Why Business Bankruptcy is Often Personal

            As we all know, not all businesses can thrive in a great economy and many businesses are currently stretched thin in the current less than ideal business climate.  Unfortunately, some businesses just don't make it and that is when they often call Halcomb Singler, LLP, and tell me that they need to file a bankruptcy for their business.

          While it is true that some businesses do need to file a bankruptcy, what ends up happening in many of these cases is that the business owner(s) file bankruptcy and the business simply closes its doors.  When I tell potential clients this they are often surprised.  The business owner is normally thinking that they spent money for an attorney to incorporate their business and therefore a corporate shield went into effect and protects the business owners from the liabilities of the corporation.  While, it does make sense for businesses to be set up as legal entities, many businesses cannot fail without dragging its owners down with it.  The simple reason for this unfortunate truth is the personal guarantee.

            For those starting a business, the personal guarantee almost goes without saying.  There is little chance that a bank, a landlord or even a company that rents copiers is going to give your new company credit without you having a little skin in the game.  Creditors do that by requiring a personal guarantee of one or more of the owners of the business.  By signing a personal guarantee the business owner agrees that if the business is not able to meet the debt that the owner will pay it with his or her own money.  A personal guarantee "trumps" a business entity and is enforceable by the creditor should the business not be able to make good on its agreement.

            As a result of many creditors requiring a personal guarantee, the owner of a failed business may be on the hook for thousands of dollars on top of the fact that they are out of a job due to the closing of the business.  When the landlord, bank or other creditor with a personal guarantee attempts to collect the debt from the owner they may find bankruptcy to be a good option in helping the business owner to recover from the financial burden of the failed business.

            At that same time it is often not necessary for the business to file a bankruptcy.  This is true because in many cases the business doesn't really own much valuable "stuff."  For example, a failed landscaper may have some mowing equipment that he or she keeps in a storage facility.  If there is a secured loan (meaning the property is collateral and can be repossessed) on the mowing equipment the creditor on the mowers will come and pick them up from the landscaper.  The mower creditor will then attempt to sell the mowers and send the landscaper a bill for anything still owed after reselling the mowers.  Therefore, the only property that landscaper likely has left after the mowers are repossessed are a few old computers and some office furniture.

            Since there is really not any property left over there is little reason to go through the time and expense of a business bankruptcy.  This is true because in a Chapter 7 Business Bankruptcy the trustee would simply liquidate the un-exempt assets of the company, which can be done for much less money outside of bankruptcy.  Further, the filing of a personal bankruptcy (which is often necessary due to personal guarantees) can be structured to relieve the business owner of further collection attempts by business creditors.  True, the business itself can be sued, but does it really matter if the business owns no stuff and the owner has discharged any personal guarantee(s) in a bankruptcy?

            For those starting a business I cannot stress enough the importance of finding an attorney to show you how to set up the entity, to set up the entity for you, to show you how to maintain the entity, and to review the contracts that you will inevitably sign to get your business off of the ground.  I have met with many people who were not aware that a personal guarantee was in the contracts they signed while getting their business off of the ground.

            I wish all of you luck in your business ventures and hope that you never need to understand why business bankruptcy is often personal.  However, if you find yourself with a struggling business in the Indianapolis area and are attempting to evaluate whether bankruptcy is a viable option feel free to contact me by clicking on the link or call me at 317-575-8222 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.

Do I Make Too Much Money for Indiana Bankruptcy?

            As an attorney in Hamilton County, Indiana, I have represented bankruptcy clients in every range of the income spectrum from long-term unemployment to earning more than $250,000.00 per year.  The short answer is that there is no maximum income under the bankruptcy code that a person cannot exceed in order to file a bankruptcy petition.  However, that doesn't mean that it is always the best step for a high earner to file bankruptcy.

        For the purposes of this blog, I would identify a "high-earner" as an individual making $100,000.00 per year gross or a family of no more than 2 children making $125,000.00 per year.  However, high-earner is not a legal term nor are the income numbers I wrote accurate means test numbers.  The first thing to keep in mind is that most high-earners do not qualify for a Chapter 7 bankruptcy (although this is certainly possible).  The reason that most high earners do not qualify for a Chapter 7 bankruptcy is because they usually fail the means test and have money left over at the end of each month that could be used to pay creditors.

       So, most high-earners who must consider bankruptcy due to consumer debt have the option of filing a Chapter 13 bankruptcy or attempting to settle their debts on their own or with the help of an attorney.  The option of whether to file a Chapter 13 or attempt to settle debts outside of bankruptcy can be a difficult decision.  Which direction is the best changes from person to person, but often depends on how far behind the high-earner has fallen on debts, the amount of excess income that the high-earner has at the end of the month as well as whether filing a bankruptcy could negatively affect that person's profession.

       If the high-earner has fallen behind on debts to the point that lawsuits have been filed and there is a garnishment pending it is more likely that Chapter 13 is a better option.  This is true because after as much as 25% is taken out of the high-earner's paycheck he or she will likely not have enough money to save to try to pay off other debts.  On the other hand, if the high-earner attempts to settle his or her debts as soon as he or she is unable to pay, there is a better chance that a creditor workout will be successful.  I find this to be the case because creditors will typically not negotiate until a payment is a few months behind.  The high-earner can use this time to save up money to pay off debts in a lump-sum settlement.  Since it is typically easier to settle a debt with a lump-sum instead of a payment arrangement, there is a better chance of settlement without bankruptcy for the high-earner who starts planning early.

       If a high-earner files a Chapter 13 bankruptcy, he or she will be paying back some amount of money to his or her creditors over a period of three to five years.  The percentage of debt paid back by high earners in a Chapter 13 tends to be a higher percentage of debt than a lower-income Chapter 13 debtor.  In fact, is it possible for a high-earner to have to pay back 100% of what they owe to creditors through the Chapter 13 bankruptcy plan even though this is not typical of most Chapter 13 bankruptcy filers.

       Just as it does in life, having extra money gives a potential debtor more options.  Specifically, the option of opting to settle with creditors outside of the bankruptcy process so as to avoid filing bankruptcy, the perceived stigma of filing bankruptcy, and the intrusion of the trustee into the person's privacy.  The bottom line is that just because a person earns more income than most does not mean that he or she is not a good candidate for bankruptcy.  Financial struggles do not discriminate.  At Halcomb Singler we are dedicated to advising people whether bankruptcy is a good option to solve their financial problems.  If you believe you may ned to file bankruptcy and would like to discuss it with an attorney please call, (317) 575-8222 or click here to request a 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.

Medical Bankruptcy in Indianapolis??

          From time to time a person will call Halcomb Singler, LLP, asking for assistance in filing a "medical bankruptcy."  It is common that the caller has experienced illness or injury and has received a mounting pile of medical bills that he or she could never pay.

         First, I need to point out that a "medical bankruptcy" is not a correct bankruptcy term.  While medical bills are often the root cause of a bankruptcy, it would still be either a Chapter 7, Chapter 11 or Chapter 13 bankruptcy petition that is actually filed with the Court....there is no separate chapter for medical bankruptcy.

        However, the person calling my law firm isn't a bankruptcy lawyer, so I don't mind at all that they are inquiring about a medical bankruptcy.  It is not the potential client's job to know what type of bankruptcy should be filed nor what it is called.  That is my job and it is one that I enjoy.

        Sometimes it is not even necessary for a person with only medical bills to file bankruptcy.  One example of this scenario that I can think of is if a single person was renting an apartment and his or her only income was from social security.  So long as the individual did not have any other non-exempt assets, he or she may not actually need to file a bankruptcy.  The simple reason is that the individual does not have anything that a creditor can take.  Sure, the hospital or doctor may file a lawsuit to try to collect on the medical bill and the hospital or doctor will almost certainly win this lawsuit.  However, when the medical care provider attempts to collect on the judgment they will find that the individual is not subject to garnishment and does not have any personal property that may be seized to satisfy the judgment.  As I have said before and will say again....you cannot get blood from a turnip.

        However, simply because one does not have any property to lose does not mean that the person will not decide to file a bankruptcy.  Even a person who does not have any property to lose may be required to show up at a court proceeding from time to time in the event that the medical providers filed lawsuits.  These are fairly routine hearings called proceedings supplementals and I would typically advise a client who has no income subject to garnishment and no personal property above the exemptions that there is nothing to be nervous about.  For some people the thought of showing up at court is intensely terrible.  I have had a few clients in the past where I was actually nervous about them going to court because they were so nervous about it and so stressed that I feared they may suffer from a heart attack, stroke or some other severe health issue as a result of the stress.  Therefore, even though a person may not need to file a bankruptcy to protect any income or assets, he or she may opt to do so to stop collections calls and court proceedings.

        The bottom line is that if you have mounting medical bills that you cannot pay bankruptcy may be a useful tool.  The should be determined by you meeting with a qualified bankruptcy attorney in your area.  As always, if you live in Indianapolis or the surrounding areas and would like to meet to determine whether bankruptcy is a good option for you call my office at 317-575-8222.  Evening and weekend appointments are available.

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 to Avoid Filing a Second Bankruptcy

            One of the most common phrases a bankruptcy lawyer will hear from a client once their first bankruptcy has been filed is, "I am never doing this again."  Each time I hear that phrase I hope that the client is right.  I hope that the opportunity for a fresh start will help that client get back on his or her feet and to move them in the direction toward great financial health.

            However, just making the announcement that another bankruptcy will not happen is not enough to make sure that the client is not in that position again.  Unfortunately, it is very common for me to file a second or even third bankruptcy for an individual or couple.  Often the bankruptcies are many, many years apart from each other.  Many times there are very legitimate reasons for a second bankruptcy such as major health problems or an extended period of job loss.  Nonetheless, some clients simply fall back into the same habits of pre-bankruptcy and find themselves back in debt with nowhere else to turn.  While I am always willing to give my clients legal advice irregardless of the number of bankruptcies they have filed, I know that given the option, my clients would opt out of bankruptcy the second time around so I decided to dedicate this blog posting on how to avoid filing bankruptcy for a second or third time.

           First things first....we have all heard that the definition of insanity is doing the same thing over and over again while expecting a different result.  I believe this to be especially true of post-bankruptcy finance.    The first thing that should be done after a bankruptcy (or just prior to filing) if for you to sit down and do a budget.  Take into account the money coming in and the money going out.  Do not set unrealistic numbers, such as $100.00 per month for a family of 4 for food.  Try to make the numbers as close as you can to what you believe you will actually spend on living expenses.  If you aren't sure how much you spend on a certain area, make an educated guess and then save your receipts.  If your guess was off adjust that number later by averaging your receipts.

           I often hear that there is no reason to budget because there is not enough money.  Nothing could be further from the truth.  If you do not sit down and figure out your budget you wouldn't even know that there was not enough money.  And, if you don't have enough money to cover your living expenses, you have a few options.  The first option is to cut unnecessary spending.  Again, I caution you to cut your budget to a point that is unrealistic.  Lets face it, you are going to spend some money each month on entertainment, even if it is just renting a few movies.  However, your daily Starbucks habit or your kid's soccer camp are good examples of expenses that can be cut if you don't have enough money coming in to cover your expenses.  Also, if you are being drug down by a rent payment that you really can't afford make plans to move when your lease expires.  Option number 2 is figure out how to bring in more money to cover your expenses.  This could be working extra hours at the job you already have, setting up a side business or getting a second job delivering pizzas.  Be creative.  There are many ways to bring in extra money.

         Second, put the idea of credit cards, lines of credit, payday loans, personal loans, 401k loans and borrowing in general out of your head.  If you cannot afford to pay for something in cash you cannot afford it.  Just because your neighbor has a new couch doesn't mean that you need a new couch.  Please try not to compare yourself to others because they may only have new things that you don't have because they are drowning in debt and are on the verge of bankruptcy themselves....you never know.

          Third, be budget conscious.  I recommend buying two small accordion files.  One will hold cash for your allowed budgeted variable expenses, such as food, clothing, gasoline, entertainment, etc.  The other will hold coupons.  It is amazing how much further you can stretch your budget with coupons.  It can actually be fun to see how much money you save on things that you would buy anyway.  When there is a sale and you have a really great coupon for something that you would buy anyway (such as toothpaste) stock up so that you have enough of a supply to last until the next round of sales.  Just be cautious to avoid buying things you don't really need or won't use simply because there is a good coupon in the paper.  And remember that coupons are in many other places than the newspaper these days.  They can be found online to be downloaded from grocery stores and printed from the internet.

          Fourth, set up an emergency fund.  Face it.  Things are going to go wrong in life.  The things that go wrong are a lot easier to deal with if you have some money set aside to deal with them.  Since right after a bankruptcy you should no longer be drowning in debt, this is a great time to set up an emergency fund.  I recommend about $1,000.00 initially, to be build on over time.  Even though it can be difficult to save this much money, it is key to avoiding debt.  If you have no emergency fund then you have no choice but to turn to credit when something goes wrong in life, which then gets you right back in the same position as when you started.

         Finally, avoid major financial mistakes during moments of weakness.  One bad decision can put you right back into financial turmoil.  I have seen many cases where the purchase of a vehicle that a person really could not afford set them on a path toward bankruptcy.  There is no reason to have a $500.00 car payment when you bring home $2,000.00 per month.  It will feel much better to drive an older vehicle that is not as nice that you can afford than to stress out about how you are going to make a car payment each month.  I am not saying that a person should never finance a vehicle, because you likely need a vehicle to get to and from work.  I am saying that one poor decision on a major purchase can start a person on the road back toward bankruptcy.

        For those of you who read my blog, I would love to hear your comments on tips for either avoiding bankruptcy or for setting yourself up for financial success after bankruptcy.  For those of you who believe a bankruptcy may be necessary to get a fresh start, please do not hesitate to contact me at 317-575-8222 for a free consultation at Halcomb Singler, LLP.

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 Bad is Bankruptcy?

            I believe most bankruptcy attorneys have probably heard a lot of misinformation about bankruptcy....I know I have.  So, I wanted to write today about the questions I hear from clients at Halcomb Singler, LLP, again and again in an attempt to clear up how bad (or not that bad) it really is to file for bankruptcy.**

        Potential clients ask if there will be a sign in their yard informing the neighborhood that they have filed bankruptcy, whether their name will be listed in the local paper for having filed bankruptcy, or any other number of public "outings" as to their debtor status.  The bankruptcy trustee does not come plant a sign in your yard letting everyone know that you have filed bankruptcy.  Further, while the fact that a person has filed bankruptcy is public record, and it may appear in some business or legal newspaper; I have not seen any listing of bankruptcy debtors in the Indystar or any other local newspaper in Indianapolis or the surrounding areas.


         One of the most annoying things about bankruptcy is that the person filing is required to gather a fairly large amount of documents likely fill out a lengthy questionnaire for their attorney, assuming they are represented by counsel.  This can be a very time consuming process and may require the future debtor to track down lots of documentation regarding their finances.  However, I believe most people understand that this information is needed to give their attorney and the Court a clear view of their financial situation.

        Once the bankruptcy petition has been filed, most debtors are very nervous about their Court date.  Most bankruptcy cases only require one hearing which is the 341 meeting of creditors.  This hearing typically lasts about 5 minutes and is not in a courtroom nor is it in front of a judge.  Your creditors may appear and ask questions, although more often than not no creditors appear.  There may be some other folks who have also filed bankruptcy who are waiting for their name(s) to be called in the room as well.  This is probably the most stressful time during a bankruptcy case for bankruptcy debtors.  Debtors are often afraid that the trustee will declare that they are not eligible for bankruptcy, that the trustee or one of their creditors will yell at them or that they will be lectured about their irresponsibility for failure to pay their bills.

         After the 341 hearing of creditors is over most bankruptcy debtors are surprised at quick and easy the hearing went, especially because they have usually spent a month building it up in their heads.  However, I would never say that every hearing goes completely smoothly.  From time to time a trustee may lecture debtors about filing bankruptcy.  Sometimes an angry creditor will appear and ask the debtors sharp questions.  However, these instances are the exception rather than the rule.  Assuming you are being represented by a bankruptcy attorney familiar with the trustees in your district, the attorney will likely prepare you for the hearing by asking you many of the same questions that will be asked by the trustee.

         In a Chapter 13 bankruptcy, one of the hardest things for debtors is staying on budget.  In a Chapter 13 bankruptcy, the debtor(s) is paying a monthly payment to the trustee for distribution to creditors.  Since this repayment plan can go from 36 to 60 months, debtors have to stay on a strict budget in order to make the trustee payment.  This can be difficult to do and often results in the debtor(s) falling behind on their trustee payments.  If the debtor(s) fall far enough behind on trustee payments and are not able to get current, this will eventually lead to the dismissal of their bankruptcy case....which leaves them back where they started.

          I certainly don't want to downplay the seriousness of filing a bankruptcy petition and do believe it is a decision that should not be taken lightly.  In my opinion the largest downside to bankruptcy is the emotional one for debtors.  Debtors may feel like they have failed or be embarrassed that they need to file a bankruptcy.  However, I continue to tell clients again and again that the bankruptcy code exists under American law because there are times when individuals or businesses simply need to start over or need a way to move forward when debt becomes overwhelming.  

         If you live in the Indianapolis area and wonder whether you may benefit from the filing of a bankruptcy I would be happy to meet with you at my Carmel, Indiana office to answer your questions and recommend whether or not I believe you are a good candidate for bankruptcy.  To set up this free consultation please call me at (317) 575-8222.

**I have not addressed the obvious negative financial consequences of bankruptcy, such as credit scores, but have attempted to focus on perceived negative experiences of those contemplating 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.

Bankruptcy and Your Indiana Personal Injury Case

           Through my practice as a bankruptcy and personal injury lawyer at Halcomb Singler, LLP, in Carmel, Indiana, I have had the opportunity to see a personal injury result in an individual or couple needing to file for bankruptcy.  Unfortunately, this is not uncommon because a personal injury often prevents the injured party from going to work while at the same time increasing medical expenses.  Since personal injury cases can take a few years to either settle or come to trial, the injured party may find him or herself being sued by medical providers due to unpaid medical bills as a result of the accident.  Often, at this time the advice of a bankruptcy attorney is sought.

          When an individual or married couple file bankruptcy their property, including a claim against any third party for personal injury, must be disclosed to the Court.  Failure to do so would likely result in the dismissal of the bankruptcy case and possibly federal criminal charges.  The Bankruptcy Code through section 541 defines property of the bankruptcy estate broadly.  Generally, it states that, with a few exceptions, everything that you own or have claim to on the date of the filing of your bankruptcy petition is legally owned by your bankruptcy estate as soon as you file for bankruptcy.  This means that if a person files a bankruptcy petition prior to obtaining funds through settlement or judgment in their personal injury case that the bankruptcy estate is the legal owner of this claim and that the trustee may take the funds to pay your creditors.  Unfortunately, in Indiana there is no exemption for funds received in a personal injury lawsuit (as exists in some states).  Therefore, it is possible that a debtor could lose their entire personal injury settlement.

           The bottom line is that it if you have been involved in a car accident and the medical bills from that accident are causing you serious financial distress it still may not be a good idea to file for bankruptcy until you have received your settlement.  Perhaps your settlement may be significant enough to pay all of your creditors and then some.  Perhaps your settlement will not be enough to pay your creditors and you will still need to file for bankruptcy.  Only a qualified bankruptcy attorney can help you to determine whether the filing a bankruptcy petition prior to the settlement of your personal injury claim is a good idea.  I do offer a free consultation to those considering bankruptcy where we can discuss whether bankruptcy would be of benefit to you or your family.  Just call me at (317) 575-8222 or click here to contact Halcomb Singler, LLP.  

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.