The truth is, there is no set minimum debt amount required to file for bankruptcy protection. However, that doesn’t mean bankruptcy is the best option for everyone with debt. Before taking the step toward filing for bankruptcy, it’s crucial to know all your debts, understand your specific circumstances, the types of debt you have, and whether bankruptcy can provide the fresh start you need.

In this comprehensive guide, we’ll explore when filing for bankruptcy makes sense, how to determine if you qualify, the obligations that can be discharged, and the pros and cons of the different bankruptcy chapters.

Sawin & Shea, LLC: Your Trusted Guide to Financial Freedom Through Bankruptcy

If you’re a resident of Indiana struggling with overwhelming debt, the thought of filing for bankruptcy may have crossed your mind. While the process can seem daunting, partnering with the right legal team can make all the difference in navigating the complexities of the law and securing the fresh start you deserve. Enter Sawin & Shea, LLC – a firm with over 50 years of combined experience in bankruptcy services, dedicated to providing compassionate and non-judgmental representation to individuals and families in need.

At Sawin & Shea, LLC, our team of seasoned attorneys understands the weight of financial stress and the toll it can take on your well-being. With a deep commitment to personalized service, we take the time to understand your unique circumstances and tailor our approach to your specific needs. Whether you’re facing foreclosure, repossession, wage garnishments, or relentless creditor harassment, our expertise in bankruptcy law can offer the protection and relief you’ve been seeking.

One of our firm’s key strengths lies in our comprehensive understanding of both Chapter 7 and Chapter 13 bankruptcy options. If you qualify for Chapter 7 bankruptcy, our attorneys can guide you through the process of eliminating unsecured debts, such as credit card balances, medical expenses, and personal loans, within a matter of months. This powerful solution can immediately halt creditor harassment, wage garnishments, and lawsuits, allowing you to breathe a sigh of relief and regain control of your financial life.

What sets Sawin & Shea, LLC apart is our commitment to clear communication and accessibility. Our attorneys take the time to explain the bankruptcy process in a straightforward manner, ensuring you understand your rights and obligations every step of the way. We offer evening and weekend appointment options to accommodate your busy schedule, and our flexible payment plans make our services accessible to those in financial distress.

With a team of seasoned attorneys, you can trust that your bankruptcy case is in capable hands. If the weight of debt has become too heavy to bear, don’t hesitate to take the first step towards financial freedom. Contact Sawin & Shea, LLC today for a risk-free consultation and let our team of dedicated professionals guide you through the bankruptcy process with compassion, expertise, and a commitment to securing the best possible outcome for your unique situation.

When You Have Too Much Debt to Handle

Sometimes debt can pile up to the point where making even minimum payments feels impossible with your current income. Credit card balances, personal loans, and other unsecured debts can quickly spiral out of control, especially when combined with secured debts like a car loan or mortgage. A high interest rate makes it even harder to make progress paying down balances.

If you find yourself missing payments and looking to borrow money due to so much debt compared to your gross income, bankruptcy may be an option to regain your financial footing. Bankruptcy filers with income below their state’s median can potentially qualify for Chapter 7 to discharge many debts. However, certain debts like child support, alimony, and other domestic support obligations cannot be eliminated. Student loans are also difficult but not impossible to discharge in bankruptcy.

For wage earners with regular income above the median, Chapter 13 bankruptcy allows you to consolidate payments through a court-approved wage earner’s plan. Rather than settlements or minimum payments to each creditor, a single payroll deduction is made to fund your plan over 3-5 years.

Bankruptcy Law Provides a Fresh Start

While bankruptcy brings a negative mark on your credit report for up to ten years, it allows you to get out from under crushing debt you simply can’t repay. By filing for bankruptcy and receiving a discharge, you can prevent garnishments, foreclosure, vehicle repossession, and harassment from creditors and debt collectors.

Bankruptcy law was created to give debtors a true fresh start and pathway to rebuilding wealth. After bankruptcy, you can obtain new credit through a secured credit card or borrow more money through other means without old obligations weighing you down.

Just be sure to hire an experienced bankruptcy lawyer to correctly file all the required paperwork with the courts and properly list all assets, your bank account, and creditors. Bankruptcy legal fees are an investment in finally resolving your debt for good.

How Much Debt Is Enough? Do You Have Enough Dischargeable Debt to File Bankruptcy?

While there is no minimum debt amount for filing for bankruptcy, you’ll want to make sure you have enough dischargeable debt to make filing worthwhile. Dischargeable debts are those that can be eliminated through bankruptcy.

Some common dischargeable unsecured debts include:

• Credit card debt
• Personal loans
• Medical bills
• Utility bills
• Certain types of obligations without collateral

However, all your debts cannot be discharged, even when you file bankruptcy.

These non-dischargeable debts include:

• Most student loans
• Child support and alimony obligations
• Most tax debts
• Court fees, fines, and penalties
• Obligations from personal injury cases involving DUI

If the majority of your debt burden consists of non-dischargeable obligations like student loans or tax debt, bankruptcy may not provide significant debt relief. Take a close look at your debt breakdown to determine if you have enough tax debts and other obligations to make filing worthwhile.

The Bankruptcy Means Test

Even if you have considerable dischargeable debt, you’ll still need to pass the bankruptcy means test to qualify for Chapter 7 bankruptcy, which is a liquidation of assets to pay off creditors.

The means test compares your current monthly income to the median income for a household of your size in your state. If your income exceeds the median, you may not be eligible for Chapter 7 bankruptcy unless you can demonstrate special circumstances that would allow your filing.

For example, in Indiana, the current median annual income is:

• 1-person household: $60,351
• 2-person household: $77,580
• 3-person household: $91,461
• 4-person household: $105,581

If your household income is higher than the median for your household size, you may still be able to file Chapter 7 bankruptcy if you can pass the full means test calculation that factors in certain allowed expense deductions from your income.

Those who don’t pass the test according to bankruptcy laws are still eligible for Chapter 13 bankruptcy, which involves a court-approved debt repayment plan rather than liquidation.

Secured Debt vs. Unsecured Debt

Not all debts are treated equally in bankruptcy court. It’s critical to understand the difference between secured and unsecured debts according to bankruptcy code.

Secured obligations have collateral attached, such as a mortgage secured by your home or an auto loan secured by your vehicle. With secured debts, your creditors have the right to seize the collateral property if you default on payments.

In contrast, unsecured debt from unsecured creditors doesn’t have collateral attached. Credit card balances, personal loans, medical bills, and utility bills are generally unsecured debt.

Both secured and unsecured debts can typically be discharged in bankruptcy. However, handling secured obligations requires some additional considerations:

Chapter 7 Bankruptcy and Secured Debts

In Chapter 7 liquidation bankruptcy, you have three main options for dealing with secured debt:

1) Surrender the collateral back to the lender to discharge the debt

2) Reaffirm the debt by agreeing to remain obligated to the original contract terms

3) In some cases, you may be able to “redeem” the collateral by paying the creditor a lump sum equal to the current value

With mortgages and auto loans, many debtors choose to reaffirm and keep the collateral by continuing the monthly payments. Surrendering the home or vehicle can eliminate the debt but also means giving up the property.

Chapter 13 Bankruptcy and Secured Debts

With a Chapter 13 repayment plan bankruptcy, you can often keep secured assets like homes and vehicles while catching up on past-due payments over a 3-5 year repayment period.

By reorganizing secured debts and financial obligations into your repayment plan, Chapter 13 stops foreclosure or repossession, buys you time to get current, and may even allow you to cram down certain debts to lower minimum payments.

When Bankruptcy Makes Sense

In some situations, bankruptcy provides much more powerful debt relief than any alternative.

Here are some cases where filing makes the most sense:

• You have little or no assets to protect, and your debts exceed your ability to repay through other means like debt consolidation.
• When the assets you have are in danger from creditor action.
• Your major debts are dischargeable, such as credit cards, medical bills, personal loans, or payday loans.
• You missed your minimum amount of mortgage or auto payments, and Chapter 13 would allow you to keep the collateral while catching up over time.
• You are stuck in a cycle of barely making minimum payments on debt.
• You are facing lawsuits and judgements.
• Repossessions are pending.

If you’re facing harassment from aggressive debt collectors, considering bankruptcy may be wise simply to get the benefit of the automatic stay that stops creditor actions.

If your disposable income could support a Chapter 13 repayment structure, that option avoids liquidating assets in Chapter 7 bankruptcy. But if your income is below-median and Chapter 7 bankruptcy is a possibility, it may provide the quickest path to a true fresh start.

The Bankruptcy Filing Process

The bankruptcy process begins by having you provide documents and information needed to your attorney so that they can prepare a bankruptcy petition and schedules. You will then complete the required credit counseling from an approved agency. 

Your bankruptcy lawyer will work with you to complete detailed bankruptcy forms that disclose all assets, income, expenses, debts, and creditor information. These forms are filed electronically with the bankruptcy court.

According to the bankruptcy code, next you’ll attend a mandatory 341 meeting of creditors where you are sworn in and questioned by the bankruptcy trustee assigned to your case. The case trustee will examine the paperwork and ask questions to verify details about your assets, income, and debts.

Provided no issues arise at the 341 meeting:

• In a Chapter 7 bankruptcy case, the trustee will take control of any nonexempt assets to liquidate for creditor payouts. You’ll receive your discharge order within 60-75 days.
• In Chapter 13, your proposed 3-5 year repayment plan will go before the bankruptcy judge for confirmation. Upon completing all plan payments and meeting remaining obligations, you’ll receive your Chapter 13 debt discharge order from the court.

While a bankruptcy discharge eliminates your personal liability for the included debts, be aware that it will remain on your credit report for 7-10 years and impact your ability to obtain new credit for a period of time.

The Automatic Stay Provides Relief

One of the immediate benefits of filing bankruptcy is that it imposes an automatic stay. The automatic stay is a federal injunction that stops most creditor actions to collect debts from the moment your bankruptcy case is filed.

Specifically, the stay prohibits creditors from:

• Initiating or continuing any lawsuits
• Demanding payments from the debtor
• Sending letters or making collection calls
• Garnishing wages
• Foreclosing on mortgages or repossessing vehicles
• Shutting off utilities

This provides immediate relief from creditor harassment and legal actions. As long as the stay is in effect, creditors are banned from continuing collection efforts on debts that may potentially be discharged in your bankruptcy.

The automatic stay gives you some breathing room to get your finances in order. It also preserves your assets and income so they can be properly addressed during the bankruptcy process, rather than having them seized by aggressive creditors beforehand.

Making the Right Choice for Your Financial Future

As you can see, there is no universal minimum debt amount required to file for bankruptcy protection. The decision depends far more on your overall financial situation, disposable income, assets, income level, and the types of debts you’re facing.

For some, bankruptcy – whether Chapter 7 or Chapter 13 – is clearly the best path to resolving unmanageable debt and getting a true fresh start. For others, less drastic options like consolidation or debt settlement may allow for repayment without the negative credit impact of bankruptcy.

The key is making an informed choice based on your unique circumstances. Consulting with an experienced bankruptcy lawyer is the best way to understand all of your options and take the smartest next steps for your short-term relief and long-term financial health.

If bankruptcy makes sense for your situation, a qualified bankruptcy lawyer can guide you through every step of the filing process, from credit counseling to the meeting of creditors to your final discharge order. While it’s not an easy decision, bankruptcy was created to give good people an opportunity to recover from crushing debt and rebuild their lives.

Don’t let overwhelming debt drag you down when there are legal solutions available. Take control of your finances once again by exploring all of your debt relief options, including Chapter 7 bankruptcy and Chapter 13 bankruptcy protection in bankruptcy court. The path to becoming debt-free could be closer than you think.

Contact Sawin & Shea, LLC

If you are struggling with overwhelming debt and considering bankruptcy as a potential solution, don’t hesitate to take action. The team at Sawin & Shea, LLC has extensive experience guiding clients through filing bankruptcy. We know how much debt is too much debt and can help you explore all available options to find the best path forward. Don’t let unmanageable debt continue to weigh you down – contact Sawin & Shea today to schedule a free consultation to discuss attorney fees and take the first step towards your bankruptcy filing and financial freedom.

If you’re considering filing Chapter 7 bankruptcy or are going through the process, it’s important to remember that you don’t have to go through the steps alone. Bankruptcy is the best financial option for many struggling with debt, and it may be the right tool to get your finances back on track, rebuild credit, and on the road to homeownership. 

Take control of your finances and learn all about bankruptcy basics by calling the Sawin & Shea administrative office at 317-759-1483 or visiting us online to schedule your free bankruptcy consultation today.

The post How Much Debt Is Needed to File for Bankruptcy? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

This typically occurs because the debtor doesn’t have the money to pay all of their creditors, so they feel they need to rank which ones are more important to pay first. Maybe they got a tax refund and wanted to use the money to pay down some of their debt, or they sold some possessions in hopes of getting the debt under control.

They might give preference to the more aggressive creditors or try to pay off old debt first, but they choose to get one debt paid above all the rest. Under ordinary business terms, that’s sensible. But this decision to prioritize paying a single creditor over another can complicate their case should they decide to start bankruptcy paperwork.

When payments are made to some creditors over others, they can be considered preferential payments according to bankruptcy laws. Though a debtor may have just been trying to do what they thought was best, the bankruptcy court and the bankruptcy trustee may not see it that way.

The preferential payment rule exists to protect creditors, ensuring that they get what they’re owed in the event of bankruptcy. The bankruptcy trustee assigned to the debtor’s case will ensure equal distribution of the bankruptcy estate so that all creditors are paid the maximum amount possible.

Bankruptcy Filing and Preference Payments

When a debtor decides that the best way forward is filing bankruptcy, that’s not a decision that is undertaken lightly. To determine the best way to proceed, and whether Chapter 7 or Chapter 13 bankruptcy are right for you, you should meet with an experienced bankruptcy lawyer.

A bankruptcy lawyer can help you create a strategy to protect your assets and ensure that your bankruptcy petition goes as smoothly as possible.

Before you decide to make any payment that could potentially be construed as a preference payment, consult your attorney. They’ll help you avoid potential pitfalls within the bankruptcy code.

Bankruptcy Code on Preferential Payment

Bankruptcy law is in place to ensure all creditors are paid fairly and to prevent creditors from unfairly pursuing debtors at the expense of other creditors.

If you file for bankruptcy and the court determines that you prioritized paying a creditor over others, the bankruptcy trustee assigned to oversee your case could go to the preferred creditor, get the funds back, and distribute them evenly amongst your creditors.

When a debtor makes a transfer— defined as money paid or a non-monetary act, such as returning goods to the original creditor— to a creditor that qualifies as a preferential transfer, it can be reversed by the bankruptcy trustee to ensure that other creditors are paid.

Preferential payments include:

• Payments made to one creditor on a debt that existed before the time the payment was made.
• Payments exceeding $600 in the 90 days before filing, known as the preference period or look back period
• Payment amounts exceeding the amount that the creditor would have received in bankruptcy
• Payment not made in exchange for new value
• Payment not made in the ordinary course of business or financial affairs between the debtor and the payee

Additionally, the code specifies that these payments must have been made to a “non-insider” creditor. Insider creditors include a friend, family, member, or business associate.

If the payments were made to an insider creditor, the preference period changes from 90 days to within one year of filing.

Secured vs. Unsecured Creditor

A secured creditor has a lien of some kind on a debtor’s property. Bank-owned assets that have a recurring monthly payment, like mortgage payments or an auto loan fall under this category. They can repossess the assets in question if the debtor is delinquent in payment, so there’s less risk in making the loan.

If the debtor’s payment history is in good stead, their assets owned by a secured creditor are safe— their home or their car, for example.

Unsecured creditors lend money without any collateral. These debts are higher risk, as they have nothing to seize if the debtor doesn’t make regular payments.

A good example of this type of creditor is a credit card company; they extend borrowers credit without requiring any collateral. Other regular creditors include utility companies, landlords, doctors or hospitals. Family members. business, or even a general partner, classified as insider creditors, are classified as other unsecured creditors.

Of course, failure to pay unsecured creditors can negatively impact a bankruptcy filer; it can impact their credit score, making it hard to secure other loans. However, these creditors cannot seize assets if they haven’t received payment within the requisite time period.

Preferential Payment Reversals: A.K.A Clawbacks

According to preference rules, the trustee assigned to your bankruptcy case can review the financial transactions that occurred before filing for bankruptcy.

If any payments made to creditors during the preference period are classified as preferential transfers, the trustee assigned to your case can reverse these payments through a preference claim, also known as a clawback.

Preference suits revert any payments deemed to the debtor’s bankruptcy estate. Then, all the funds available will be evenly distributed amongst all creditors, as the trustee demands. Clawback or preference claims are considered a central proceeding in bankruptcy cases.

Not everything can be resolved by a judge in a bankruptcy case unless it is a central proceeding, meaning clawback procedure can and will be resolved in the Bankruptcy Court. There is no way to avoid it if preference payments were made.

Once the money is secured after the preference suit, the trustee will begin distributing funds.

Exceptions to Preference Payment Claims

Of course, a creditor who has been paid won’t be eager to give back money paid by the debtor, even if it could potentially be considered a preference payment. There are exceptions that businesses can claim to keep the money they were paid.

These include:

• If the money was paid in a “contemporaneous exchange for new value,” the subsequent transfer might not be categorized as a preferential transfer. In other words, if the debt incurred was for something new, not an old debt or antecedent debt, it would be classified as a contemporaneous exchange.

• Payments made to regular creditors in the “ordinary course of business” wouldn’t be considered preference payments. If, for example, a debtor had a recurring order set up for their business and, historically, the debtor pays for this order within 30 days and that 30-day payment window is considered to be standard for the industry, payments made within the preference period will likely stand. It’s considered part of the ordinary course of business and the defense applies.

• If a payment was made for a “subsequent transfer of new value,” it could be ineligible for clawback. For instance, if a debtor makes a $30,000 payment to a creditor for an old debt that wasn’t classified as the ordinary course of business, that would be classified as preferential payment. However, if the same creditor provided the debtor with $20,000 of product after that payment was made but the debtor in possession of the product did not make an additional payment, they could argue that they should be able to keep $20,000 of the original $30,000 payment to cover this newly incurred debt.

If a creditor can prove any of the exceptions above, they could be permitted to keep the money paid to them.

Of course, a debtor wants to ensure that all their creditors are paid for services rendered, but the bankruptcy laws must be carefully followed. An experienced bankruptcy attorney can help navigate these challenges.

Avoiding Preference Payment in the Future

Though making a preferential payment is not illegal, and you will not get in trouble for doing so, it is best avoided when possible.

The only time a debtor can face charges for making preferential payments is if they intentionally made them to defraud a creditor or hide money. In this case, you may face criminal charges and risk losing the benefit of having your debt discharged through a bankruptcy filing.

Typically, however, most debtors make preferential payments without realizing they are doing so or because they feel they have no other option. If they have enough money to discharge a debt, they believe it’s the best thing to do under the circumstances.

You will not be punished in these cases, but if you think that you may file for bankruptcy again at some point, it is something to keep in mind when you are determining how to pay each creditor.

How Sawin & Shea, LLC Can Help

If you are concerned about preferential payment affecting your bankruptcy case and aren’t sure what to do, it can be helpful to consult an experienced bankruptcy attorney.

Bankruptcy lawyers handle cases like this every day and will know how to guide you through the process to ensure everything is done correctly.

At Sawin & Shea, we believe in providing compassionate and understanding representation to all of our clients who file for bankruptcy and are determined to help you achieve the best possible outcome.

Our attorneys are highly experienced in bankruptcy cases and are here to help you through the process every step of the way.

If you have any questions about filing for bankruptcy, contact us at 317-759-1483 or send us an email for a free consultation.

The post What Are Preferential Payments in Bankruptcy? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

That said, we’re here to answer common questions regarding the accessibility of bankruptcy information and whether these documents are part of public records. If you have additional questions regarding bankruptcy in Indiana, contact the experienced bankruptcy attorneys at Sawin & Shea. 

Are Bankruptcy Documents Public Record?

The public has access to federal court records, and debtors file bankruptcies in federal court rather than state court. This means that bankruptcy petitions are part of public records. Further, 11 USC 107(a) states that “a paper filed in a case … of a bankruptcy court are public records and open to examination by an entity at reasonable times without charge.” 

Those filing for bankruptcy should expect their records to be available to the public unless a judge decides to seal the case records, which is exceptionally rare. 

What Information Is Kept in Public Bankruptcy Records? 

Those filing for bankruptcy need to expect certain information to be publicly accessible. 

The following details will be available for anyone who looks up a debtor’s record:

• The debtor’s name and contact information
• The filer’s debts, assets, and income
• The bankruptcy case information, including the filing date, type of bankruptcy, discharge date, and bankruptcy status
• The judge’s name
• The bankruptcy trustee’s name
• Information regarding the 341(a) Meeting of Creditors
• The creditors’ names and contact information
• The bankruptcy attorney’s name and contact information

While accessible, public bankruptcy records do not include all of a debtor’s private information. 

Some details that a filer can expect to be excluded from your public bankruptcy records include:

• The names of children under the age of 18
• Their Social Security number
• The month and day of their birthday
• Their financial account numbers

Will My Court Documents Be in Public Records?

If you file for bankruptcy, your petition will be part of public records. As we’ve discussed, the only exception is if a judge decides to seal your case from public view. For that reason, many of those considering bankruptcy worry about friends, family, and co-workers finding out about their filing status. Fortunately, the likelihood of anyone looking up your bankruptcy information is low. 

Information regarding your bankruptcy may be accessible, but it’s highly unlikely that your status will be distributed to the public, meaning that people will likely not find out about your bankruptcy. While there are certainly ways in which someone could look up your bankruptcy records — more on that below — they’ll need a reason to suspect that you filed. To uncover your bankruptcy status, they’ll need to already be searching for your bankruptcy information. If they don’t have a reason to think you’re undergoing bankruptcy, it would be odd for them to look up your filing information, especially because finding your case details is time-consuming and usually costs money. Of course, if someone is wondering about your financial aptitude, they can search to find out whether you have ever filed for bankruptcy. 

Strangely, some jurisdictions publish bankruptcy filings online and in local newspapers, but this is rare. You can find out whether your court will publish your bankruptcy status by contacting them directly, or you can ask a bankruptcy attorney. 

How to Find Bankruptcies on Public Records

Once a debtor files for bankruptcy, the bankruptcy court’s clerk will add their information to the Public Access to Court Electronic Records (PACER) service. Technically, anyone can access PACER, but you must create an account and be willing to pay a fee for each record. 

This is another reason why those filing shouldn’t worry about friends and family finding out — someone would need to be willing to create an account and pay for your record to confirm that you filed for bankruptcy. If they don’t have a reason to look into your bankruptcy, the likelihood of them searching to find your information is low.  

Another method of public access for court documents, public records, and more is the Multi-Court Voice Case Information System (McVCIS). This is an automated service that provides case details in a computer-synthesized voice. The service is available free of charge 24/7, and you can reach it by calling 866-222-8029.  

With PACER and McVCIS, you can learn basic information from a bankruptcy record, including:

• Case filing date
• Name of the debtor 
• Case status 
• The type of bankruptcy, such as Chapter 7 or Chapter 13
• Name of the judge
• Name of the trustee
• Name and contact information of the debtor’s attorney
• Discharge date
• Information about the Meeting of Creditors

In addition to these public methods, there are third-party websites that serve as search engines for court records, such as BankruptcyData and LexisNexis. Like with PACER, you’ll need to pay a fee to access a debtor’s bankruptcy records. 

Contact a Bankruptcy Attorney Today

If you’re considering bankruptcy or are going through the process, it’s important to remember that there’s no shame in filing. Bankruptcy is the best financial option for many inundated with debt, and it may be the right tool to get your finances back on track. 

For bankruptcy assistance in Indiana, contact the experienced bankruptcy attorneys at Sawin & Shea, LLC. You can schedule a free case consultation today online or by calling 317-759-1483.

The post Are U.S. Bankruptcy Court Documents Public? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

The short answer is “yes.” It is possible to file for bankruptcy with no money, but only in very limited circumstances. It is not generally recommended that Debtors take on the task of presenting a bankruptcy case pro se, that is without an attorney. 

In this blog, we’ll discuss how to file bankruptcy with no money. We’ll also unpack paying bankruptcy fees in installments and why it’s best to enlist the experienced bankruptcy attorney. While you can technically file bankruptcy for free without a lawyer, it’s important to retain one if possible. Otherwise, you may make costly mistakes during the filing process that ultimately end up setting your finances back even further. 

How Can I File Bankruptcy Chapter 7 With No Money?

While it’s possible to declare bankruptcy with no money down, you’ll need to file Chapter 7. You’ll also have to prove that you’re not financially able to pay for court fees and other expenses. To waive your fees, your household income must be below 150% of the federal poverty line. For instance, if two people live in your household and your household income is less than $1,822.50, you live below 150% of the poverty line. If you’re unsure whether you qualify based on your household income, consult this helpful chart. 

If you meet this criterion, you’ll then submit Form 103B Application to Have the Chapter 7 Filing Fee Waived. The form will enable you to certify your income to prove that you cannot afford to pay filing fees.The ultimate decision on whether or not to waive the fee is up to the Judge that you are assigned. In the district where I practice, Judges are not going to waive the fee if you have paid an attorney any amount to help you with your case.

Additionally, you’ll need to ask for your required credit counseling and financial management class fees to be waived as well. These fees are typically less than $50 combined, but you can contact the agency or organization administering the counseling and financial management class if you can’t afford them. 

Paying Bankruptcy Fees in Installments

If you’re unable to waive your Court fees, you’ll need to pay a total of $338 for a Chapter 7. This total includes the filing fee, administrative fee, and trustee surcharge, but it does not include your credit counseling and financial management class fees. 

Those unable to afford this fee upfront can apply to pay in installments. You’ll need to fill out Form 103A Application for Individuals to Pay the Filing Fee in Installments. You’ll submit this form along with your bankruptcy petition and your payment plan’s first installment. This first payment is usually around $80, and you’ll make three subsequent payments to cover the $338 in fees. 

Fortunately, filing for bankruptcy places an automatic stay on your assets. With this automatic stay, your creditors won’t be able to garnish your wages, meaning that you can use your earnings to pay your installment plan. However, if you do not make timely installment payments, the Court will dismiss your case and you will once again be at the mercy of your creditors. 

Should I File for Bankruptcy for Free?

If you’re hoping to avoid paying any money when you file for bankruptcy, you’ll likely want to file a Pro Se bankruptcy, meaning you file without the assistance of an attorney. This is fairly common for those hoping to save money during the filing process. However, filing Pro Se bankruptcy carries certain risks and will make the process far more challenging.

The main reason why you’ll want to hire a bankruptcy attorney is for their knowledge and experience. 

When filing bankruptcy, you’ll need to know: 

• What debts are dischargeable
• What assets are exempt and not exempt
• Court rules and procedures

Due to the nuances and complexities of filing bankruptcy, it’s not surprising that Pro Se bankruptcies have a much higher likelihood of failure than bankruptcies assisted by attorneys. The truth is that while you may save money by opting for a Pro Se bankruptcy, you may end up having to pay more in the long run because of mistakes. You might not be able to retain certain exempt assets, or you may fail to discharge your eligible debts. 

Further, the more complex your bankruptcy filing, the more critical it is for you to invest in a bankruptcy attorney. For instance, Chapter 13 is more complicated than Chapter 7 and requires filers to create a repayment plan to pay back creditors. An experienced Chapter 13 bankruptcy attorney can help you navigate this confusing process to ensure you file correctly and with the best payment plan possible. 

Your bankruptcy lawyer will take the stress and guesswork out of the filing process, and they’ll also protect you against creditor harassment. As we’ve discussed, filing for bankruptcy places an automatic stay on your assets, meaning your creditors cannot attempt to recover what you owe, repossess your property, or garnish your wages. That said, it’s common for unethical creditors to unlawfully harass debtors after they’ve already filed for bankruptcy. Fortunately, you can rest assured that an experienced bankruptcy attorney will protect your rights against aggressive creditors. 

Contact a Bankruptcy Attorney Today

While you have every right to file for bankruptcy alone, consider contacting an attorney. An attorney’s guidance will help you file correctly while retaining the most assets possible.

Here at Sawin & Shea, LLC, our Chapter 13 and Chapter 7 bankruptcy attorneys have years of experience assisting those filing for bankruptcy in Indiana, and we’ve helped numerous individuals recover money from abusive creditors. 

You can schedule a free consultation with our attorneys today by calling 317-759-1483 or by filling out this form. 

The post How Can You File for Bankruptcy With No Money? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

What is an Automatic Stay? 

An automatic stay refers to the legal injunction put into place upon filing for bankruptcy. It stops:

• Debt collection efforts
• Foreclosures 
• Wage garnishments
• Civil lawsuits
• Utility shutoffs
• Most other creditor actions to collect pre-bankruptcy debts

The stay helps facilitate the goals of bankruptcy by preventing creditor collection efforts and allowing time for orderly debt restructuring or liquidation. It is one of the fundamental debtor protections under the Automatic Stay in the Bankruptcy Code.  

When Does the Stay Begin?

The automatic stay starts immediately upon filing a bankruptcy petition. For personal bankruptcies, it goes into effect when an individual files Chapter 7 or Chapter 13. At the moment of filing, creditors receive legal notice to halt collection activities.

How Long Does the Stay Last? 

The duration of the automatic stay depends on the type of bankruptcy and whether collection is against the debtor or the debtor’s property.

For Collections Against the Debtor

The stay protecting the debtor typically remains until:

• The debtor receives a discharge 
• The court denies the discharge
• The court dismisses the bankruptcy case

Once one of those events happens, creditors can restart collection efforts for unpaid debts unless those debts receive a discharge, which permanently stops creditors from collecting the debt.  

For Collections Against Property 

In a Chapter 7 case, creditors secured by property collateral have some additional options. Within 30 days of filing bankruptcy, a debtor must file a Statement of Intent regarding secured property. This states whether the debtor will surrender, redeem, or reaffirm secured debts. 

If the debtor fails to redeem, reaffirm, or surrender on time, the stay lifts after the property is abandoned by the trustee, by motion of the creditor, or discharge or dismissal of the case. The creditor can then pursue repossession or foreclosure. A creditor can request relief from stay by motion during the bankruptcy if a debtor lacks equity in the property or fails to provide “adequate protection.”

In a Chapter 13 case, the stay remains in effect as to the property of the estate until the court enters an order lifting or removing the protection. The can happen if a creditor files a motion, if the Debtor’s confirmed plan surrenders the property, upon dismissal of the case, or upon final discharge.

Can Creditors Violate the Stay?

Yes. If a creditor knowingly violates the automatic stay in Chapter 7 or Chapter 13, the court may impose compensatory damages, attorneys’ fees, and punitive damages. Common violations include sending demand letters, making collection calls, or attempting repossession post-bankruptcy. Unfortunately, violations still occur, often because collectors lack notice of the filing.

Put Your Mind at Ease with Bankruptcy Guidance from Sawin & Shea, LLC

The automatic stay in Chapter 13 is a powerful legal shield for debtors upon filing bankruptcy. This injunction generally remains throughout the bankruptcy process until discharge or dismissal. By halting collection pressure, it facilitates debt resolution. While comprehensively prohibiting creditor actions, there are exceptions to the stay that creditors can pursue. Understanding the timeline and contours of the automatic stay can help debtors make the most of its critical protections.

If you are facing bankruptcy, you don’t have to travel the confusing road alone. The bankruptcy attorneys at Sawin & Shea, LLC have years of experience working with cases just like yours.

Contact us at 317-759-1483 or send us an email for a free consultation today!

The post Automatic Stay Timeline appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

In recent years, cryptocurrencies have become incredibly popular, and numerous Indiana residents own different types of digital currencies, such as Bitcoin, Ethereum, Tether, and more. Unlike other investments, these currencies are decentralized, have no association with centralized banks, and have no physical form, existing purely in the digital realm. With that being said, cryptocurrency bankruptcy has also become more common.

Due to the unprecedented nature of cryptocurrencies, many wonder whether these digital holdings are exempt during bankruptcy proceedings. In this blog, you’ll learn all about cryptocurrency and bankruptcies, including whether these investments are exempt.

Is Crypto Considered an Asset?

The money you hold in crypto is considered an asset, and no matter how small your crypto balance is, you’ll need to report it when filing for bankruptcy. Like with traditional types of investments, such as stocks and bonds, you must disclose these digital holdings. 

The fact of the matter is that failing to report the full extent of your assets, including crypto assets, will lead to harsh penalties, as this is considered bankruptcy fraud. Those who commit bankruptcy fraud may face a fine of up to $250,000 and up to five years in prison. 

Is There a Difference Between Cryptocurrency Bankruptcy and Normal Bankruptcy? 

The only difference between a cryptocurrency bankruptcy and a standard bankruptcy is that those with money in crypto need to report the assets. For a standard bankruptcy that doesn’t involve crypto, debtors still need to report all other assets, but they won’t have these digital holdings.

Can I Protect My Cryptocurrency Assets During Bankruptcy?

Those filing for bankruptcy are often able to exempt certain assets, so is it possible to exempt cryptocurrency? 

While no specific exemption protects crypto assets, Indiana filers can guard up to $450 of value in intangible personal property. Intangible personal property includes cash, bank accounts, tax refunds, and cryptocurrency amongst other things cash related.  

If you’re already using the intangible property exemption  to protect other intangible personal property, you won’t be able to exempt your crypto assets. 

What Happens During Cryptocurrency Bankruptcy?

When it comes to crypto bankruptcies, you list the market value of your digital assets in your bankruptcy petition. The value of crypto shifts rapidly, so when listing your digital assets in your bankruptcy petition, you must value these holdings at the date and time in which you file. 

For instance, let’s say that your Bitcoin balance was worth $5,000 last month but only $4,000 this month due to a dip in the crypto market. While it may be tempting to list your crypto balance as being worth $5,000, this is an inaccurate representation of what your digital investment is now worth. You must list the approximate market value of your assets in cryptocurrency when you’re bankrupt. 

What happens next will depend on whether you file for Chapter 7 or Chapter 13 bankruptcy. With Chapter 7, a Chapter 7 Trustee will liquidate all nonexempt assets. Your bankruptcy trustee could sell off your crypto assets to pay back your creditors. 

Chapter 13, on the other hand, involves filers making regular payments for three to five years to pay back creditors. To determine the duration of your payment plan and monthly payments, you must list all of your financial information, including both wages and assets. 

From there, the bankruptcy court will determine how much you must pay back to creditors based on your disposable income and financial situation, including your crypto assets. You’ll likely be able to keep your crypto assets when filing for Chapter 13, but these digital assets can increase the amount you’ll need to pay back to creditors. 

Contact a Bankruptcy Attorney Today

If you’re considering filing for bankruptcy and have crypto assets, it’s important to get in touch with an experienced bankruptcy attorney. These attorneys know the ins and outs of bankruptcy law and can help you navigate the complexities of Bitcoin bankruptcy and other forms of cryptocurrency bankrupt cases. 

For bankruptcy attorneys serving Indiana, contact Sawin & Shea, LLC. We can help you untangle the intricacies of bankruptcy and keep creditors from harassing you. 

You can schedule a free consultation with one of our bankruptcy attorneys today by calling 317-759-1483, or you can schedule your appointment online. 

The post Cryptocurrency Bankruptcy vs. Normal Bankruptcy appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

Here’s what you need to know. 

Vacation in Chapter 7 Bankruptcy

You can take a vacation before filing for Chapter 7 bankruptcy if you’ve already paid for it, you weren’t experiencing financial difficulty at that time, and it’s non-refundable. If you booked it well in advance, your financial situation may have changed significantly. You will need to prove your financial situation was stable when you booked the vacation, or your bankruptcy case may be affected. If the trip is refundable, you may have to liquidate your tickets or vouchers and give that money to your creditors.

The court considers it bankruptcy fraud if you have already filed for bankruptcy and then spent your money on a vacation within three months of filing. Bankruptcy fraud is a federal crime, and the penalties are very steep. It is punishable with up to five years in prison and up to $250,000 in fines that the court won’t discharge in bankruptcy. 

Vacation in Chapter 13 Bankruptcy

In Chapter 13 bankruptcy, the court creates a plan that allows you to pay your debt in three to five years. In this scenario, it is easier to take a vacation because you aren’t asking the court to discharge all your debt. Your attorney can work with your trustee to approve your travel. 

However, taking a trip in Chapter 13 bankruptcy is still contingent on your ability to cover your scheduled loan payments. In addition, you must be mindful about the type of vacation you plan. You filed for bankruptcy because you can’t pay your existing debt. Therefore, traveling to a five-star luxury resort won’t make a great impression on the bankruptcy court. Consider a trip to a national park for free recreational activities such as hiking or cycling, or spend a week at a friend’s beach house within driving distance. 

These are some precautions to consider before taking a vacation during Chapter 7 or Chapter 13 bankruptcy:

• Use a debit card, not a credit card.
• If you’re going overseas, ask for permission from your bankruptcy trustee. 
• Thoroughly fill out a trustee travel request with your reason for traveling, dates, destinations, contact details, and payment information.
• Don’t miss any court deadlines or meetings.
• Use disposable income to pay vacation expenses. 
• Don’t take on new debt.
• Have an emergency fund set aside for unexpected situations while traveling, as some expenses may not be covered by bankruptcy protections.
• Be aware that bankruptcy exemptions and protections may vary from state to state and in different countries. If you own valuable assets or property, consult with your attorney to understand how they may be affected by international travel.
• Stay in regular communication with your bankruptcy attorney while traveling in case any issues or questions arise.

Can I Get a Passport When Going Through Bankruptcy?

The court considers international travel a luxury. Therefore, the U.S. State Department may deny your passport application if you owe more than $50,000 in back taxes. You can expect to wait 90 days after you’ve paid those debts to get a passport. The State Department may also deny a passport if you owe more than $2,500 in child support. 

Can You File for Bankruptcy in Another State?

Filing for bankruptcy in another state is possible, but it typically involves specific rules and considerations. Federal bankruptcy laws apply uniformly across the United States, which means you can file for bankruptcy in a state other than your current residence. However, there are residency requirements that vary depending on the type of bankruptcy you’re pursuing. For Chapter 7 bankruptcy, you typically file in the district where you’ve lived for the greater part of the previous 180 days or where you currently reside. In Chapter 13 bankruptcy, you should file in the district where you’ve had your principal residence or your principal place of business for the majority of the 180 days preceding the filing. While you can file in another state, it’s advisable to consult with a bankruptcy attorney in the jurisdiction you’re considering to ensure you meet all the local requirements and to navigate any potential complexities associated with filing in a different state. Additionally, bankruptcy exemptions, which determine what property you can keep, vary from state to state, so consulting with the attorneys at Sawin & Shea, LLC can help you understand how those exemptions may affect your case.

Do You Need to File for Bankruptcy? We Can Help.

The attorneys at Sawin & Shea, LLC provide compassionate legal representation for people going through bankruptcy. We can help you navigate the bankruptcy process and answer important questions, including, “When should you go bankrupt?” and “Can bankruptcy travel overseas?” Don’t risk sabotaging your bankruptcy by being uninformed about your travel plans. Contact us at 317-759-1483 or send us an email for a free consultation today!

The post Can You File for Bankruptcy While Traveling? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

People file for bankruptcy for any number of reasons, from job loss, to unpaid medical bills, to sky-high credit card bills. And it’s not an uncommon event either– roughly 375,000 people filed for bankruptcy in 2022 alone. 

It’s a good solution for many people because declaring bankruptcy provides some relief from the crushing weight of unpaid debt and helps them make a fresh start.

However, it’s important to note that not all debts are treated equally when it comes to filing for personal bankruptcy. There are some debts that filing for bankruptcy will not discharge. 

Read on to discover what debts are not discharged in bankruptcy. 

What’s the Difference Between Chapter 7 and Chapter 13?

Put simply, Chapter 7 is all about liquidation while Chapter 13 is about reorganization. What do we mean by this?

In the case of a Chapter 7 bankruptcy, the court appoints a trustee who is in charge of selling off (liquidating) a declarer’s non-exempt assets. Assets that do not fall within the statutory exemption values are liquidated and the proceeds used to pay your creditors something. However, the declarer is still responsible for paying non-dischargeable debt even after the process is complete. 

Chapter 13 involves a 3 to 5 year plan to repay a portion of debt as determined under bankruptcy law. If the declarer keeps to the agreement, then at the end of the period, they can keep their otherwise nonexempt assets, and all most types of remaining debts are discharged.

What’s the Difference Between Dischargeable and Non-Dischargeable Debt?

It is important to understand that in either form of bankruptcy (Chapter 7 or Chapter 13), there are types of debt that cannot be discharged even after filing for bankruptcy. 

In broad terms, bankruptcy law differentiates between consumer-related debt as well as secured vs. unsecured debt. If a debt is secured, it means it is backed up by collateral property. If a debt is unsecured, no collateral is put up as a guarantee to pay. 

Dischargeable debt would include things like:

• Medical bills
• Credit card bills
• Utility bills
• Back rent
• Personal loans
• Repossession balances

At the end of the bankruptcy process, the remaining balances for these types of unsecured debts will likely be forgiven. 

Non-dischargeable debt would include things like:

• Some state, local, and federal taxes
• Child support, spousal maintenance and/or other debts dedicated to family support
• Student loans (see below about discharging student loans in a bankruptcy)
• Court fees
• Punitive debt (more on that below)
• Credit purchases of $1,150 or more for luxury items made within 60 days of filing, if an adversary proceeding deems the debt not discharged.

A Special Note About Student Loan Debt

Can student loans be discharged in bankruptcy? While it is possible to petition the court to discharge student loans via bankruptcy, the reality is that it can be a significant challenge for most people to meet the requirements. 

The court views certain debts as ‘non-priority’ and others as ‘priority,’ based on when and how they should be paid. Typically, student loan debt is considered a non-priority and so isn’t likely to be paid before other priority debts like child support, alimony, and unpaid taxes. 

The only exception is if you can prove that your student debt presents undue hardship to yourself and your dependents through a separate legal proceeding called an Adversary Complaint. The process for proving hardship is complex and can be intimidating for most, which is why it’s important to consult with an experienced bankruptcy attorney.

Are Punitive Damages Dischargeable in Bankruptcy?

Punitive damages are typically not dischargeable in bankruptcy. These damages are often assessed as a form of punishment for particularly egregious conduct, such as intentional harm or gross negligence, rather than as compensation for a specific loss. Bankruptcy laws generally prevent the discharge of debts arising from willful and malicious actions or debts incurred through fraudulent behavior. Since punitive damages are associated with intentional wrongdoing or misconduct, they usually fall under this category of nondischargeable debts. These type of debts, generally, are discharged unless the creditor files a special lawsuit in the bankruptcy asking the court to declare them not discharged, However, it’s essential to consult with a bankruptcy attorney for precise guidance on your specific situation, as bankruptcy laws can be complex and subject to interpretation.

Sawin & Shea: Experienced Indiana Bankruptcy Attorneys

Laws around bankruptcy are complex and are constantly changing. For the best advice and to ensure that your bankruptcy process will proceed as smoothly as possible, your best choice is to hire an experienced lawyer. 

An attorney with experience in bankruptcy law can help you with filings and guide you through the complicated, often confusing process. The Indiana bankruptcy attorneys at Sawin & Shea, LLC have been helping people navigate the bankruptcy process for years. If you’re considering filing for bankruptcy, we’d love to schedule a free consultation with you today-317-759-1483. 

The post What Debts Are Not Discharged in Bankruptcy? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

Bankruptcy is an opportunity for someone to forge their way through what seems like an impossible debt-ridden situation and come out the other side. It is a legal way of either consolidating or discharging allowable debts in order to get a fresh start. Although businesses can also declare bankruptcy, we will focus on personal bankruptcy in this article. 

In Chapter 7 Bankruptcy, (sometimes misleadingly described as liquidation bankruptcy), certain debts are discharged within 3-4 months. After taking a means test, you will file papers and a petition with the bankruptcy court. This will immediately stop your creditors from being able to contact you to demand payment. 

You and your bankruptcy attorney will next attend either a creditor meeting or a 341 hearing with your court-appointed bankruptcy trustee. At this hearing (which is not in a courtroom and does not have a judge), your documents will be checked for authenticity, and you will establish your assets, liabilities, expenses, and income.      

Chapter 13 Bankruptcy is a Federal Bankruptcy Court-sanctioned debt reorganization plan. It works through reorganization, as opposed to liquidation, and you do not have to pass the Chapter 7 means test. You are not allowed to have more than $465,275 of unsecured debt (such as credit card or medical debt) or more than $1,395,875 of secured debt (such as a house, property, or vehicle).

Under Chapter 13 Bankruptcy, you have time and a plan in which to repay your debts. For many of them, such as alimony, child support, and secured debts, you will pay the entire amount, but for some unsecured debts, you may end up paying only what the court decides you can afford and is feasible, given your income. 

Which Debts Cannot be Discharged in Bankruptcy? 

Section 523 of the United States Bankruptcy Code explains which debts cannot be discharged in bankruptcy:

• Child support.
• Alimony payments.
• Car loans (unless you allow your car to be repossessed, in which case you will not owe any past payments).
• Debts from willful and reckless acts, embezzlement, fraud, or larceny.
• Property liens: If you want to keep your house, you will have to pay what you owe on the mortgage and keep payments current. If you allow the bank to take your house, these debts will be discharged.
• HOA fees: As with your car and house debts, this depends on what you decide to do. If you keep your house, you will need to pay all HOA fees that you owe and continue to pay future fees as they are due. If you do not keep your house, your HOA fees will be discharged.
• Certain taxes: Your bankruptcy attorney will be able to provide more details about this but debts to the IRS or to the Indiana Department of Revenue that are older than 3 years may be discharged. 
• Most federal student loans.
• Court fines.
• Unscheduled debts: These are debts you neglected to list when you filed for bankruptcy. 

Which Debts Can be Discharged in Bankruptcy? 

• Medical bills.
• Credit card debts: Keep in mind the fact that you cannot buy more than $1,150 of luxury goods within 60 days of filing for bankruptcy.
• Overdue utility bills: This doesn’t mean that you will be absolved of all future utility bills, but it does prevent utility companies from being able to shut off your water or electricity because of past bills. 
• Civil court judgments (not counting anything that was based on fraud).
• Rent that is past due.
• Personal loans.
• “Payday” type loans.
• Collection agency bills.
• Dishonored checks (unless they were based on fraud).

You will be required to complete a financial management course before your bankruptcy is complete. 

Chapter 7 Bankruptcy Discharge

After approximately 4 months, the court will issue a bankruptcy discharge. You will no longer owe most of your debts and a copy of the order of discharge will be mailed to the applicable creditors. They will no longer be allowed to contact you to demand payment of the discharged debts, and you will be free to start rebuilding. The bankruptcy will remain on your record for 7-10 years. 

Chapter 13 Bankruptcy Discharge

Under Chapter 13 Bankruptcy proceedings, your debts will not be discharged as quickly as in Chapter 7. Your debt reorganization plan will last between 3-5 years, and only when it is completed will you receive your discharge. 

However, your creditors will not be allowed to try to collect from you while you wait to have your debt discharged and your debts will be frozen in an automatic stay, so you will not be foreclosed on or lose your vehicle as long as you make the agreed-upon monthly payments to your trustee.

Chapter 13 Bankruptcy is sometimes called “the wage earner’s plan.” Because you either repay all or most of your debt, it doesn’t stay on your credit report as long as a Chapter 7 Bankruptcy does. It is generally removed automatically 7 years after the date you file your bankruptcy.

If you have questions about how to apply for bankruptcy discharge, consult an experienced bankruptcy attorney to make sure that it is the right choice for you, and if so, to help you navigate the myriad Indiana bankruptcy laws.

At Sawin & Shea, LLC, we understand that hiring an attorney to help you file bankruptcy is scary. We are committed to providing compassionate and non-judgmental representation to all of our clients. Our attorneys know exactly what is a discharged bankruptcy and have helped thousands of people just like you get the fresh start they deserve. We are here to help.

Speak to an attorney today at (317) 759-1483 or contact us online. 

The post Discharge in Bankruptcy – Bankruptcy Basics appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

A recent survey from Capital One reports that 73% of Americans name financial concerns as their number one source of stress. When it comes to financial worries, they can be many and complex: Am I making enough? How will I get under my debt? Will I be able to retire comfortably? Am I okay if an emergency happens?

If worries about debt resonate with you, again, you’re not alone. The typical American household carries an average of $101,915 of debt contributing to a staggering $17 trillion of personal debt as a nation as of the end of 2023’s first quarter.

With these kinds of figures, it isn’t surprising that we often get the question from clients: Does filing for bankruptcy eliminate debt?  And we have the answer.

Bankruptcy Explained

Bankruptcy is a powerful legal process that can help individuals or businesses that are overwhelmed by debt get a fresh start and a path to rebuild.

Before you decide if bankruptcy is the best option for you, it’s important to understand the two different types of bankruptcy that are available to individuals: Chapter 7 bankruptcy and Chapter 13 bankruptcy.

Chapter 7 is also known as the “liquidation bankruptcy” because it allows individuals to liquidate all non-exempt assets to help pay off their debt. Most Debtors, however keep everything they have. If there are non-exempt assets, once these assets are liquidated and paid toward your debt, the remaining balance of your debt is completely discharged. Chapter 7 bankruptcy is usually a faster process and may be considered a “fast bankruptcy,” that immediately gets the filer out from under the weight of their debt.

Chapter 13 bankruptcy is different in that it serves as a way for individuals to reorganize their debt and create a plan to pay into a plan under the court’s protection over the course of 3-5 years. With Chapter 13, your debt would be restructured and you would make a monthly payment to a bankruptcy trustee. Once the trustee receives these funds, they then pass them on to creditors to put toward your debt. Filing Chapter 13 is most beneficial for those who want to keep any non-exempt assets they may have. It also can help people who do not qualify for a Chapter 7 and people who need to catch up on things like houses or cars.

Which Bankruptcy Clears All Debt?

The answer to this isn’t quite this straightforward. Here are the processes for each to better understand what happens to your debts and assets when you file. 

If you’re looking for immediate debt relief and you’re hoping to immediately begin building back your good credit, Chapter 7 would be the best fit for you and your goals. 

With Chapter 7 bankruptcy, you’ll be able to eliminate most unsecured debts, which includes:

• Credit card debt
• Medical debt
• Personal loans
• Payday loans
• Utility bills

It’s important to keep in mind, though, that Chapter 7 will not eliminate all kinds of debt. Examples of secured debt that Chapter 7 does not eliminate include:

• Student loans (unless you can prove undue hardship)
• Certain types of tax debt
• Child support or alimony

Chapter 7 can eliminate secured debts like mortgages and cars only if you surrender your interest in the collateral. To keep thing like houses and cars through a Chapter 7 you will need to reaffirm the debts on the house or car and maintain regular payments.

Unlike Chapter 7 bankruptcy, Chapter 13 allows debtors to create a repayment plan over three to five years. With Chapter 13, a wide range of debts can be included in the plan, making it a flexible solution for those facing various financial challenges. The types of debt included are similar to Chapter 7, but Chapter 13 does not only discharge debt. Chapter 13 can help debtors protect non-exempt assets that might be at risk in Chapter 7. Chapter 13 is good at helping people get caught up on things that they are behind on, and want to keep like houses and cars. If a prospective debtor is not eligible for a Chapter 7, a Chapter 13 can force creditors to take what the law requires they pay them, and then they can get a discharge at the end of the plan on the unpaid balance of most unsecured debts.

Where Do I Go From Here?

Before going in, know that filing for any type of bankruptcy can seem like an overwhelming process. However, you’ll probably find it isn’t nearly as overwhelming as the debt you’re sitting under.

That’s why it’s important to partner with the right experts who can guide you through the process from start to finish and eliminate a lot of your stress and all of your confusion. For an expert and inexpensive bankruptcy, Sawin and Shea, LLC is the firm you should turn to. With over 70 years of combined bankruptcy experience, there’s nothing we haven’t seen or experienced when it comes to bankruptcy. 

If you’re stressed you’re ready to begin looking at options to get out from under your debt, contact us today for a free consultation to discuss what is best for you and your current financial situation. 

The post Does Filing for Bankruptcy Eliminate Debt? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.