Why December is Typically a Slow Month for Bankruptcy

              In December most bankruptcy attorneys in in the slowest part of their year.  They are reorganizing their offices, staffs, and preparing for a new year.  Some like me are writing blog posts about bankruptcy in Indiana.  Many will even take a week or so off for Christmas.  Why??  It's probably for a few reasons.

              The first reason is the one that many people think of.....that filing bankruptcy is not a great way for most people to celebrate their Christmas.  Many people (understandably) would rather enjoy the holiday season without the stress of filing bankruptcy.  This is not to say that I never file any bankruptcy petitions during the holiday season.  In fact, I believe a few years ago I had a 341 meeting at the bankruptcy court in Indianapolis on December 23rd.

             The reason that many people are less aware of that bankruptcy filings slow down in December is due to income tax refunds for the next year.  If you live in the Indianapolis area and file a Chapter 7 bankruptcy in December you can probably kiss the majority of any 2012 income tax refund you may have received in 2013 goodbye (less any earned income credit you receive).  For many people who need to file bankruptcy an income tax refund is imminent due to decreased earnings in 2012 and they need that money for the necessities of life.  As a result, if no creditors are forcing bankruptcy through garnishment proceedings or through freezing a bank account, etc., I will normally counsel clients to file their income taxes as early as possible in 2013 and to use their refund on living expenses, home maintenance, car repairs, etc.  I often ask my clients to tell me how they would like to spend their income tax refund and to send me an e-mail so that I can "ok" it.  I like to see how my clients propose to spend this money because there are some things that the money could be spent on just prior to filing bankruptcy.  For example, paying back a relative, going on a vacation and buying a flat screen television are likely things I would counsel against.

  I have found that most people who are in need of filing bankruptcy have been struggling financially for some time and there are lots of things they have not been spending money on in an effort to pay creditors.  For example, clothing, a mattress, car repairs, home repairs, a new or used appliance to replace one that went out long ago, car insurance, and life insurance are common just to name a few.

              But in another week bankruptcy attorneys will once again be working like busy bees.  Since many folks put off the decision in favor of or against bankruptcy over the holidays there is typically a rush of people who want to meet with a bankruptcy attorney in January.  If you are one of those people who have been trying to dig your way out of debt with little success over the past year or two please contact me.  I offer an initial consultation free of charge at my Carmel office and I can explain to you the pros and cons of filing bankruptcy and can answer your questions regarding bankruptcy (including how much it would cost and how in the world you might be able to pay for it).  If you would like to meet with me call my law firm, Halcomb Singler, at 575-8222 or click here and we will e-mail or call you to set up 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. 

Walking Away From a House You Don't Want in Indiana

   

      Not surprising, a lot of the people who meet with me at my Halcomb Singler, LLP, office in Carmel, Indiana, are there because they are concerned that they have fallen behind on their home.  My clients have many different options regarding either attempting to keep their home or deciding, after considering their options, that they would rather let the home go and move on.  For purposes of this blog posting I will discuss a little bit about a few different ways to let a home go in Indiana.  Don't ask me why this photo is relevant.....I just couldn't resist posting an angry Donald to my blog.

     Unfortunately, surrendering a house is not as easy as it may sound.  You have probably heard of people "walking away" from their homes/mortgages, but it is not quite that easy in Indiana.  There are, however, several ways to surrender your home whether during Chapter 7 Bankruptcy, Chapter 13 Bankruptcy or outside of bankruptcy.  One of the most important points to keep in mind is that you are responsible for a home until the property is no longer deeded in your name.  When you buy a home that home is deeded to you immediately.  That deed is filed with the recorder's office in the county in which the home is located and it serves as notice as to whom owns that house.  The deeded owner of a home is responsible for cutting the grass, maintaining the home so that it does not become so run down as to qualify as a hazard, may be responsible if someone is injured on the property and is likely responsible for the payment of homeowner's association dues assuming that there is an HOA.  As a result of these obligations, it is important to understand when a house will no longer be deeded in your name.

       One way to get a house "out of your name" is to do a deed in lieu of foreclosure.  Just as it sounds, this means that you deed your house back to the bank and they agree to take the house back from you instead of filing a mortgage foreclosure.  This sounds like a great option at first.  However, it is important to point out that the agreement you sign must actually say that you will not be liable for any deficiency balance when the house sells.  It is also easier said than done to get a mortgage company to agree to this and send the required documentation.

        Another option is what is called a short sale.  Most Hoosiers have heard of this option.  You list your house for sale and when you get an offer from a potential buyer for less than is owed on the house you must get approval from the lender or lenders to sell the property for less than the home is worth.  This can be a very time-consuming process.  If you have attempted to call a mortgage lender's loss mitigation department in the last 3 years you understand that you are going to wait a long time to speak with someone, the person you are speaking with may or may not have any clue about short sales (even though they are in the short sale department) and the lender probably lost all of the documents you sent them regarding the short sale 6 times.  I admit I am maybe being slightly overly cynical with this, but I have had all of these things happen.  I also received the same letter each day (just with a different date) 30 days in a row from a lender when I was attempting to negotiate a deed in lieu of foreclosure for my client....so I guess I am allowed to be a bit cynical.

         Option 3= do nothing.  In Indiana if you don't pay your mortgage for long enough the lender will probably file a mortgage foreclosure.  I say probably because there are certainly some houses that even the bank doesn't want back.  However, if you own a decent home the bank will likely foreclose and eventually obtain a judgment and sell the house at sheriff sale.  When the house is sold at sheriff sale it is no longer going to be in your name, so you won't have to worry about cutting the grass, etc.  However, if the house sells at sheriff sale for less than you owe then you may be liable for the deficiency balance on the mortgage and the lender may chase you down to try to collect.

        Additionally, there are potentially tax considerations to think about in any of these above options.  Typically, if you owe a debt that is forgiven then you owe income tax on the difference.  For example, if you owe Bank of America $120,000.00 on your home and then do a short sale for $100,000.00, Bank of America may send you a surprise that next January of a 1099C for $20,000.00, which is the amount equal to the loan.  The Mortgage Relief Forgiveness Act of 2007 basically says (I am oversimplifying this greatly) that if you surrender your home through deed in lieu of foreclosure or short sale and that the home was your primary residence that you will not owe income tax on the forgiven debt.  However, that Act expires at the end of 2012 and no one knows how and if it will be extended or changed.

          Of course, both individual and joint bankruptcy debtors have the option of "surrendering" their homes in bankruptcy.  Again, just because the box marked "surrendered" is checked on the bankruptcy petition does not mean that you can simply walk away from the home and not worry about it ever again.  You have to cut the grass until the home goes through mortgage foreclosure and eventual sheriff sale or you will get a ticket from the local municipality.  This process can take months.  You are also potentially going to be liable for any homeowner's association fees that are incurred after the date of the filing of your petition.  As a result, many homeowners who surrender their homes in bankruptcy opt to continue to live in the homes until just prior to the sheriff sale.  This way they can maintain the home, not to mention having a "free" place to live for what would likely amount to several months.  And, when a home is surrendered in bankruptcy there are no tax implications.

          As you can see, there are a LOT of options even once you decide that you don't want to keep your home in Indiana.  It is difficult to write about these options generally.  If you are living in the Indianapolis area and are considering your options to get out of your home I would be happy to meet with you at my Carmel office to go over potential options.  Just give me a call at (317) 575-8222 or click here to set up 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.  

No Life Insurance? No iPhone!

               I know, I know.  What in the world could this post have to do with filing bankruptcy in Indiana?  The answer to that question is plenty.  As a bankruptcy attorney at Halcomb Singler, LLP, I go over the expenses of each one of my clients with them in order to properly advise them about bankruptcy.  One thing that I notice over and over again is that very few people have life insurance policies that would be adequate to support their families.  Many people have an insurance policy through work that would cover funeral expenses, but few people I meet with at Halcomb Singler, LLP, have any other life insurance.  However, many of those same people spend money on getting their nails done, professional highlights at expensive salons....and, of course, every NEEDS an iPhone.

               I am not saying that no one should ever have an iPhone.  However, I am saying that you should only have an iPhone if you have the other things in life that are necessitates covered.  For most people, life insurance should be looked at as a necessity.  However, many people chose to spend their money on the "latest and greatest" electronic or entertainment rather than life insurance.  I find this sad. To me this says that person cares more about stuff than his or her family's well begin should he or she pass away.  For example, in a family of 4 where the father works full time in sales and is gone during the week and the wife stays home to manage the home and the 2 children what would happen if either parent died without adequate life insurance?  If the father dies with only enough life insurance to get him in the ground it looks like it is time for the family to move.  Time for mom to get a job or a new husband asap.  This may seem a bit dramatic, but for a mom who hasn't worked in many years to go out and get a job that can keep the family in the same home is unrealistic for most people.  Not only does the mom have the disadvantage of having been out of the workforce for years, but now she is going to have to pay someone else for child care.

              In the example above, many people make the mistake of thinking that the mom doesn't need life insurance because she isn't working and doesn't bring any financial gain to the family.  On the contrary, mom is caring for the children.  If mom passed away then dad could only continue to work and earn money if he is paying money for someone to take care of the kids.

              Another scenario that comes to mind is that of the single mom.  Single moms need life insurance to leave to their children in the event of passing.  It is best that a guardian has been designated and that the money is left in trust to the guardian for the benefit of the child, but that goes beyond the scope of this blog into the realm of estate planning.  I know that single moms are often operating on a very tight budget.  However, term life insurance is very affordable and simply must be budgeted for!

             It is not fun to think about these scenarios, but they do happen....and they do result in people having to file for bankruptcy.  I was at a bankruptcy hearing within the past month where the person who filed bankruptcy was a young widow, probably under the age of 40.  The trustee asked that debtor if she was entitled to any life insurance from the passing of her late husband.  The debtor started to tear up when answering that she had not received any life insurance money.

            Let me remind you that I don't sell life insurance.  I have nothing to gain from people buying life insurance.  But it saddens me to sit with people day after day who are simply very financially vulnerable in the event of death.  I wanted to blog on this topic because it is yet another example of how many American's spending decisions are out of whack.  Americans will spend money on cable television and iPhones and not make sure the family is taken care of should there be an unexpected passing.    That is the last way your family should remember you.....as a person who didn't care about their financial well-being and as a person who may have forced bankruptcy as the only solution.

Halcomb Singler, LLP, is a debt relief agency.  It helps people file for bankruptcy under the bankruptcy code.  No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so.  The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.    

The Impending Bankruptcy Flood of 2013??

         

          While it is probably safe to say that the government's failure to fix the fiscal cliff, the fact that milk is about $3.00 per gallon, or gas that seems to always hover above $3.50 per gallon that bankruptcy filings may increase in Indiana in 2013.  However, that is not what inspired this blog post.  While at a bankruptcy hearing a few weeks ago one of the Chapter 7 bankruptcy trustees brought up a great point.

              Many reading this may not know that there was significant change to bankruptcy laws in October, 2005.  In 2005 it was thought that the change in law was going to make it very difficult to file bankruptcy and especially difficult to qualify for Chapter 7 bankruptcy.  In my opinion, didn't really make it harder to qualify for Chapter 7 bankruptcy, it really just requires more information from potential bankruptcy clients.  Nonetheless, it seemed like everyone who ever thought about filing bankruptcy in filed in 2005.  The hearing rooms that the trustees use to hold bankruptcy hearings were seriously overflowing at the end of 2005 and beginning of 2006.  Trustees were holding hearings every day in order to try to keep up.  I think that additional trustees were also added in order to make it through the masses of people who filed bankruptcy up to the law change in October, 2005.

              Now to the reason I believe 2013 will be a high bankruptcy filing year.  The reason is that an individual can only file a Chapter 7 bankruptcy petition once every 8 years.  This is measured from the date of the filing of the old bankruptcy petition to the date of the filing of the new bankruptcy petition.  Since 2013 is 8 years after the 2005 filing extravaganza I believe 2013 will be a very busy year for bankruptcy attorneys in Indiana.  It is safe to say that there are many people who are being hounded by creditors right now who have gone to meet with a bankruptcy attorney only to be turned away because they can't file a Chapter 7 bankruptcy petition again until 8 years have passed since their last filing.  In fact, I am filing a bankruptcy petition at the end of the week for a client who first filed Chapter 7 bankruptcy about 8 years ago.  So starts the flood?

              Combine the fact that so many people filed bankruptcy in Indiana (and everywhere else) in 2005, and add to that the stellar economic situation we have been dealing with since then.  The housing meltdown, high unemployment, super high cost of food, and record high student loan debts and it does not take a rocket scientist to predict that bankruptcy filings will be high in 2013.  If you live in Indianapolis or the surrounding areas I would be happy to meet with you to discuss bankruptcy.  Just give me a call at 575-8222 to set up your appointment.  Merry Christmas and Happy New Year!

Halcomb Singler, LLP, is a debt relief agency.  It helps people file for bankruptcy under the bankruptcy code.  No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so.  The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.