Making the Choice to File for Bankruptcy 10.13

Sometimes situations arise in people’s lives when debt becomes overwhelming and unmanageable. When this happens, it is recommended you speak with an Indiana bankruptcy attorney to find out what options you have available to get out of debt. Filing for bankruptcy is usually used as a last option by most people when they have more debt than they can pay and need to start over or reorganize their debt. There is nothing to be ashamed of when filing for bankruptcy. The good thing about bankruptcy is that it gives you chance to start over without debt or reduced debt if you opt to enter into a court-approved reorganization bankruptcy plan with your creditors.


Advantages of Filing for Bankruptcy


Millions of people find debt relief by filing for bankruptcy. The biggest advantages of bankruptcy is that it prevents your creditors from collecting a debt against you so you don’t have to worry about them calling you or filing a lawsuit or getting a judgment against you. You get to eliminate your debt or restructure it depending on which bankruptcy Chapter you file under.


Before you file, you should consult with an experienced Indiana bankruptcy attorney. The attorney can review you financial situation and make suggestions for all options that can help you get out of debt and relieve your stress. In some instances, you may be able to negotiate a settlement of your debt with your creditors such as debt reduction. If you are underwater on your home mortgage, you may qualify for a mortgage modification or a refinance with a lower interest rate. Since everyone’s financial situation and debt is different, the Indiana bankruptcy attorney will be able to structure a plan that works for your individual financial situation.


Disadvantages of Filing for Bankruptcy


Bankruptcy negatively affects your credit a bankruptcy remains on your credit of 10 years. However, the biggest negative impact occurs immediately after you file. You may be denied credit for a short time or have to pay higher interest rates for a few years and wait a couple years before you can take out a new mortgage. The good thing is credit improves over time.


Deciding Which Chapter to File Under?


If it turns out that bankruptcy is the right choice for you, your Indiana bankruptcy lawyer can help you decide which bankruptcy Chapter to file under that will provide the best solutions to your debt problems.  If you do not have a lot of assets, a Chapter 7 complete liquidate may be the best alternative. Keep in mind that you may not have to liquidate all your assets under Chapter 7. There are bankruptcy exemptions and homestead exemptions that allow you to keep some of your property such as your home or car.


If you have a business or you have substantial assets that you want to keep, then a reorganization plan Under Chapter 11 or Chapter 13 may be a better solution. With a Chapter 11 or Chapter 13, you can keep all your assets because you enter into a court-approved repayment plan for a period of approximately five years. Once you complete the plan, your unsecured debt will be discharged as well.


Indiana Bankruptcy Attorney Help


By talking to an Indiana bankruptcy attorney you will become informed about your legal rights and options in order to make the right decision to eliminate or reduce your debt.

Finding an Indiana Bankruptcy Attorneys 8.1

Finding an Indiana Bankruptcy Attorney


Choosing to file for bankruptcy is a big step. You will also need to receive credit counseling from an authorized Indiana legal counseling agency within a six month period prior to filing. Bankruptcy laws are complex and representing yourself is not advisable because you may jeopardize your rights. You need to make sure that the right forms are filed and you file in the right federal court jurisdiction. Your first step should be to consult with an experienced Indiana bankruptcy attorney.


Where to Find the Attorney


The best way to find an Indiana bankruptcy attorney is through a referral from a friend, family member or another attorney. You can also call the Indiana State Bar and get a name of a bankruptcy attorney or visit their website. The Bar Association has a list of pro bono attorneys and attorneys that volunteer their legal services that you may be able to get legal help from in Indiana at reduced fees on their website at:


Interviewing Your Attorney


It is a good idea to interview a few attorneys. At the initial consultation, you can get to know the attorney and ask questions.  Here are some questions that you should ask:


  • How long your Indiana bankruptcy attorney has been practicing?


  • Does the attorney’s practice consist of mainly bankruptcy law or what percentage of their practice covers bankruptcy?


  •  How many other attorneys are in the practice and what other practice areas does the firm handle?


  • What type of services will be performed?


  • What are the fees and costs involved?


  • Who will be performing the work, associates, paralegals, legal assistants, etc.?


  • How long will it take to file and complete the bankruptcy discharge?


  • How often does the attorney communicate with clients and in what manner?


  • What type of technology does the firm use?


  • General questions about the bankruptcy process.


If you are concerned about the fees and costs, you may qualify for legal aid assistance from the legal aid society or attorneys that offer pro bono services. Try and ask as many questions as you can during the initial interview process so you can educate yourself about the process and determine if you like the attorney and can work with that person.


Determining the Right Indiana Attorney to Hire


An important factor in choosing the right bankruptcy attorney is to hire an Indiana attorney that specializes in bankruptcy matters. Bankruptcy is a highly specialized practice area. You may not want to jeopardize your rights by using someone who is not familiar with the bankruptcy laws in Indiana and in general the federal bankruptcy laws. The second important criteria in choosing a bankruptcy attorneys is to determine whether you can get along and work with the attorney and whether you have trust and confidence in their ability to get the job done and obtain the results you want.


Chapter 7 Straight Bankruptcy vs. Chapter 13 Reorganization 7.13

Chapter 7 Straight Bankruptcy vs. Chapter 13 Repayment Plan

Filing for bankruptcy protection protects you from creditors trying to collect a debt, suing you and obtaining a lien or judgment against you or your property. Basically, bankruptcy stops your creditors from contacting you and harassing you. After your debts are discharged in bankruptcy, if a creditor tries to collect against you, they would be in violation of the law and subject to fines and/ penalties.

Keep in mind though that bankruptcy may not be the right option for everyone. Bankruptcy is usually a last resort option when debts have become unmanageable for individuals and businesses, who want to either start over debt free or reorganize and reduce their debts by taking advantage of bankruptcy protections.  Before making any decisions to file for bankruptcy protection, it is recommended that you discuss your financial situation with an experienced and knowledgeable Indiana bankruptcy attorney.

Chapter 7 vs. Chapter 13


There are different bankruptcy Chapters that individuals can file under including Chapter 7 and 13 under the Bankruptcy Code. Businesses may file under Chapter 7 or Chapter 11.  An Indiana bankruptcy lawyer can explain the differences to you, and will assist you in deciding which Chapter gives you the best protections and which you are qualified to file under.


Chapter 7


Individuals or businesses who have very little assets and no longer want to stay in business can take advantage of filing for bankruptcy protection under Chapter 7. Filing under Chapter 7 gives you the most benefit because you can start over without debt. There are certain debts that cannot be discharged under bankruptcy such as:


  • Child and spousal support
  • Student loans
  • Taxes
  • Debts owed as a result of fraud, embezzlement or larceny
  • Debts you failed to disclose on your bankruptcy schedule
  • Debts for willful and malicious injury
  • Fines or penalties owed to the government
  • Judgments against you for a wrongful death or personal injury lawsuits
  • Condominium or homeowner association fees or assessments


In a Chapter 7 bankruptcy, your assets, except those which are exempt under the Indian bankruptcy laws, are sold to pay off your creditors.  Indiana married couples who file for joint bankruptcy may double the exemptions amounts.


Exemptions available to Indiana residents filing for bankruptcy include:

  • A homestead exemption for your personal residence up to $17,600. Also, any interest that a debtor has in property held as a tenant by the entirety is considered exempt
  • Other real estate or tangible personal property up to $9,350
  • Intangible personal property, including bank accounts and cash up to $350
  • Professionally prescribed health aids belonging to the debtor or debtor’s dependent
  • Interest in a retirement plan regarding contributions made on behalf of the debtor or debtor’s spouse
  • Disability payments
  • Social security, Medicare or Medicaid benefits, VA benefits
  • Workers compensation benefits
  • Unemployment benefits
  • Contributions made by debtor to educational savings plans, as defined in Section 530(b) of the Internal Revenue Code of 1986 made at least one year prior to filing bankruptcy or in excess of $5,000
  • Medical care savings or health savings accounts established pursuant to Section 223 of the Internal Revenue Code of 1986.
  • The debtor’s interest in a tax refund or credit under Section 32 of the Internal Revenue Code of 1986 (the federal earned income tax credit) or IC 6-3.1-21-6 (the Indiana earned income tax credit).


If you wish to keep your car loan and/or your home mortgage, you can reaffirm those debts. If you default, your creditor has the right to repossess your car or foreclose on your home. You must also pass the Indiana means income test, which your Indiana bankruptcy attorney can determine for you. Any unsecured debts will be discharged by the bankruptcy court.


Chapter 13

Chapter 13 is used by individuals with substantial assets that wish to keep their assets and reorganize their debts. You must enter into a court-approved repayment plan with your creditors, which is to be paid over a period of three to five years. After you complete your plan, your remaining unsecured debt will discharged. Your Indiana bankruptcy attorney can assist you with negotiating reduced debt with your creditors.  Non-dischargeable debts are the same as those listed under Chapter 7 above.


Businesses may also file for reorganization under a Chapter 11, which is similar to Chapter 13. The advantage for the business to file under Chapter 11 is that company can remain in business, reduce their debts and get rid of their unsecured debts.

Indiana Bankruptcy Attorney

Since federal and Indiana bankruptcy laws are complex, hiring an Indiana bankruptcy attorney to represent you is recommended. An Indiana bankruptcy attorney can advise you of the advantages and disadvantages of filing for bankruptcy protection, represent you in negotiations with your creditors and in bankruptcy court and advise you of other options available to you if you decide not to file for bankruptcy.

Bankruptcy Lien Stripping 7.13

How You Can Take Advantage of Bankruptcy Lien Stripping and Eliminate Your Second Mortgage


Many Indiana homeowners are upside down on their mortgages as a result of declining home prices over the past five years. By filing for bankruptcy protection under Chapter 13, upside down homeowners can keep their homes and all their other assets.  Once you file for bankruptcy protection, your creditors cannot try and collect a debt against you. Bankruptcy stays any foreclosure actions by your lender. It gives you more time to negotiate with the lender and your other creditors to reduce your debts, including get rid of a second mortgage on your primary residence by using a lien stripping strategy.


However, you should not rush into bankruptcy before weighing other options. It is recommended that you first speak with an Indiana bankruptcy attorney before making any final decisions.  Federal and Indiana bankruptcy laws are complex. The attorney will be able to explain the laws to you and your legal rights and obligations and go over other options with you if you decide that bankruptcy is not the right strategy for your financial situation.


Qualifying for Chapter 13

Individuals who file for Chapter 13 bankruptcy protection must show that they have sufficient income to repay their creditors. Chapter 13 is a reorganization and restructuring of your debts which is accomplished by negotiating debt reduction with your creditors, including lien stripping with your mortgage lender, and then entering into a court-approved repayment plan over a three to five year period.  With lien stripping, you also get rid of your second mortgage. An Illinois bankruptcy attorney can help you negotiate debt reduction with your lender by restructuring your debt.   This means that you will be able to get out from underwater on your mortgage when you owe more than your home is worth.


How Lien Stripping Works

Lien stripping basically works in the following manner.  You and your first lien holder will enter into a court-approved repayment plan. Your Indiana bankruptcy attorney will negotiate a modified loan with your lender, which will make your mortgage payments more affordable. Your second mortgage goes away so you no longer have to worry about repaying the second. When you complete your repayment plan, the second mortgage and your unsecured debts (except for non-dischargeable debts, including spousal and child support, student loans, taxes and other non-dischargeable debts, which your Indiana bankruptcy attorney can explain to you) are discharged by the bankruptcy court.


Consult with an Indiana Bankruptcy Attorney

Filing bankruptcy is serious and should be discussed with an Indiana bankruptcy attorney. Since bankruptcy is typically used as a last resort when debts are unmanageable, your Indiana bankruptcy attorney can also advise you of any other options that may be available to you such as a mortgage modification, reinstatement, forbearance, short sale, debt settlement and other options.

Improving Your Credit By Disputing Negative Credit Items 6.13

In addition to paying your credit card and other bills on time, disputing negative credit items on your credit report is an effective way of improving your credit and raising your credit score. However, most consumers either do not know how to go about doing it or are intimated at the thought of having to contact a creditor or consumer reporting agency. That is where the assistance of an Indiana debt counseling attorney can be extremely helpful. The attorney can advise you of all your legal rights and options and help you sort through your credit report to determine which negative items are disputable.


Fair Credit Reporting Act (FCRA)

Under the Fair Credit Reporting Act (FCRA), you are allowed to dispute errors and mistakes on your credit report by contacting the three major credit reporting agencies, TransUnion, Equifax and Experian, online or by writing to them. Be sure to look at the guidelines posted at each credit bureau’s website. Always include your name, address, social security number, the name of the creditor and the account number, reason for the dispute and sign the dispute form or letter. Keep in mind though that each of the major three credit reporting agencies, may have files with different information depending on which of your creditors report to which agency. Many creditors report to all three, but some choose to report to just one.


If you are unsure about what your credit files contain, it is a good idea to order your annual free credit report to review for errors or identity theft from all three agencies. You can order the report online by going to and request the three reports. Once you receive the reports, you should review them carefully. After making your dispute, if your creditor does not respond within 30 days, then the reporting agency must permanently remove the item from your report.


Under the FCRA, consumers are also allowed to contact a creditor directly to dispute any mistakes or incorrect negative items. If you write to your creditor directly, the creditor must provide you with an accounting reflecting your late payments, or they are in violation of the FCRA. They must report the corrected and accurate information to the credit reporting agencies. If they do not, you can ask the credit reporting agencies to permanently block the incorrect negative information, or you can sue the creditor by hiring an Indiana debt counseling lawyer.
Getting Legal Help

While you can try and contact the creditor reporting bureaus or your creditors on your own, you may have a higher degree of success by hiring an Indiana debt counseling attorney to help you with your endeavor. In addition, an Indiana debt counseling attorney can successfully help you negotiate debt reduction and debt settlement, or assist you with other options such filing for bankruptcy.

Holiday Shopping Could Cost You More Than You Think

When asked to imagine a winter holiday scene, it might be fair to say that most people would picture a winter scene with stockings hanging from the mantel of a fire place and presents scattered beneath a decorated tree. A scene like this does not come free of charge, however; it costs money to put presents under the tree. And if families are not cautious, the choices they make during the holiday season could lead to having to file for bankruptcy.
Whether a family of lesser means, of wealth or anywhere in between, the holiday season presents a tempting opportunity to stretch budgets beyond reasonable means, risking putting the family in a difficult financial position as the new year begins.
Consumers have options of how they choose to finance purchasing gifts; all offer benefits, but all also present financial risks if consumers are not careful. A CBS News article highlights three common ways to finance purchases: credit cards, debit cards and cash, and layaway.
Credit cards allow consumers to purchase items under the promise of paying the credit card company at a later date. As CBS News notes, many credit card companies offer special promotions during the holidays, allowing consumers to more quickly accumulate rewards points. If people are able to pay the balance of their credit card bill during the next billing cycle, credit cards may offer a great way to purchase gifts. However, if a person buys more than they can easily afford, the interest that accumulates on a carried credit card balance can quickly create a very difficult financial situation.
Debit cards and cash present a way to purchase gifts without fear of accumulating interest. But, paying for presents in this manner is only available to people who have the cash available to spend. If people are not careful, using a debit card can quickly deplete their checking account.
Layaway plans allows people to put presents on hold at stores after paying a small down-payment. People then save money until they are able to pay the remaining balance. As the CBS News article states, stores do not offer layaway in an effort to be helpful to consumers, but rather as a way to make money and help make sure the store does not lose sales to customers with no credit or with limited financial resources.
If used responsibly, credit cards, debit cards and cash, and layaway plans can help people put gifts under the tree this holiday season. However, if people overextend themselves financially, they may find them in situations that require solutions for regaining control of their financial situations, such as filing for bankruptcy. Bankruptcy may offer people a way out from under a mountain of debt, including credit card debt, to gain a fresh start.

Cut Down on Medical Costs to Keep Bills Under Control

According to, 2.8 million Americans are turning 65 years old in 2011 and becoming eligible for Medicare. While the government program is less expensive than many private health-insurance programs, the out-of-pocket expenses can still add up and cause financial strain, especially for people living on fixed incomes.
To avoid significant health-care debt – which is one of the more common reasons why people file for bankruptcy – provides the following tips to help keep medical costs as low as possible:

  • Understand your paperwork:
    Know the parts of your bill and what an Explanation of Benefits (EOB) is.
  • Don’t pay the bill immediately if you are not certain it is correct: It is harder to get money back once you have paid the bill.
  • Make sure the bill has accurate basic information: Check that the bill has your name, address, date of service and insurance information listed correctly.
  • Verify the bill against the EOB provided by your insurer: The EOB should show the amount charged by the provider, the amount paid by the insurer and the amount to be paid by you. That amount on your EOB should be the same as the amount on your bill.
  • Avoid receiving treatment or services from out-of-network providers: Your insurance company has negotiated lower prices with in-network providers, so using out-of-network providers generally will be more expensive.
  • Ask the provider for a prompt-payment discount: Many providers offer discounts to people who pay for their treatments in full on the day of service.
  • Ask for an interest-free payment plan: If you can’t pay right away, some providers will allow you to set up an interest-free payment plan.
  • Don’t ignore bills and let them pile up or go to debt collectors: Don’t wait so long that your bill gets sent to a debt collector or begins to collect interest. If you are in the process of verifying or correcting a bill, let the health-care provider know and ask that the bill not be sent to a collector.

Non-Attorney Bankruptcy Petition Filers Causing Problems for Debtors

This prolonged recession has hit many families hard. Many people have experienced financial problems for the first time, and are unsure what to do to get back on their feet. When they turn on the TV or go online, they are constantly exposed to ads from groups or organizations that are devoted to reducing debt or helping someone file for bankruptcy.
However, not all of these groups are created equal. Some unfortunately prey on debtors to make a quick dollar, and leave the individual in worse financial shape. Debtors rely on bad advice and have to find additional help to undo the damage that has been done.
Recently, there has been a rise in the number of non-attorney bankruptcy petition preparers offering their services to debtors in need. These individuals “help” a debtor file for bankruptcy. They assist the debtor with all of the necessary steps to file for bankruptcy, offering complete service at a cost comparable to attorneys in the area.
While this may sound like a bargain to someone who has experiencing financial hardship, it is often not the answer to getting out of debt. One of the biggest issues for a person going through the bankruptcy process is what property will he or she be allowed to keep. Attorneys experienced with assisting bankruptcy clients will know how to maximize a client’s exemptions, potentially allowing a debtor to keep their most important property (source: Alex Spiro).
Exemptions are just one small part of the complicated bankruptcy process. Once the bankruptcy plan is put in place, a debtor may be unable to change its terms. Property that is liquidated to pay off debts is gone and this cannot be changed.
Knowing the complexities of the bankruptcy code is just one advantage that experienced attorneys can provide to their bankruptcy clients. By understanding all of the options that are available, debtors can make the decisions that are in their family’s best interests.

The Ticking Time Bomb of Student Loan Debt

Since World War Two, going to college has been seen as the ticket to the American Dream. Statistics show college educated employees earn more than their non-college educated coworkers.
A recent report from the National Association of Consumer Bankruptcy Attorneys (NACBA) indicates there may be growing clouds on that horizon.
They report potential clients with student loan debt have increased significantly in the last three to four years and “about half (48 percent) of bankruptcy attorneys reported significant increases in such potential clients.”
No Discharge?
The trouble with student loans for those who cannot repay them, is that unlike many types of debt, they are generally not dischargeable in bankruptcy. There is also no statue of limitations, allowing the creditors to sue years, and even decades, after the debtor left school.
Undue Hardship
The only way, under the bankruptcy laws, to discharge student loans is known as “Undue Hardship.” The most widely used test came out of a case the Brunner case.
A demanding three-part test is used to determine if one qualifies for an undue hardship discharge, where one has to have virtually no chance of ever improving one’s income.
Co-Sign Any Student Loans Recently?
Another source of concern is the number of parents implicated in this debt. The NCBA report indicates that in 2010, 17 percent of parents had taken out loans for their children and this compares to 5.6 percent in 1992-1993.
If their children default on the loans, the lenders will come looking for them. In the worst cases, parents could lose a lifetime of assets repaying large student loans.
A Drag on the Economy
With all, or a large percent, of their income being directed to paying down student loans, this debt will weigh down on the entire economy, taking money away from other purchases.
Many student loans will require 20 to 30 years to repay, leaving many with no discretionary income for most of their adult lives. The NCBA notes that 2010 was the first year that student loans had surpassed $100 billion.

You Cannot Earn a Discharge For Your Student Loans

The combination of the down economy and rising tuition costs has left many recent college graduates with substantial amounts of student debts. And, according to a news article by the Southern California Public Radio, the amount of student loan debt that Americans have acquired now exceeds debts for credit cards and car loans, combined.
The Federal Reserve Bank in New York estimated that by the fourth quarter of 2011, $867 billion in student loan debt was outstanding, and a recent report by the Consumer Financial Protection Bureau estimated that the total amount owed on student loans was over one-trillion dollars.
In an economy where students are unable to find high-paying jobs, making monthly student-loan payments becomes very difficult if not impossible. While filing for Chapter 7 or Chapter 13 bankruptcy may be able to help these graduates alleviate many types of debt – such as credit card debt or medical bills – so that cash can be freed up to make student loan payments, it is very unlikely that their student loans will be discharged.
In certain circumstances, though, student loans may be discharged through bankruptcy. If it is proved that the student loans are an “undue hardship” on debtor, his or her dependants, or his or her family, then a judge may order the student loans to be discharged.
Proving undue hardship is very difficult, though. In general, it must be shown that the debtor:

  • Is unable to maintain a minimum standard of living;
  • Is unlikely to change or improve his or her current situation any time soon; and
  • Has made “good-faith efforts” to repay his or her student loans.

Even though student loans may not be discharged through bankruptcy, filing for bankruptcy still may help you get back on track. Knowing the options available to you can help you make the decisions that are best for your financial future. Another way out of the situation is to rebuild your credit with help of excerpts in Rebuilding Credit Kansas City MO.