If you’ve gone through a Chapter 7 bankruptcy, you may be wondering if homeownership is still possible for you, especially if your credit has taken a major hit.

The good news is that you can eventually buy a house after bankruptcy, and having a cosigner can even help improve your chances.

Understanding the Home Buying Journey with Co-Signers and Bankruptcy

Before we dive into the specifics of buying a house after Chapter 7 with a cosigner, it’s essential to understand what a cosigner is and how bankruptcy affects them.

A cosigner is someone who agrees to be equally responsible for repaying a loan or debt if the primary borrower fails to make the payments.

In the case of mortgage loans, a cosigner essentially guarantees that the lender will receive the monthly payments, even if the primary borrower defaults.

When you file bankruptcy with Chapter 7, your qualifying debts are discharged, meaning you’re no longer legally obligated to pay them. However, this discharge only applies to you, the primary borrower – it doesn’t absolve co-signers from their responsibility to repay the debt.

This means that if you have a cosigner on a loan before you filed bankruptcy, they may be on the hook for the remaining balance after your bankruptcy process is finalized.

The lender can pursue legal action against your cosigner to collect the debt, and late or missed monthly payment can negatively impact their credit score and credit history.

Can a Co-Signer Help You Buy a House After Bankruptcy?

While having a cosigner doesn’t automatically guarantee that you’ll be approved for a mortgage loan after bankruptcy, it can certainly improve your chances. Lenders typically view a mortgage application with a cosigner more favorably because there’s an additional party responsible for making the loan payments.

However, it’s important to note that even with a cosigner, you’ll still need to meet the minimum credit score, waiting period, and other requirements set by the mortgage lenders and the specific loan type you’re applying for.

Additionally, lenders will likely consider the lower credit score between you and your cosigner when evaluating your mortgage application for an FHA loan or a conventional loan for a house after bankruptcy.

Remember that in most cases, you’ll need to wait 2-4 years after your Chapter 7 bankruptcy discharge or dismissal date before lenders will consider your home loan application.

Loan Types

Here’s a breakdown of the different loan types and each respective waiting period after a Chapter 7 bankruptcy discharge:

FHA (Federal Housing Administration) Loans: Lower than most conventional loans, a 2-year waiting period and a base credit score of 580 (or 10% down payment if your score is between 500-579) are expected with an FHA loan for a house after bankruptcy

VA Loans: Similar to an FHA loan, a 2-year waiting period and a base credit score typically around 620, also seen with a conventional loan, are common for VA loans

USDA Loans: With USDA loans, the regulations are more strict than with an FHA loan or a VA loan. Expect a 3-year waiting period and a required base credit score of 640

Conventional Loans: For a conventional mortgage, you’ll see 4-year waiting periods, longer than the FHA loan, USDA loan, or VA loan, and a base credit score of 620

It’s worth noting that these waiting periods are the minimum requirements set by the respective agencies.

Some mortgage lenders may have stricter guidelines and require longer waiting periods, even with a cosigner for each home loan type.

During this waiting period time frame, focus on rebuilding your credit through smart financial habits and reach out to lenders and real estate professionals when you’re ready to get pre-approved for a home loan.

Additionally, if your bankruptcy was caused by extenuating circumstances beyond your control (such as a job loss, medical bills, divorce, or other financial situation), you may be able to qualify for a mortgage sooner than the typical waiting periods to buy a house.

Down Payment and Mortgage Insurance Requirements

Another factor to consider when buying a house after Chapter 7 bankruptcy is having enough saved for a down payment and qualifying for acceptable terms.

In addition to the waiting period, different loan types have different down payment and mortgage insurance requirements:

FHA Loans: Usually require a minimum 3.5% down payment. You’ll also need to pay annual insurance premiums for the life of FHA loans unless you eventually refinance to a conventional loan.

VA Loans: No down payment is required if you have full VA loan entitlement. The VA also does not require any upfront or annual insurance.

USDA Loans: USDA loans require no initial payment, but the home must be in an eligible rural area as defined by the United States Department of Agriculture. Annual insurance fees apply for the life of the USDA loan.

Conventional Loans: Most lenders will want you to put at least 20% down to avoid paying private mortgage insurance (PMI). But some allow Fannie Mae or Freddie Mac conventional loans with just 3% down if you have good credit when you apply for a mortgage.

Risks and Considerations for Co-Signers

While having a cosigner can undoubtedly improve your chances of getting approved for a mortgage after bankruptcy, it’s crucial to understand the risks involved for the cosigner.

As mentioned earlier, when you file for Chapter 7, your cosigner remains legally responsible for repaying the debt.

If you default on the mortgage, your co-signer’s credit score and financial situation could be severely impacted. The lender may even pursue legal action against them to recover the outstanding balance.

It’s essential to have an open and honest conversation with your potential cosigner, ensuring they fully understand the risks they’re taking. They should be prepared to make the mortgage payments in full if you’re unable to do so for any reason.

Additionally, it’s important to differentiate between a co-signer and a co-borrower. A co-borrower is equally responsible for the mortgage loan from the outset, whereas a cosigner is only liable if the primary borrower defaults.

Rebuilding Your Credit After Bankruptcy

Regardless of whether you have a cosigner or not, rebuilding your credit after bankruptcy is crucial if you want to improve your chances of getting approved for a mortgage loan.

Here are some tips to help you rebuild your credit after a Chapter 7 bankruptcy:

1. Obtain a free credit report from the three major credit bureaus (Experian, Equifax, and TransUnion) and dispute any errors or inaccuracies.

2. Make all future loan and bill payments on time, as payment history is a significant factor in your credit report and on your credit score. Lenders want to see a solid history of making on-time payments for all your bills and responsibly managing your financial obligations before approving you for a mortgage after bankruptcy.

3. Consider getting a secured credit card or credit-builder loan to establish a new, positive credit history while making on-time payments. With a secured credit card, you put down a refundable security deposit that becomes your spending limit. Then make a small charge each month and pay it off in full. This helps create a positive payment history on your credit report.

4. Keep your credit utilization low by paying down high-interest debt like credit cards, car loans, and personal loans when working toward owning a house after bankruptcy.

5. Avoid taking on new debt, unsecured debts, or a car loan until your credit score improves.

6. Credit-builder loans are another option to build credit by making scheduled payments to yourself that are reported to the credit bureaus. Be wary of unsecured credit cards and other new debt until your credit score fully recovers.

By following these steps and being patient before you apply for a mortgage, you can gradually rebuild your credit and increase your chances of getting approved for a mortgage loan after bankruptcy, with or without a cosigner.

Writing a Letter of Explanation

In addition to rebuilding your credit, mortgage lenders will often require you to write a letter of explanation detailing the extenuating circumstances that led to your bankruptcy filing.

This letter is an opportunity for you to provide context and demonstrate that you’ve taken steps to address the underlying issues that caused your financial difficulties.

In your letter, be sure to explain the extenuating circumstances that led to your bankruptcy (if applicable), such as job loss, medical bills, or divorce.

Describe the steps you’ve taken to improve your financial situation, such as developing a budget, paying down debts, and establishing new, responsible credit habits.

A well-written letter of explanation can go a long way in convincing mortgage lenders that you’re a responsible borrower who has learned from past mistakes and is committed to making on-time mortgage payments beyond the extenuating circumstances that prohibited you before.

Working with Real Estate Agents and Getting Pre-Approved

Once your waiting period after bankruptcy is over and you’ve made significant progress rebuilding your credit score, it’s time to start seriously pursuing home loans again. A crucial early step is getting pre-approved for a mortgage.

A pre-approval letter from a lender shows real estate agents and home sellers that you are a qualified, motivated buyer. It gives you a clear price range to shop in based on your income, debts, and credit profile.

The pre-approval process also allows the lender to check that you meet the requirements for home loans like Fannie Mae or Freddie Mac conventional loans.

When applying for pre-approval, be prepared to provide documentation like W2s, pay stubs, tax returns, and bank statements. The lender will want to see that you have been making on-time payments on all bills and obligations post-bankruptcy. They’ll also need to verify that your Chapter 7 case was discharged by the court.

Know Your Options: Buying a House After Chapter 7 with a Co-Signer

While filing for Chapter 7 can undoubtedly make the home-buying process more challenging, it’s not an insurmountable obstacle.

By understanding the waiting periods for different loan types, rebuilding your credit, and considering the option of having a cosigner, you can increase your chances of getting approved for a mortgage loan after bankruptcy.

Remember, having a cosigner when you apply for a mortgage is not a guarantee of approval, and it comes with significant risks for the cosigner.

Be sure to have open and honest conversations about these risks and carefully consider whether a cosigner is the right choice for your situation.

If you’re navigating the complexities of bankruptcy and homeownership, it’s always advisable to consult with an experienced bankruptcy attorney who can guide you through the legal process and loan terms and help you make informed decisions regarding a home loan.

With patience, diligence, and the right support, you can overcome the challenges of bankruptcy and achieve your dream of homeownership.

Contact Sawin & Shea, LLC for Chapter 7 Bankruptcy Guidance

If you have any other questions about buying a house after multiple bankruptcies, dealing with remaining debt from a previous bankruptcy, bankruptcy court, or ensuring you meet all requirements, it’s wise to consult an experienced bankruptcy lawyer.

They can review your full financial situation and explain all available loan options and waiting period terms as you pursue homeownership after bankruptcy.

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. 

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 Can You Buy a House After Chapter 7 with a Co-Signer? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

Because Chapter 7 involves a Chapter 7 Trustee selling off certain non-exempt assets, many who consider this bankruptcy method worry about what assets and possessions they can retain. Fortunately, the vast majority of those filing are able to keep all of their possessions.

That said, no two bankruptcy cases are the same, and your Chapter 7 liquidation process will depend on your individual circumstances. Though most Chapter 7 cases are what we callf “no-asset cases” meaning you keep all of your possessions. To fully gauge what you may lose, it’s best to get in touch with a bankruptcy attorney who can give advice and guidance as you undergo your bankruptcy filing to discuss your personal assets.

For experienced bankruptcy lawyers in Indiana, contact Sawin & Shea, LLC. We’ll help you understand what personal property and other assets you can keep and identify assets that may be at risk, and we’ll guide you through the entirety of your bankruptcy case.

In this blog, we discuss what assets and property a debtor may lose in Chapter 7 bankruptcy. We’ll unpack the difference between an exempt and non-exempt asset, and we’ll discuss what debts you can discharge.

What Is Chapter 7 Bankruptcy?

Chapter 7 is also known as liquidation bankruptcy because it involves liquidating (selling off) non-exempt assets belonging to the debtor to repay creditors and lenders. The bankruptcy trustee will sell your non-exempt assets to pay a portion of your debts to creditors. You’ll then be able to discharge the balance of eligible debts, such as credit card debt and medical bills.

You’ll need to complete the bankruptcy process before discharging your debts, but filing has immediate benefits, including an automatic stay. The automatic stay prohibits creditors and lenders from attempting to recover what you owe. They cannot take legal action against you or seize your assets.

Chapter 7 Means Test

Not every debtor is eligible for Chapter 7 bankruptcy, and higher-income earners are less likely to qualify. As part of the bankruptcy paperwork process, your attorney will run an income-based test called the Means Test. This is a test that determines if you are eligible for a Chapter 7 bankruptcy. If you are not, this test determines how much you are required to pay back to your unsecured creditors in a Chapter 13 reorganization. 

Indiana’s median income changes from year to year. As of 2024, the annual median incomes are as follows:

• 1 Member Household – $60,351
• 2 Member Household – $77,580
• 3 Member Household – $91,431
• 4 Member Household – $105,581
• and add $9,900 for every additional family member

If your income is beyond these limits, you’ll need to complete the means test before filing. This test calculates your disposable income by evaluating your earnings compared to your essential expenses.

There are calculators online, but it’s best to consult with a bankruptcy attorney to ensure you calculate your disposable income accurately. If you file a bankruptcy petition and it turns out your income is too high, the bankruptcy court will dismiss your case.

Some useful documents and information you should bring to your attorney as a debtor to calculate whether you’re eligible for Chapter 7 bankruptcy include:

• Income taxes
• Child care expenses
• Alimony and child support information
• Information regarding your mortgage and car loans
• All of your sources of income
• Your spouse’s income
• Unemployment benefits
• Workers’ compensation benefits
• Indiana government income

In addition to this test, prospective filers must also meet another qualification. They cannot file for Chapter 7 bankruptcy if they’ve already filed within the past eight years. Fortunately, you might be able to file Chapter 13 instead.

Reaffirming Debts in Chapter 7 Bankruptcy

Chapter 7 bankruptcy allows you to discharge your unsecured accounts, but you cannot do away with a creditor’s a security interest, meaning a debt with collateral must either get paid or the collateral property surrendered. Mortgages and car loans are both considered secured debts because they both have backing collateral.

Although you can’t eliminate your mortgage or car loan in Chapter 7 bankruptcy and hold onto the collateral, you can reaffirm these debts. When you reaffirm a debt, you’re essentially agreeing to be liable for the account again despite your bankruptcy.

Your mortgage and car loan lenders will likely be fine with you reaffirming these debts as long as you aren’t behind on payments and the collateral is properly insured. You’ll be able to keep your asset because you’ve reaffirmed your intention to pay off this debt.

Credit Counseling

Before you file your Chapter 7 bankruptcy petition, you’ll need to complete a credit counseling course through an approved counseling agency. The U.S. Bankruptcy Code requires debtors to complete credit counseling courses 180 days before filing.

Filing Your Chapter 7 Petition

After completing credit counseling, your attorney will help you fill out and eventually submit all necessary Chapter 7 bankruptcy forms. These forms will help the bankruptcy court understand your financial situation and why you need to file.

You’re under no legal obligation to have an attorney help you with these forms, but having a legal professional assist you can make the process easier and help you avoid serious issues. Bankruptcy is a complicated process and not understanding the process can lead to serious problems that can lead to a denial of discharge, loss of assets, and dismissal of your case.

Once complete, you’ll file your bankruptcy petition, and you’ll need to pay a filing fee.

The Bankruptcy Trustee

When you file Chapter 7 bankruptcy, the court will assign a trustee to your case. This trustee will be in charge of your bankruptcy estate. They will assess your financial information and debts, and they will inform your creditors about your bankruptcy status.

The bankruptcy trustee is also responsible for selling a debtor’s nonexempt assets to repay creditors.

The Meeting of Creditors

Your court-appointed bankruptcy trustee will organize your 314(a) meeting, also called the meetings of creditors. Here, the trustee and any creditors who attend can ask you questions under oath about your finances to ensure you were honest in your bankruptcy petition.

After the meeting, you’ll need to complete an approved financial management course. These courses are intended to educate debtors so that they don’t make the same mistakes that led to their bankruptcy.

Will the Bankruptcy Trustee Sell All of My Personal Property?

The court-appointed trustee will not sell off all of your assets and property. Instead, they’ll merely sell non-exempt property and assets to pay off a portion of debts to unsecured creditors.

Fortunately, exempt assets include necessities, as the liquidation process isn’t supposed to deprive you of property that’s necessary to live and work. We’ll go into great detail about exact Indiana exemptions including non-exempt property and exempt property later in this blog, but let’s first discuss what assets a debtor may potentially lose in Chapter 7 bankruptcy.

What Assets Can I Lose In Chapter 7 Bankruptcy?

Bankruptcy law states that any non-exempt assets can be sold off to pay creditors.

Common types of assets and nonexempt property a debtor could potentially lose in Chapter 7 bankruptcy include:

• Vacation properties
• Investment accounts
• Stocks and bonds
• Rental properties
• Luxury items
• Valuable artwork
• Jewelry
• Antiques
• Lien free vehicles
• Electronics
• Musical instruments
• Real estate.

If you have a great deal of non-exempt assets and own your home, you likely will want to consider Chapter 13 rather than Chapter 7 bankruptcy. That way, you create a payment plan based on your income. You’ll make monthly payments over the course of three to five years, and you’ll be able to keep all of your assets, including your real estate properties and vehicles.

What Are Exempt Assets in Chapter 7 Bankruptcy?

Bankruptcy exemptions in Chapter 7 allow filers to retain certain assets. These exemptions differ from state to state, and federal bankruptcy exemptions are also available in some states. In this section, we’ll detail what assets and property a debtor will be able to keep.

Does Indiana Use Federal Exemptions in Bankruptcy?

Indiana has its own state exemptions, and Indiana residents must abide by these exemptions rather than federal exemptions outlined in the U.S. Bankruptcy Code.

It’s also important to note that new residents may not be able to access Indiana exemptions. A debtor must have lived in Indiana for 730 days before filing in order to benefit from the state exemptions. If a debtor lived in Indiana for less than 730 days before filing, they must follow the asset exemptions of the state where they lived previously.

Indiana Homestead Exemption

The Indiana homestead exemption enables the person filing Chapter 7 to keep a portion of their home’s equity. This will also apply to personal property that classifies as a residence, such as a mobile home.

An important note is that this exemption only includes property that is your primary residence. You cannot use this exemption to protect an asset such as a rental property or vacation home.

The exemption amount is $22,700 of equity in property or real estate. You can also double this amount to $45,400 of equity protection if you’re married and filing jointly. Your spouse must co-own the home in order to double the equity protection.

Unfortunately, you cannot double your exempted amount if you have a non-filing spouse, but if a spouse is on the real estate with you a special exemption could apply. 

Indiana Personal Property Exemption

In addition to retaining equity in your home, Indiana bankruptcy state law includes a personal property exemption that protects tangible property and nonresidential real estate.

This exemption limit is $12,100 worth of tangible property, and this amount doubles when a debtor is married and files jointly with their spouse.

Some types of an asset of tangible property you could protect include:

• Jewelry
• Clothing
• Luxury items
• Antiques
• Equity in vehicles
• Instruments
• Furniture
• Electronics
• Other valuable belongings
• Equity in a rental or vacation property

Further, this exemption allows you to protect $450 worth of an asset of intangible property, once again doubling when you file bankruptcy with a spouse. This includes cash, money in bank accounts as of the filing date, claims against others, money people owe you, stocks, and other cash equivalents. Retirement accounts are generally exempt.

Does Indiana Have a Motor Vehicle Exemption?

State law does NOT feature an exemption for motor vehicles, such as cars, vans, trucks, etc. People filing bankruptcy can protect their vehicles through the personal property exemption. You’ll be able to protect equity in the vehicle(s) to the extent that you have available exemptions.

Other Bankruptcy Exemptions

There are also other important bankruptcy exemptions to consider when filing Chapter 7.

These exemptions include various accounts, benefits, settlements, and property including:

• Your retirement account
• Pension and IRA accounts
• Firefighter pension funds
• Police pension funds
• Legislator benefit plans
• Public employee retirement accounts
• Health savings accounts
• Medical care savings accounts
• Spendthrift trusts
• Indiana State Teachers’ Retirement Fund benefits
• Fraternal benefit society benefits
• Some life insurance policies
• Unemployment benefits
• Workers’ compensation 
• Health aids
• Military equipment, uniforms, and arms
• Specific partnership property

Finally, Indiana allows you to keep part of unpaid wages. This will either be 75% of your unpaid wages or 30 times the Federal minimum wage, whichever is less. An attorney can help determine exemptions in your case.

What Is a Non-Exempt Asset or Non-Exempt Property? What Debts Do I Discharge in Chapter 7 Bankruptcy?

If the bankruptcy trustee sells off your non-exempt assets, they will distribute the proceeds to creditors according to bankruptcy law, and then you’ll be able to discharge most debts that are unsecured. The bankruptcy trustee usually pays off a portion of the money owed to the debtor’s unsecured creditors through the liquidation of the debtor’s assets. Even if you can’t fully pay creditors, you will still be able to discharge your eligible debts.

Common types of dischargeable debt include:

• Credit card debt
• Medical debt
• Repossessions
• Judgements
• Evictions
• Unpaid phone bills
• Personal loans
• Unpaid utility bills

What Debts Can I Not Discharge in Chapter 7 Bankruptcy?

Types of loans and debts are exempt from discharge, including:

• Debt from child support
• Debt from alimony and divorce proceedings
• Student loan debt
• Back taxes from the last three years (and possibly years previous)
• Court penalties and fines owed to governmental agencies
• Debt you owe for a personal injury settlement that occurred because you drove under the influence of alcohol or drugs

Contact a Chapter 7 Bankruptcy Attorney Today

Chapter 7 bankruptcy can be daunting, especially if you’re not sure what assets you risk losing. It’s best to contact a Chapter 7 bankruptcy attorney who can assist you with your bankruptcy case. An attorney who practices in bankruptcy law can help you as the debtor determine asset exemptions and will help you navigate the differences between an exempt and non-exempt asset and get your bankruptcy filed correctly.

Making mistakes during the bankruptcy case process could lead to your case being dismissed. Your legal representative will also help with aggressive creditors and will protect you from harassment from other creditors.

For experienced bankruptcy attorneys in Indiana fluent in bankruptcy code, contact the law office of Sawin & Shea, LLC. We have over 45 years of bankruptcy experience with asset cases and can help you navigate the complexities of Chapter 7 and your assets and other property.

You can schedule a FREE consultation at our office with one of our bankruptcy lawyers today online or by calling our Indianapolis office at 317-759-1483. Our office also offers public assistance for certain legal cases. 

The post What Assets Do You Lose in Chapter 7? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

This debt relief option is the best choice for numerous indebted individuals, and it shouldn’t merely be considered a last resort — It’s a proactive solution that can help you regain financial stability.

Although there’s no reason to feel ashamed for filing, many hold negative beliefs about personal bankruptcy, and they make wrongful assumptions about those who file.

Due to the negative perceptions of bankruptcy, many professionals worry about whether bankruptcy affects their ability to retain professional licenses and certifications. They also wonder how their filing may impact future employment opportunities and their standing with employers.

In this blog, we discuss how Chapter 7 and Chapter 13 bankruptcy, when filed, can affect professional licenses, certifications, your job, and prospective employment opportunities.

How Will Filing Bankruptcy Impact My Professional License?

The short answer is that filing bankruptcy should NOT impact your current professional licenses or certifications. Federal law protects those who file against discrimination, and this includes having your license revoked.

Bankruptcy Code Section 525(a) states that:

“…a governmental unit may not deny, revoke, suspend, or refuse a license, permit, charter, franchise, or other similar grant to…a person that is or has been a debtor under this title or a bankrupt or a debtor under the Bankruptcy Act.”

Your bankruptcy alone shouldn’t affect your professional license, but you may need to report that you declared bankruptcy, depending on your type of license or certification. Ensure you research whether you’re obligated to report your bankruptcy before filing or reach out to an experienced bankruptcy attorney to assist you.

Will Bankruptcy Affect My Ability to Obtain a New License or Certification?

If you file bankruptcy, it could determine your ability to obtain a new professional license. Bankruptcy alone shouldn’t determine whether or not you get or lose the license, but the licensing board or state board will evaluate you holistically. During that process, they may consider your finances, missed payments, and credit, especially if your career requires you to handle money.

Again, bankruptcy shouldn’t be the sole factor in determining whether an applicant can obtain a professional license, but a poor credit report can negatively affect an applicant’s chances. An applicant’s bankruptcy and credit check may also reveal serious issues that may impact their license status, such as fraud.

Professional Licenses and Loan Defaults

While a bankruptcy filing alone shouldn’t ruin your chances of obtaining a license, defaulting on certain loans and debts can. In fact, defaulting may even jeopardize your current license status.

Types of loan and debt defaults that may affect your professional license include:

• Child support
• Student loans
• Alimony

Can My Bankruptcy Filing Affect My Employment?

It is against the law for an employer to fire you on the basis of your bankruptcy, and this includes both government and private employers. Additionally, the Bankruptcy Code states that it’s illegal for employers to demote you or reduce your pay or responsibilities because of your bankruptcy.

If you suspect that you’ve been fired or demoted due to your bankruptcy, you should contact a labor attorney to assist you, as there’s no excuse for workplace discrimination.

While bankruptcy laws prohibit an employer from treating an employee differently, your bankruptcy case may still impact your employment, depending on your profession.

For example, lawyers and real estate agents may be prohibited from holding money or assets on behalf of clients while undergoing bankruptcy and fulfilling financial obligations. That said, these limitations are temporary.

Additionally, bankruptcy may indicate other financial problems that can impact your status with your employer, such as fraud or defaulting on certain loans.

Your employer cannot reduce your pay or fire you because you filed bankruptcy, but they can fire you for fraud, defaulting, and bad credit, especially if you’re responsible for handling money.

Will My Current Employer Find Out About My Bankruptcy?

While you can rest assured that you won’t be fired if you file for bankruptcy, you may still worry that your employer and co-workers will lose respect for you. Again, there’s no reason to feel ashamed if you file for bankruptcy, but it’s understandable to care what others think.

Fortunately, it’s unlikely that your office or other workplace will learn that you filed bankruptcy. You’re under no obligation to disclose your bankruptcy to your company. In most cases, they will not find out.

That said, there are some situations in which your office could learn of your bankruptcy. For example, if your salary payments were garnished to repay creditors, your bankruptcy will halt the garnishment. Your employer will be notified of the bankruptcy in order to stop the wage garnishment.

Additionally, your employer could find out if they run a credit check on you, but they need to receive your permission to check your credit. Further, your employer could require you to receive a new security clearance, and they will likely discover that you filed bankruptcy during that process.

Can Bankruptcy Affect My Future Job Prospects?

Filing bankruptcy can impact your employment opportunities. Bankruptcy laws state that public employers cannot take your bankruptcy into consideration during the hiring process. As we’ve discussed, there may be other reasons related to your bankruptcy that could impact your job application with a public employer — such as defaulting on student loan debt — but the bankruptcy alone shouldn’t compromise your application.

While public employers cannot consider bankruptcy filings when deciding whether to hire you, the law does not apply to private employers. If you apply for a job with a private company, the prospective employer may decide to deny you due to your bankruptcy. Unfortunately, this can cause you to lose potential opportunities, especially if your career involves finances or accounting.

Some of the ways in which private employers discover bankruptcy filings include security clearance background checks and credit checks. Additionally, they can search for your bankruptcy since it’s part of the public record. If your job application requires you to undergo a background or credit check, it’s best to inform the company that you’ve filed.

File Bankruptcy with the Help of an Experienced Lawyer

If you’re considering filing for bankruptcy, it’s best to work with an attorney to help you with your case. For Chapter 13 and Chapter 7 attorneys in Indiana, contact Sawin & Shea, LLC.

Our attorneys have years of experience assisting Indiana professionals through the bankruptcy process, and we can help you get your finances back on track.You can schedule a FREE case consultation today online or by calling 317-759-1483.

The post What Is the Impact of Bankruptcy on Professional Licenses and Certifications? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

They believe those declaring bankruptcy are irresponsible or bad with money.

The truth is that there’s nothing to be ashamed of in filing for bankruptcy — bankruptcy is a great option for debt relief and overcoming financial problems, and filing could be your best option for getting your finances back on track. Additionally, your personal bankruptcy will likely not impact job opportunities with a new employer.

That said, there are some situations in which your current or prospective employer will find out about your filing status.

In this blog, we take a close look at ways Chapter 7 bankruptcy affects future or current employment. If you have additional questions, we encourage you to read our online articles about filing bankruptcy. Additionally, you can reach out to the Sawin & Shea team for further support.

You can get a free consultation by contacting us online or calling us at (317) 759-1483, and we’ll review your personal situation.

What Is Chapter 7 Bankruptcy?

Chapter 7 is often referred to as liquidation bankruptcy. The bankruptcy court will liquidate non-exempt assets in order to pay back some of your debt. Fortunately, most of those who file bankruptcy are able to keep all of their possessions.

This form of bankruptcy differs from Chapter 13, which involves the evaluation of your current income to construct a three-to-five-year debt reorganization plan.

Bankruptcy Court Process

Now, let’s unpack what you can expect in your bankruptcy proceedings. When you file a Chapter 7 petition, you’ll receive an automatic stay protecting you from lawsuits and other collection efforts. This bankruptcy protection will prohibit a collection agency or another creditor from recovering debt or taking action against you.

You’ll also be assigned a trustee to manage your bankruptcy case. The bankruptcy trustee will oversee the process of liquidating non-exempt assets to repay your creditors, and they will organize a 341 meeting, also known as the Meeting of Creditors.

During this mandatory meeting, the trustee and attending creditors, if any, will ask you questions under oath regarding your financial situation. You’re not required to have legal representation in the meeting, but it’s best to have a bankruptcy lawyer to support and assist you.

Completing Chapter 7

To complete Chapter 7, you are required to undergo a finance management course as well as credit counseling. You must complete credit counseling within 180 days of filing your petition, and you’ll need to complete a debtor education course after your Meeting of Creditors.

After completing your required courses and undergoing the liquidation process, you’ll be able to discharge certain debts. The bankruptcy discharge will eliminate your unsecured debts, including unpaid medical bills and credit card debt.

Will My Bankruptcy Filing Impact My Current Employment?

In the event that you file for bankruptcy, it should not affect your current job. It is against federal law for an employer to fire an employee due to their bankruptcy filing, and this applies both to government agencies and private employers.

The U.S. Bankruptcy Code states that filing for bankruptcy can not be considered employment misconduct by a manager or company.

If an employer fires their employee due to a bankruptcy filing, it’s considered employment discrimination, and the former worker can sue them.

Bankruptcy Law

Additionally, bankruptcy law states that your place of employment cannot treat you differently for filing. Your employer cannot reduce your wages, demote you, or strip you of work responsibilities. An employee’s bankruptcy has no bearing on their work performance, and an employer cannot punish them for filing.

If you’ve filed for bankruptcy and it now impacts your current job, you should contact an employment lawyer.

There’s no excuse for workplace discrimination, and your bankruptcy case should have no impact on your status in the company.

Can Bankruptcy Affect My Job Application When Applying for Government Employment?

Government employers are prohibited from considering bankruptcy when determining whether to hire a job applicant. This means that if you apply for a government job, they cannot deny you employment due to your bankruptcy filing status.

Some public employers require job applicants to undergo a background check, especially if they need a security clearance. The government employer will learn that you have filed bankruptcy when you go through this process.

You may find this embarrassing, but the government agency still can’t deny you employment on the basis of your bankruptcy filing.

If you apply for a position with a federal, state, or local government agency, you can rest assured that your bankruptcy won’t get in the way of obtaining a job.

Can Bankruptcy Affect My Job Application When Applying in the Private Sector?

Unlike public employers, private employers can deny you a job for filing for bankruptcy, and bankruptcy can affect future employment in certain occupations. In practice, however, employers discriminating against a potential employee for filing a bankruptcy case is rare.

The way in which these private employers find out about applicants’ bankruptcy statuses is through credit checks. Chapter 7 filings can remain on credit reports for up to ten years.

In addition to bankruptcy issues, poor credit history can impact your ability to secure employment in finance management, and Chapter 7 will negatively impact your credit report.

Your prospective employer needs to obtain your consent before initiating a credit check, but they will likely deny you employment if you refuse to let them see your credit report.

Additionally, your potential employer may require you to obtain a security clearance, especially if the work involves government contracts. As discussed in the previous section, security clearances require background checks, and your employer will learn about your bankruptcy during the process.

There’s no guarantee that they will deny you a job, but they have the right to.

If a company requests to run a credit check or requires a security clearance, it’s likely in your best interest to be honest about having filed for bankruptcy, as they will most likely find out anyway. You do not want to let omitting information about your bankruptcy affect your new job. Fortunately, many private employers will not care about your bankruptcy.

Will My Current Employer Find Out About My Bankruptcy?

As we’ve discussed, your employer may find out about your bankruptcy if you undergo a credit check or a background check for a security clearance.

If you are currently employed and need to file bankruptcy, you may wonder whether your work will find out. Again, potential bankruptcy filers don’t need to worry about losing their jobs, as this is considered discrimination, but you may be concerned about your manager or co-workers thinking of you differently.

Fortunately, it’s unlikely that your place of employment will find out that you filed for bankruptcy, and most employers will not care. That said, there are a few ways in which employers learn about employee bankruptcy filings. If you had a wage garnishment, filing bankruptcy will halt the financial encumbrance, and your employer will be notified that they no longer need to set aside part of your wages for a creditor.

Additionally, employers learn about bankruptcy filings when employees owe money to them. You must list all forms of debt when filing, and that includes if you owe an employer money.

After filing for bankruptcy, the bankruptcy trustee will inform your employer about your bankruptcy status as well as details regarding the Meeting of Creditors.

Will The Bankruptcy Court Publish My Filing?

It’s important to note that the court will publish your bankruptcy case, making it part of public record that many employers may check. This means anyone searching for your filing status will be able to find it online. That said, if your employer has no reason to search for you if you’ve filed bankruptcy, it’s unlikely that they will find out.

Contact a Bankruptcy Attorney

If you’re considering filing bankruptcy, we wholeheartedly encourage research to find your best options. While there are many online articles available, it’s best to enlist the help of an experienced bankruptcy attorney. They can help you by protecting you from aggressive creditors, and they can assist you with getting your finances back on track. Finally, an experienced bankruptcy attorney can help you with bankruptcy paperwork as well as other steps in the filing process on your path to debt relief.

This will ensure you do everything correctly so that you can discharge all eligible debts and become desirable to any employer.

For assistance from a bankruptcy lawyer in Indiana, contact Sawin & Shea LLC. We have over 45 years of combined experience assisting Indiana residents through the bankruptcy process, and we offer support in filing Chapter 7 and Chapter 13 bankruptcy.

You can schedule your free consultation today online or by calling 317-759-1483.

The post What Happens If I Get a Job After Filing Chapter 7? 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 if you find a job in another state? Can you move out of state while in Chapter 7 bankruptcy? These are excellent questions, and in this article, we’ll present information to help you understand the impact of a move during bankruptcy.

Can I File for Bankruptcy in Another State?

Under the U.S. Bankruptcy Code, bankruptcy laws are federal laws. While some bankruptcy exemptions and rules vary from state to state, your Chapter 7 bankruptcy will be handled in federal bankruptcy court.

File for bankruptcy in the federal district where you have lived for the majority of the previous 180 days. Don’t be tempted to move somewhere else because you think you’ll gain certain bankruptcy benefits. The federal government designed residency requirements to prevent abuse of the system. You can move to another state after filing for bankruptcy, but your bankruptcy may still be based on your previous residence.

If it looks like you’ll need to move out of state during the bankruptcy process, work with an experienced bankruptcy attorney who can help you manage the details of your situation. Your bankruptcy attorney can help you understand details like residency issues and location-appropriate exemptions and advantages.

Can You Move Out of State While in Chapter 7 Bankruptcy?

To find what bankruptcy exemptions that you will use to determine the property you can exempt from liquidation in a Chapter 7 case, there is a 24-month from filing date calculation. Otherwise, your bankruptcy will be based on where you lived the majority of the previous 180 days. 

So yes, you can move out of state during Chapter 7 bankruptcy, but your bankruptcy may still be governed by the state you left. Also, some states will only allow someone to use their exemptions if they are currently living there. In this situation, you may miss out on valuable exemptions.

Prevent this situation by beginning the bankruptcy process before moving or taking a job out of state. Remember that if you eventually move away, you may need to travel quite a distance to return for a court-ordered appearance. Some courts will allow online video conferences or phone meetings instead of in-person meetings, but this is not guaranteed.

What is the 730-Day Rule?

The 730-Day Rule is another term for the two-year requirement mentioned above. Under the 730-Day Rule, you must have lived in a state for two consecutive years before your bankruptcy filing date to claim it as your filing location for exemption purposes. 

It’s worth noting that Chapter 7 bankruptcy typically takes about four to six months to complete. Avoiding moving during this time may simplify your situation and allow the bankruptcy to move along most quickly.

What About Relocating During Chapter 13?

Chapter 13 bankruptcy, also known as a debt reorganization, usually takes three to five years to complete. It may be challenging to avoid moving to another location during such an extended period.

Moving within the same state shouldn’t impact your bankruptcy reorganization plan, but you should still notify the courts, creditors, and your attorney. Moving out of state should still allow you to continue your Chapter 13 reorganization plan, but it may complicate your situation. Speak to your bankruptcy attorney immediately if you suspect you may be moving to another state soon.

Sawin & Shea: Experienced Indiana Bankruptcy Attorneys

If you still have questions about whether you can move out of state while in Chapter 7 bankruptcy, please reach out to the experienced team at Sawin & Shea. We offer a free video consultation about Chapter 7 and Chapter 13 bankruptcy, so it’s easy to start quickly on the road to financial recovery.

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 before, after, or during a move to another location, please schedule a free consultation today at 317-759-1483. 

The post Can You Move Out of State While in Chapter 7? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

First, let’s briefly touch on two of the most common types of bankruptcy: Chapter 7 and Chapter 13. 

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

Put simply, Chapter 7 is a 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 debtor’s non-exempt assets. Laws called exemption statutes determine what a person or married couple can keep through the Chapter 7 process. If a debtor has assets that are not protected under those statutes, the trustee can liquidate those items and use the proceeds to pay creditors back something. 

Chapter 13 involves commitment from the declarer to repay a portion of their debt over a specified period (usually three to five years). If the declarer keeps to the agreement, then at the end of the period, they can keep their otherwise nonexempt assets and all allowable remaining debts are discharged.

Why Does the Type of Debt You Have Matter in Bankruptcy Cases?

It matters because not all debts are equal in the eyes of the law. It distinguishes between what are called ‘secured’ and ‘unsecured’ debts, which are terms you need to know before filing for bankruptcy. 

And possibly the most common question people ask is credit card debt is secured or unsecured.

What is the difference?

Secured vs Unsecured Debt: What’s the Difference?

In broad terms, 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. 

Unsecured Debt

What is unsecured debt? Unsecured debt would include things like:

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

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

However, it is important to note that before bankruptcy is declared, lenders can still come after you to get you to pay off the unsecured debt. They may use collection agencies, or they may sue you (asking the court to garnish wages, take an asset, or put a lien on your home). One of the benefits of declaring bankruptcy is that debt collectors cannot try to collect on debts that were discharged in bankruptcy. 

Secured Debt

Secured debt would include things like:

• House mortgages
• Car/vehicle loans
• Some taxes
• Loans for furniture/appliances/large electronics

Which type of debt is most often secured? The two most common examples of secured debt are mortgages and auto loans. 

Secured Debt in Bankruptcy

A bankruptcy can discharge your underlying responsibility to pay the debt, but it does not do away with the creditors rights to the collateral they hold as security. That means that you must continue to pay on most secured debts to keep or hold onto the collateral.

This is accomplished by entering into a reaffirmation agreement in a Chapter 7. This is a voluntary agreement between a secured creditor and the debtor that re-obligates the debtor on the secured debt. The debtor must maintain regular payments on the secured loan in order to keep the collateral.

In a Chapter 13, the debtor’s reorganization plan sets forth how they are going to treat secured debt. A Chapter 13 plan can cure arrearages on houses or cars, stopping foreclosures and repossessions. Debtor’s plan can reorganize secured debt and pay it as part of the plan, many times at a lower interest rate and sometimes at the fair market value of the collateral even if they owe more on the loan. 

In both types of cases, a debtor can opt to give the collateral back to the lender and walk away from the debt, receiving a discharge on remaining balances. This is what is called a “surrender” under bankruptcy law.

Consulting with the Bankruptcy Experts at Sawin & Shea, LLC

Bankruptcy law and the process for filing are complex, and determining whether your debts are secured vs. unsecured and the options for treating them in a bankruptcy is something our attorneys can assist you with. 
An attorney with experience in bankruptcy law can help you with filings and discuss with you the credit consequences of filing for bankruptcy. 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, call us at 317-759-1483 or request your free consultation online.

The post Secured vs Unsecured Debt: Everything You Need to Know appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

According to the Consumer Financial Protection Bureau, consumer credit reports show $88 billion in medical debt as of June 2021. However, it is expected that medical debts are much higher since not all medical debts are furnished to consumer reporting agencies. 

Because of the serious burden medical debts have placed on Americans, many are turning to bankruptcy as a potential option. However, while bankruptcy can help, it’s important to understand how the process works, especially concerning your medical debt. 

At Sawin & Shea, our team of Chapter 7 and Chapter 13 bankruptcy lawyers is here to help. We understand how stressful even just considering bankruptcy can be and are dedicated to providing quality, compassionate representation to help you through this trying time. 

Can You File Bankruptcy on Medical Bills?

Simply put, yes, you can file bankruptcy on your medical bills. Your medical bills are considered “unsecured debts” which means there is no property that can be taken from you under contract as a result of not paying your medical bills — and most unsecured debts, like medical bills, are eligible for bankruptcy. 

Medical debts are also considered a necessity, which means they are protected under the “necessity” doctrine. In other words, because medical debts typically come from paying for treatment that is considered a life necessity, they cannot be subjected to fraud or luxury purchase analysis. Thus your right to have your medical debts discharged will not be taken away. 

Does Bankruptcy Clear Medical Debt?

How your medical debts are discharged or if they are fully discharged will depend on the type of  bankruptcy you file. 

Chapter 7 Medical Debts & Bankruptcy

If you file Chapter 7, you can have your medical debts discharged or wiped away, however, there is a caveat. In Chapter 7, certain non-exempt assets can be used to pay off your debts. Some of your property will be exempt, such as your personal property and necessities. 

However, each state has a statutory structure that determines what assets you can hold onto thoroug the bankruptcy process. Non-exempt items could be taken, liquidated, and the proceeds used to help pay your creditors something.. If you have any assets you are worried about losing, consult a bankruptcy attorney who can talk to you about what you can hold onto in a Chapter 7.  Chapter 7 may not aways be the best option, but it is a way to have all of your medical debts cleared.

Chapter 13 Medical Debts & Bankruptcy

Chapter 13 bankruptcies work by setting up a three- to five-year payment plan so you can make more affordable payments based on what the law says you have to pay under a couple of tests. In these cases, your assets and property are protected and will not be taken from you, but you will still be required to make a payment on your debts. What you have to pay is a function of an asset based test and an income based test. Many Chapter 13 Debtors pay pennies on the dollar back to their unsecured creditors.

After you have completed your Chapter 13 payment plan, if there is any remaining unsecured debt, it will be discharged with a few exceptions like some taxes, most student loans, and child support. This is the better option if you want to protect your assets, or if you are otherwise not eligible for a Chapter 7 case.

How to Qualify for Bankruptcies

If you intend to file bankruptcy for your medical debts, you will need to meet certain requirements. For Chapter 7 the requirements are as follows:

• Your average monthly income from the past six months must be lower than the median income for your household size in your state. You may also need to take a means test to determine whether your disposable income is high enough to make partial payments. 
• You haven’t filed for Chapter 7 bankruptcy in the past eight years.
• You haven’t filed for Chapter 13 bankruptcy in the past six years. 

For Chapter 13 bankruptcy, the following are the requirements:

• You have sufficient income to make the payments outlined in your bankruptcy plan.
• Your combined total secured and unsecured debts are less than $2,750,000.
• You can provide proof of filing your federal and state tax returns for the past four years.

How Sawin & Shea, LLC Can Help

At Sawin & Shea, we believe in providing compassionate and understanding representation to those struggling with debt. We understand how stressful and even confusing filing for bankruptcy can be. Our bankruptcy attorneys have years of experience in bankruptcy cases, including those involving medical debts, and can help walk you through the process every step of the way. We can even offer guidance after your bankruptcy case has ended. 

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

The post What Should You Know About Medical Debts & Bankruptcy? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

What Is a Timeshare? 

When you buy into a timeshare, you purchase a shared piece of vacation real estate, usually in one resort or a family of resorts. You pay cash or finance your portion with a mortgage and then pay monthly or annual maintenance fees. You and your family can then stay at that property for about one week a year. 

Timeshares are a lifetime commitment, but many owners eventually want to sell because they get tired of paying the fees associated with the property when they only stay there about one week a year. Unfortunately, timeshares usually lose value and are difficult to sell due to simple supply and demand. Many more people are trying to sell timeshares than there are people who want to buy them.

Always do extensive research before purchasing a timeshare property. The Office of the Indiana Attorney General also advises you to: 

• Resist high-pressure sales. A gift from a developer – including a reduced-price vacation or any “prize” in exchange for a sales presentation – does not obligate you to buy a timeshare. 
• Carefully read all contracts and literature that the developer provides.

Should You Give Up Your Timeshare? 

If you can no longer afford the monthly payments, you can surrender your timeshare when you declare bankruptcy. In this case, the property will go back to the lender. However, you may still have to pay the monthly or annual fees until the bank forecloses and transfers the title from your name. 

Chapter 7 Timeshare Bankruptcies 

If you file for Chapter 7 bankruptcy, you might be able to keep your timeshare. That depends on whether you have equity in the timeshare and what other assets you possess. Timeshares usually don’t have equity and won’t be sold by the trustee in a Chapter 7 bankruptcy. 

If you want to get rid of your timeshare, you can do it before it has been foreclosed on or after. It is usually best to wait for foreclosure because you won’t have to pay any fees once you’ve filed for bankruptcy.

If the lender hasn’t foreclosed on the timeshare property or the foreclosure is still in progress, you will list the debt to the lender as part of your bankruptcy. The lender will then ask the court for permission to foreclose on it. The court will distribute equity to your creditors. If you owe more on your timeshare than it’s worth, your bankruptcy discharge will wipe out your obligation to pay.  

Bankruptcy on a Timeshare in Chapter 13

Declaring Chapter 13 bankruptcy allows you to keep all of your assets. The court works with you to develop a plan to repay your debt over three to five years. The repayment plan can include your timeshare’s monthly mortgage payment and maintenance fees. You’ll have to stay current on those payments. 

If you don’t have enough income to cover the timeshare (or prefer to let it go), you can surrender it as part of a Chapter 13 bankruptcy or reject a payment plan and discharge the debt and all associated payments. 

Sawin & Shea –Indiana Bankruptcy Attorneys

The attorneys at Sawin & Shea have experience in all areas of bankruptcy, including timeshare bankruptcies. With our guidance, you can get out from under an untenable financial situation and make a fresh start. Contact us at 317-759-1483 or send us an email for a free consultation today! 

The post Can You Get Rid of a Timeshare if You File for Bankruptcy? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

However, the process of going through Chapter 7 can be complicated and stressful to ensure you can keep what you need to continue living your life even after bankruptcy. In this article, we will walk you through Indiana debt collection laws and some of the many exemptions that help you keep your personal, real, or intangible assets when you file for a Chapter 7 in the State of Indiana.

What is Chapter 7 Bankruptcy?

Chapter 7 is the quickest and easiest way to discharge the majority of your debts through bankruptcy. It’s also the most common with over 229,000 filings in 2022 alone. 

Chapter 7 is also known as liquidation bankruptcy because in exchange for receiving a discharge of most kinds of debts, the debtor has to give up non-exempt assets. The Court can sell all nonexempt possessions and assets. The money earned from these sales then goes to the creditors and any remaining balances on the debts are discharged.  

Debt that qualifies for discharge under Chapter 7 includes:

• Credit card debt
• Medical bills
• Personal loans
• Mortgages
• Car loans
• Utility bills
• Payday loans
• Evictions

Debt that usually does not qualify for discharge under Chapter 7 includes:

• Child support
• Alimony
• Most student loans
• Some taxes

If the filer qualifies for Chapter 7, not all assets need to be sold, however. Known as exempt assets, these are the things you may keep when you file for Chapter 7 bankruptcy.

Debt Collection Laws: What Can Debt Collectors Do?

Debt collectors have a legal right to pursue the collection of personal debt within the bounds of the law. They can typically contact you through various means, including phone calls, letters, and emails, to request payment or negotiate repayment terms. Debt collectors may also report delinquent accounts to credit bureaus, which can negatively impact your credit score. In some cases, debt collectors may take legal action by filing a lawsuit against you to obtain a court judgment. If the court grants a judgment in favor of the creditor, they have additional collection options, such as wage garnishment, bank account levies, or placing liens on the debtor’s property. Debt collectors must adhere to the Fair Debt Collection Practices Act (FDCPA) and other relevant state and federal debt collection laws to ensure they act within the bounds of legality and fairness. Debtors have rights and protections under these laws to prevent harassment, false representations, or unfair practices by debt collectors.

Debt collectors in Indiana are subject to certain regulations and restrictions when attempting to recover personal debt. Indiana laws also provide individuals with exemptions to protect specific assets during bankruptcy proceedings. These exemptions allow debtors to retain essential items and debt collectors or bankruptcy trustees cannot seize or force the sale of these exempt assets to satisfy outstanding debts. However, it’s crucial to consult with a bankruptcy attorney to ensure that your assets are appropriately protected within the legal framework. Indiana’s bankruptcy laws aim to strike a balance between helping individuals overcome financial difficulties while ensuring that creditors have a fair chance to recover some of what they are owed.

What Are My Exempt Assets?

The United States Bankruptcy Code allows filers to keep certain assets, but depending on your state, that list may include other assets. Most states have codified what bankruptcy exemptions debtors filing in that state can use. If you have moved from a different state in the two years prior to filing the exemptions you may take become a bit more complicated. It is best to consult a bankruptcy attorney to ensure that you get the most benefit from your exemptions.

One of the most common exemptions in Indiana is the Homestead Exemption which allows an individual to protect up to $22,750 of equity in their real estate holdings or mobile home. If a spouse co-owns that property, the exemption amount can be doubled. This exemption applies to a property that is your personal or family residence.

Another standard exemption is known as the tangible personal property exemption. With this exemption, you can protect up to $12,100 of nonresidential real estate or tangible personal property of your choosing. Under another exemption, you can also protect up to $450 of intangible property, which include cash or cash equivalents. While Indiana does not have a specific exemption for motor vehicles, the tangible property exemption is often used to protect any equity a filer has in a car, truck, or other vehicle.

Filers in Indiana can also protect wages with the wages exemption. This would include the lesser of 75% of unpaid wages that were earned by the filer or 30 times the Federal minimum wage. 

Another common exemption allows you to protect retirement benefits you have invested in. This may include:

• Pension, retirement, or IRA accounts
• Police and firefighter pension fund
• Public employee retirement
• Indiana State Teachers’ Retirement fund benefits

These are just a few of the exemptions that Indiana state bankruptcy laws allow you to protect if you are filing for Chapter 7 bankruptcy and facing asset liquidation. The goal is to not leave you completely destitute after filing for bankruptcy. These exemptions help ensure you have someplace to live, transportation to get to and from work, and other essentials. 

What Are My Next Steps?

If you’re considering Chapter 7 bankruptcy, it’s vital to know the debt collection laws, and what exemptions apply to your situation and which are not to determine the best course of action. If exceptions are used incorrectly, you could potentially lose the property altogether. 

Because the bankruptcy process can be complicated and stressful, the first step to take if you’re considering Chapter 7 bankruptcy is to contact a trusted bankruptcy attorney like the attorneys at Sawin & Shea, LLC. Our collective decades of experience mean we know the laws surrounding bankruptcy inside and out, and we will ensure any debtors are practicing fair debt collection practices and following the law. We will be able to guide you through the entire process with confidence that you’ll get to keep everything you need while experiencing a quick and simple Chapter 7 bankruptcy. 

Contact our office today or call us at 317-759-1483 to discuss all your bankruptcy options and have the peace of mind you deserve during the entire process. 

The post What Can I Keep if I File For Chapter 7 Bankruptcy? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.