounting for submittal to creditors and the Court. There should be a date established for creditors to file claims. The Court will authorize the sale and sale terms. The sale may be private. The Court will review claims and allow or disallow the payment of the claims.

 

Indiana Bankruptcy Attorney Assistance

If you are a distressed business owner and need advice about getting out of debt, you should contact an Indiana bankruptcy attorney. The attorneys at Walton Legal Services can discuss Chapter 11 reorganization and bankruptcy options including an assignment for benefit of creditors as well as other options to find the best solution for your business debt problems.

 

Getting Your Credit Back After Filing Bankruptcy in Indiana

Getting Your Credit Back After Filing Bankruptcy in Indiana

There is nothing to be ashamed of after you filing for bankruptcy and receiving a bankruptcy discharge. In fact, millions of consumers have experienced bankruptcy and have turned their lives and credit around. Famous people file for bankruptcy protection all the time. In fact, both Abraham Lincoln and Thomas Jefferson had financial troubles, and they rebounded. You can do as long as you take responsibility for your actions. Dealing with previous bad credit habits and establishing new responsible debt management habits just takes motivation and getting some good advice from an expert such as a bankruptcy attorney and/or credit advisor to get your financial house in order.

Re-establishing Credit After a Chapter 7 Bankruptcy Discharge

The good thing about a Chapter 7 bankruptcy discharge is it allows you a second chance to start over and learn from your previous credit mistakes. When you file for Chapter 7, you get the added benefit of eliminating your debts so you can start fresh. Creditors are more willing to provide you with new credit because they know you don’t have any more debts. After a few years of establishing good credit habits and paying your bills on time, your credit score will go up and eventually you will regain your good credit rating.

Re-establishing Credit After a Chapter 13 Bankruptcy Discharge

An Indiana bankruptcy court-approved Chapter 13 repayment plan between you and your creditors allows you to keep all your assets and pay off your negotiated reduced debt within a 3-5 year period. Once you have completed the plan, your remaining unsecured debts are also discharged by the bankruptcy court. This gives you the opportunity to start over as well by continuing on with good credit habits. You are also able to maintain your relationship with your old creditors.
Your new creditors recognize your efforts as well by extending you new credit. Keep in mind that your credit rating improves over time on its own, as long as you continue to practice responsible credit habits.

Here are a few tips to help improve your credit score right away after bankruptcy and help you restore your credit:

1) Apply for a secured credit card with a smaller limit. Secured cards are secured by a savings account established in your name for the same amount as your credit card limit. Your creditor reports your payment history to the three major credit bureaus, and you can rebuild your credit this way.

2) Avoid going over your credit limits. Always stay under your limits.

3) Pay cash for everyday items such as food, clothes and gas, and use your credit cards for emergencies. Getting in the habit of writing a check, using a debit card or paying cash will prevent you from spending money that you don’t have.

4) Always pay the full balance on your credit cards whenever possible or substantially more than the minimum payment so you don’t incur expensive finance charges. Making small minimum payments incurs high finance charges. The one that benefits is your credit card or finance company.

5) Pull a free copy of your annual credit report making sure there are no errors. If you find errors, write to the consumer credit bureaus asking them to remove the items. You would be surprised how many errors there are. It is also a good idea to periodically check your credit or purchase a credit card fraud alert protection plan for a nominal fee to prevent identity theft.

Obtain Legal and Financial Assistance

By following responsible credit habits, you will avoid the temptations to overspend and then have debt catch up with you later. Talking to an expert Indiana bankruptcy law attorney or credit advisor about your credit options is recommended. Learning from bad credit mistakes and taking the advice of legal and credit experts is a major step in the right direction in regaining your credit after bankruptcy.

The Eight Year Waiting Period is Over

The Eight Year Waiting Period is Over

Many consumers are confused about the 8 year waiting period requirement between bankruptcy filings. Under the Bankruptcy Abuse and Consumer Protection Act of 2005 (BAPCPA), the waiting periods for certain debtors who received a bankruptcy discharge has been changed to 8 years before a successive bankruptcy can be filed after their first bankruptcy discharge. The determining factor is the type of bankruptcy proceeding a consumer initially filed and whether the previous case was discharged or not. The 8 year rule primarily applies when you decide to file successive Chapter 7 filings. A Chapter 7 bankruptcy is a complete liquidation.

What You Need to Know About the 8 year Bankruptcy Waiting Period

Another important aspect about filing for bankruptcy in Indiana and the 8 year waiting period rule is that there is no minimum time period which prevents you from filing for bankruptcy protection. Keep in mind that the critical determining factor is whether your initial bankruptcy was discharged. The waiting rule clock starts ticking from the time your bankruptcy was discharged not filed. Therefore, if you file prior to the 8 year waiting period after your Chapter 7 bankruptcy discharge, you will not be able to receive a discharge on your second and subsequent bankruptcy.

There may be some benefits to filing for another bankruptcy in Indiana before the 8 year period expires such as creditor protection because creditors are stayed from collecting a debt against you once you file for bankruptcy protection. This may give you more time to negotiate with your creditor such as your bank if you are heading towards foreclosure or your car finance company if you are behind in your car payments. However, it won’t get your debts discharged.

If your bankruptcy was never formally discharged, you withdraw the petition or your first bankruptcy was denied, then you could file sooner. However, the debts from your first bankruptcy may not be included in current bankruptcy filing and discharge. If you originally filed under Chapter 7 and then you decided to file a successive and subsequent bankruptcy under Chapter 13, the rules get even more complicated.

Getting the Right Advice

To find out whether you must wait for the 8 year period to expire before filing for bankruptcy in Indiana, it is recommended that you consult with a Indiana bankruptcy law attorney and/or a credit advisor. An Indiana bankruptcy lawyer is the only person who can legally represent you and attend bankruptcy court hearings on your behalf. An experienced Indiana bankruptcy attorney will also negotiate with your creditors and advise you of alternative options to bankruptcy. You may also wish to seek credit counseling for a certified credit counselor to help you establish responsible credit habits and debt management.

Welcome to Our Indianapolis Bankruptcy Law Blog

Things change fast in the legal world. Every day, state legislatures and judges make hundreds of decisions that impact the way cases are prepared and presented for court. At Walton Legal Services, we know how important it is to stay current with legal issues. We follow the legal stories that will have an impact on the best strategies to use while protecting your rights.

Keeping you informed about the legal process will help you make better decisions about your own bankruptcy case. This Blog page is intended to serve as a forum for discussing case law and relevant court decisions. Periodically, this page will be updated with new information and topics for discussion, so please return often to see the most current post and comments.

Our firm has always placed an emphasis on personalized attention and responsiveness to client concerns. Your input means a lot, so please send us your comments. Thank you for visiting. Call or contact the office by e-mail to discuss your specific legal need today.