In my experience the hardest thing for folks struggling with debt is to pick up the phone to call a bankruptcy attorney. Most folks try and try to deal with their debt without the advice of a professional. Each person has his or her own reasons for trying to deal with the problem without help....embarrassment, avoidance of the problem, and not wanting to acknowledge that there is a problem are a few that I see all the time.
However, I have also found that meeting with a qualified Indiana bankruptcy attorney makes most people feel better. Yes. You read that correctly. Better. This is because it is the first step toward taking action to resolve the problem. Most of us have that list of to-dos that we put off, and each and every one of us feels much better and a great sense of accomplishment when we check an item off of that list. I believe meeting with an Indiana bankruptcy attorney helps people feel a sense of control.
But why meet with an experienced Indiana bankruptcy attorney? Many people are hesitant because they are not certain that they would like to file a bankruptcy and don't want to waste an attorney's time. People often assume that they will feel pressure by an attorney to file bankruptcy.
The biggest reason to meet with an Indiana bankruptcy attorney is for the peace of mind that comes with knowledge. I have met with thousands of people and many times I advise them that I don't think they need to file bankruptcy. I can also tell people what to expect if they are being sued by a creditor and what a creditor may and may not do to collect a debt. I give the people I meet with the information to make an informed decision about whether bankruptcy, debt settlement or another option would best benefit themselves and their family.
So, as we see ourselves peering into 2011, please know that I am happy to meet with those feeling financial pressure to give you the information necessary for you to decide whether you would like to file a bankruptcy. There is no fee for the meeting. I practice in the Southern District of Indiana Bankruptcy Court, which is where folks living in Fishers, Carmel, Noblesville, Anderson, Kokomo, Indianapolis, and Zionsville (just to name a few) file a bankruptcy petition. Feel free to contact me for an appointment at a time convenient for you. Happy New Year!
Halcomb Singler, LLP, is a debt relief agency. It helps people file for bankruptcy under the bankruptcy code. No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so. The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.
Monday, December 27, 2010
Sunday, November 28, 2010
Bankruptcy and the Non-Filing Spouse
There are many times when it makes sense for only one of two married people to file bankruptcy instead of filing jointly. Most of the time, the reason is that there is very little debt in the non-filing spouse's name or that the non-filing spouse has recently filed a bankruptcy petition and is time-barred from receiving another discharge at that time. Understandably, the non-filing spouse assumes that he or she will have no part of the bankruptcy process. However, this is not entirely true. The non-filing spouse must give pay stubs to the attorney of the filing spouse. And although it is unlikely, a non-filing spouse may sometimes have to appear at a court hearing to be questioned about his or her income and/or expenses.
I have heard the following question so many times, I thought I would take the opportunity to answer it on my blog:
"My spouse is filing bankruptcy, not me. Why do you need my pay stubs."
The bottom line is that if your spouse is filing bankruptcy and you are not you will still be somewhat involved. This is true because so long as you and your spouse live in the same household, the bankruptcy court will look at your total household income and expenses to determine whether your spouse should have money to pay to his or her creditors.
Bankruptcy attorneys will need the last 6 months of the non-filing spouse's pay stubs to determine what type of bankruptcy the filing spouse can file. Once it is time to file the bankruptcy petition, the attorney must file the pay stubs of the non-filing spouse for the 60-day period of time prior to the filing of the bankruptcy petition with the court. This does not mean that the non-filing spouse is filing bankruptcy. This does not mean that the non-filing spouse will be required to appear at the 341 hearing.
On rare occasions, such as if the united states trustee files a motion to dismiss, the attorney for the debtor spouse may ask the non-filing spouse to come to testify about his or her income or expenses. If this were to happen it is very likely that the attorney would speak with the non-filing spouse about what to expect, what questions would likely be asked and how to properly answer the questions.
If you spouse files bankruptcy you have not filed bankruptcy just by virtue of being married. However, if your spouse files for bankruptcy and does not pay on a joint debt the creditor will eventually be able to try to come after you. However, if you have a joint debt, such as a car loan that your spouse is reaffirming and will continue to make payments on life will continue normally as to that creditor. Check your credit report after your spouse has filed bankruptcy and be prepared to contest any inaccurate information with the three credit reporting agencies.
The moral of this entry is that even if you are not filing bankruptcy it is, in my opinion, still important for you to understand your spouse's bankruptcy, and to understand that your spouse's bankruptcy can affect you. If you need a bankruptcy attorney or are considering whether it makes sense to file bankruptcy I can help. For a free consultation with me at my law firm, Halcomb Singler in Carmel, Indiana, click here.
Halcomb Singler, LLP, is a debt relief agency. It helps people file for bankruptcy under the bankruptcy code. No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so. The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.
Saturday, November 6, 2010
Cost-Cutting to Avoid or Recover from Bankruptcy
I just watched the series premier of "Downsized" on WE. As a bankruptcy attorney, I found this show very interesting. As the name implies, it is about a family coping after having filed bankruptcy. Prior to bankruptcy, the husband owned a construction company and earned a very comfortable living. The family was able to live well and didn't really think about money.
As a bankruptcy attorney I found this show very intriguing. I meet with many clients who are struggling just to pay their minimal living expenses on a day to day basis. I am always looking for ways to identify with them and hope to be able to provide them with suggestions on how to streamline their finances. Overall, I try to give my clients hope that even though they are facing an extremely difficult time in their lives, that this time will make them stronger and that they can and will get through it.
One thing the show focused on was the way that the teenage children were dealing with the family struggling to make ends meet. While the teens were frustrated with the situation, 3 of them went dumpster diving to look for cans and other goods to recycle and came up with about $20.00 to go towards the family's rent. Then, one of the teens sold his baseball glove for $100.00 which made the family's rent for that month.
"Downsized" reminded me it is not and probably will never be easy to deal with a lack of income. In our present economy many professional, educated and hard-working people are finding themselves in extreme financial hardship. These are people who have never found themselves wanting for anything. They are the true middle class.....and just as the family in "Downsized" discussed; major lifestyle changes need to be made when there is a significant decrease in income.
A few of the suggestions that I often make to clients looking to decrease expenses are as follows:
1. Cancel Cable and Internet.
Again....I will stress that none of these suggestions are fun. Any person can find a reason to talk themselves out of canceling cable or Internet service. I have heard many excuses including my personal favorite that "my kid needs it for school." I suggest speaking to the teacher or school and explaining that Internet isn't in the budget. If the school can't give homework assignments, post grades, etc., on paper then just go to the library.
2. Cut out the gym membership.
I am guessing you have tennis shoes. Go outside and run for free.
3. Cut Coupons and Shop Sales on Groceries
I am constantly amazed about how many people tell me that they go to the grocery store and spend money without any limits. Groceries are an expenses that you can control much more easily than a gas or electric bill. Take advantage of this by cutting coupons and only buying what is on sale. Plan your meals around the sale items you purchase.
4. Don't Ever Eat Out...this includes lunch
Seriously. NEVER. It can be done. I recall a number of years when my family did not eat out when I was a child. If you are having trouble making your rent or mortgage payment you just cannot afford to eat out. End of story.
5. Go to Cash
Stop using the debit card as your primary means to make purchases. Go to cash instead. Use your budget to lay out how much cash you get each month for food, clothing, gas, and other variable living expenses. When the cash is done you are done spending until next month. When you can see how much money there is and can physically see the cash you are spending you will spend less. It is amazing how that coffee at a fast food restaurant or soda at the gas station add up. You may think I am overreacting with this one, but I look at people's bank statements all the time and it amazes me how fast the little things add up.
6. Cut out the dance classes, soccer leagues, or any other unnecessary classes or activities.
These are not needs. They are wants. Being able to pay rent or mortgage is more important than fun.
7. No Vacations
I don't care if it is a weekend 2 hours away. I don't care how much you think you "deserve" it. If you are really struggling just push the idea of a vacation out of your mind. You can do it. I know plenty of people who haven't been on a vacation in 10 years. Again, this is not fun...this is the manual for those who are just trying to make ends meet.
8. Do not worry about the Jones
Because more and more people struggling financially were traditionally middle-class, they feel the need to maintain a certain standard for their social circle. This pride can cost them. Let your friends in on the fact that you are struggling and if they are really your friends they will understand. This will also make it less likely that they will put you in uncomfortable situations such as inviting you to an expensive dinner or on a weekend trip. It will also make you feel better because when you are around them you will not feel the need to put on a persona that everything is great with your finances.
9. Remember what you do have
If you, your spouse and your children are healthy you have everything. Many wealthy people are sitting in hospitals with sick children right now and wish that they could buy their children better. They cannot. If you have the love of your family and your family is blessed with health then your finances are not the biggest problem you could be facing. When you feel hopeless remember that you always have something to be thankful for and that it could always be worse.
10. Make it fun to stop spending
Believe it or not it can be fun to watch your money. It is rewarding to live within your means. It is fun to see that you saved $15.00 at the grocery store or that you were able to use banking points to buy a gift card to give as a gift. You feel good when you find $25.00 in change around the house. Focus on the positive in what you are doing with your limited resources.
This is in no way an exhaustive list. There are no limits on what you or your family can do to make ends meet in a sticky financial situation. While many families are going through extremely difficult financial situations right now, it is important to remember that you cannot move forward if you are without hope. While it can often seem like a hopeless situation, it can also bring families together and help shape children into strong adults.
Please post any additional tips you have for cost-cutting in the comments section. As always, if you live in central Indiana and feel you may need to file bankruptcy you can meet with me at Halcomb Singler LLP, in Carmel, Indiana. Please contact our office at 317-575-8222 or just click here for an appointment.
Halcomb Singler, LLP, is a debt relief agency. It helps people file for bankruptcy under the bankruptcy code. No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so. The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.
As a bankruptcy attorney I found this show very intriguing. I meet with many clients who are struggling just to pay their minimal living expenses on a day to day basis. I am always looking for ways to identify with them and hope to be able to provide them with suggestions on how to streamline their finances. Overall, I try to give my clients hope that even though they are facing an extremely difficult time in their lives, that this time will make them stronger and that they can and will get through it.
One thing the show focused on was the way that the teenage children were dealing with the family struggling to make ends meet. While the teens were frustrated with the situation, 3 of them went dumpster diving to look for cans and other goods to recycle and came up with about $20.00 to go towards the family's rent. Then, one of the teens sold his baseball glove for $100.00 which made the family's rent for that month.
"Downsized" reminded me it is not and probably will never be easy to deal with a lack of income. In our present economy many professional, educated and hard-working people are finding themselves in extreme financial hardship. These are people who have never found themselves wanting for anything. They are the true middle class.....and just as the family in "Downsized" discussed; major lifestyle changes need to be made when there is a significant decrease in income.
A few of the suggestions that I often make to clients looking to decrease expenses are as follows:
1. Cancel Cable and Internet.
Again....I will stress that none of these suggestions are fun. Any person can find a reason to talk themselves out of canceling cable or Internet service. I have heard many excuses including my personal favorite that "my kid needs it for school." I suggest speaking to the teacher or school and explaining that Internet isn't in the budget. If the school can't give homework assignments, post grades, etc., on paper then just go to the library.
2. Cut out the gym membership.
I am guessing you have tennis shoes. Go outside and run for free.
3. Cut Coupons and Shop Sales on Groceries
I am constantly amazed about how many people tell me that they go to the grocery store and spend money without any limits. Groceries are an expenses that you can control much more easily than a gas or electric bill. Take advantage of this by cutting coupons and only buying what is on sale. Plan your meals around the sale items you purchase.
4. Don't Ever Eat Out...this includes lunch
Seriously. NEVER. It can be done. I recall a number of years when my family did not eat out when I was a child. If you are having trouble making your rent or mortgage payment you just cannot afford to eat out. End of story.
5. Go to Cash
Stop using the debit card as your primary means to make purchases. Go to cash instead. Use your budget to lay out how much cash you get each month for food, clothing, gas, and other variable living expenses. When the cash is done you are done spending until next month. When you can see how much money there is and can physically see the cash you are spending you will spend less. It is amazing how that coffee at a fast food restaurant or soda at the gas station add up. You may think I am overreacting with this one, but I look at people's bank statements all the time and it amazes me how fast the little things add up.
6. Cut out the dance classes, soccer leagues, or any other unnecessary classes or activities.
These are not needs. They are wants. Being able to pay rent or mortgage is more important than fun.
7. No Vacations
I don't care if it is a weekend 2 hours away. I don't care how much you think you "deserve" it. If you are really struggling just push the idea of a vacation out of your mind. You can do it. I know plenty of people who haven't been on a vacation in 10 years. Again, this is not fun...this is the manual for those who are just trying to make ends meet.
8. Do not worry about the Jones
Because more and more people struggling financially were traditionally middle-class, they feel the need to maintain a certain standard for their social circle. This pride can cost them. Let your friends in on the fact that you are struggling and if they are really your friends they will understand. This will also make it less likely that they will put you in uncomfortable situations such as inviting you to an expensive dinner or on a weekend trip. It will also make you feel better because when you are around them you will not feel the need to put on a persona that everything is great with your finances.
9. Remember what you do have
If you, your spouse and your children are healthy you have everything. Many wealthy people are sitting in hospitals with sick children right now and wish that they could buy their children better. They cannot. If you have the love of your family and your family is blessed with health then your finances are not the biggest problem you could be facing. When you feel hopeless remember that you always have something to be thankful for and that it could always be worse.
10. Make it fun to stop spending
Believe it or not it can be fun to watch your money. It is rewarding to live within your means. It is fun to see that you saved $15.00 at the grocery store or that you were able to use banking points to buy a gift card to give as a gift. You feel good when you find $25.00 in change around the house. Focus on the positive in what you are doing with your limited resources.
This is in no way an exhaustive list. There are no limits on what you or your family can do to make ends meet in a sticky financial situation. While many families are going through extremely difficult financial situations right now, it is important to remember that you cannot move forward if you are without hope. While it can often seem like a hopeless situation, it can also bring families together and help shape children into strong adults.
Please post any additional tips you have for cost-cutting in the comments section. As always, if you live in central Indiana and feel you may need to file bankruptcy you can meet with me at Halcomb Singler LLP, in Carmel, Indiana. Please contact our office at 317-575-8222 or just click here for an appointment.
Halcomb Singler, LLP, is a debt relief agency. It helps people file for bankruptcy under the bankruptcy code. No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so. The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.
Sunday, October 24, 2010
Beware the Credit Counselor (Top 5 Things You Need to Know)
Beware the Credit Counselor: Top 5 Things You Need to Know
As a bankruptcy attorney, I have seen how debt has serious consequences for my clients in Hamilton County, Indiana. Often, the people who are coming in to meet with me see themselves as at the end of the line. They are stressed out, afraid, embarrassed and are simply over it. They have done everything they can think of and then some to get themselves out of debt. And, in an attempt to avoid bankruptcy many of my clients have turned to debt consolidation companies.
Debt consolidation companies typically tell individuals to stop paying their credit card bills and instead to pay some monthly amount to the debt consolidation company so that they company can negotiate their debts and help them become debt free. Typically the company will set up a plan for an individual telling them that they can settle their debts if that person will pay x dollars per month for x number of months.
Overall, I do not have any objection to a client attempting to avoid bankruptcy through debt consolidation. I typically tell my clients that if they believe they can pay off their debts in 7 to 10 years then they should do so instead of filing bankruptcy. So, making payments to a debt consolidation company on a monthly basis can be a very effective way to get yourself out of debt. However, if you are considering a debt consolidation company, here's what you need to know:
1. FEES. Unlike attorneys, debt consolidators are not subject to ethical rules. Attorneys must charge reasonable fees. When considering debt consolidation read the provision on fees carefully. Some debt consolidation companies charge a percentage of the amount that their clients pay in each month. Others will set up a client on a monthly payment plan and the debt consolidation fee will be the first several months of the repayment program. Yes.....the entire amount that the debt consolidation client pays each month to the company for several months is unavailable to actually settle a debt, because it is going to the company's fee. This is a huge problem, which I will address further in a second But, if you are considering a debt consolidation company, go with one that takes a percentage of each payment so that the company begins acquiring money to settle your debts sooner.
2. WHAT DEBT CONSOLIDATION COMPANIES DO. Debt consolidation companies are taking the money you pay each month (less their fee), and putting it into an account for you which will be used to pay a debt settlement. These companies don't have any magic powers or know about any unknown laws that entitle you to settle your debts for less. They also cannot (nor could anyone else) guarantee that so long as you make all of your payments that your debts will be settled for that exact number. For the most part, they are sending out a letter to your credit card company asking them to accept lower payments or a specific amount to put you on a payment arrangement or to settle your debt. Whether the credit card company will agree with this offer is basically out of the hands of the debt consolidation company. The credit card company will either accept this offer or they will not. If the credit card company decides not to accept and you are no longer making your monthly payment to the credit card company, you will eventually be sued. Which brings us to number 3....
3. LAWSUITS. Most debt consolidation companies don't have any attorneys negotiating on your behalf. Therefore, if you get sued because a credit card company hasn't received money as fast as they want or because they choose not to deal with the debt consolidation company you are on your own. If you show up to court and tell the judge that you couldn't afford the credit card company payment and have signed up for debt consolidation the judge is still going to enter a judgment against you for the amount owed on the credit card. This means that at some point your bank account could be frozen and your wages could be garnished. And the debt consolidation company isn't going to have an attorney represent you in Court. The debt consolidation company is probably out of California or Florida and is not about to hire an attorney to represent your interests in Indiana. Bottom line....if you get sued, you are going it alone.
4. DON'T UNDERESTIMATE YOU. While I do represent clients in debt consolidation I always tell them that this type of work (so long as a lawsuit hasn't been filed) does not require a lot of legal expertise and you can do it yourself. There is no reason that an individual cannot call up his own credit card company and offer a percentage of what is owed on the balance. The worst that can happen is that the person on the other end of the line says no. However, many people fee so stressed out by their financial situation they decide that they would rather pay someone else to do the negotiating for them, which is a personal choice. However, this is certainly something you can do on your own.
5. REAL INDIANA EXPERIENCE. Recently one of my clients told me that he had enrolled with debt consolidation a year ago and had been paying about $800.00 per month to that company for the last year. He expected the debt consolidation company to pay off nine (9) creditors so long as he paid $800.00 per month for two years. I heard this individual's story when he showed up at my office with copies of lawsuits filed by eight (8) of the nine (9) credit card companies. When I reviewed the debt consolidation contract I found that my client had paid the debt consolidation company's fees for about 11 of those 12 months. Therefore, the debt consolidation company had not built up any money to settle my clients' debts. However, they had happily accepted a fee of approximately $7,000.00 (that is not a typo) for their "work." Of course, the debt consolidation company wasn't going to help my client deal with the lawsuits, so he cancelled the debt consolidation program and I helped him settle his lawsuits. While I do not know exactly what my client was charged for me to work on these lawsuits, I do know it was no were near $7,000.00 and probably more in the range of $1,000.00.
To sum it up, debt consolidation can be a useful tool for folks dealing with debt. However, this is not a decision that should be taken lightly and many questions should be asked prior to signing a contract with a debt consolidation company. If you are struggling with debt in Fishers, Noblesville or Carmel, Indiana I can help. I provide a free initial consultation and I will be able to tell you whether debt consolidation or bankruptcy can be tools in your fight to get out of debt. Call 575-8222 to set up an appointment with me at Halcomb Singler, LLP.
Lastly, I'd like to hear about the experiences that any of you have had with debt consolidation companies (good or bad). Without naming the specific company, leave a comment about your experience with debt consolidation.
Halcomb Singler, LLP, is a debt relief agency. It helps people file for bankruptcy under the bankruptcy code. No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so. The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.
As a bankruptcy attorney, I have seen how debt has serious consequences for my clients in Hamilton County, Indiana. Often, the people who are coming in to meet with me see themselves as at the end of the line. They are stressed out, afraid, embarrassed and are simply over it. They have done everything they can think of and then some to get themselves out of debt. And, in an attempt to avoid bankruptcy many of my clients have turned to debt consolidation companies.
Debt consolidation companies typically tell individuals to stop paying their credit card bills and instead to pay some monthly amount to the debt consolidation company so that they company can negotiate their debts and help them become debt free. Typically the company will set up a plan for an individual telling them that they can settle their debts if that person will pay x dollars per month for x number of months.
Overall, I do not have any objection to a client attempting to avoid bankruptcy through debt consolidation. I typically tell my clients that if they believe they can pay off their debts in 7 to 10 years then they should do so instead of filing bankruptcy. So, making payments to a debt consolidation company on a monthly basis can be a very effective way to get yourself out of debt. However, if you are considering a debt consolidation company, here's what you need to know:
1. FEES. Unlike attorneys, debt consolidators are not subject to ethical rules. Attorneys must charge reasonable fees. When considering debt consolidation read the provision on fees carefully. Some debt consolidation companies charge a percentage of the amount that their clients pay in each month. Others will set up a client on a monthly payment plan and the debt consolidation fee will be the first several months of the repayment program. Yes.....the entire amount that the debt consolidation client pays each month to the company for several months is unavailable to actually settle a debt, because it is going to the company's fee. This is a huge problem, which I will address further in a second But, if you are considering a debt consolidation company, go with one that takes a percentage of each payment so that the company begins acquiring money to settle your debts sooner.
2. WHAT DEBT CONSOLIDATION COMPANIES DO. Debt consolidation companies are taking the money you pay each month (less their fee), and putting it into an account for you which will be used to pay a debt settlement. These companies don't have any magic powers or know about any unknown laws that entitle you to settle your debts for less. They also cannot (nor could anyone else) guarantee that so long as you make all of your payments that your debts will be settled for that exact number. For the most part, they are sending out a letter to your credit card company asking them to accept lower payments or a specific amount to put you on a payment arrangement or to settle your debt. Whether the credit card company will agree with this offer is basically out of the hands of the debt consolidation company. The credit card company will either accept this offer or they will not. If the credit card company decides not to accept and you are no longer making your monthly payment to the credit card company, you will eventually be sued. Which brings us to number 3....
3. LAWSUITS. Most debt consolidation companies don't have any attorneys negotiating on your behalf. Therefore, if you get sued because a credit card company hasn't received money as fast as they want or because they choose not to deal with the debt consolidation company you are on your own. If you show up to court and tell the judge that you couldn't afford the credit card company payment and have signed up for debt consolidation the judge is still going to enter a judgment against you for the amount owed on the credit card. This means that at some point your bank account could be frozen and your wages could be garnished. And the debt consolidation company isn't going to have an attorney represent you in Court. The debt consolidation company is probably out of California or Florida and is not about to hire an attorney to represent your interests in Indiana. Bottom line....if you get sued, you are going it alone.
4. DON'T UNDERESTIMATE YOU. While I do represent clients in debt consolidation I always tell them that this type of work (so long as a lawsuit hasn't been filed) does not require a lot of legal expertise and you can do it yourself. There is no reason that an individual cannot call up his own credit card company and offer a percentage of what is owed on the balance. The worst that can happen is that the person on the other end of the line says no. However, many people fee so stressed out by their financial situation they decide that they would rather pay someone else to do the negotiating for them, which is a personal choice. However, this is certainly something you can do on your own.
5. REAL INDIANA EXPERIENCE. Recently one of my clients told me that he had enrolled with debt consolidation a year ago and had been paying about $800.00 per month to that company for the last year. He expected the debt consolidation company to pay off nine (9) creditors so long as he paid $800.00 per month for two years. I heard this individual's story when he showed up at my office with copies of lawsuits filed by eight (8) of the nine (9) credit card companies. When I reviewed the debt consolidation contract I found that my client had paid the debt consolidation company's fees for about 11 of those 12 months. Therefore, the debt consolidation company had not built up any money to settle my clients' debts. However, they had happily accepted a fee of approximately $7,000.00 (that is not a typo) for their "work." Of course, the debt consolidation company wasn't going to help my client deal with the lawsuits, so he cancelled the debt consolidation program and I helped him settle his lawsuits. While I do not know exactly what my client was charged for me to work on these lawsuits, I do know it was no were near $7,000.00 and probably more in the range of $1,000.00.
To sum it up, debt consolidation can be a useful tool for folks dealing with debt. However, this is not a decision that should be taken lightly and many questions should be asked prior to signing a contract with a debt consolidation company. If you are struggling with debt in Fishers, Noblesville or Carmel, Indiana I can help. I provide a free initial consultation and I will be able to tell you whether debt consolidation or bankruptcy can be tools in your fight to get out of debt. Call 575-8222 to set up an appointment with me at Halcomb Singler, LLP.
Lastly, I'd like to hear about the experiences that any of you have had with debt consolidation companies (good or bad). Without naming the specific company, leave a comment about your experience with debt consolidation.
Halcomb Singler, LLP, is a debt relief agency. It helps people file for bankruptcy under the bankruptcy code. No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so. The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.
Sunday, October 3, 2010
Statement of Presumed Abuse
Statement of Presumed Abuse.
Sounds pretty bad, doesn't it? This is notice that some Chapter 7 Bankruptcy Debtors will receive in the mail. It means that the United States Trustee's Office, which is the office that is charged with maintaining the integrity of the bankruptcy code, thinks that you really should have filed a Chapter 13 bankruptcy.
Before your blood pressure reads off the charts or your eye starts twitching uncontrollably...Relax. This notice is often scarier than it looks. Many times receiving this notice in the mail does not mean that your Chapter 7 bankruptcy will need to be converted to a Chapter 13....but lets back up and discuss how and when you are likely to receive a Statement of Presumed Abuse in your Chapter 7 bankruptcy.
Each Chapter 7 bankruptcy petition contains a form called a Means Test. The means test takes all of your household's income (not including social security) over the 6 months prior to filing, adds it all up, and divides it by 6 to come to your average over the last 6 months. This amount is called the debtor's current monthly income (CMI). Your CMI is compared to the average yearly income of your household size in Indiana. For example, a married debtor with 2 children would be compared to the income of an average family of 4 in Indiana. In the event your yearly income is higher than the average family of your size, there is a presumption that you should have enough money left over at the end of the month to pay into a Chapter 13 repayment plan.
However, simply because a debtor's income is higher than the average household of his or her size in Indiana, all hope is not lost. The means test works similarly to an income tax return in that you take deductions for living expenses, debt repayment, taxes withheld, etc. However, most of the deductions are not the debtor's current living expenses, they are average living expenses for a household size that is the same as the debtor. Once the debtor reaches the end of the means test, if the number that the means test has determined the debtor SHOULD have left at the end of the month is higher than $167.67, the presumption of abuse has arisen.
Just because the presumption of abuse has arisen does not mean that a person could not file a Chapter 7 bankruptcy and receive a discharge. For example, if a debtor had a very well-paying job and was laid off 3 months prior to the filing of the bankruptcy, the 3 months that the debtor was working could lead to the calculation showing a presumption of abuse. However, in reality, the Court and the trustee's office understand that since the debtor no longer has that job, that even though the means test says the debtor should have money left at the end of the month that the debtor's job loss is a change in circumstances that rebuts the presumption of abuse. In addition, debtors may set forth "special circumstances" in the means test. Special circumstances are exactly as they sound....justifiable additional expenses which make it impossible for a debtor to make a payment into a Chapter 13 repayment plan. Special circumstances may be a student loan payment or the expense of separate households of spouses necessary for employment. What exactly will qualify as a special circumstance varies from jurisdiction to jurisdiction and is often the subject of argument in bankruptcy courts today.
If a debtor is going to receive a Statement of Presumed Abuse, it will be filed within ten (10) days of that debtor's 341 meeting of creditors. Sometimes an attorney from the United States Trustee's ("UST") office will even show up the the 341 meeting of creditors to question the debtor, but not always. The Statement of Presumed Abuse does not state exactly what the UST finds to be problematic about your bankruptcy petition. Typically, after your attorney receives the notice, he or she will discuss your case with a trial attorney from the UST's office to determine what exactly the UST perceives to be problematic with your case being successfully discharged as a Chapter 7.
Sometimes the UST will find what they perceive to be an error in the way that the Debtor's Means Test was completed. Sometimes, the UST's office will have calculated the debtor's income differently than the attorney's office, or sometimes the UST's office will simply have questions about the debtor(s) and their ability to make payments into a Chapter 13. Often, the UST's office will want proof of high expenses, such as medical expenses, day care expenses, etc. In the event that this series of conversations satisfies the UST's inquiry, the UST may withdraw its Notice of Presumed Abuse, and the Chapter 7 debtor will likely move on to receive a discharge.
In the event that the UST is not satisfied, and continues to believe that the debtor should have funds to pay into a Chapter 13, the UST has 30 days from the filing of the Notice of Presumed Abuse to file a Motion to Dismiss or Convert your Chapter 7 bankruptcy petition. My experience has been that most cases can be resolved so that the Debtor continues to receive a Chapter 7 Discharge rather than the UST filing a Motion to Dismiss. I will save the explanation of the Motion to Dismiss process, in the event it is filed, for my next discussion.
In the meantime, feel free to e-mail me or comment on a subject that you would like me to discuss on my blog. As always, if you are a person struggling with debt in central Indiana, I would be happy to meet with you to discuss whether or not bankruptcy or debt negotiation could help with your situation. You can find me at Halcomb Singler, LLP, in Carmel, Indiana. Call me for a free initial consultation on bankruptcy.
Halcomb Singler, LLP, is a debt relief agency. It helps people file for bankruptcy under the bankruptcy code. No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so. The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.
Sounds pretty bad, doesn't it? This is notice that some Chapter 7 Bankruptcy Debtors will receive in the mail. It means that the United States Trustee's Office, which is the office that is charged with maintaining the integrity of the bankruptcy code, thinks that you really should have filed a Chapter 13 bankruptcy.
Before your blood pressure reads off the charts or your eye starts twitching uncontrollably...Relax. This notice is often scarier than it looks. Many times receiving this notice in the mail does not mean that your Chapter 7 bankruptcy will need to be converted to a Chapter 13....but lets back up and discuss how and when you are likely to receive a Statement of Presumed Abuse in your Chapter 7 bankruptcy.
Each Chapter 7 bankruptcy petition contains a form called a Means Test. The means test takes all of your household's income (not including social security) over the 6 months prior to filing, adds it all up, and divides it by 6 to come to your average over the last 6 months. This amount is called the debtor's current monthly income (CMI). Your CMI is compared to the average yearly income of your household size in Indiana. For example, a married debtor with 2 children would be compared to the income of an average family of 4 in Indiana. In the event your yearly income is higher than the average family of your size, there is a presumption that you should have enough money left over at the end of the month to pay into a Chapter 13 repayment plan.
However, simply because a debtor's income is higher than the average household of his or her size in Indiana, all hope is not lost. The means test works similarly to an income tax return in that you take deductions for living expenses, debt repayment, taxes withheld, etc. However, most of the deductions are not the debtor's current living expenses, they are average living expenses for a household size that is the same as the debtor. Once the debtor reaches the end of the means test, if the number that the means test has determined the debtor SHOULD have left at the end of the month is higher than $167.67, the presumption of abuse has arisen.
Just because the presumption of abuse has arisen does not mean that a person could not file a Chapter 7 bankruptcy and receive a discharge. For example, if a debtor had a very well-paying job and was laid off 3 months prior to the filing of the bankruptcy, the 3 months that the debtor was working could lead to the calculation showing a presumption of abuse. However, in reality, the Court and the trustee's office understand that since the debtor no longer has that job, that even though the means test says the debtor should have money left at the end of the month that the debtor's job loss is a change in circumstances that rebuts the presumption of abuse. In addition, debtors may set forth "special circumstances" in the means test. Special circumstances are exactly as they sound....justifiable additional expenses which make it impossible for a debtor to make a payment into a Chapter 13 repayment plan. Special circumstances may be a student loan payment or the expense of separate households of spouses necessary for employment. What exactly will qualify as a special circumstance varies from jurisdiction to jurisdiction and is often the subject of argument in bankruptcy courts today.
If a debtor is going to receive a Statement of Presumed Abuse, it will be filed within ten (10) days of that debtor's 341 meeting of creditors. Sometimes an attorney from the United States Trustee's ("UST") office will even show up the the 341 meeting of creditors to question the debtor, but not always. The Statement of Presumed Abuse does not state exactly what the UST finds to be problematic about your bankruptcy petition. Typically, after your attorney receives the notice, he or she will discuss your case with a trial attorney from the UST's office to determine what exactly the UST perceives to be problematic with your case being successfully discharged as a Chapter 7.
Sometimes the UST will find what they perceive to be an error in the way that the Debtor's Means Test was completed. Sometimes, the UST's office will have calculated the debtor's income differently than the attorney's office, or sometimes the UST's office will simply have questions about the debtor(s) and their ability to make payments into a Chapter 13. Often, the UST's office will want proof of high expenses, such as medical expenses, day care expenses, etc. In the event that this series of conversations satisfies the UST's inquiry, the UST may withdraw its Notice of Presumed Abuse, and the Chapter 7 debtor will likely move on to receive a discharge.
In the event that the UST is not satisfied, and continues to believe that the debtor should have funds to pay into a Chapter 13, the UST has 30 days from the filing of the Notice of Presumed Abuse to file a Motion to Dismiss or Convert your Chapter 7 bankruptcy petition. My experience has been that most cases can be resolved so that the Debtor continues to receive a Chapter 7 Discharge rather than the UST filing a Motion to Dismiss. I will save the explanation of the Motion to Dismiss process, in the event it is filed, for my next discussion.
In the meantime, feel free to e-mail me or comment on a subject that you would like me to discuss on my blog. As always, if you are a person struggling with debt in central Indiana, I would be happy to meet with you to discuss whether or not bankruptcy or debt negotiation could help with your situation. You can find me at Halcomb Singler, LLP, in Carmel, Indiana. Call me for a free initial consultation on bankruptcy.
Halcomb Singler, LLP, is a debt relief agency. It helps people file for bankruptcy under the bankruptcy code. No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so. The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.
Wednesday, September 8, 2010
Do I qualify for a Chapter 7 or Chapter 13?
The Indiana Bankruptcy Blog would not be complete without a posting on this "ultimate question." After consumer debt clients understand the difference between Chapter 7 and Chapter 13 (which is generally no payments vs. payments) the next question is typically "Do I qualify for a Chapter 7?"
The answer to that question is often depends on whether you can pass two tests. First, the Bankruptcy Court will ask you to list all of your current monthly income. This includes social security, unemployment, child support, and any other income you have coming into your household (your spouse's income is included even if he or she is not filing....which is a great subject for a future blog.) Then, the Court will deduct your current "reasonable" living expenses. For a discussion on what the Court would consider reasonable see the previous Indiana Bankruptcy Blog entry. If you are left with more than $100.00 left per month after paying your living expenses you will not qualify for a Chapter 7 and will need to pay at least whatever you have left over at the end of the month into a Chapter 13 repayment plan. This is the first test.
The second test came to be in 2005 in an attempt to objectify the definition of a reasonable living expense. This test is called the Means Test. For this test your last 6 months of household income is added up and divided by 6 to come to your current monthly income. Social security is not included in this calculation. Once you have calculated your current monthly income that number is multiplied by 12 to get to an average annual income. Your household annual income is compared to the average income of your same family size. For example, if you are married with 2 children you will be compared to the average household of 4 in Indiana. The averages are according to the IRS and can be found on the United State's Trustee's website. If your average is less than the average for your family size and state, there is no presumption you have abused the bankruptcy code by filing a Chapter 7 bankruptcy. On the other hand, if your income is higher than the average for your family size and state then there is a presumption of abuse. In short, this means that there is a presumption that you should have enough money at the end of the month to pay into a Chapter 13 repayment plan and should not qualify for a Chapter 7. However, all hope is not lost if your income is higher than the average for your family size. The means test will take deductions from your current monthly income for living expenses based on averages instead of what your family may actually spend. Therefore, the average for housing may be more or less than the rent or mortgage payment that you are paying. Average expenses for vehicle operation, vehicle payments, non-mortgage utility expenses, and several other deductions are taken into account. Some of the averages are national, some are for our state of Indiana and some are for the county. (In Indiana, Hamilton County tends to have some of the higher averages for living expenses.) Once you complete the test if the means test shows that you objectively should have less than $167.00 at the end of the month you have rebutted the presumption of abuse an may still file a Chapter 7 bankruptcy.
One important note is that if you fail either of these tests you will not be successful in receiving a Chapter 7 discharge in most circumstances. For example, if you have $400.00 left over each month after paying your living expenses, but the means test shows you have nothing left over, you will not qualify for a Chapter 7 Bankruptcy. On the same note, if your current monthly income less expenses leaves you with nothing, but the means test says you should have $400.00 left over at the end of the month you will likely not qualify for a Chapter 7. This is a flag to the Court that you are spending too much on living expenses.
This is a general overview of how the Chapter 7 vs. Chapter 13 bankruptcy determination is made. There may be other factors such as the amount of assets that you have, whether you are current on your house payment, etc., which also factor into whether a Chapter 7 bankruptcy would benefit you. It is certainly necessary to meet with a qualified bankruptcy attorney to determine whether you will qualify for a Chapter 7 bankruptcy. If you are in Hamilton County, Tipton County, Marion County or Madison County Indiana and are considering bankruptcy I would be happy to meet with you for a free consultation to discuss your options and whether or not bankruptcy might be helpful for you and your family. Just contact Halcomb Singler, LLP, at 317-575-8222. Please feel free to leave a comment if you have questions about this blog and I will do my best to answer them.
Halcomb Singler, LLP, is a debt relief agency. It helps people file for bankruptcy under the bankruptcy code. No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so. The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.
The answer to that question is often depends on whether you can pass two tests. First, the Bankruptcy Court will ask you to list all of your current monthly income. This includes social security, unemployment, child support, and any other income you have coming into your household (your spouse's income is included even if he or she is not filing....which is a great subject for a future blog.) Then, the Court will deduct your current "reasonable" living expenses. For a discussion on what the Court would consider reasonable see the previous Indiana Bankruptcy Blog entry. If you are left with more than $100.00 left per month after paying your living expenses you will not qualify for a Chapter 7 and will need to pay at least whatever you have left over at the end of the month into a Chapter 13 repayment plan. This is the first test.
The second test came to be in 2005 in an attempt to objectify the definition of a reasonable living expense. This test is called the Means Test. For this test your last 6 months of household income is added up and divided by 6 to come to your current monthly income. Social security is not included in this calculation. Once you have calculated your current monthly income that number is multiplied by 12 to get to an average annual income. Your household annual income is compared to the average income of your same family size. For example, if you are married with 2 children you will be compared to the average household of 4 in Indiana. The averages are according to the IRS and can be found on the United State's Trustee's website. If your average is less than the average for your family size and state, there is no presumption you have abused the bankruptcy code by filing a Chapter 7 bankruptcy. On the other hand, if your income is higher than the average for your family size and state then there is a presumption of abuse. In short, this means that there is a presumption that you should have enough money at the end of the month to pay into a Chapter 13 repayment plan and should not qualify for a Chapter 7. However, all hope is not lost if your income is higher than the average for your family size. The means test will take deductions from your current monthly income for living expenses based on averages instead of what your family may actually spend. Therefore, the average for housing may be more or less than the rent or mortgage payment that you are paying. Average expenses for vehicle operation, vehicle payments, non-mortgage utility expenses, and several other deductions are taken into account. Some of the averages are national, some are for our state of Indiana and some are for the county. (In Indiana, Hamilton County tends to have some of the higher averages for living expenses.) Once you complete the test if the means test shows that you objectively should have less than $167.00 at the end of the month you have rebutted the presumption of abuse an may still file a Chapter 7 bankruptcy.
One important note is that if you fail either of these tests you will not be successful in receiving a Chapter 7 discharge in most circumstances. For example, if you have $400.00 left over each month after paying your living expenses, but the means test shows you have nothing left over, you will not qualify for a Chapter 7 Bankruptcy. On the same note, if your current monthly income less expenses leaves you with nothing, but the means test says you should have $400.00 left over at the end of the month you will likely not qualify for a Chapter 7. This is a flag to the Court that you are spending too much on living expenses.
This is a general overview of how the Chapter 7 vs. Chapter 13 bankruptcy determination is made. There may be other factors such as the amount of assets that you have, whether you are current on your house payment, etc., which also factor into whether a Chapter 7 bankruptcy would benefit you. It is certainly necessary to meet with a qualified bankruptcy attorney to determine whether you will qualify for a Chapter 7 bankruptcy. If you are in Hamilton County, Tipton County, Marion County or Madison County Indiana and are considering bankruptcy I would be happy to meet with you for a free consultation to discuss your options and whether or not bankruptcy might be helpful for you and your family. Just contact Halcomb Singler, LLP, at 317-575-8222. Please feel free to leave a comment if you have questions about this blog and I will do my best to answer them.
Halcomb Singler, LLP, is a debt relief agency. It helps people file for bankruptcy under the bankruptcy code. No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so. The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.
Saturday, September 4, 2010
What is a REASONABLE living expense?
One thing that bankruptcy debtors can count on is an objection from the trustee if he or she believes that a monthly living expense is unreasonable. Which leads me to the title of this blog. WHAT IS REASONABLE? This is certainly a relative term. What is reasonable to me may be outlandish to you or vice versa. And, more importantly, what is reasonable to you may not be reasonable to your bankruptcy trustee.
I often find myself discussing what I believe will be deemed reasonable with clients at Halcomb Singler, LLP. For example, many clients wonder if cable television is a "reasonable" living expense. The short answer, in my experience in the Southern District of Indiana Bankruptcy Court, is yes. I wish all of my reasonable living expense inquiries were this simple.
Believe it or not, bankruptcy debtors can also easily budget $100.00 per month for entertainment and $50.00 to $100.00 on haircuts (depending on family size). I have also filed bankruptcy petitions with expenses for pet food/vet care which have not been met with any objection.
Your medical expenses are reasonable. If your doctor prescribes it, it's reasonable. Save your receipts from the pharmacy showing your copay. Save receipts from when you visit your doctor. If you are in need of a medical or dental procedure, consider asking your doctor for an estimate of the upcoming cost so that it may be reflected in your budget.
One of the most subjective living expenses is food. A client with a family of 4 is often shocked to hear that I do not believe a trustee would find $1,000.00 per month reasonable for food. This is normally because that family is spending a few hundred dollars eating out each month. In my opinion eating out is better suited for the entertainment category....not food. This includes eating out at lunch during work hours. Take a brown bag lunch and just watch the savings pile up. In my experience, a more reasonable amount for groceries is about $600.00 to $700.00 for a family of four. However, if you or a family member has specific nutritional restrictions due to a disease or other reason talk to your attorney about it. Not every debtor is the same and your circumstances may make a higher living experience in one category or another reasonable while for another family the same amount would be unreasonable.
So, how are debtors to prove that their living expenses are reasonable? I often tell my clients to begin saving their receipts once they have made the decision to file bankruptcy. Chances are that they will not need the receipts. However, in the event that a trustee objects to an expense it can be very helpful to have them on hand. Telling the trustee that you spend $900.00 on groceries each month for your family of 4 is less effective than showing the trustee 3 months of receipts for groceries averaging $900.00 per month. The receipts will allow the trustee to see exactly what you are buying (food, as opposed to alcohol, dvds, or other non-food items often found at grocery stores) and help the trustee come to the conclusion that your particular expense is reasonable.
Getting your budget in order prior to the filing of your bankruptcy petition is not only helpful for your bankruptcy, but can be a great way for you and your family to move forward after bankruptcy. If you come up with a reasonable budget for your bankruptcy you can use that budget to make sure that you stay on track financially post-bankruptcy.
If you live in Noblesville, Carmel, Fishers, Kokomo, Anderson, Indianapolis or Tipton and want to know if bankruptcy might be right for you contact my office for a free consultation at 317-575-8222 or contact me for a free initial consultation.
Halcomb Singler, LLP, is a debt relief agency. It helps people file for bankruptcy under the bankruptcy code. No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so. The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.
Halcomb Singler, LLP, is a debt relief agency. It helps people file for bankruptcy under the bankruptcy code. No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so. The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.
Tuesday, June 29, 2010
What NOT to do if you think you may need to file bankruptcy
Almost all of my clients at Halcomb Singler, LLP, have tried everything they can think of to avoid filing bankruptcy by the time they contact my office. I have grown used to the fact that my new clients are less than thrilled to have reached the point where they are compelled to seek the advice of a bankruptcy attorney. This is good. Bankruptcy is not something that is planned. Filing bankruptcy is a serious decision that should not be taken lightly. However, if you are struggling with debt and believe bankruptcy may be in your future there are quite a few actions you should avoid:
1. Clearing out your retirement account to pay debt
Your 401(k) is exempt in bankruptcy. Nothing is more sad than meeting with a client who has completely cleared out his or her (or both of their) retirement accounts only to find that they are still in need of a bankruptcy filing. Only dip into retirement if you are almost positive that you will be able to pay off your debt with the distribution. Be realistic! If you and your spouse have both been laid off and you are cashing out your retirements to get current on credit cards this may just be a stopgap. Better to meet with a bankruptcy attorney to explore your options than to file a cash out your retirement AND need to file a bankruptcy. Also, keep in mind that you may be subject to a penalty and income tax for accessing these funds.
2. Deed your (car, house, or anything else) to a relative, friend spouse, etc.
Most folks believe that they are likely to have their house, car, etc., taken in a bankruptcy and think it would be a better idea to transfer title to one of these assets to someone to "hold" while they are in bankruptcy. Nothing could be more wrong. If you have transferred property to an insider (typically a relative or business partner) within the 2 years prior to the filing of a bankruptcy the trustee can avoid (undo) the transfer and it remains your asset. Further, depending on the state that you are in you are likely within your rights to own that asset and go through bankruptcy without surrendering it. Meet with an attorney in your area prior to transferring anything.
3. Pay back relatives, doctors, friends, etc.
People are always more interested in paying back their parents, friends, or any other person they may see often or need the service of in the future rather than paying back credit card companies or loan obligations. This is understandable. However, you may be doing more harm than good by paying back money on an antecedent debt. Bankruptcy code dictates that any transfer of funds more than $600.oo within the 90 days prior to the filing of a bankruptcy by an insolvent debtor is a preference payment. This means that you have preferred one creditor over another and the general premise of bankruptcy law is that similarly situated creditors should be treated equally. So, if you pay your doctor $1,000.00 within the 90 days prior to the filing of your bankruptcy the trustee can go back to the doctor and legally recover those funds to spread out equally among your creditors. If you are paying back a relative the look back period is 2 years. So, you are best served not to pay back these creditors prior to the filing of a bankruptcy because they will likely hear from your bankruptcy trustee who will ask for the money back and may sue the creditor if necessary to recover the funds.
4. Believe the debt collectors
Chances are that if you are considering bankruptcy it is, in part, because creditors have started to contact you regarding outstanding debts. Do not let a debt collector talk you into an automatic debit of your account to repay a debt. If you have the money to pay on a debt, send them a check. Once you have given a debt collector access to your account they may take debits more often than agreed upon or for more money than agreed upon. Most people will find that once you have granted a creditor this access that their bank has little interest in becoming involved in the dispute and that the only remedy is to close the bank account in order to prevent the creditor from unfettered access to the account. Also, take anything a debt collector tells you with a grain of salt. Collectors are often paid based on the amount they collect and are likely to tell you anything they believe might lead you to make a payment.
5. Believe that your creditors will not sue you or that they will agree to a "reasonable" repayment
Do not make the mistake of believing that creditors have no recourse to sue or that they won't sue because it is not very much money. Creditors have a board of directors and are looking out for their bottom line. They very well may sue you. And if they obtain a judgment they may have the ability to freeze your bank account to obtain their money or to garnish your wages. Do not make the mistake of believing that a judge will care that you can't afford to have your check garnished or your last $1,000.00 was in that bank account. Subject to applicable exemptions, if you owe money to creditors they do have remedies and will not hesitate to use them.
6. Try to be sneaky or "smarter" than bankruptcy
Do not insult the intelligence of your bankruptcy trustee or attorney by trying hide any money or assets. I have heard this question many times..."How will anyone know if I"........(fill in the blank with hide money, assets, etc). The answer to this question is that your bankruptcy petition asks your many, many financial questions and you are required to answer these questions under the penalty of perjury. There are people working for the United States Trustee's office where you live whose job it is to try to detect when assets are being hidden by a debtor. In the event that you are found to have committed perjury on your bankruptcy petition you will likely be punished criminally in federal court. It is not worth it. Do not hide anything. Be open with your attorney because that is the only way that he or she can help you legally navigate the bankruptcy code.
7. Take funds you have on hand and pay off a car, camper, house, etc.
Depending on the chapter of bankruptcy that you file and the state you are in, a specific monetary amount of your assets will be considered "exempt," or beyond the reach of the bankruptcy court. This means that you are entitled to have so much stuff that you can keep in spite of the fact that you filed a bankruptcy. If you pay off an asset with a lien on it you may find that you now have an asset that is not exempt in the bankruptcy because you have more equity that permissible in that asset. Speak with an experienced bankruptcy attorney before paying off an asset.
The underlying theme is that you need to be advised if you believe you may need to file a bankruptcy in the future in spite of the fact that you are likely using your best efforts to avoid bankruptcy. Not much about bankruptcy is common sense. In fact, it is my opinion that much of bankruptcy law is counterintuitive. Please keep in mind that this is general advice and anyone in need of bankruptcy advice should consult with a bankruptcy attorney. As always, I am happy to speak with those who find themselves in a difficult financial situation here in Indiana. I can be reached for an appointment at 317-575-8222 or contact me at www.halcombsingler.com.
Halcomb Singler, LLP, is a debt relief agency. It helps people file for bankruptcy under the bankruptcy code. No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so. The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.
Halcomb Singler, LLP, is a debt relief agency. It helps people file for bankruptcy under the bankruptcy code. No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so. The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.
Wednesday, May 5, 2010
What to expect at your 341 Hearing
If you have filed a bankruptcy you will be required to attend a 341 meeting of creditors whereby your creditors and a trustee, who is an attorney working for the government, have the opportunity to ask you questions. For many individual debtors, this is the only hearing that they will need to attend during the course of their bankruptcy proceeding.
In the Southern District of Indiana there are many Chapter 7 interim Trustees and two Chapter 13 trustees. These trustees (not the judge) with preside over the 341 meeting of creditors, which is the hearing that every bankruptcy debtor is required to attend. Most clients have a lot of apprehension about attending this hearing. They are nervous about creditors appearing, about whether the trustee will understand why they needed to file a bankruptcy, how they will be treated by the trustee, and how they should answer the trustee’s questions.
These themes are so similar from client to client that I decided to include this topic in my blog. Just like all humans, each trustee who presides over the hearing has his or her own personality, likes and dislikes. However, there are a few things that a debtor can do to make their 341 go a little more smoothly.
1. 1. Don’t expect your attorney to answer the questions for you….the trustee is going to be asking you questions about your life and not your attorney’s life. You should know more about your own life and finances than the attorney. The trustee is not trying to trick you with legalese…they simply want honest, factual answers.
2. 2. Don’t interrupt! The trustee deserves the common courtesy of being able to finish his or her question. Also, you are going to be testifying under oath, so it is extremely important that you know what the question is before you ask it.
3. 3. Be on time and bring the documents required. In the Southern District of Indiana the trustee must verify a debtor’s identity with his or her social security card and current drivers license. If you don’t bring these documents to the hearing your trustee will likely reset the hearing and you will have to have it on another day. It is also extremely important to appear at the time you attorney directs. You attorney will want to review with you what the trustee will likely ask so that you are adequately prepared to answer the questions. If you arrive late you may be rushed into the hearing without the opportunity to ask any questions. If in doubt, arrive early and wait. It will ease your nerves to know you have found the correct location instead of getting there at the last minute. I have actually heard one of my former clients run down the hall to arrive at her hearing 5 minutes late. Suffice it to say that her frazzled nerves could not take much more by the time we walked out of her hearing.
4. 4. Do not look at the trustee as an adversary. There is no reason to enter into a verbal argument with the trustee during your hearing. There is nothing to be gained from taking a foul or argumentative with the trustee. The trustee is not your enemy. He or she is there because you have asked the Court to grant you the relief of a bankruptcy discharge.
5. 5. Don’t ramble. In the Southern District of Indiana it is entirely possible that the trustee has 5 or 6 hearings set each half hour. The hearings proceed quickly and the trustee likes to stay on time so as not to waste their own time or that of other attorneys and debtors. Listen to the question posed by the trustee carefully and respond with the answer; nothing more. You will find that many questions can be sufficiently answered with a simple “yes” or “no.” The trustee will appreciate your attentiveness and ability to provide the trustee with the information he or she needs.
6. 6. Relax. After 5 years of practice, I have yet to see anyone fail to survive a 341 hearing. The most common response I hear from my clients is “that was it?” I can understand that it is normal for those who need to file a bankruptcy are apprehensive about the bankruptcy process, especially the hearing. However, the trustees are generally very respectful and not judgmental at the hearing.
The hearing will change from trustee to trustee and from Court to Court, but I hope these tips will help your hearing proceed more smoothly.
Saturday, April 3, 2010
Instant Gratification
Today I did something that many Americans do all the time...I went shopping. I went to an apple store to look at imacs. I spoke with the salesperson, decided which model would be useful and which specifications I should select. I was informed that the particular model had a pricetag of $1800.00. That was where I did something different than many Americans would have done...I walked out of the store without an imac.
This is not to say that at some point in the future that I may walk into that same store and complete the purchase. But instead of pulling out a credit card and making an impulse purchase I decided to think about the purchase and find out what a similiar pc would cost.
And most importantly I had not allocated for and saved the money to pay for that particular purchase. In the event I did buy the computer I would not simply remove the money from my emergency fund. Instead I would budget and save for the purchase.
This experience got me to wonder this: when did it become out of the ordinary to save up the money for something that you want before buying it? In my opinion this is a much superior method to paying for it with a credit card so you can have it now and then paying interest until the computer is so out of date that it is time to get a new one. But the truth is that too few of us save up to pay for our purchases. We allow the lure of instant gratification to break us and we find ourselves in the end with a lot of stuff and no money.
I believe we need to go back to the way our grandparents did it. Pay with cash which in turn forces us to live within our means. The hard truth of doing this means that your friends may have better stuff than you and that you may not be able to live in the same neighborhood as your parents who have been working for 30 years.
What does this have to do with a bankruptcy blog? Everything. Because each day I meet with individuals who are facing bankruptcy...which is a very difficult thing to face indeed. And I am not suggesting that each person I meet with could have avoided bankruptcy through these principals, I do think that if even one of these people could go back in time knowing that these principles would help to avoid bankruptcy that they would do it gladly.
This is not to say that at some point in the future that I may walk into that same store and complete the purchase. But instead of pulling out a credit card and making an impulse purchase I decided to think about the purchase and find out what a similiar pc would cost.
And most importantly I had not allocated for and saved the money to pay for that particular purchase. In the event I did buy the computer I would not simply remove the money from my emergency fund. Instead I would budget and save for the purchase.
This experience got me to wonder this: when did it become out of the ordinary to save up the money for something that you want before buying it? In my opinion this is a much superior method to paying for it with a credit card so you can have it now and then paying interest until the computer is so out of date that it is time to get a new one. But the truth is that too few of us save up to pay for our purchases. We allow the lure of instant gratification to break us and we find ourselves in the end with a lot of stuff and no money.
I believe we need to go back to the way our grandparents did it. Pay with cash which in turn forces us to live within our means. The hard truth of doing this means that your friends may have better stuff than you and that you may not be able to live in the same neighborhood as your parents who have been working for 30 years.
What does this have to do with a bankruptcy blog? Everything. Because each day I meet with individuals who are facing bankruptcy...which is a very difficult thing to face indeed. And I am not suggesting that each person I meet with could have avoided bankruptcy through these principals, I do think that if even one of these people could go back in time knowing that these principles would help to avoid bankruptcy that they would do it gladly.
Friday, March 19, 2010
When to file a bankruptcy......later
There is no question that it is not easy to find yourself in a position in which you need to file a bankruptcy. My clients often feel hopeless, overwhelmed, and scared prior to the filing of their bankruptcy petition. Almost always they are impatient. Many of my clients share the sentiment that they "just want to get this over with" so they are able to move on with their lives...and this is the purpose of bankruptcy. To allow individuals a way out so that they can restructure their financial lives and get a fresh start.
However, there are many strategic reasons that people should stop and evaluate prior to rushing to file their petition. I will take a moment to review just a few considerations, although this is certainly not an exhaustive list:
1. Ask yourself, could it get worse?
I typically tell my clients that they want to believe the worst is behind them prior to the filing of a bankruptcy petition. I realize that none of us has a crystal ball to see the future. However, if you are coming up on the end of unemployment or believe that a layoff at work is imminent a delay in filing may be appropriate. This is true because if you have a loss of income you may incur additional debt and debt incurred after the filing of a bankruptcy is not discharged.
2. Are you entitled to an income tax refund?
If you are entitled to an income tax refund, or will receive one shortly it is likely a good idea to delay the filing of your bankruptcy petition until you have received and spent the refund funds. This is true because if you file a bankruptcy petition prior to the receipt of an income tax refund to which you are entitled the trustee may be able to take a portion or even the entire refund. It is probably worth waiting to be able to use that money on something that you or your family truly needs such as a car repair, a new mattress to replace the one you have that is 20 years old, a medical procedure, etc. So, if it is tax time talk to your attorney about how to protect your refund.
3. Do you owe income tax?
Income tax is sometimes dischargeable. However, the taxes must be filed and you must have owed the tax for a period of time prior to filing. The rules on whether income taxes are dischargeable in bankruptcy are complex and should be discussed with your attorney, but if waiting a few months to file could discharge income tax it should certainly be considered.
4. Did you receive a large bonus in the past 6 months?
Consumer bankruptcy takes your last 6 months of income into consideration in order to determine what type of bankruptcy is most allowed. If you have had a large bonus over the last 6 months it may skew your results to show that you should have enough money to pay into a Chapter 13 repayment plan when the reality of your day to day finances is that you are spending all of your income on reasonable living expenses. A delay may be considered in this situation so that the bonus "falls off" the last six months, making it more reflective of your future earnings.
5. Are you about to welcome another family member into your home?
Consumer bankruptcy under the post 2005 bankruptcy laws considers how much money you should have left at the end of the month after paying living expenses. The expenses are based on averages for the nation, your state and your county for your family size. Not surprisingly, the more people in a family, the more the average expenses cost. Therefore, if you are about to have another baby it may make sense to delay filing until he or she is born so that your additional family member is taken into account for purposes of your living expenses.
While I could probably go on through about 10 more reasons, the point is that there are many factors that must be considered when deciding if it is the appropriate time for you to file a bankruptcy petition....and that most appropriate time may not be tomorrow. So, try to be patient even though you would prefer to "just get it over with" because waiting may be beneficial.
However, there are many strategic reasons that people should stop and evaluate prior to rushing to file their petition. I will take a moment to review just a few considerations, although this is certainly not an exhaustive list:
1. Ask yourself, could it get worse?
I typically tell my clients that they want to believe the worst is behind them prior to the filing of a bankruptcy petition. I realize that none of us has a crystal ball to see the future. However, if you are coming up on the end of unemployment or believe that a layoff at work is imminent a delay in filing may be appropriate. This is true because if you have a loss of income you may incur additional debt and debt incurred after the filing of a bankruptcy is not discharged.
2. Are you entitled to an income tax refund?
If you are entitled to an income tax refund, or will receive one shortly it is likely a good idea to delay the filing of your bankruptcy petition until you have received and spent the refund funds. This is true because if you file a bankruptcy petition prior to the receipt of an income tax refund to which you are entitled the trustee may be able to take a portion or even the entire refund. It is probably worth waiting to be able to use that money on something that you or your family truly needs such as a car repair, a new mattress to replace the one you have that is 20 years old, a medical procedure, etc. So, if it is tax time talk to your attorney about how to protect your refund.
3. Do you owe income tax?
Income tax is sometimes dischargeable. However, the taxes must be filed and you must have owed the tax for a period of time prior to filing. The rules on whether income taxes are dischargeable in bankruptcy are complex and should be discussed with your attorney, but if waiting a few months to file could discharge income tax it should certainly be considered.
4. Did you receive a large bonus in the past 6 months?
Consumer bankruptcy takes your last 6 months of income into consideration in order to determine what type of bankruptcy is most allowed. If you have had a large bonus over the last 6 months it may skew your results to show that you should have enough money to pay into a Chapter 13 repayment plan when the reality of your day to day finances is that you are spending all of your income on reasonable living expenses. A delay may be considered in this situation so that the bonus "falls off" the last six months, making it more reflective of your future earnings.
5. Are you about to welcome another family member into your home?
Consumer bankruptcy under the post 2005 bankruptcy laws considers how much money you should have left at the end of the month after paying living expenses. The expenses are based on averages for the nation, your state and your county for your family size. Not surprisingly, the more people in a family, the more the average expenses cost. Therefore, if you are about to have another baby it may make sense to delay filing until he or she is born so that your additional family member is taken into account for purposes of your living expenses.
While I could probably go on through about 10 more reasons, the point is that there are many factors that must be considered when deciding if it is the appropriate time for you to file a bankruptcy petition....and that most appropriate time may not be tomorrow. So, try to be patient even though you would prefer to "just get it over with" because waiting may be beneficial.
Sunday, March 14, 2010
It is OK to say no to kids
I meet with individuals every day who are struggling with their finances. In my meetings with hundreds if not thousands of people I have noticed a consistent theme.
KIDS CAN BANKRUPT YOU!!
Now I am not advocating against having kids, I am urging parents to rember the power of the word "no." I have had far to many clients tell me that they are spending thousands of dollars each year on hockey, gymnastics, or a number of other activities. If I point out that the cost is not necessary and suggest removing it from their expenses I often receive the same reaction...."We could never do that little Sally just loves it."
I urge parents everywhere to make a budget and see if your children's wants fit in after necessary living expenses are taken into consideration. If there is room in the budget feel free to send jr to baseball camp. But if the money isn't there explain to jr that baseball camp isn't in the cards this year. It is not only an opportunity for parents to stay on track financiall, it is a great lesson for kids that money is a fixed resource. Perhaps jr can work to pay for the camp himself (if he is old enough) or perhaps he plays baseball in the back yard this summer. Whichever occurs, saying no if there are not enough funds will maintain your family's financial health and teach your child financial responsibility as well. So, don't be afraid to say no to your children.
KIDS CAN BANKRUPT YOU!!
Now I am not advocating against having kids, I am urging parents to rember the power of the word "no." I have had far to many clients tell me that they are spending thousands of dollars each year on hockey, gymnastics, or a number of other activities. If I point out that the cost is not necessary and suggest removing it from their expenses I often receive the same reaction...."We could never do that little Sally just loves it."
I urge parents everywhere to make a budget and see if your children's wants fit in after necessary living expenses are taken into consideration. If there is room in the budget feel free to send jr to baseball camp. But if the money isn't there explain to jr that baseball camp isn't in the cards this year. It is not only an opportunity for parents to stay on track financiall, it is a great lesson for kids that money is a fixed resource. Perhaps jr can work to pay for the camp himself (if he is old enough) or perhaps he plays baseball in the back yard this summer. Whichever occurs, saying no if there are not enough funds will maintain your family's financial health and teach your child financial responsibility as well. So, don't be afraid to say no to your children.
Friday, March 12, 2010
Introduction
Allow me to introduce myself. My name is Erika Singler and I am an attorney licensed in Indiana. I am a partner in the law firm of Halcomb Singler, LLP, in Carmel, Indiana. (www.halcombsingler.com). I concentrate my practice to the areas of bankruptcy, personal injury and civil litigation. However, I wanted to focus this blog on bankruptcy because I am passionate about helping people be able to emerge from bankruptcy with good financial habits that will keep them out of bankruptcy in the future. Stay posted for futher entries on everything from Indiana Bankruptcy law, making sure your kids don't cause you to need to file for bankruptcy, living on cash, needing/wanting less stuff, and what not to do if you think you may need to file a bankruptcy.
***Please be advised that nothing in this blog should be considered legal advice. In order to give legal advice it would be necessary for me to meet with a person and have a full picture of their assets, debts, income, expenses, and other information necessary for me to come to an opinion.
***Please be advised that nothing in this blog should be considered legal advice. In order to give legal advice it would be necessary for me to meet with a person and have a full picture of their assets, debts, income, expenses, and other information necessary for me to come to an opinion.
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