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.

No one would argue that we have been living through some turbulent economic times in the past several years. Factors like inflation, high interest rates, and economic uncertainty have found more and more Americans relying on credit cards to get by. In fact, Americans are at an all-time high when it comes to credit debt to the tune of $1 Trillion. On average, Americans individually carry about $7,951 in credit card debt. With those figures, chances are you are among the millions of Americans needing credit debt relief.

In this article, we will give you some ways to find relief from the weight of your debt and show you how bankruptcy attorneys like Sawin & Shea can help you. 

What Happens if You Get Behind?

Getting behind on paying your debt tends to have a big snowball effect on your credit debt. What often happens is the “Robbing Peter to pay Paul” effect, which means you use credit cards to pay other debts you are behind on, thus making your credit debt situation bigger and more overwhelming. 

Once you start getting behind on your credit card debt, the consequences just make the situation worse. These include:

1. Penalty Fees : Credit card companies typically charge between $15 – $35 for a late payment, adding to your balance. If your balance is small to begin with, this can be a painful percentage of what you owe.
2. Higher Interest Rates: While credit card companies are restricted from randomly raising interest rates, an exception to that would be if you are 60 days or more late with your payment. When this happens, your interest rate can skyrocket and make the situation harder to dig out of.
3. Collection Agency Involvement: After being 90 days delinquent on a credit card payment, the company might send you to their collections department. This means you will be contacted (usually A LOT) by their debt collectors to arrange payment. This action will leave a negative report on your credit rating, which could spell trouble for your future purchasing options. 

In short, getting behind on your credit card payments will cost you a lot more money and add to your credit card debt stress for the foreseeable future. 

What You Can Do If You’re Behind

If you’ve fallen behind, and are desperate for credit debt relief, you are certainly not the only one. It’s estimated that 61% of the population currently carries credit card debt, and 14% of those people reported missing a payment in 2023. 

If you’ve fallen behind on your credit card debt, there are some actionable things you can do to help get your way out of the stressful situation. 

Revisit Your Budget
If you’ve never had a budget you followed or haven’t looked at it in a while, it’s time to get back on track and take an honest look at your income and expenses. Many people find there are numerous ways they can cut corners here and there to help them get caught up and pay more than the minimum balance on their credit debt. 

Call Your Credit Company
A little transparency goes a long way. Informing your creditors of your particular financial situation could make them willing to waive a penalty fee or keep an interest rate at a manageable level. Contacting them sooner rather than later is advisable as it lets them know you aren’t an irresponsible debtor, you just need some assistance. 

Consider Filing for Bankruptcy
While it should be at the bottom of your list of solutions, it should be on the list as it is a viable option for credit debt relief. Two forms of bankruptcy may be your saving grace for your debt management goals:

• Chapter 7 Bankruptcy, which discharges your credit debt in exchange for selling certain non-exempt assets to pay something to your creditors. 
• Chapter 13 Bankruptcy, which helps you develop a debt repayment plan. This plan also allows you to keep your assets and forces creditors to take what the bankruptcy law says you have to pay on your debts.. 

How Does Debt Relief Affect Your Credit?

Debt relief can have both positive and negative effects on your credit, depending on the method you choose and how you manage the process. Debt relief programs, such as debt settlement or debt management plans, will lower your credit score because they often involve negotiating with creditors to reduce your interest rates while you miss payments. This results those late payments being reported on your credit report. Further, these types of plans are voluntary. Creditors can choose not to participate and can move forward with more drastic collection efforts such as lawsuits when they get tired of waiting for payment. Bankruptcy has a impact on your credit, as it typically remains on your credit report for several years. However, it provides a fresh financial start, allowing you to rebuild your credit over time. Creditors cannot opt out of participation in a bankruptcy, and no collection efforts on pre-petition debts can continue after filing.

From a simple phone call to your credit card company to filing for bankruptcy, there are ways you can find the credit debt relief you need to sleep better at night and take control of your financial future. 

How Sawin & Shea, LLC Can Help

At Sawin & Shea, we know the toll all debt can take on an individual, a relationship, and a family. Start taking control of your financial situation again with our help. We can help determine if bankruptcy is the best option for you and which bankruptcy option will help you get back on your feet the best. 

Whether you’re being harassed by creditors or looking at what bankruptcy option is best for you and your family, Sawin & Shea has your back. Contact us today for a consultation and begin taking control of your financial wellness today.  

The post Tips for Credit Debt Relief appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

Let’s look at the factors that determine how long a bankruptcy takes so you can get an idea of your bankruptcy’s timeframe. If you’d like to pin down exactly how long your specific bankruptcy will take, contact Sawin & Shea for a free consultation.

Factors in the Length of Your Chapter 13 Plan

In a Chapter 13 bankruptcy, you create a plan to pay something to creditors and eliminate your debts. A Chapter 13 can help if you are not eligible for a Chapter 7. It can help you get caught up on things you would like to keep, like houses or cars. A Chapter 13 can help protect assets that may otherwise be at risk in a Chapter 7, or liquidation, bankruptcy case.

Your bankruptcy attorney will work with you to lay out the payment terms of your bankruptcy plan. And, of course, you’ll have an opportunity to look over these terms to make sure you understand them before agreeing to them. After a case is filed, a Chapter 13 Trustee collects the monthly payments and distributes them to creditors according to the Chapter 13 plan. They also make reports to the Bankruptcy Court indicating whether or not they think your plan conforms to the requirements of Chapter 13 law.

Your Chapter 13 bankruptcy terms are based on three main factors:

• The amounts and types of debt you have
• Your income
• Your assets

Your bankruptcy attorney will consult with you to work to craft a plan that works for your intended purposes and goals. A good bankruptcy attorney is very valuable because they’re always looking out for your best interests.

Variation in the 3 to 5 Year Bankruptcy Plan

Most Chapter 13 bankruptcy plans take three to five years, although some jurisdictions allow slightly shorter plans when the debtor has agreed to pay back 100% of their debts. The percentage of the debt you intend to repay can impact the timeline significantly.

When creating the payment timeframe, the bankruptcy trustee typically looks at the last six months of your income. If your income is below the state’s median income, expect your bankruptcy to span 36 to 60 months with some flexibility in adjusting your payments over time.

People with above-average incomes typically only qualify for 60-month plans. Although you may be able to negotiate a shorter timespan if you have no disposable income, this isn’t always possible.

But here’s some good news: Chapter 13 plans can’t go beyond 60 months by law. It’s good to know there’s a firm endpoint within sight, even if your plan will be 5 years long.

Other Factors That Can Impact Your Bankruptcy Timeframe

Finally, we’d like to point out that there are a few additional things that could affect how long your bankruptcy takes. Most of them are beyond your and your bankruptcy attorney’s control, so you may have to adjust your expectations about the timeline.

One of these factors is sudden job loss and an inability to secure new employment quickly. Your bankruptcy plan was based on a certain level of income, so job loss makes this very difficult to maintain.

Similarly, an unexpected illness or injury could make you unable to work. Now you’re facing a bankruptcy repayment plan that’s no longer realistic for you.

If this happens to you, talk to your bankruptcy attorney about a Chapter 13 hardship discharge. There are strict requirements to qualify, but if you can secure this type of discharge it may ease your stress and financial burden significantly.

There’s also a possibility that a Chapter 13 bankruptcy may end early due to a windfall of money you couldn’t possibly have foreseen. Maybe during your bankruptcy plan, a distant relative dies and leaves you a large sum of money, which you then use to resolve your bankruptcy.

Working with an Attorney For Your Bankruptcy

As we’ve explained, there can be many factors that impact the length of your bankruptcy. When you work with an experienced bankruptcy attorney, you can pursue the option that works with your lifestyle and finances.

Contact the bankruptcy attorneys at Sawin & Shea to talk about how many months your bankruptcy could take and what could affect the timeframe. We’re here to help you get a fresh financial start with a Chapter 13 bankruptcy plan that makes sense for you.

Sawin & Shea—Indianapolis Bankruptcy Attorneys

Filing for bankruptcy is not the end. It’s the beginning of a new financial life for you. The Indiana bankruptcy attorneys at Sawin & Shea can help you get rid of overwhelming debt and advise you on life after bankruptcy. We are here for you during this life-changing process.

Please do not hesitate to call us today at (317) 759-1483 or send an email for a free consultation. We are ready to help.

The post How Many Months Must Be in a Chapter 13 Plan? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

How Can I Wipe Out My Tax Debt?

Whether or not you can wipe out or put off tax debt collection will depend on which bankruptcy plan you choose, what type of tax you owe, how old your tax debt is and whether you filed a tax return timely. In bankruptcy you can discharge federal income taxes only if:

• You filed tax returns for at least two years before filing for bankruptcy and they were timely.
• The tax was not assessed due to audit.
• The tax debt is at least three years old.
• You meet the 240-day rule, which means the IRS assessed the debt at least 240 days before you filed for bankruptcy.
• You did not commit a crime like tax evasion, fraud, or identity deception.
• The debt is for income taxes only. Other types of taxes don’t necessarily qualify for discharge.

Can I Eliminate Payroll Taxes or Tax Penalties?

Unlike federal income taxes, payroll taxes cannot be wiped out in Chapter 7 bankruptcy. Tax penalties are eligible to be discharged when the taxes that they are based upon are dischargeable. In certain other circumstances, penalties associated with non-dischargeable taxes may also be discharged. You may be able to eliminate tax penalties on previously unpaid income tax but not payroll tax. Tax penalties for fraud are never eligible for discharge by bankruptcy because they involve a crime.

What If I Have a Tax Lien?

If the IRS has already placed a tax lien on your property prior to the point of filing for bankruptcy, then the situation gets more complicated. A bankruptcy can discharge personal liability on a debt, but the tax lien will remain attached to anything you own, and you will still owe taxes related to it, even after your case is discharged. This is a good reason to act urgently and contact a bankruptcy attorney before things go too far.

If I Need to Wipe Out Tax Debt, What Should I Do Next?

Eliminating tax debt is possible but it is one of the most difficult things you can attempt in bankruptcy. It is a tricky process to navigate alone because you will need to deal with the United States Internal Revenue Service, provide many types of proof and documentation and avoid making critical errors that could put your bankruptcy discharge in jeopardy. You will need the advice and guidance of a bankruptcy attorney who can help you pursue eliminating the tax debt you owe. Contact an experienced bankruptcy attorney and ask them about using Chapter 7 bankruptcy to discharge your tax debt.

Sawin & Shea – Indianapolis Bankruptcy Attorneys

Filing for bankruptcy is not the end. It’s the beginning of a new financial life for you. The Indiana bankruptcy attorneys at Sawin & Shea can help you get rid of the overwhelming debt and advise you on life after bankruptcy.  We are here for you during this life-changing process. Please do not hesitate to call us today at 317-759-1483 or send an email for a free consultation. We are ready to help.

The post How Can I Eliminate Tax Debts In Bankruptcy? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

If you have a job but you’re struggling to make your payments every month, Chapter 13 can help. In fact, the U.S. courts have nicknamed Chapter 13 bankruptcy the “wage earner’s plan.”

What Is A Chapter 13 Repayment Plan?

Chapter 13 is a personal reorganization bankruptcy. It stops creditors from pestering you and halts repossessions and foreclosures while you work on creating a repayment plan that’s reasonable for you to repay based on your income and assets. In a Chapter 13 you do not have to repay most debts in full. You’ll work with the bankruptcy court to create a manageable repayment plan that focuses on your most important bills. Debts like credit card bills and medical bills often can be eliminated after receiving just cents on the dollar, giving you some breathing room so you can become financially stable.

How Much Will I Have To Pay Each Month?

Every Chapter 13 repayment plan is unique and is based on your individual situation. A Chapter 13 plan can eliminate most unsecured debts and loans so you can take care of your crucial monthly costs like your mortgage, car payment and utilities. Generally speaking, your repayment plan will take into account how much you make per month at your job and help prevent your monthly bills from exceeding the amount of your pay.

How Long Does A Chapter 13 Bankruptcy Plan Take?

Chapter 13 bankruptcy typically takes three to five years to complete, which is longer than Chapter 7 bankruptcy, for example. However, you’ll start seeing the benefits of Chapter 13 bankruptcy right away. It stops creditors from calling and otherwise contacting you. It also eases your monthly financial burden so you can stop feeling so stressed about your debt.

Is Chapter 13 the Right Choice for Me?

If you have a steady source of income, but are dealing with missed payments, foreclosure, repossession, tax debt, medical bills, credit card bills or other types of debt that is becoming overwhelming, Chapter 13 could be a great choice. It helps protect your home and the stability of your family while you get your finances in order. Contact an Indiana bankruptcy attorney to discuss your situation and decide whether Chapter 13 is the best option. Your bankruptcy attorney can help you take advantage of exemptions and other benefits of bankruptcy so you can find a brighter future ahead.

Sawin & Shea – Indianapolis Bankruptcy Attorneys

Filing for bankruptcy is not the end. It’s the beginning of a new financial life for you. The Indiana bankruptcy attorneys at Sawin & Shea can help you get rid of the overwhelming debt and advise you on life after bankruptcy.  We are here for you during this life-changing process. Please do not hesitate to call us today at 317-759-1483 or send an email for a free consultation. We are ready to help.

The post What Does a Chapter 13 Repayment Plan Look Like? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

What Is A Chapter 13 Bankruptcy Plan?

Chapter 13, also known as personal reorganization bankruptcy, helps you create an affordable repayment plan to settle your debts. You won’t have to repay all of your debts in full but your plan will satisfy your creditors one way or another. In the meantime, they are restricted from hassling and contacting you. A Chapter 13 can help you get caught up on houses and cars, help you hang onto property that might be taken and liquidated in a Chapter 7 case, and help people with debts that are not eligible for a Chapter 7 bankruptcy for one reason or another.

What Kind of Paperwork Will I Have to File?

Under Chapter 13, you are obligated to file forms, provide documents and share information the court will need to process your case. This includes filing a petition for Chapter 13 bankruptcy and providing a list of all sources of income, your debts and creditor contact information, your property and belongings, and your monthly bills. The court will also require you to prove you have attended credit counseling and received a certificate of completion. You’ll need to share your recent tax returns and show that you have filed your taxes with the IRS for the past four years. There will also be some attorney fees and a bankruptcy filing fee.

What Are My Other Obligations Under Chapter 13?

When your Chapter 13 plan goes into effect, you are obligated to start making payments to a person called the Chapter 13 Trustee. You begin making your scheduled payments 30 days of filing. Your payments can be made through payroll deduction. Each of your monthly or bi-monthly payments will be distributed in priority order, starting with your trustee’s and attorney’s fees, followed by your high-priority debts like child support and back taxes, then your secured debts like your mortgage and car loans, and, finally, your unsecured debts. If you fail to follow your Chapter 13 plan and get too far behind, the court can dismiss your bankruptcy.

\What Am I Obligated to Pay in My Chapter 13 Plan?

What each person/couple pay into a Chapter 13 Plan is highly variable. There are debts that have to be paid such as priority tax claims. There are debts that might be paid inside a plan or outside a plan depending on your situation like mortgages or car loans. There are also unsecured debts like credit cards, medical bills, repossessions, and past evictions that get paid what the law states they are entitled to under an asset-based test and an income-based test. In many cases, the unsecured debts receive pennies on the dollar and then are discharged at the end of a plan.

How Long Will I Be Obligated Under the Chapter 13 Plan?

A Chapter 13 bankruptcy plan lasts between three and five years. Under an income-based test, if your household’s monthly income in the six months before filing exceeds your state’s median income, you must use a five-year plan. If your income is equal to or less than your state’s median income, you qualify for a three-year plan. Either way, Chapter 13 will help you settle your debts and move on much faster than if you never filed. Bankruptcy provides a responsible route to stabilizing your finances and finally clearing away a mountain of debt.

Sawin & Shea – Indianapolis Bankruptcy Attorneys

Filing for bankruptcy is not the end. It’s the beginning of a new financial life for you. The Indiana bankruptcy attorneys at Sawin & Shea can help you get rid of the overwhelming debt and advise you on life after bankruptcy.  We are here for you during this life-changing process. Please do not hesitate to call us today at 317-759-1483 or send an email for a free consultation. We are ready to help.

The post What Are My Repayment Obligations Under Chapter 13 Bankruptcy? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

If you have been adversely affected by the pandemic, please visit the State of Indiana website at https://www.indianahousingnow.org and/or the City of Indianapolis website for Marion County residence at https://indyrent.org. At these sites you can seek assistance that can help you stay in your apartment or home.

If these grants are not enough help, and you are having other financial difficulties, Sawin & Shea LLC are available for a free phone or video consultation.

For more information on bankruptcy and evictions please see some additional video and articles here.

COVID-19, The Cares Act and Credit Reporting

Are You Having Trouble Paying Rent & Looking at Eviction During the COVID-19 Crisis?

How Does The 2020 Cares Act Affect A Chapter 13 Bankruptcy?

Can I Protect My Home and Personal Property in Bankruptcy?

The post Indiana Rental Assistance Program appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

Are Millennials Filing for Bankruptcy at Higher Rates Than Others?

There’s no question that millennials are filing for bankruptcy at higher rates than other generations. People between the ages of 23 and 38 currently account for almost 40% of all new filings. The number one debt source for this group is credit card debt, despite the fact that Generation Y also has the largest amount of student loan debt among all generations.

Why are Millennials Filing for Bankruptcy?

Millennials are the first generation of people who have always lived on debt. Unlike Gen X, baby boomers and the silent generation, younger people find it very difficult to make it through modern adult life without taking on student loans, car loans, home loans and many other types of debt. Economic simplicity is almost impossible. Credit card offers are everywhere and everything from cell phones to furniture can be financed. The average millennial has about $36,000 in personal debt, plus a home mortgage if they have one. Student loan debt among millennials is an average of $34,500. It’s a massive amount of debt.

Will Millennials Ever Get Out of Debt?

Sixty percent of millennials don’t believe there’s any way they will ever pay off all of their debt in their entire lifetime, a sad statistic indeed. Although 79% of them say they have a plan to pay off debt, the reality is they don’t seem to be making much headway paying down the total amount. With limited budgets, they mostly make small monthly payments that cover interest and fees only.

Should I Consider Filing for Bankruptcy?

Whether you’re a millennial or not, sometimes there’s not much else you can do to protect your current assets and your financial future other than file for bankruptcy. If you acquired multiple credit cards years ago when you were 18 or 19 years old, you may now be overwhelmed with debt now that you’re hitting age 30. It’s over 10 years of trying to pay down accrued high interest rates without much relief. There’s no need to feel ashamed of your situation. Instead, take a positive step forward by resolving your debts with the help of an experienced bankruptcy attorney.

Sawin & Shea – Indianapolis Bankruptcy Attorneys

Filing for bankruptcy is not the end. It’s the beginning of a new financial life for you. The Indiana bankruptcy attorneys at Sawin & Shea can help you get rid of the overwhelming debt and advise you on life after bankruptcy.  We are here for you during this life-changing process. Please do not hesitate to call us today at 317-759-1483 for a free consultation. We are ready to help.

The post Why Are More Millennials Facing Bankruptcy? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

Most people would like to have the financial resources to provide for their families, plan for the future, and have something left over to have some fun. For many of us, however, the debt hanging over our heads makes these thoughts seem a goal that is out of reach.

Sometimes, a person’s problems with debts are self-inflicted. Most debt problems, however, arise from sources over which we have little or no control. Job loss, medical issues, marital issues, and other types of financial emergencies arise and cause crushing debt. We at Sawin & Shea are experienced Indiana bankruptcy attorneys that can help relieve these burdens.

Stress over debt takes both a physical and emotional toll on people. Debt causes loss of sleep, panic, changes in eating habits, anger, and self-doubt. Debt can, in fact, lead to physical ailments. In a poll reported in USA Today on June 9, 2008, debt stressed respondents reported that 27% had ulcers or digestive tract problems, compared with 8% of those with low levels of debt stress. 44% of the respondents had migraines or other headaches, compared with 15% of low debt responders. Further, 29% suffered severe anxiety, compared with 4%. 23% of the high debt group had severe depression, compared with 4% from the low. Heart attack rates doubled for high debt respondents compared to their low debt counterparts.

Now, for the good news. We have ways that we can help get that debt monkey off your back. Chapter 7 or Chapter 13 bankruptcy can get you back on track. Do not suffer the physical and emotional pain caused by debt. The experienced bankruptcy attorneys at Sawin & Shea LLC can put you back in control of your financial life. We can help you like to hear the phone ring again. We can help you not dread the thought of going through your mail. Do not suffer the physical and emotional damage that debt caused by past indiscretions or trouble outside of your control imposes on your daily life.

Take control of your physical and emotional health. If you are suffering from an overload of debt, let us help. The Indianapolis bankruptcy attorneys at Sawin & Shea LLC are here to show you how a Chapter 7 or a Chapter 13 can put the goal of financial independence within reach.

Call Indianapolis Bankruptcy Lawyers – Sawin & Shea – 317-759-1483

If you are considering bankruptcy and have student loan debt, give our Indiana bankruptcy lawyers a call and get an assessment of your chance of discharging school loans. We will provide you with a free evaluation of your case and educate you on all the options you have as you look to a debt free fresh start in life.

The post The Emotional and Physical Impact of Debt appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

A growing concern for students both young and old, outstanding school loan payments have risen to critical mass in this country. Learn ways to help alleviate the stress of student debt.

In 2014, total outstanding student loan debt in the U.S. rose to nearly $1.2 trillion, according to the New York Fed. In the fourth quarter alone, the average student loan balance was $26,700. While overall debt attributed to school loans has grown notably in the last 10 years, the financial burden of school debt has peaked the fastest among Americans age 60 or older, people near or in retirement. In 2014, that amounts to $204 billion borrowed or co-signed by older people to help a child or grandchild pay for college, or to finance their own education to finish an undergraduate degree, earn a graduate degree or switch vocations.

Student Loan Categories

Loans for education are awarded for use in two-year and 4-year programs, undergraduate, graduate and doctorate programs, colleges and universities, technical schools as well as internet-based learning institutions, truck driver training and the like. Student loans are categorized as backed by the federal government or through a private lender. Each has specific requirements for repayment. Essentially both types of student loans are treated the same way in bankruptcy courts.

Discharging Student Loans in Bankruptcy

When attempting to discharge student loan debt in bankruptcy, a Debtor must file a separate Court action within the case called an Adversary Proceeding. During this litigation process the Court will consider what you can reasonably afford to pay now and in the foreseeable future. In certain cases. The Court could, for example, find that that out of $50,000 of student loan debt that you can afford a repayment plan over a period of time for $20,000 of the debt, with the remaining $30,000 to be forgiven. The details of the repayment plan will be determined by earning potential, based on number of years that the court can reasonably foresee your ability to pay.

To wipe out student loans in bankruptcy, you must prove to the court that paying them would cause you undue hardship, which is defined by the Brunner Test in most bankruptcy courts. The Brunner Test includes three elements:

• Cannot maintain a minimal standard of living. Based on current income and expenses, you cannot maintain a minimal standard of living for your family if a student loan is repaid.
• Situation will continue. Your situation is likely to continue for most of the repayment period.
• Good faith effort to repay. You made a good faith effort to repay the loans, including federal repayment plans if you have a federal student loans.

The Brunner Test defines significant, ongoing hardship that contributes directly to your ability to make payment towards student loans, whether it be disability, age or insufficient income for basic needs along with student loan repayment.

Recent cases in the Seventh (Krieger v. Educational Credit Management Corp., 713 F.3d 882 (7th Cir. 2013)) and Ninth (Hedlund v. Educational Resources Institute Inc., 718 F.3d 848 (9th Cir. 2013)) Circuit Court of Appeals may make it easier for people with student loan debt to meet the three elements of the Brunner Test. The Seventh Circuit found Ms. Krieger’s age and lack of success in the job market over 10 years to be very important in demonstrating undue hardship. The Ninth Circuit cited Mr. Hedlund’s efforts to obtain employment, maximize income and minimize his expenses. Both courts have taken a more liberal approach to some of the Brunner elements, loosening up the rules so to speak, which could make it easier for your bankruptcy lawyers to wipe out some or all of your student loan debt in bankruptcy. Essentially, these cases have put more power back in the hands of a bankruptcy judge actually trying facts rather than an appellate court’s ability to overturn those standards. It is a move in favor of debtors that now allows bankruptcy lawyers to consider the dischargeability of student loans for more people.

Debt Consolidation

Say you have $75,000 in student loan debt and $40,000 in medical and credit card bills. A Chapter 13 or reorganization bankruptcy may help manage and discharge a significant amount of the general unsecured debts and keep student loans out of collection status for a period of time, usually a repayment delay of up to five years. Student loan companies along with all other types of creditors can’t come after you for money through any kind of judicial process, stopping student loans dead in their tracks. This is actionable in a relatively short time frame, and gives you an opportunity to get your finances back on track, eliminating other types of debt as you move a little further along in your career, with the potential for an increasing income. If certain circumstances occur, such as your school closes prior to you receiving a degree or certificate or graduation, your student loans may be dischargeable in bankruptcy. Without further action from the Bankruptcy Court, however, student loans remain non-dischargeable at the end of a Chapter 13 plan.

Helping Older People Cut Student Debt

In addition to Chapter 13 or reorganization bankruptcy plans, people who are approaching retirement (and even those who aren’t) and are carrying debt due to student loans can benefit from the following advice:

• Make loan payments on time. Experts say that students who don’t postpone payments, keep track of their payment, stay in touch with their loan officers and graduate increase their chances of successful repayment. If your loan goes into default, the government can garnish your wages, withhold your tax refund or take a portion of your Social Security benefits.
• If you qualify for an income-driven repayment plan (“Pay as You Earn”, income-based and income-contingent), you can lower monthly payments on federal student loans, based on 10 to 20 percent of discretionary income. Any remaining balances on your federal loans will be forgiven after 20 to 25 years as long as you’ve made your payments on time.
• Federal PLUS loans for a child or a grandchild can make you eligible for income-contingent plans, if the loan is consolidated. For private student loans where you co-signed for you kids, try to negotiate a lower payment with the lender.
• If you have excellent credit, refinancing student loans may help lower interest rates.

Call Indianapolis Bankruptcy Lawyers – Sawin & Shea – 317-759-1483

If you are considering bankruptcy and have student loan debt, give our Indiana bankruptcy lawyers a call and get an assessment of your chance of discharging school loans. We will provide you with a free evaluation of your case and educate you on all the options you have as you look to a debt free fresh start in life.

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