Bankruptcy and Foreclosure Decline in 2011

Posted on April 11, 2012 by Larry Des Jardines

The 2011 bankruptcy and foreclosure statistics show a 12% reduction in personal bankruptcies and a 34% reduction in foreclosures. Of these bankruptcies, close to 70% of the filings were Chapter 7 bankruptcies, which discharges debt and allows the debtor to avoid repayment. The other third involved Chapter 13 bankruptcies, which allow the debtor to force creditors to take what they can afford to repay over a three to five year repayment plan, then discharge (eliminate) any unpaid balances of most unsecured debts.

Along with the drop in bankruptcy and foreclosure came an increase in consumer borrowing as reported by the Federal Reserve in November. As consumers gain more access to credit, they seem less likely to consider bankruptcy. It seems as if they are using credit cards instead. This may lead to yet another personal debt crisis.

It is not wise for consumers to use credit to attempt to “borrow their way out of debt.” Taking out loans or using credit cards at a point in time when you know or should know that you do not or will not have the ability to repay the debt can cause problems in potential future bankruptcy filings. Using credit in this manner can result in those debts exception from discharge in a future bankruptcy filing. It may be best to file for bankruptcy before acquiring new debts attempting to keep up.

By law, filing for bankruptcy protects the debtor against harassing collector calls and lawsuits. It is a legitimate option for those who are struggling to make ends meet and cannot see a way out of debt. An experienced personal bankruptcy attorney can help you with your options and assist you in creating a new start.

Our knowledgeable and compassionate attorneys have over 30 years of experience with personal bankruptcy law and will work with you to find the right solution. We are nonjudgmental and personalize our service to your needs. If you are plagued with debt problems, call us now at 317-759-1483 to set up a free consultation with one of our qualified bankruptcy lawyers. You can also email us for more information.

We offer clear explanations with personalized service and fast response to emergency situations. If you need help getting out of debt, call us now at 317-759-1483 to set up a free consultation with one of our compassionate Indianapolis bankruptcy lawyers. You can also email us for more information.

Posted in Bankruptcy Basics | Leave a comment

Bankruptcy vs Foreclosure

Posted on April 4, 2012 by Larry Des Jardines

It is stressful when you get behind on your mortgage. It certainly is more stressful if you have received legal papers for a foreclosure. There is help available. It is an important time to calmly, but quickly consider your options when faced with this dilemma.

How bankruptcy can help

Filing a bankruptcy creates an automatic stay, which protects the debtor and his/her property, including their home. This protection stops the foreclosure process and also protects the debtor from harassing phone calls, collection letters, lawsuits, utility shut-off, repossessions and wage garnishments by creditors.

In a Chapter 13 bankruptcy we ask the court to approve a repayment plan that can stop foreclosure on your home and set a period of three to five years to catch up the mortgage arrears. It is even possible, in some cases, to discharge or wipe out second or third mortgages. Chapter 13 bankruptcy also protects you from, and ultimately discharges your legal responsibility to pay other debts such as medical bills, credit cards, and collection accounts.

A Chapter 7 bankruptcy can temporarily stop a foreclosure as well as get a discharge on most other types of debts. It can provide extra time in the house to put your affairs in order. It will also assure that you will not owe the mortgage creditor (or other lien holders) anything after the house is sold.

Many consumers are confused when considering what they should do when they receive notice of a foreclosure. Consulting with an experienced bankruptcy attorney can help clear this confusion and assist you in making the appropriate decision for your situation.

If you have questions about the differences between bankruptcy and foreclosure or wish to learn more, call us now at 317-759-1483 to set up a free consultation with an experienced Indianapolis bankruptcy attorney. You can also email us for more information. We are here to help you on the path to a debt-free future.

Posted in Bankruptcy Basics, Debt Relief Solutions | Leave a comment

Can You File Bankruptcy on a Second Mortgage

Posted on March 28, 2012 by Larry Des Jardines

We meet with many people weekly that are having trouble making their house payment. In some cases a big part of their financial hardships are caused by having to pay on a second mortgage or a home equity line of credit (HELOC). One of our main goals in representing clients is to help them retain homes they want to keep. In some circumstances we may be able to use bankruptcy law to help eliminate the second mortgage or HELOC.

Chapter 13 Bankruptcy and Lien Stripping

A Chapter 13 bankruptcy offers options to deal with second mortgages or home equity lines of credit. How much we can help depends on how much the house is worth and how much is owed on a primary mortgage.

In most Chapter 13 bankruptcies we can help a homeowner that is simply delinquent on their first or second mortgage catch up on those payments over time under the Bankruptcy Court’s protection. Regular payments resume on the mortgages in these plans.

However, if a homeowner owes more on their primary mortgage than the house is worth, it is possible to strip a second mortgage lien from the property and treat the balance of the loan as an unsecured debt. Lien stripping does away with the need for regular, ongoing payments to the second mortgage. This generally results in significant savings and helps people hold on to a house that they might otherwise loose. Given the present state of the real estate market, we are helping our clients in this way with increasing frequency.

It should be remembered that those who file bankruptcy must complete their bankruptcy plans in order for mortgages to be stripped or discharged. If you are worried about your mortgage payments and are considering bankruptcy, talk to the experienced and compassionate bankruptcy attorneys at Sawin, Shea, and Des Jardines LLC.

Chapter 7 Bankruptcy Filing

Chapter 7 bankruptcy does not eliminate debt, but it discharges it, removing the personal legal obligation to pay that debt. A Chapter 7 filing does not discharge or do away with a lender’s lien rights in the collateral securing the loan. Therefore, if a person wants to keep an item secured by a lien through a chapter 7 bankruptcy, we need to reaffirm, or pick up legal liability for the debt through a process called reaffirmation of the debt. Therefore, if a person wants to keep their home in a Chapter 7 bankruptcy they will need to reaffirm and pay the second mortgage or HELOC.

Bankruptcy laws are complex. It is important to have an experienced bankruptcy attorney that knows the system and can get you the maximum relief you deserve.

Call us now at 317-759-1483 to set up a free or email us for more information. We are here to help you on the path that works for you and your unique situation.

Posted in Bankruptcy Basics, Filing Bankruptcy in Indiana | Leave a comment

Rebuilding Credit After Bankruptcy

Posted on March 23, 2012 by Larry Des Jardines

One of the most common questions we are asked in our bankruptcy practice is about how filing will affect credit. The truth is in the vast majority cases bankruptcy filing improves a person’s credit. The filing stops ongoing negative reporting for old delinquent debts and provides a starting point to help you start to re-establish credit.

The fact that you filed bankruptcy may appear on your credit reports for up to ten years, but with the help of an experienced bankruptcy attorney, your credit can recover much quicker. There are several things you can do after bankruptcy that can improve your credit score and start you on the road to financial recovery.

Some ways to establishing credit after bankruptcy:

Get a secured credit card

  • After your bankruptcy is final, it is important to work towards re-establishing credit. This can be done easily by working with a local bank or credit union and receiving a secured credit card. This type of credit card is secured because the applicant gives the bank money to hold and the bank then allows a credit limit equal to that amount. For instance, the applicant would put $800 in the bank if he/she wanted an $800 credit limit. Be cautious when setting up a secured account when it comes to upfront fees. Also, make sure that the secured credit card that you choose reports to the credit reporting agencies, some do not. Make small charges and pay them timely.

Get a unsecured card

  • You may be surprised, but you may receive many offers from credit card companies after your bankruptcy. An unsecured credit card means that you do not have to pay anything upfront to the lender, but you also want to watch for any fees. Remember to pay off your balance in full each month to improve your credit.

Take out a loan

  • Loans can be either secured or unsecured and are very similar to credit cards in procedure. A vehicle loan with a bank or credit union is great ways to re-establish credit.

With both secured and unsecured credit cards and loans, find out if the lender reports your credit card activity to the three credit card bureaus (Experian, Equifax, and TransUnion) so that making timely payments will improve your credit score.

What to avoid:

Don’t apply to retail cards first

  • Because most of the credit cards offered by department stores and gas stations are handled by the small group of major lenders, you may already be in the system regarding your bankruptcy. The negative inquiry will damage your credit.

Stay away from finance companies

  • Finance companies will often offer you high-interest, high-fee loans or credit cards after your bankruptcy. These are not as helpful as those from a local bank or credit union on your credit score.

It is important to remember that making timely payments on debt is one of the most important factors in rebuilding your credit. It is important to have an experienced bankruptcy attorney on your side to get you relief from old problematic debt so that you can work on making your credit better in the future.

Please feel free to call us now at 317-759-1483 or send us an email to schedule a free consultation with an attorney to review your personal situation.

Posted in Bankruptcy Basics, Debt Relief Solutions | Leave a comment

Bankruptcy and Retirement Accounts

Posted on February 29, 2012 by Larry Des Jardines

The good news is that under both Indiana law and federal bankruptcy law most types of retirement accounts are given broad protection from creditors and seizure in bankruptcy. This means that you are able to keep your ERISA qualified retirement plan, pre-tax plans such as your IRA, 401(k), and 403(b), and Roth IRA through the bankruptcy process. It is for this very reason that I generally counsel my clients not to withdrawal funds from these accounts to pay off debt. Your retirement plan is there to use for your retirement, and the powers that be have enacted laws to help you keep it.

There are other reasons not to withdrawal money from a protected retirement account to pay debts. When you make an early withdrawal or receive an early distribution from these pre-tax retirement accounts, there are tax consequences. Generally, you will owe tax on the withdrawal. In addition there are penalties associated with early withdrawal. This tax burden can ultimately result in a person owing taxes on the withdrawal that cannot be discharged in bankruptcy.

The bottom line is that we strongly discourage early withdrawals from a pre-tax retirement account or Roth IRA in an effort to pay off debts. There are other options. An experienced Indiana bankruptcy lawyer can help you deal with debts while helping you protect important assets from your creditors.

Please feel free to call us now at 317-759-1483 or send us an email to schedule a free consultation with an attorney to review your personal situation.

Posted in Bankruptcy Basics, Filing Bankruptcy in Indiana | Leave a comment

I Never Thought I Would Need Bankruptcy

Posted on February 22, 2012 by Larry Des Jardines

One of the last places that people want to be is sitting across from me while we discuss options for their financial future. Many times some common misconceptions or fear about the bankruptcy process increase this anxiety, or worse, keep them from coming in to explore their legal options at all. I have compiled a list of some common reasons people resist getting a fresh start in bankruptcy.

Filing a bankruptcy will cause us embarrassment or make us feel ashamed.

We strive to keep the fact that an individual or couple has filed a bankruptcy as private as possible. While a bankruptcy filing is a matter of public record, the days of bankruptcy notices appearing in the local paper is largely a thing of the past. Most social stigmas about bankruptcy are from a time well past, when people obtained credit from a small local bank or other local institution, not a multi billion dollar global corporation. I often advise my client that the need to file a bankruptcy is a financial matter, not a moral one.

I will never get credit again if I file a bankruptcy.

I never tell clients that bankruptcy makes their credit better. However, in the vast majority of cases that I handle, bankruptcy gives my client an opportunity to start making their credit better. Bankruptcy stops creditors from continuing to report ongoing negative information and provides a platform to start rebuilding credit. My clients are often getting good rates for cars and houses two to three years after their bankruptcy.

I will lose things I want to keep if I file a bankruptcy.

My main focus in helping people with bankruptcy is asset protection. In other words, helping people hang onto things that they want to keep while helping them get out from under things that they can’t afford. It is certainly possible, in fact common, for people to keep all of their things while still receiving a discharge of a majority or all of their debts. An experienced Indiana bankruptcy attorney can help determine the best course of action to help you hang onto the stuff you want to keep through the bankruptcy process.

I am worried that I can’t afford bankruptcy.

I generally advise my clients to think about what it will cost them if they do not file a bankruptcy. Wage or bank account garnishments can make it impossible to pay rent or your mortgage. Cars can be repossessed. We work with our clients to provide affordable options and can, in some circumstances, file a bankruptcy and get people under the Bankruptcy Court’s protection for little or no attorney fees down.

Please feel free to call us now at 317-759-1483 or send us an email to schedule a free consultation with an attorney to review your personal situation.

Posted in Bankruptcy Basics, Filing Bankruptcy in Indiana | Leave a comment

What Kind of Debts Can I Get Rid of With Bankruptcy?

Posted on February 15, 2012 by Larry Des Jardines

Often, the first question a new client has for me is regarding what types of debts can be discharged or eliminated in a bankruptcy. Many times this question arises because they heard things like “medical bills can’t be discharged” from a friend, family member, or at work. Medical bills most definitely can and will be discharged in a bankruptcy. Needless to say this information can be way off base.

Most debts are discharged or eliminated by bankruptcy. I typically tell my clients that it is much easier for me to tell them what types of debts I cannot help them get rid of in bankruptcy. Here is a short list of the most common debts that survive bankruptcy.

Student Loans

Student loans are only discharged in cases of extreme hardship. There must be a separate legal process filed in the bankruptcy case to determine whether a person’s circumstances are dire enough for them to be discharged. We can delay the payment of student loans in a Chapter 13 bankruptcy, but usually they are ultimately not discharged.

Certain Taxes

Some older income taxes may get discharged in bankruptcy. Income taxes due in the three years prior to filing, tax liens, and other types of taxes such as withholding or sales tax may not get discharged. A benefit of Chapter 13 bankruptcy is that we can deal with taxes and tax liens that would survive a Chapter 7 as part of a reorganization plan. There are many complex factors that must be considered in the determination of whether taxes can be discharged. An experienced bankruptcy attorney can help you determine if your taxes are dischargeable.

Child Support, Alimony, or Spousal Maintenance

These debts are not dischargeable in any bankruptcy no matter the circumstance.

Marital Debts

Debts that can affect an ex spouse that you were ordered to pay in your divorce are not dischargeable in a Chapter 7 bankruptcy. However, these debts can be discharged in a Chapter 13 bankruptcy.

Debts for Fines and Penalties Owed to Governmental Units and Criminal Restitution

This includes traffic tickets and other debts arising out of criminal prosecution or government fines.

Condominium or Home Owners Association Dues Incurred After the Filing of Your Bankruptcy

The association can charge you any fees or dues that come due after the filing of your bankruptcy while you still have a legal or equitable interest in the condo or home.

There are other types of debts that may not be discharged in a bankruptcy case if the creditor comes forward and gets a ruling from the bankruptcy Judge declaring the debt not discharged. This can happen in cases of debts incurred by fraud, wrongful death or injury caused by the operation of a motor vehicle while intoxicated, willful or malicious injury, embezzlement, or theft. If you have a question about whether your debts can be discharged in bankruptcy please consult with an experienced bankruptcy attorney.

Please feel free to the Indianapolis bankruptcy attorneys of Sawin Shea & Des Jardines now at 317-759-1483 or send us an email to schedule a free consultation with an attorney to review your personal situation.

Posted in Bankruptcy Basics | Leave a comment

What Happens After Bankruptcy Discharge?

Posted on February 8, 2012 by Larry Des Jardines

One of the most common concerns I hear from the clients in my practice is what happens after your bankruptcy is over and your debts are discharged. Whether filing Chapter 7 (liquidation of all assets with request to be discharged from financial obligations) or Chapter 13 (reorganization of debt), there are a few points to keep in mind.

You are protected by the Bankruptcy Court’s discharge order.

Near the end of the bankruptcy process the Bankruptcy Court issues a permanent order discharging debts. This court order keeps most creditors from taking any action to collect their debt in the future. If a creditor attempts to collect a discharged debt, you may have a legal action to pursue against them. If a creditor is asking for payment after you received a bankruptcy discharge, an experienced bankruptcy attorney can advise you of your rights.

Your credit score may start to improve.

Many people that come in to see us for a bankruptcy have had years of debt problems and low credit scores to match. Getting problem debts discharged in bankruptcy can provide a starting point to start improving your credit. My clients are often surprised at how quickly their credit improves after bankruptcy.

You will receive many offers from lenders.

You may be surprised by how many credit card and loan offers you will receive in your mailbox after filing for bankruptcy. Most will offer a “quick fix” to rebuilding your credit, but beware of high fees and sky-rocketing interest rates. Choose to rebuild your credit with reputable lenders such as your local banks and credit unions. To get the full benefit from your post bankruptcy credit make sure that the lenders report to the credit reporting agencies and make your payments on time.

You can look forward to buying a house or car at a good rate sooner than you think.

Because you filed for bankruptcy, you will be considered a high risk for conventional mortgage and auto loans for the first couple of years after bankruptcy. If you take this time to save your money and rebuild your credit history, however, you can be eligible for a mortgage or a car loan at competitive rates in 2-3 years.

You should create a budget.

To avoid overspending and start saving, it is imperative to create a budget and stick to it. Remember, in order to rebuild your credit and start on the road to financial freedom, you need to be able to spend less than you make.

You should start saving.

As you create your budget, keep in mind that you should also be setting aside money for emergency situations and future expenses. This may require adjustments in your spending habits.

Are you considering bankruptcy?

If you are considering filing for bankruptcy, consult with an experienced bankruptcy attorney to walk you through the process for your best opportunity for financial success.

Please feel free to call us now at 317-759-1483 or send us an email to schedule a free consultation with an attorney to review your personal situation.

Posted in Bankruptcy Basics, Debt Relief Solutions | Leave a comment

Bankruptcy and Cosigners

Posted on January 26, 2012 by Larry Des Jardines

A cosigned debt is a debt where one or more person guarantees that that the primary borrower will pay the debt. Legally, a cosigner or co-debtor is equally responsible on the debt. If the primary borrower does not pay the debt, the creditor or lender can pursue the cosigner for the debt. Late or missed payments affect the cosigner’s credit the same way that it affects the credit of the primary borrower. The effect that a bankruptcy has on a cosigned debt and/or cosigner depends on the type of bankruptcy.

In a Chapter 7 bankruptcy or straight bankruptcy the Debtor (person filing bankruptcy) asks the Court to issue a discharge on debts. This discharge legally eliminates the creditor’s rights to collect from the debtor. The cosigner does not receive the same benefit from the bankruptcy. The cosigner may then be stuck paying the debt. There are options that a Chapter 7 debtor or the cosigner can pursue to deal with the debt.

If the cosigned debt is a secured debt such as a mortgage loan or a car loan, the debtor in a Chapter 7 bankruptcy may protect a cosigner by agreeing to keep paying to keep the collateral (the house or car). With other types of cosigned debts the cosigner can maintain the payments and a debtor in bankruptcy may informally agree to pay them back after the bankruptcy proceeding is over. The cosigner may also discharge the debt in a bankruptcy if they so choose.

In a Chapter 13 bankruptcy the debtor asks the Court to approve a 3 to5 year reorganization plan. As part of the Chapter 13 reorganization bankruptcy a debtor may be able to protect a cosigner using what’s called the co-debtor stay. This Court ordered protection keeps creditors from pursing the cosigner for the debt as long as the debtor in bankruptcy has fashioned their plan to pay the cosigned debt through their plan. This Court ordered protection does not work with business debts or with debts from which the cosigner received the majority of the benefit.

The strategies and rules that go into helping people in bankruptcy achieve their goals vary from person to person. A consultation with an experienced bankruptcy lawyer is a critical first step in achieving your fresh start.

Please feel free to call us now at 317-759-1483 or send us an email to schedule a free consultation with an attorney to review your personal situation.

Posted in Bankruptcy Basics, Filing Bankruptcy in Indiana | Leave a comment

Can You File Bankruptcy Twice?

Posted on January 24, 2012 by Larry Des Jardines

The circumstances that cause a person to need to file bankruptcy can, unfortunately, occur more than one time in a person’s life. This is the reason that there are no set limits on how many times a person (or married couple) can file for bankruptcy. There are some time limits to consider, however, that determine what kind of bankruptcy is available for us to use to help previous filers out of their current debt problems. The good news is that in almost every circumstance, we can craft a solution to your debt issues regardless of your previous bankruptcy history.

The first consideration is whether there was a discharge in the previously filed case. If a case was dismissed without discharge it is likely that the following time limits will not apply. A consultation with an experienced bankruptcy attorney can help sort out what kind of bankruptcy we can help you with.

If the case you previously filed was a Chapter 7 or straight bankruptcy:

You cannot file and receive a discharge in another Chapter 7 for eight years from the previous case’s filing date.

You can file a Chapter 13 or reorganization bankruptcy to stop all collection efforts and force creditors to take what the law says you can afford to pay them anytime after a Chapter 7 filing. If a Chapter 13 bankruptcy is filed within 4 years of the prior Chapter 7, you will not receive a discharge on the balances of the debts at the end of a plan. A Chapter 13 filed 4 year after the previous Chapter 7 case does result in a discharge of your debts.

If the case you previously filed was a Chapter 13 or reorganization bankruptcy:

You are eligible to file a receive a discharge in a Chapter 7 bankruptcy 6 years after the previous Chapter 13 case’s filing date. You are eligible to file a Chapter 7 bankruptcy with no waiting period if you paid back 70% or more of your unsecured debts in the prior Chapter 13.

In what is a rare occurrence, a person who files a Chapter 13 bankruptcy and receives a discharge, cannot receive a discharge in a subsequent Chapter 13 case filed within 2 years of the previous case’s filing date.

A consultation with an experienced bankruptcy attorney can help you sort out how best to get a fresh start free from debt.  Please feel free to call us now at 317-759-1483 or send us an email to schedule a free consultation with an attorney to review your personal situation.

Posted in Bankruptcy Basics, Debt Relief Solutions | Leave a comment