In the throes of economic turmoil unseen by Indiana consumers for generations, the drive to eliminate family debts has taken on added importance for households throughout our state, and the bankruptcy courts grow ever more clogged as Indianans attempt to escape from their financial obligations. Much as residents of Indiana may well view Chapter 7 debt elimination bankruptcy as the fresh start once promised, however, modern practicalities have far more damaging repercussions. The effects of bankruptcy upon Indiana consumers’ credit ratings isn’t a secret, of course, but, after certain legislation went through the congress a few years past, the liquidation of unsecured debts should no longer be considered a guarantee for any household. At the same point, even for borrowers who manage to qualify for eligibility, measures to attempt to garner this sort of assistance – particularly, given the sudden drive for bankruptcy protection midst all segments of the Indiana economy, experienced and reputable law firms – does not come for free. Sadly, at the same time as many of our Indianan neighbors first realized the depths of their credit predicament, the new realities of bankruptcy protection may leave this debt relief option outside the hopes of the people who most need the government’s help. As well, co-signers on loans shall be unfortunately hung out to dry following bankruptcy. Even if a Chapter 7 debt elimination bankruptcy goes through for one individual, anyone that had signed along with a loan that he or she had taken out will potentially be liable for the entire balance. There are so very many different complications and potential barriers to debt elimination that Indiana borrowers must make certain that they know what they’re doing before they enter the program.
Nothing that borrowers will read within the following text should be construed as legal advice, understand. Professional counsel well versed in the financial statutes of Indiana and acquainted with the borrower’s specific economic parameters should be consulted before any decision is made toward bankruptcy. Much as your authors have attempted to provide a brief illustration of the problems of Chapter 7 and Chapter 13 bankruptcy protection as well as varied sorts of debt relief available for consumers in Indiana this day and age, we do not want any of our readers to believe that the information contained herein shall be the final word on any subject: particularly since the Indiana regulations (along with the regulations of every state) change so very often on the heels of the federal legislation. The Bankruptcy Abuse Prevention and Consumer Protection Act, passed in the fall of 2005 by a national congress in thrall to lender special interest groups, limited Chapter 7 debt elimination bankruptcy protection –the only sort of bankruptcy that most Indiana residents are even aware of – to heads of household that make less than the median income of their state. For Indiana, upon the date of publication of this article (borrowers still interested in the potential of bankruptcy should make sure to check the most recent census data), that means that wage earners would have to gross below forty thousand dollars a year in order to be considered for the Chapter 7 bankruptcy program. If the Indiana filer has two members within their household, that level goes up to fifty two thousand dollars. It’s fifty seven thousand dollars for three members, sixty nine thousand dollars for four members, and Indiana borrowers should add another seven thousand dollars for every additional member.
For borrowers who do manage to successfully declare bankruptcy in Indiana, they will – for the most part – be able to keep their vehicle and their home as long as there hasn’t been too much equity earned within the property. Specifically, when filing for bankruptcy protection, Indiana debtors should remember that the governmental protection does not extend to so called voluntary liens. Anything that could be repossessed or foreclosed upon shall follow different rules. Once a bankruptcy petition has been accepted by the Indiana courts, there will be what has become known as a 341 meeting which will force the person filing for bankruptcy discharge of their unsecured debts to decide whether or not to reaffirm their secured obligations or return the property to the lenders and, should they still owe more money than the assets are currently worth (whether from damage or depreciation or simply the repercussions of the falling Indiana economy), then attempt to gain protection from that debt. Even if the value of the assets is worth substantially more than the mortgage or automobile loan, as long as the Indiana debtor filing for bankruptcy agrees to remunerate the remainder while within the Chapter 13 payment schedule, everything should be okay. Unfortunately, a number of the lenders will have what’s called a vested security interest in the asset so that foreclosure or repossession would remain a possibility because bankruptcy protection does not necessarily remove the security interest, and the borrowers must take special care that these loans are paid on time each and every month (unless, at some point, the borrower can manage to simply satisfy the full amount). At the same time, though bankruptcy will not automatically aid these loans, borrowers should remember to take advantage of their working relationship with the Indiana court trustee so that any suspicious creditor activity could be investigated by the state or federal authorities. If the Indiana borrowers could genuinely manage to prove that the lenders had behaved fraudulently, they may even be able to stop payments without surrendering the assets in question.
To repeat ourselves, the maintenance of assets during bankruptcy yet another area in which the aid of attorney consultation should prove invaluable. Once Indiana residents have started down the Chapter 7 debt elimination process, they will have to go through quite a bit of paperwork. More than just an irritation, this record of the filers’ debt histories and asset portfolios is the basis of every successful Chapter 7 declaration and the bankruptcy will not succeed unless every line of the initial bankruptcy petition and creditor matrix is precisely filled out. After the passage of the BAPCA legislation, the chances of Indiana consumers facing charges of fraud from sloppy or simple forgetfulness have been greatly increased. Accuracy’s of the highest importance, and, to be honest, most Indiana borrowers with even minimal assets shall probably require the help of an attorney to ensure that they put down everything correctly so that they will avoid criminal prosecution and, nearly as meaningful, help themselves hold on to as much of their property as possible. When put into comparison with the exemptions granted from the national bankruptcy code, Indiana consumers should actually count themselves lucky. As long as there is less than seventy five hundred dollars of equity in the borrower’s primary residence (far easier these days, thanks to the drop in market value seen throughout Indiana real estate), for instance, the Indiana homestead exemption should stand unchallenged.
The actual list of exemptions for specific claims offered by the Indiana statutes is far too lengthy to be properly discussed, but we will go through some of the more common elements. Three quarters of wages earned but not yet paid, tools of trade, and property that could demonstrably be shown to be part of a business jointly owned will all be protected. Life insurance, accident benefits, compensation resulting from criminal action, funds within a medical care account, most retirement plans, and all public pensions will be similarly saved. Further, four thousand dollars of the Indiana household’s personal goods – provided no one possession will individually exceed one hundred dollars of potential replacement value – will be okay. There is, once again, any number of other exemptions available to Indiana borrowers: firefighters, national guard members, many different groups have their own separate guidelines. Any consumer seriously exploring bankruptcy protection must recognize the importance of bankruptcy attorneys familiar with both Indiana regulations and the ever mutable United States code. There’s just more information regarding bankruptcy protection necessary for the successful petition than the ordinary consumer could grasp through amateur detective work, and, with the penalties for improperly compiled paperwork growing ever harsher, Indianans not specifically trained in the minutiae of bankruptcy statutes shouldn’t even try to struggle through declaring bankruptcy without assistance no matter the price.
Thousands of consumers throughout Indiana are currently searching for alternatives to bankruptcy so that they may find a lasting source of debt relief that does not hinder their future credit opportunities. Truth be told, many ordinary borrowers in Indiana simply wish to find some form of protection from their ever growing debt loads that will shield them from the harassing phone calls of bill collectors. As a legal safeguard that immediately – once the bankruptcy petition has been accepted by the Indiana court clerk – prevents lender representatives from harassment (or any communication, to be honest), there’s an obvious attraction to the bankruptcy alternative. Nevertheless, borrowers are going to have to look at the possible drawbacks of Chapter 7 or Chapter 13 bankruptcy protection before they decide anything that could so greatly impact their family’s financial prospects. While your authors admit how tempting the notion of a legal erasure of all unsecured debts may seem, we hope that we have shown that this sort of Chapter 7 discharge is actually harder than ever (and, even for the few Indiana residents who manage to claim eligibility for the protection, far more expensive) to legitimately attain. In a particularly tragic loophole, those few Indiana borrowers who would gain most from the Chapter 7 debt elimination bankruptcy may now feel that they are unable to afford the varied costs of the program. Worse yet, the residents of Indiana whose earnings make them ineligible for Chapter 7 shall be thrown into Chapter 13 protection, and few households shall find that debt relief strategy to be beneficial once all things are considered.
Chapter 13 protection, since the Indiana borrowers who claim this sort of protection will end up repaying almost all of the money owed, are almost never ideal, but home owners that need to stop foreclosure proceedings on their primary residence or repossession of the family vehicle may have no other choice. Neither Chapter 7 nor Chapter 13 bankruptcy, it should be said, will actually do more than allow existing liens on collateral to be restructured, but, nonetheless, this new opportunity for organization of debts could make an importance difference for many Indiana families. For instance, Indiana heads of households that have their wages garnished or utilities suspended would dearly need the automatic stay that bankruptcy protection could offer. Even the halt to telephone harassment from bill collectors may seem initially worth the trouble. Once all of the actual drawbacks of bankruptcy are fully examined, though, Chapter 7 or Chapter 13 bankruptcy protection should dissuade any Indiana borrower no matter their grievance. Even borrowers who attempt to claim bankruptcy protection so that they could have their say in court to address creditors falsely claiming loans could as easily challenge these lenders without undertaking the credit damage and out of pocket costs (and, potentially, asset seizure or constrained household budget) that bankruptcy necessarily demands. So many of the Indiana consumers that we have spoken with feel that the creditors requesting money are honestly in the wrong, but the Indiana court system allows for different alternatives to deal with such matters. If lenders are trying to bill the consumer for funds that are not owed, the consumer should contact the Indiana Attorney General’s office and report fraudulent behavior and avoid the costs that bankruptcy necessarily forces Indianans to absorb.
Chapter 13 bankruptcies are considered far and wide to be the least effective method of debt relief because the program contains all of the most damaging implications of bankruptcy protection – especially the negative impact to credit ratings – without actually canceling any of the debt balances the Indiana borrower may have taken out. Furthermore, the borrowers may well have to submit a healthy chunk of their household income to the judgment of the Indiana court trustee for dispensation among the various borrowers, and, moreover, this solution could take as much as five years with governmental intervention guiding family decisions regarding the family budget. In the most basic explanation, within a Chapter 13 bankruptcy, the household’s disposable income shall be subject to the Indiana courts whims for up to five years as the trustees determine how best to repay the lenders. As with any of these debt relief alternatives – and particularly when the government is a piece of the puzzle – the utilization of a lawyer experienced in Indiana debt statutes as well as the national regulations should be considered essential for everyone involved. While, when struggling through a Chapter 13 bankruptcy, the borrower’s income not otherwise given to minimum payments for secured loans and household utilities shall be disbursed according to the arbitration of the trustee chosen by the Indiana courts, there are potential loopholes within the Indiana statutes that could be feasibly invoked, but, there, again, the high priced attorneys shall have to be necessary.
Also, the Indiana consumers who, after reading all of this, still remain interested in bankruptcy protection should also take special notice of just how, in a more subtle fashion, the recent legislation has affected another part of the bankruptcy code. With the Indiana court trustees allowed far less mutability as regards their examination of borrowers’ cases because of congressional alterations to the protection, the dispensation of filers’ earnings will now be adjudged according to expenses compiled by the Internal Revenue Service as opposed to what the Indiana household petitioning for bankruptcy will actually be paying out every month. For that matter, even secured loans – such as second cars or vacation homes – will not be necessarily protected depending upon the mindset of the particular trustee. In the direst circumstances, this sort of unnaturally harsh budgetary dominion could force families to pull their children out of schools or even move to another area of Indiana. Remember, should borrowers fail to meet a single payment during a Chapter 13 bankruptcy, the Indiana trustee could deem the borrowers in question to be in contempt of court and require them to repay the full amount at once. Recent studies have indicated that less than one quarter of the Indiana consumers who have attempted Chapter 13 bankruptcy protection successfully made their way through the program because the current statutes have so unfairly tarnished the program, but that does not necessarily mean that they would have no other option available for at least a partial relief of their personal unsecured debts.
Though, obviously, no Indiana borrower in their right mind would ever want to file for bankruptcy again, they should still keep in mind that the Chapter 7 debt elimination bankruptcy protection would not be legally available for another six years as the consequences of the program linger. Nevertheless, they should attempt to restart their lives almost immediately and, depending upon the family’s needs, even try another form of debt management. For whatever reason, many residents of Indiana are under the impression that bankruptcy declaration will hinder their potential to acquire and maintain goods from then on. Once again, the threat of property forfeiture hangs over all bankruptcies – and, of course, relatively damaged credit will also limit the potential for larger purchases – but, even following the discharge of debts after a successful Chapter 7 bankruptcy protection, Indiana borrowers shall not have to worry about all personal possessions considered exempt nor those objects bought after the end of the bankruptcy period. For six months afterwards, however, the newly bankrupt will have to report any significant windfall (whether property settlement or inheritance or anything else that would have been impossible to have foreseen at the time when borrowers first filled out the initial bankruptcy petition) to the Indiana trustee, and, during that one hundred and eighty days, it’s possible that the Indiana courts could decide to seize a part or even all of those funds to repay lenders even though the financial obligations had been technically discharged. If there’s even the slightest potential for this sort of good fortune, Indiana consumers would be well advised to drop out of whichever bankruptcy program as quickly as possible and investigate another source of debt relief. Even if the borrower has filed bankruptcy within the past few years and would not qualify for Chapter 7 protection, some lenders will still consider, say, debt settlement negotiation just so that they could ensure the repayment of at least a part of the funds that were owed. Considering the legal costs involved with attempts toward collection, most creditors shall move heaven and earth to avoid the attorney fees.
Debt settlement, the process wherein borrowers ask professional negotiators to speak to the assembled lenders in the hopes of an eventual lowering of the financial burdens that were owed, has been named by many of the Indiana consumers who fought back their debts without having to take advantage of the Chapter 7 or Chapter 13 bankruptcy protection. While nothing will be as effective for the erasing of unsecured debts (settlement negotiation, in precisely the same way as bankruptcy laws currently allow, will only be relevant for credit card bills, charge card accounts, and those bills that have been delegated to collection agencies) as Chapter 7 debt elimination programs once provided, increasing numbers of Indiana residents have found that representatives of the credit cards will be surprisingly willing to shrug away as much as sixty percent of the overall credit account balances in exchange for the settlement negotiator’s promised.