As a bankruptcy attorney, I spend plenty of time going over strategies with potential clients on how to pay down debt. I often watch shows like Suze Orman and have myself completed Dave Ramsey's Financial Peace University. Not only do I find both of these individuals interesting, but I sometimes am able to get ideas from them to help me better advise my clients. This weekend on Suze Orman's show she discussed her opinion on the best strategy for paying down debt. I quickly realized that Suze Orman and Dave Ramsey have completely different views on this matter, so I thought it would make for a good discussion. First things first.....let me explain each position.
Suze Orman
As Suze Orman discussed on her show this weekend, she believes that all debts should be listed from highest interest rate to lowest interest rate. Then, you should try to contact each company and try to negotiate a lower interest rate, although Suze acknowledges that it is likely going to be a futile attempt. Once you have called all of the companies, redo your list (if necessary) and pay the minimum payment on all debts. Take any extra funds you have and pay it on the account with the highest interest rate. Once you have paid off the highest interest rate debt move on to the next until you have paid them all off.
Dave Ramsey
Dave Ramsey also believes in making a list. However, he wants you to list your debts in order from the lowest to the highest amounts, not taking the interest rates into consideration. He then says you should make the minimum payment on all of the debts and make as large of a payment as possible on the smallest debt. Once the smallest debt is knocked out you should go to the next debt. Dave Ramsey refers to this method as a "debt snowball" and believes that this method helps people to see progress in paying down their debt which helps them to stick with it.
As a side note, Suze presently preaches that you should have 8 months of net income in an emergency fund before beginning to pay off your debts. Dave Ramsey believes that most should have $1,000.00 in the bank prior to beginning the debt snowball, but reduces the number for those on modest incomes. And one thing that Suze didn't mention is that you have to stop incurring more debt. Debt reduction doesn't work unless you stop using the cards! Nothing will frustrate you more than making large payments, but not seeing a reduction in balances due to new charges.
Since watching Suze Orman I have been thinking about which method I believe to be the best approach for those attempting to get themselves out of debt, whether it be out of necessity to avoid bankruptcy or just to live a more debt-free lifestyle. And, as shocking as it may be to hear this from an attorney....I have decided that it depends.
I know the math people out there are reading this right now and thinking that I am crazy. The math clearly agrees with Suze's method. You really should end up paying less money in interest according to Suze's method and therefore should pay off your debt much more quickly.
However, after spending years meeting with people who have been attempting to pay off their debts...and sometimes ending up in bankruptcy, I cannot discount the psychology of seeing progress in a debt snowball. Lets be honest. Suze Orman's method is not rocket science. It is not something that each and every person is not able to figure out on his or her own. So why aren't more people able to do it??? Because it is hard to deny yourself. It is hard not to continue to use credit while attempting to get yourself out of debt. It is hard to see the light at the end of the tunnel using this method. However, if you are writing fewer and fewer checks to creditors each month, you are seeing real progress toward making yourself debt free and I believe that goes a long way to helping keep up the discipline it takes to get out from under debt. But I am not saying that Suze is all wrong.....it just depends on the situation and the person.
For example, lets assume that Sally has 3 credit cards. One has a balance of $10,000.00 at 11% interest, the second has a balance of $13,000.00 at 7% interest and the third has a balance of $12,000.00 at 12% interest. In my opinion, the only way to pay down this debt is with the Suze method. There is just not enough difference in the amounts to justify paying the lowest amount first. There would be no "psychological benefit" because all three of these amounts are so close that they would each take about the same amount of time to pay off. Therefore, you should pay the debt with the highest interest rate first.
However, lets take another example and say that George has 7 credit cards (this is not at all uncommon in my experience) with the following balances and interest rates:
$750.00 at 20%
$550.00 at 10%
$5,000.00 at 15%
$1,200.00 at 9%
$800.00 at 9%
$10,000.00 at 11%
$350.00 at 20%
In George's situation, I believe it would likely be better to start paying on the $350.00 debt first, then to move up the chain based on the amount owed instead of the interest rate. George could likely pay off several of these debts in a very short amount of time, allowing himself to see real progress towards getting out of debt and I believe that this might help him stay on track to get completely out of debt. In addition, by knocking out a few of the creditors early, he has fewer payments to make. This means fewer opportunities to make a late payment which will add a late fee and a higher interest rate.
Of course, whether to use the Suze or the Dave method also depends on you. You have to take a close look at yourself and decide whether you believe you will be more encouraged to get out of debt by seeing the interest payments you are saving yourself or by seeing the number of creditors drop off of the list. The decision is going to be different from person to person. I'd love to hear comments about which method you believe would work best to pay down debt and why.
For some people, neither the Suze Orman nor the Dave Ramsey method will work. I am talking about the people who just don't have enough funds to make even the minimum payments on their debt and don't see that situation changing. These people are having lawsuits filed against them and are facing wage garnishment. If you are stressed out about debt, sick of collection calls and facing lawsuits bankruptcy may be a good option. I am willing to meet with those in Indianapolis and central Indiana about bankruptcy without judgment free of charge. Please contact me if you would like to set up a meeting to talk about your problems and find out whether bankruptcy might help you put your debts behind you or call (317) 575-8222.
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, March 28, 2011
Thursday, March 24, 2011
Indiana 5th in Bankruptcy Filings
I don't think that top of the bankruptcy filings was a ranking that Mitch Daniels or any citizen of the State of Indiana was striving to achieve. However, according to an article written by creditcards.com, Indiana had the 5th highest number of bankruptcy filings in 2010. Indiana was only topped by Nevada, Georgia, Tennessee and Alabama.
According to the article, Indiana had 7.1 bankruptcy filings per 1,000 residents in 2010. As a bankruptcy attorney, I was not surprised to see that the number of bankruptcy filings in Indiana was 7.1 per 1,000 residents. However, I was surprised to see how much higher Indiana ranked than some other states that I would have thought were suffering from much worse economic climates than Indiana. For example, Indiana ranked higher than Michigan in bankruptcy filings per residents in 2010. We all know how Michigan has been affected by the decline in the auto market, so I was surprised that Indiana surpassed Michigan. In addition, I was shocked that West Virginia filings were 3.3 per 1,000 residents. Indiana files double the bankruptcy petitions per 1,000 people than West Virginia! I am no expert on West Virginia, but I always thought it was a fairly poor state with little industry outside of coal mining. Clearly I must be missing something. If you were wondering Alaska came in "last" with only 1.6 bankruptcy filings per 1,000 residents in 2010.
The article also went on to predict more bankruptcy filings in 2011 than there had been in 2010. Unfortunately, I am not surprised by this prediction. With the current economic conditions, employers cutting hours and/or not awarding pay raises and the skyrocketing price of gas many Hoosiers are just trying to stay afloat. Those who are considering bankruptcy are not alone and while everyone should do their best to avoid bankruptcy, it is not something that you have to face alone.
However, when the collection calls and lawsuits start coming it is probably time to speak with a bankruptcy attorney. It may not be appropriate for you to file bankruptcy, but at least an attorney can give you the information to make an informed decision about whether bankruptcy can help you. As this study shows, those falling behind financially in Indiana are not alone and there is rarely a financial situation beyond hope.
One of the most enjoyable parts of being a bankruptcy attorney is meeting with those in debt in central Indiana and helping them come up with a plan of attach. That plan may or may not include bankruptcy. However, I believe that when most people leave Halcomb Singler, LLP, they feel more confident than when they arrived with a plan of attack to take care of their debts once and for all. If you are getting behind on your bills, have been served with a summons from a creditor or are afraid you won't be able to make that next house payment I can meet with you to come up with a plan. There is no fee to meet with me, so if you are in Carmel, Westfield, Noblesville, Fishers, Indianapolis, Lebanon or anywhere else in Marion, Hamilton, Tipton, Boone, Madison, or Howard counties either click here or call me for an appointment at 317-575-8222.
According to the article, Indiana had 7.1 bankruptcy filings per 1,000 residents in 2010. As a bankruptcy attorney, I was not surprised to see that the number of bankruptcy filings in Indiana was 7.1 per 1,000 residents. However, I was surprised to see how much higher Indiana ranked than some other states that I would have thought were suffering from much worse economic climates than Indiana. For example, Indiana ranked higher than Michigan in bankruptcy filings per residents in 2010. We all know how Michigan has been affected by the decline in the auto market, so I was surprised that Indiana surpassed Michigan. In addition, I was shocked that West Virginia filings were 3.3 per 1,000 residents. Indiana files double the bankruptcy petitions per 1,000 people than West Virginia! I am no expert on West Virginia, but I always thought it was a fairly poor state with little industry outside of coal mining. Clearly I must be missing something. If you were wondering Alaska came in "last" with only 1.6 bankruptcy filings per 1,000 residents in 2010.
The article also went on to predict more bankruptcy filings in 2011 than there had been in 2010. Unfortunately, I am not surprised by this prediction. With the current economic conditions, employers cutting hours and/or not awarding pay raises and the skyrocketing price of gas many Hoosiers are just trying to stay afloat. Those who are considering bankruptcy are not alone and while everyone should do their best to avoid bankruptcy, it is not something that you have to face alone.
However, when the collection calls and lawsuits start coming it is probably time to speak with a bankruptcy attorney. It may not be appropriate for you to file bankruptcy, but at least an attorney can give you the information to make an informed decision about whether bankruptcy can help you. As this study shows, those falling behind financially in Indiana are not alone and there is rarely a financial situation beyond hope.
One of the most enjoyable parts of being a bankruptcy attorney is meeting with those in debt in central Indiana and helping them come up with a plan of attach. That plan may or may not include bankruptcy. However, I believe that when most people leave Halcomb Singler, LLP, they feel more confident than when they arrived with a plan of attack to take care of their debts once and for all. If you are getting behind on your bills, have been served with a summons from a creditor or are afraid you won't be able to make that next house payment I can meet with you to come up with a plan. There is no fee to meet with me, so if you are in Carmel, Westfield, Noblesville, Fishers, Indianapolis, Lebanon or anywhere else in Marion, Hamilton, Tipton, Boone, Madison, or Howard counties either click here or call me for an appointment at 317-575-8222.
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, March 22, 2011
Is it possible to be "too broke" for Bankruptcy?
But when could someone be "too broke" to file a bankruptcy? One example is when a potential bankruptcy debtor is what attorneys call judgement-proof. One time a debt collector told me that my client was not judgment-proof because there was a judgment entered against him right now. Always remember that debt collectors don't know everything because that is not at all what it means. When someone is judgment-proof it means that they do not have any significant assets that can be garnished or attached by a creditor to pay a judgment.
The most common example of potential bankruptcy clients I see at Halcomb Singler who are judgment proof are older folks living on Social Security and a pension. Neither social security no a pension can be garnished by a creditor and when people are retired they have no paycheck for a creditor to garnish. Therefore, it seems like a waste for judgment proof people to pay a bankruptcy attorney, gather the numerous documents necessary to file a bankruptcy petition and to go to a bankruptcy hearing when they are not subject to lose anything to a creditor.
Another common example of being judgment-proof is when you are out of work and have only a small amount of personal property (click here for a discussion on Indiana Exemptions). In Indiana you are allowed to have a minimal amount of personal property and home equity that creditors can't touch. If you fall below these thresholds and aren't working they can't do anything. As the old saying goes, you can't get blood from a turnip. And it is completely true.
That being said, even after I inform judgment-proof folks that they really don't need to file bankruptcy some decide to file anyway. Why? Generally, it is to stop the harassment of creditors and the obligation to attend court hearings. In Indiana, once a creditor has obtained a judgment they will ask the court to set a hearing called a proceedings supplemental, which is a hearing at which the creditor is permitted to ask the debtor what property he owns, where he banks, where he works, and other questions to see how the creditor can get paid. Just because this hearing happens once and the debtor doesn't have any assets or income that the creditor can take at that particular time doesn't mean that the creditor won't reset this hearing for another date. The creditor can drag you into court every thirty days or so and ask you the same questions over and over again. In Indiana, if you fail to appear for a proceedings supplemental a warrant can be issued for your arrest, so it is important to go. So, now you are seeing why some people who are judgment-proof still decide to file bankruptcy sometimes. They are tired of having to go to court to answer questions about their income and assets and are tired of receiving collection calls all day long, day after day.
Whether to file a bankruptcy when you are judgment proof is a personal decision. I have found that people have different thresholds of tolerance for being in debt. For some people, the debt is a constant source of worry, fear and embarrassment and for others it is just a small bump in the road. If you live in central Indiana including Hamilton, Marion, Boone, Madison, Tipton and Howard Counties and are considering bankruptcy you can contact me for a free consultation at my Carmel, Indiana office.
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.
Friday, March 18, 2011
What to do if you receive a Mortgage Foreclosure
So after struggling to pay the mortgage payment, then falling behind, then calling the mortgage company several times to try to work out a modification, and then submitting numerous documents on more than one occasion it happens....the sheriff's department comes to your house or you get a certified mailing and when you open it there is summons and complaint for mortgage foreclosure. What now?
First of all, don't panic. The complaint and summons does not mean that you are kicked out tomorrow, or in 10 days or even in a month or 2. Unfortunately, you are not alone in receiving this complaint. In Indiana, depending on how you were served with these papers you have either 20 or 23 days to respond. Many people expect to see a court date at which they are required to appear, but this is not the case in Indiana. If you fail to respond a default judgment can be entered against you. What you need to do is find an attorney who can advise you of your options with regard to the mortgage foreclosure. In my opinion a bankruptcy attorney who also does litigation is the best type of attorney to help you with this because even if you never thought you would ever need to file a bankruptcy, there are tools that an attorney may be able to use in bankruptcy to help you with your foreclosure problem. Do not delay in finding an attorney to help you because there are deadlines involved and attorneys are busy people with many clients that cannot always drop everything to work with you last minute because they have an obligations to their existing clients.
The good news is that in Indiana those who are defendants in mortgage foreclosure lawsuits when the property in question is their residence are eligible for a settlement conference. This is a conference where you (and your attorney if you are represented by an attorney) get to meet with the attorney for the mortgage company as well as a person from the mortgage company via telephone. This is the opportunity to try to figure out a modified payment that will allow you to stay in the house, if this is what you want to do. There are certainly many times when this settlement conference does not reach an agreement, but it is still an opportunity and you should go into it with a number that you believe you can realistically pay to the mortgage company. It is important to be realistic and understand that the mortgage company will not agree to let you stay in the home for free due to circumstances outside of your control.
If the settlement conference ends in an agreement between you and the mortgage company to make reduced payments, then so long as you continue to make these payments there will typically be no further action taken in the mortgage foreclosure. However, if no agreement is reached at a settlement conference, then it is likely that the mortgage company will continue to push forward in an attempt to foreclose on the house.
Once it becomes clear that the mortgage company will no longer work with you, I recommend a long reflection as to whether the house is something that you should keep or something you should give up. I know that no one wants to have to tell their kids that they are moving because the house is no longer affordable. I know no one wants their neighbors to see them pack up and leave. However, that does not mean that sometimes it is not the right decision to let the house go. Even if you decide to let the house go, you will be able to live there a while so that you can find another place to live and hopefully pack up some money.
When you are evaluating whether or not you want to try to keep the home is where a knowledgeable bankruptcy attorney may be helpful. Many bankruptcy attorneys offer free consultations and will present to you whether bankruptcy may be able to help you keep your home. Or, how bankruptcy can help you get out from under your home. Whatever your situation, there are always options. In my opinion, the only way that you will know how to make the best decision for you and your family is if you are aware of all of your options.
If you have received a foreclosure complaint in Hamilton County, Indiana, I may be able to help you. Please call me at 317-575-8222 or contact me 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.
First of all, don't panic. The complaint and summons does not mean that you are kicked out tomorrow, or in 10 days or even in a month or 2. Unfortunately, you are not alone in receiving this complaint. In Indiana, depending on how you were served with these papers you have either 20 or 23 days to respond. Many people expect to see a court date at which they are required to appear, but this is not the case in Indiana. If you fail to respond a default judgment can be entered against you. What you need to do is find an attorney who can advise you of your options with regard to the mortgage foreclosure. In my opinion a bankruptcy attorney who also does litigation is the best type of attorney to help you with this because even if you never thought you would ever need to file a bankruptcy, there are tools that an attorney may be able to use in bankruptcy to help you with your foreclosure problem. Do not delay in finding an attorney to help you because there are deadlines involved and attorneys are busy people with many clients that cannot always drop everything to work with you last minute because they have an obligations to their existing clients.
The good news is that in Indiana those who are defendants in mortgage foreclosure lawsuits when the property in question is their residence are eligible for a settlement conference. This is a conference where you (and your attorney if you are represented by an attorney) get to meet with the attorney for the mortgage company as well as a person from the mortgage company via telephone. This is the opportunity to try to figure out a modified payment that will allow you to stay in the house, if this is what you want to do. There are certainly many times when this settlement conference does not reach an agreement, but it is still an opportunity and you should go into it with a number that you believe you can realistically pay to the mortgage company. It is important to be realistic and understand that the mortgage company will not agree to let you stay in the home for free due to circumstances outside of your control.
If the settlement conference ends in an agreement between you and the mortgage company to make reduced payments, then so long as you continue to make these payments there will typically be no further action taken in the mortgage foreclosure. However, if no agreement is reached at a settlement conference, then it is likely that the mortgage company will continue to push forward in an attempt to foreclose on the house.
Once it becomes clear that the mortgage company will no longer work with you, I recommend a long reflection as to whether the house is something that you should keep or something you should give up. I know that no one wants to have to tell their kids that they are moving because the house is no longer affordable. I know no one wants their neighbors to see them pack up and leave. However, that does not mean that sometimes it is not the right decision to let the house go. Even if you decide to let the house go, you will be able to live there a while so that you can find another place to live and hopefully pack up some money.
When you are evaluating whether or not you want to try to keep the home is where a knowledgeable bankruptcy attorney may be helpful. Many bankruptcy attorneys offer free consultations and will present to you whether bankruptcy may be able to help you keep your home. Or, how bankruptcy can help you get out from under your home. Whatever your situation, there are always options. In my opinion, the only way that you will know how to make the best decision for you and your family is if you are aware of all of your options.
If you have received a foreclosure complaint in Hamilton County, Indiana, I may be able to help you. Please call me at 317-575-8222 or contact me 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.
Monday, March 14, 2011
The Chapter 7 Bankruptcy Process
As a bankruptcy attorney I have seen many Chapter 7 Bankruptcy cases through from filing to discharge. However, I know that my clients and people considering filing bankruptcy are unsure of the process, so today I wanted to concentrate on the timeline of a Chapter 7 Bankruptcy in the Southern District of Indiana.
Once you have found and retained a bankruptcy attorney you will likely have quite a bit of work on your hands. There will probably be a questionnaire the bankruptcy attorney gives you to complete and a list of other documents the attorney needs to prepare your bankruptcy petition. There is no doubt that it is a pain to gather all of this information. However, it is very important to give your attorney a complete picture of your finances, which he or she obtains from the information you provide. This way your attorney can advise you in the best manner for your situation. You will also have to complete a credit counseling course prior to the filing of the bankruptcy petition. Your attorney can tell you more about this, but it is a class that you normally take online or over the telephone. I normally meet with my clients a second time to review their questionnaire and documents. It is typical for the client to have questions about filling out the questionnaire or for me to have questions about what they wrote down.
After meeting with the client to go over their questionnaire and documents I begin to prepare a draft of their Chapter 7 Bankruptcy Petition. A typical petition is approximately 50 pages. For me, it typically takes about a week before I am finished with a petition, and this is assuming that the client gathered all of the information I needed at the first meeting. At this point I have the client(s) come in to my office again to review a draft of the petition. At this time I explain the petition, make sure that the information in the petition is correct and let the client know if we need any additional information to complete the petition. At the end of this meeting I will usually set a date for the client(s) to come back in to review a copy of their final bankruptcy petition.
When the client returns to review their final bankruptcy petition we spend about 30 minutes to review the petition and have the client(s) sign it. After the client leaves I then file the petition electronically. This means that on the day your bankruptcy petition is filed you do not make any court appearance. About 2 business days after the petition is filed I will receive an e-mail from the Bankruptcy Court letting me know your hearing date, which is called your 341 meeting of creditors. Your 341 meeting of creditors is usually 30 to 45 days after the filing of your bankruptcy petition. In the Southern District of Indiana if you live in Howard County your hearing will be in Kokomo, if you live in Madison County your hearing will be in Anderson and for those living in Marion County and the surrounding counties the hearing will be in downtown Indianapolis. I send my clients a copy of the notice of hearing with the full address and time of the hearing as soon as possible so that they are able to get the hearing day off of work.
Prior to the 341 hearing, attorneys are required to send the bankruptcy trustee in the case some documents along with a form called the "Document Production" form. So, I will typically send this document to my clients for their signature and a request for a few more documents shortly after they receive notice of their hearing.
Once the 341 hearing date arrives I meet my client(s) about 15 minutes prior to the hearing to go over questions they should expect to hear from the trustee and to answer any questions. Sometimes the hearings run behind schedule and it is necessary to wait for a little while prior to your hearing being called. However, once the hearing is called it rarely takes more than 5 minutes to complete. If you want to know more about what to expect at the 341 meeting click here for a previous blog.
After the hearing is over bankruptcy debtors are required to complete a second course on financial management. This must be done within 45 days of the 341 hearing. If debtors fail to complete this course it may result in the case being closed without a discharge.
In most cases the Chapter 7 bankruptcy debtor receives their discharge about 60 days after the 341 hearing. The discharge is the legal forgiveness of any of the debtor's dischargeable debts. In many cases, receipt of the discharge means that the case is over. However, it is possible that the trustee will hold the case open to allow time to claim the trustee's portion of your income tax refund or to tie up any other loose ends in your case. It is important for you and your attorney to have good communication so you know when your case has really ended.
If you live in the Indianapolis or surrounding areas and are considering bankruptcy please call Halcomb Singler, LLP, at 317-575-8222. We can set up a free consultation for you to meet with me and I will be happy to answer your questions about bankruptcy and whether or not I believe it will be beneficial to you.
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.
Once you have found and retained a bankruptcy attorney you will likely have quite a bit of work on your hands. There will probably be a questionnaire the bankruptcy attorney gives you to complete and a list of other documents the attorney needs to prepare your bankruptcy petition. There is no doubt that it is a pain to gather all of this information. However, it is very important to give your attorney a complete picture of your finances, which he or she obtains from the information you provide. This way your attorney can advise you in the best manner for your situation. You will also have to complete a credit counseling course prior to the filing of the bankruptcy petition. Your attorney can tell you more about this, but it is a class that you normally take online or over the telephone. I normally meet with my clients a second time to review their questionnaire and documents. It is typical for the client to have questions about filling out the questionnaire or for me to have questions about what they wrote down.
After meeting with the client to go over their questionnaire and documents I begin to prepare a draft of their Chapter 7 Bankruptcy Petition. A typical petition is approximately 50 pages. For me, it typically takes about a week before I am finished with a petition, and this is assuming that the client gathered all of the information I needed at the first meeting. At this point I have the client(s) come in to my office again to review a draft of the petition. At this time I explain the petition, make sure that the information in the petition is correct and let the client know if we need any additional information to complete the petition. At the end of this meeting I will usually set a date for the client(s) to come back in to review a copy of their final bankruptcy petition.
When the client returns to review their final bankruptcy petition we spend about 30 minutes to review the petition and have the client(s) sign it. After the client leaves I then file the petition electronically. This means that on the day your bankruptcy petition is filed you do not make any court appearance. About 2 business days after the petition is filed I will receive an e-mail from the Bankruptcy Court letting me know your hearing date, which is called your 341 meeting of creditors. Your 341 meeting of creditors is usually 30 to 45 days after the filing of your bankruptcy petition. In the Southern District of Indiana if you live in Howard County your hearing will be in Kokomo, if you live in Madison County your hearing will be in Anderson and for those living in Marion County and the surrounding counties the hearing will be in downtown Indianapolis. I send my clients a copy of the notice of hearing with the full address and time of the hearing as soon as possible so that they are able to get the hearing day off of work.
Prior to the 341 hearing, attorneys are required to send the bankruptcy trustee in the case some documents along with a form called the "Document Production" form. So, I will typically send this document to my clients for their signature and a request for a few more documents shortly after they receive notice of their hearing.
Once the 341 hearing date arrives I meet my client(s) about 15 minutes prior to the hearing to go over questions they should expect to hear from the trustee and to answer any questions. Sometimes the hearings run behind schedule and it is necessary to wait for a little while prior to your hearing being called. However, once the hearing is called it rarely takes more than 5 minutes to complete. If you want to know more about what to expect at the 341 meeting click here for a previous blog.
After the hearing is over bankruptcy debtors are required to complete a second course on financial management. This must be done within 45 days of the 341 hearing. If debtors fail to complete this course it may result in the case being closed without a discharge.
In most cases the Chapter 7 bankruptcy debtor receives their discharge about 60 days after the 341 hearing. The discharge is the legal forgiveness of any of the debtor's dischargeable debts. In many cases, receipt of the discharge means that the case is over. However, it is possible that the trustee will hold the case open to allow time to claim the trustee's portion of your income tax refund or to tie up any other loose ends in your case. It is important for you and your attorney to have good communication so you know when your case has really ended.
If you live in the Indianapolis or surrounding areas and are considering bankruptcy please call Halcomb Singler, LLP, at 317-575-8222. We can set up a free consultation for you to meet with me and I will be happy to answer your questions about bankruptcy and whether or not I believe it will be beneficial to you.
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.
Friday, March 11, 2011
Spending Down Income Tax Refund Prior to Filing Bankruptcy
It is tax time! For many of my Indianapolis area bankruptcy clients, this means an income tax refund. This refund can range from a few hundred dollars to several thousand and my clients all want to know (rightly so) what do they do with this money if they intend to file bankruptcy?
Understandably, most of my clients at Halcomb Singler would prefer to save their income tax refund. They see this money as a sense of security and the chance to start saving so that they are never faced with financial difficulties again. However, saving cash prior to bankruptcy is really not an option. As I explained in a previous blog, there is only so much cash that one may have on hand on the date of the filing of a bankruptcy that is protected from creditors and the bankruptcy trustee. For an individual bankruptcy filer, that number is $350.00 and for joint debtors it is $700.00.
The practical reality of this low cash exemption is that people have to spend down an income tax refund prior to bankruptcy. But how should this money be spent? In my opinion, it is still possible to spend this income tax refund wisely and in a way that will help you start out on the right foot after your bankruptcy.
DO NOT SPEND YOUR INCOME TAX REFUND ON:
1. Gifts for Family Members or Friends;
2. To pay credit card debt;
3. To buy a new big screen television, go on a vacation or any other luxury;
4. To pay back a relative for money you borrowed;
5. To pay any amount over $599.00 to a creditor;
6. Gambling.
INSTEAD, CONSIDER SPENDING THE INCOME TAX REFUND ON:
1. Your living expenses including utility bills, car payment, house payment, food, gas, auto insurance, etc.
2. Purchase something for your home that you have been putting off because you haven't had any money, but that you really need. Examples could be a new mattress, replace carpeting, or make some badly needed home repairs (so long as you are planning to keep your house);
3. Pay some non-dischargeable income taxes, sales tax or withholding taxes;
4. Catch up some back child support payments;
5. Pay to have some dental work done that you have been putting off;
6. Buy yourself or your children some new clothing if that is something that you have not done in a long time;
7. Pay for your medications;
8. Buy a used vehicle if you don't have a car or need a second car (this is only a good idea if you still have remaining tangible exemptions)
Typically, I tell my clients to make a list of how they would like to spend their income tax refund and then to give me a call to review whether I believe their wishes would be acceptable prior to bankruptcy. Of course, any significant financial decision made just prior to the filing of a bankruptcy should be discussed with a qualified bankruptcy attorney. If you live in Indianapolis and would like to meet with me for a free initial consultation at my Carmel, Indiana office located at 718 E. Adams Street, Suite E, Carmel, IN 46032 to discuss bankruptcy call me at 317-575-8222 x 12 or click here, fill out the form and my office will contact you to schedule 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.
Understandably, most of my clients at Halcomb Singler would prefer to save their income tax refund. They see this money as a sense of security and the chance to start saving so that they are never faced with financial difficulties again. However, saving cash prior to bankruptcy is really not an option. As I explained in a previous blog, there is only so much cash that one may have on hand on the date of the filing of a bankruptcy that is protected from creditors and the bankruptcy trustee. For an individual bankruptcy filer, that number is $350.00 and for joint debtors it is $700.00.
The practical reality of this low cash exemption is that people have to spend down an income tax refund prior to bankruptcy. But how should this money be spent? In my opinion, it is still possible to spend this income tax refund wisely and in a way that will help you start out on the right foot after your bankruptcy.
DO NOT SPEND YOUR INCOME TAX REFUND ON:
1. Gifts for Family Members or Friends;
2. To pay credit card debt;
3. To buy a new big screen television, go on a vacation or any other luxury;
4. To pay back a relative for money you borrowed;
5. To pay any amount over $599.00 to a creditor;
6. Gambling.
INSTEAD, CONSIDER SPENDING THE INCOME TAX REFUND ON:
1. Your living expenses including utility bills, car payment, house payment, food, gas, auto insurance, etc.
2. Purchase something for your home that you have been putting off because you haven't had any money, but that you really need. Examples could be a new mattress, replace carpeting, or make some badly needed home repairs (so long as you are planning to keep your house);
3. Pay some non-dischargeable income taxes, sales tax or withholding taxes;
4. Catch up some back child support payments;
5. Pay to have some dental work done that you have been putting off;
6. Buy yourself or your children some new clothing if that is something that you have not done in a long time;
7. Pay for your medications;
8. Buy a used vehicle if you don't have a car or need a second car (this is only a good idea if you still have remaining tangible exemptions)
Typically, I tell my clients to make a list of how they would like to spend their income tax refund and then to give me a call to review whether I believe their wishes would be acceptable prior to bankruptcy. Of course, any significant financial decision made just prior to the filing of a bankruptcy should be discussed with a qualified bankruptcy attorney. If you live in Indianapolis and would like to meet with me for a free initial consultation at my Carmel, Indiana office located at 718 E. Adams Street, Suite E, Carmel, IN 46032 to discuss bankruptcy call me at 317-575-8222 x 12 or click here, fill out the form and my office will contact you to schedule 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.
Wednesday, March 9, 2011
Why Bankruptcy Lawyers Hate 401k Distributions
I am not sure that anything is more frustrating to a bankruptcy attorney than when a client who is preparing to file bankruptcy has recently taken a 401k distribution. Not only is the client going to pay income tax on that money, but they may also have paid a penalty to access that money. But the worst part is that taking out money from their 401k did not help them avoid bankruptcy, and the money would have been protected from their creditors if it had been left in the 401k. Finally, the client is often approaching retirement age and may have just taken out the majority of what they had saved for retirement.
A while back I wrote a blog about Indiana Bankruptcy Exemptions. In this blog I explained that retirement accounts are normally exempt from both creditors and the bankruptcy trustee in a bankruptcy proceeding. This means that you can typically get through bankruptcy without losing any of the money in their 401k. So, prior to taking a 401k distribution you should consider the following:
1. Can you afford the income tax you will need to pay and potentially the penalty incurred with a 401k distribution?
2. What are you going to use the money for? Is it for a luxury, such as putting an addition on your home? In my opinion, 401k loans should not be used for any non-essential items. Is the money for your child's college tuition? I would also reconsider taking a 401k distribution for this purpose. Your child can get a student loan for school, but no one is going to give you a loan for your retirement.
3. Is the distribution an attempt to get yourself out of debt? Before taking a distribution for this purpose consider whether the money you receive (don't forget to deduct taxes and insurance) will be sufficient to actually get you out of debt. For example, think twice if your debt load will go from $40,000.00 to $20,000.00 after taking the 401k distribution. In addition, it is important that if your debt arose from bad spending habits or living outside of your means that you correct that behavior. If the root of the issue which caused you to incur debt isn't resolved you will find yourself back with just as much debt as prior to taking a 401k distribution.
4. How close are you to retirement? Do you have time to rebuild your savings for retirement? It is important to remember that many factors outside of our control can limit the number of years that we are able to work. You may not be able to work until you are 65, 67 or whenever you are planing on retiring. You don't want to look back on your decision 20 years down the road regretting that you tapped into your 401k.
The bottom line is that sometimes it is ok to take a 401k distribution to get you over a hurdle or beyond a pinch. However, a 401k should not be looked at as a savings account from which you can take distributions for an emergency. I have met with too many people who have taken a large 401k distribution only to find that they need to file bankruptcy only a few months more down the road. Having to advise a client that the 20k they took out 5 months ago in an effort to avoid bankruptcy could still be sitting in their retirement account and be exempt in bankruptcy is one of my least favorite things to do. If you are weighing whether you would be better served to try to settle your debts with a 401k distribution or file for bankruptcy and would like to meet with a qualified bankruptcy attorney you can contact me here or at my Carmel, Indiana office at 317-575-8222.
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.
A while back I wrote a blog about Indiana Bankruptcy Exemptions. In this blog I explained that retirement accounts are normally exempt from both creditors and the bankruptcy trustee in a bankruptcy proceeding. This means that you can typically get through bankruptcy without losing any of the money in their 401k. So, prior to taking a 401k distribution you should consider the following:
1. Can you afford the income tax you will need to pay and potentially the penalty incurred with a 401k distribution?
2. What are you going to use the money for? Is it for a luxury, such as putting an addition on your home? In my opinion, 401k loans should not be used for any non-essential items. Is the money for your child's college tuition? I would also reconsider taking a 401k distribution for this purpose. Your child can get a student loan for school, but no one is going to give you a loan for your retirement.
3. Is the distribution an attempt to get yourself out of debt? Before taking a distribution for this purpose consider whether the money you receive (don't forget to deduct taxes and insurance) will be sufficient to actually get you out of debt. For example, think twice if your debt load will go from $40,000.00 to $20,000.00 after taking the 401k distribution. In addition, it is important that if your debt arose from bad spending habits or living outside of your means that you correct that behavior. If the root of the issue which caused you to incur debt isn't resolved you will find yourself back with just as much debt as prior to taking a 401k distribution.
4. How close are you to retirement? Do you have time to rebuild your savings for retirement? It is important to remember that many factors outside of our control can limit the number of years that we are able to work. You may not be able to work until you are 65, 67 or whenever you are planing on retiring. You don't want to look back on your decision 20 years down the road regretting that you tapped into your 401k.
The bottom line is that sometimes it is ok to take a 401k distribution to get you over a hurdle or beyond a pinch. However, a 401k should not be looked at as a savings account from which you can take distributions for an emergency. I have met with too many people who have taken a large 401k distribution only to find that they need to file bankruptcy only a few months more down the road. Having to advise a client that the 20k they took out 5 months ago in an effort to avoid bankruptcy could still be sitting in their retirement account and be exempt in bankruptcy is one of my least favorite things to do. If you are weighing whether you would be better served to try to settle your debts with a 401k distribution or file for bankruptcy and would like to meet with a qualified bankruptcy attorney you can contact me here or at my Carmel, Indiana office at 317-575-8222.
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, March 7, 2011
Never file Chapter 7, Chapter 13 or go see a Bankruptcy Lawyer
Ok, so why is a bankruptcy lawyer telling you never to go see a bankruptcy lawyer? I'm not telling you to avoid a bankruptcy attorney if you are having serious debt issues. What I am hoping is that you read this posting prior to having any financial issues and change your spending habits now so that your chances of ever having to make an appointment with a bankruptcy attorney decrease. I can tell you that there will not be anything that I write about in this blog posting that you haven't thought of yourself, but the difference between failure and success in this situation is action.
How many times have you heard that it is necessary to do a budget? How many times have you done a budget. Doing a budget is no fun. As I sit here I can admit that I really need to revise my budget, but it is about the last thing I want to do. But, I have seen how beneficial having a budget can be to finances and my ability to save money, so I will revise my budget shortly. Make sure that your budget is realistic. I often have clients tell me that they are spending $250.00 at the grocery store on a family of four. When this happens I ask them where they are shopping because I want to start shopping at that store. The fact is, that unless they are doing a great job with coupons, it is pretty much impossible to feed a family of four on $250.00 per month. This family either does not know what it is spending on food, or they are eating out a lot which explains why they are only spending $250.00 on food. One thing that you must keep in mind when putting together a budget is that it is a document of change. You may have an income that fluctuates due to the amount of hours worked or due to commissions. If this is true, you need to revise your budget every month. Sure, there are a few items that will stay the same...any vehicle payments, house payment, electric bill (this and any gas bill should be on the budget plan so you aren't surprised with an outrageous bill that blows your budget).
When you are putting together your budget is a good time to see where you can trim from your budget. We all spend some money that just doesn't make sense. For example, I don't understand spending a lot of money on cable television, eating out or buying the latest and greatest cell phone. Take a hard look at your budget to see where you can cut, but make sure not to cut so much that it is unrealistic. Leaving yourself $150.00 for gas per month when you and your spouse each drive 30 miles each way to work isn't going to cut it. If the budget is not realistic you will lose interest in it immediately because it is failing you. Don't set yourself up to fail.
If you have set up your budget and found that even after cutting everything you can think of that you are still spending more money than you make then you have one option.....figure out how to bring in more money. I read the other day that during the great depression that more people than ever opened their own businesses. Now, it may not be possible for you to open your own business due to lack of startup funds, lack of an idea of a great product, etc. However, it is always possible to get another job. It always amazes me how many people I meet with cannot fathom the idea of having a second job. Even if you are working part time at a fast food restaurant making an extra $200.00 per week, this is still an extra $866.00 per month, taking into account 52 weeks in a year. This would pay 2 car payments or some people's mortgage. But, if you don't sit down and set up a budget you won't know that you need a second job because you won't know that you are spending more than you make each month.
I cannot stress enough that, even if you are no where near needing to file a bankruptcy at the moment, that it is amazing how job loss, illness, or many other things outside of your control could happen that would put a serious strain on your finances. If you set up a budget and concentrate on saving money now then you will be in a much better situation financially if any of those things happen to you in the future.
Budget to decrease the chances that debt ever brings you to my office. But remember, even if you have always done everything right financially sometimes there are factors outside of our control that cause the need for bankruptcy. It does not mean that you are a bad person. It just means that you do not have enough money to pay your debts and we live in a country where the bankruptcy code allows a way to deal with your debt. If you live in the Indianapolis, Carmel, Fishers, Noblesville, Westfield, Lebanon, Tipton, Kokomo, or any of the surrounding areas and would like to meet with me for a free, non-judgmental consultation to find out your financial options please 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.
How many times have you heard that it is necessary to do a budget? How many times have you done a budget. Doing a budget is no fun. As I sit here I can admit that I really need to revise my budget, but it is about the last thing I want to do. But, I have seen how beneficial having a budget can be to finances and my ability to save money, so I will revise my budget shortly. Make sure that your budget is realistic. I often have clients tell me that they are spending $250.00 at the grocery store on a family of four. When this happens I ask them where they are shopping because I want to start shopping at that store. The fact is, that unless they are doing a great job with coupons, it is pretty much impossible to feed a family of four on $250.00 per month. This family either does not know what it is spending on food, or they are eating out a lot which explains why they are only spending $250.00 on food. One thing that you must keep in mind when putting together a budget is that it is a document of change. You may have an income that fluctuates due to the amount of hours worked or due to commissions. If this is true, you need to revise your budget every month. Sure, there are a few items that will stay the same...any vehicle payments, house payment, electric bill (this and any gas bill should be on the budget plan so you aren't surprised with an outrageous bill that blows your budget).
When you are putting together your budget is a good time to see where you can trim from your budget. We all spend some money that just doesn't make sense. For example, I don't understand spending a lot of money on cable television, eating out or buying the latest and greatest cell phone. Take a hard look at your budget to see where you can cut, but make sure not to cut so much that it is unrealistic. Leaving yourself $150.00 for gas per month when you and your spouse each drive 30 miles each way to work isn't going to cut it. If the budget is not realistic you will lose interest in it immediately because it is failing you. Don't set yourself up to fail.
If you have set up your budget and found that even after cutting everything you can think of that you are still spending more money than you make then you have one option.....figure out how to bring in more money. I read the other day that during the great depression that more people than ever opened their own businesses. Now, it may not be possible for you to open your own business due to lack of startup funds, lack of an idea of a great product, etc. However, it is always possible to get another job. It always amazes me how many people I meet with cannot fathom the idea of having a second job. Even if you are working part time at a fast food restaurant making an extra $200.00 per week, this is still an extra $866.00 per month, taking into account 52 weeks in a year. This would pay 2 car payments or some people's mortgage. But, if you don't sit down and set up a budget you won't know that you need a second job because you won't know that you are spending more than you make each month.
I cannot stress enough that, even if you are no where near needing to file a bankruptcy at the moment, that it is amazing how job loss, illness, or many other things outside of your control could happen that would put a serious strain on your finances. If you set up a budget and concentrate on saving money now then you will be in a much better situation financially if any of those things happen to you in the future.
Budget to decrease the chances that debt ever brings you to my office. But remember, even if you have always done everything right financially sometimes there are factors outside of our control that cause the need for bankruptcy. It does not mean that you are a bad person. It just means that you do not have enough money to pay your debts and we live in a country where the bankruptcy code allows a way to deal with your debt. If you live in the Indianapolis, Carmel, Fishers, Noblesville, Westfield, Lebanon, Tipton, Kokomo, or any of the surrounding areas and would like to meet with me for a free, non-judgmental consultation to find out your financial options please 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.
Thursday, March 3, 2011
How Much Debt Do I Need to Justify Filing Bankruptcy?
At Halcomb Singler, LLP, I hear this question often from those seeking advice on whether to file bankruptcy. There is no minimum amount of debt required by the bankruptcy code that an individual or couple must have to file for bankruptcy. However, there have been several occasions that I have advised individuals not to file bankruptcy because it just didn't make sense considering the low amount of their debt.
However, there is no simple number or formula for when it makes sense to file a bankruptcy. The amount of debt is relative to the amount of income, the type of debt, and numerous other factors. For example, I would advise an individual who had $50,000.00 in student loan debt who was in good health that there was no reason to file bankruptcy. Even though $50,000.00 is a considerable amount of debt, the student loan debt is likely not dischargeable in bankruptcy. On a similar note, I might advise an individual making about $80,000.00 with approximately $40,000.00 in credit card debt against filing bankruptcy if the individual had $2,000.00 of income left over each month after paying living expenses. On the other hand, I have filed a bankruptcy petition for an individual making $260,000.00 per year with approximately $80,000.00 of unsecured debt.
As you can tell, there are many factors which go into making the determination as to whether an individual or couple has enough debt to justify the filing of bankruptcy. A bankruptcy will stay on your credit for 7 to 10 years. It will make financing anything during that time a bit more difficult and you will certainly end up paying higher interest rates on anything financed. However, if you don't have the ability to pay your creditors and sustain a minimal living for you and your family these downfalls may be less menacing.
I am happy to meet with you at my Carmel, Indiana office if you have questions about whether it would make sense for you to file bankruptcy. There is no fee for this consultation. If you would like to sign up just enter your information on our contact page and you will be contacted for an appointment date and time.
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.
However, there is no simple number or formula for when it makes sense to file a bankruptcy. The amount of debt is relative to the amount of income, the type of debt, and numerous other factors. For example, I would advise an individual who had $50,000.00 in student loan debt who was in good health that there was no reason to file bankruptcy. Even though $50,000.00 is a considerable amount of debt, the student loan debt is likely not dischargeable in bankruptcy. On a similar note, I might advise an individual making about $80,000.00 with approximately $40,000.00 in credit card debt against filing bankruptcy if the individual had $2,000.00 of income left over each month after paying living expenses. On the other hand, I have filed a bankruptcy petition for an individual making $260,000.00 per year with approximately $80,000.00 of unsecured debt.
As you can tell, there are many factors which go into making the determination as to whether an individual or couple has enough debt to justify the filing of bankruptcy. A bankruptcy will stay on your credit for 7 to 10 years. It will make financing anything during that time a bit more difficult and you will certainly end up paying higher interest rates on anything financed. However, if you don't have the ability to pay your creditors and sustain a minimal living for you and your family these downfalls may be less menacing.
I am happy to meet with you at my Carmel, Indiana office if you have questions about whether it would make sense for you to file bankruptcy. There is no fee for this consultation. If you would like to sign up just enter your information on our contact page and you will be contacted for an appointment date and time.
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, March 1, 2011
Chapter 13 Bankruptcy Isn't All Bad
In meeting with my clients at Halcomb Singler, I have noticed that people potentially needing to file bankruptcy have already decided that they don't want to file a Chapter 13 Bankruptcy. It is not uncommon for folks to come in and tell me that if they don't qualify for a Chapter 7 Bankruptcy then they just aren't going to file for bankruptcy. Sometimes I agree with them and sometimes I do not. I do admit that a Chapter 13 Bankruptcy can be difficult. As a general overview, a Chapter 13 allows debtors to repay creditors over a period of 36 to 60 months at no interest. The amount which must be paid varies between debtors. However, the monthly payment is usually one that the debtor can afford...however, it means cutting the fat out of his or her budget. Making it through a Chapter 13 and obtaining a discharge takes discipline and work. However, there are many great tools that can be used in a Chapter 13 and I wish that people would not rule it out before they are informed of these potential benefits. So, I have compiled a list of a few "tools" of Chapter 13 bankruptcy that can be very helpful to some debtors. This is not an exhaustive list, as each potential bankruptcy debtor's circumstances are different.
1. Mortgage Repayment: One of the most useful tools in a Chapter 13 bankruptcy is that people who got behind on their house payment, but now have the means to make the house payment as well as an additional payment to the trustee may catch up their mortgage over 3 to 5 years. I have helped numerous clients get current on their homes with a Chapter 13 Bankruptcy.
2. Income Taxes: Income taxes that are not dischargeable may be paid over the life of the plan. This allows debtors to become current on their tax debts and to emerge from bankruptcy with no debt to the IRS or Indiana Department of Revenue.
3. Domestic Support Obligation: Chapter 13 Bankruptcy is a great way to help catch up child support or domestic support obligations. Some debtors are able to catch up their domestic support obligations and pay back very little to their other general unsecured creditors.
4. Vehicle Cram Down: Debtors are able to virtually refinance a vehicle purchased at least 2.5 years prior to the bankruptcy filing. This can be very helpful if the vehicle was purchased at a high interest rate.
5. Strip your Second Mortgage: A lesser-known benefit of a Chapter 13 in Indiana is that if your home is worth less than you owe on your first mortgage then you can petition the court to strip off, or deem unsecured, your second mortgage. This is a very valuable tool for those debtors who are greatly under water on their homes to get back on track financially after bankruptcy.
6. Co-signers are protected: When the automatic stay that prevents creditors from attempting to collect from the debtor is in place, a co-signer is also protected. So, if your mother, for example, who did not file bankruptcy, co-signed on your car loan she will not be harassed by creditors during the Chapter 13 plan so long as the vehicle is subject to the automatic stay. This does not mean that she wouldn't still be liable for the debt if it was not paid through the Chapter 13 after the bankruptcy was discharged or dismissed.
7. Creditors cannot opt-out: Unlike debt consolidation or credit counseling, creditors cannot opt out of a Chapter 13 bankruptcy. So long as the automatic stay remains in effect, creditors are not permitted to file lawsuits, lawsuits that have been filed are stayed and collection calls stop.
8. Pay Back Less than you Owe (Usually): Most debtors end up paying back far less than they owe to unsecured creditors, who are the last in the pecking order of bankruptcy to receive a piece of the payments debtors make to the trustee. And, at the end of the Chapter 13 bankruptcy when the debtor receives a discharge, the unsecured debt is gone even through it was not paid in full during the three to five year repayment plan.
9. Protect Property that is not Exempt: If a debtor has property above and beyond what is exempt in Indiana, the debtor will not lose this property so long as creditors are receiving more money through the Chapter 13 than if the non-exempt property was liquidated and distributed to creditors through a Chapter 7 Bankruptcy. This is called the Best Interests of the Creditors test.
10. Pay back Creditors: While I hesitated to list this as a "benefit" to filing a Chapter 13, I have noticed that many of my clients really want to pay their creditors something. Through the filing of a Chapter 13 many of my clients feel a sense of accomplishment in being able to pay back some of what they borrowed.
To those of you in the Indianapolis area, if you would like to meet me for an evaluation of your debt and to be advised as to whether I believe you are a candidate for a bankruptcy or for debt consolidation, please contact me through my law firm's website. I am happy to meet with individuals for a free initial consultation to review your income, assets, expenses and general financial health to advise whether bankruptcy may be a helpful tool for you.
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.
1. Mortgage Repayment: One of the most useful tools in a Chapter 13 bankruptcy is that people who got behind on their house payment, but now have the means to make the house payment as well as an additional payment to the trustee may catch up their mortgage over 3 to 5 years. I have helped numerous clients get current on their homes with a Chapter 13 Bankruptcy.
2. Income Taxes: Income taxes that are not dischargeable may be paid over the life of the plan. This allows debtors to become current on their tax debts and to emerge from bankruptcy with no debt to the IRS or Indiana Department of Revenue.
3. Domestic Support Obligation: Chapter 13 Bankruptcy is a great way to help catch up child support or domestic support obligations. Some debtors are able to catch up their domestic support obligations and pay back very little to their other general unsecured creditors.
4. Vehicle Cram Down: Debtors are able to virtually refinance a vehicle purchased at least 2.5 years prior to the bankruptcy filing. This can be very helpful if the vehicle was purchased at a high interest rate.
5. Strip your Second Mortgage: A lesser-known benefit of a Chapter 13 in Indiana is that if your home is worth less than you owe on your first mortgage then you can petition the court to strip off, or deem unsecured, your second mortgage. This is a very valuable tool for those debtors who are greatly under water on their homes to get back on track financially after bankruptcy.
6. Co-signers are protected: When the automatic stay that prevents creditors from attempting to collect from the debtor is in place, a co-signer is also protected. So, if your mother, for example, who did not file bankruptcy, co-signed on your car loan she will not be harassed by creditors during the Chapter 13 plan so long as the vehicle is subject to the automatic stay. This does not mean that she wouldn't still be liable for the debt if it was not paid through the Chapter 13 after the bankruptcy was discharged or dismissed.
7. Creditors cannot opt-out: Unlike debt consolidation or credit counseling, creditors cannot opt out of a Chapter 13 bankruptcy. So long as the automatic stay remains in effect, creditors are not permitted to file lawsuits, lawsuits that have been filed are stayed and collection calls stop.
8. Pay Back Less than you Owe (Usually): Most debtors end up paying back far less than they owe to unsecured creditors, who are the last in the pecking order of bankruptcy to receive a piece of the payments debtors make to the trustee. And, at the end of the Chapter 13 bankruptcy when the debtor receives a discharge, the unsecured debt is gone even through it was not paid in full during the three to five year repayment plan.
9. Protect Property that is not Exempt: If a debtor has property above and beyond what is exempt in Indiana, the debtor will not lose this property so long as creditors are receiving more money through the Chapter 13 than if the non-exempt property was liquidated and distributed to creditors through a Chapter 7 Bankruptcy. This is called the Best Interests of the Creditors test.
10. Pay back Creditors: While I hesitated to list this as a "benefit" to filing a Chapter 13, I have noticed that many of my clients really want to pay their creditors something. Through the filing of a Chapter 13 many of my clients feel a sense of accomplishment in being able to pay back some of what they borrowed.
To those of you in the Indianapolis area, if you would like to meet me for an evaluation of your debt and to be advised as to whether I believe you are a candidate for a bankruptcy or for debt consolidation, please contact me through my law firm's website. I am happy to meet with individuals for a free initial consultation to review your income, assets, expenses and general financial health to advise whether bankruptcy may be a helpful tool for you.
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.
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