If you’re considering filing Chapter 7 or Chapter 13 bankruptcy, consider enlisting the help of skilled bankruptcy attorneys. They can assist you through the bankruptcy process and can keep creditors from unlawfully harassing you.  

In order to understand the bankruptcy process, here’s what you need to know about consumer debt and non-consumer debt. 

What is Consumer Debt?

Consumer debt refers to an individual, family, or household’s debts incurred through personal spending and expenses. Some examples of consumer debt include:

• Personal credit card debt
• Store financing
• Home mortgages
• Rental furniture
• Personal lines of credit and bank loans
• Vehicle leases, which can include cars, planes, boats, and more
• Cosmetic-based medical debt
• Family or personal legal fees

If your debts have to do with personal or family spending rather than business expenses, penalties, and taxes, they are likely consumer debts. 

What is Non-Consumer Debt?

Non-consumer debts include business spending and expenses, as well as different taxes and penalties. Examples of non consumer debts include:

• Alimony
• Child support 
• Traffic tickets
• Parking tickets
• Criminal restitution
• Business loans
• Personal guarantees
• Business property mortgages
• Business-related legal fees
• Taxes

Are Student Loans Consumer or Non-Consumer Debts? 

You may have noticed that we didn’t list student loans in the consumer and non-consumer categories. The reason for this is because the student loan debt classification depends on multiple factors, including whether the loans were primarily spent on tuition, which would likely fall under non-consumer, or for daily expenses and rent, which a court would likely consider consumer debt. 

Because the interpretation of whether student debt is consumer or non-consumer is somewhat subjective at times, it’s helpful to have a bankruptcy attorney at your side who can assist you with proving a classification in court. 

How Does Consumer and Non-Consumer Debt Impact Your Bankruptcy Chapter 13 Filing?

When it comes to filing Chapter 13, your consumer and non-consumer debt classifications determine what is and isn’t protected by an automatic stay. 

An automatic stay prevents creditors and lenders from collecting debt or collateral on protected assets. With consumer debts, co-debtors receive the protection of an automatic stay. 

For example, if you co-own a house with someone filing Chapter 13 bankruptcy and the house is your primary residence, the automatic stay will protect you from a home foreclosure because it’s considered consumer debt. 

If you’re a co-signer or co-debtor on a business property, such as a rental home, the automatic stay doesn’t protect you from lenders, so they can repossess the property. 

How Does Consumer and Non-Consumer Debt Impact Your Chapter 7 Bankruptcy Filing?

Some people are required to undergo a bankruptcy means test before filing for Chapter 7 bankruptcy. This test calculates whether an individual can repay lenders and creditors without declaring Chapter 7 bankruptcy. 

Those who primarily have non-consumer debts rather than consumer debts do not need to take the bankruptcy means test.

What Does “Primarily” Consumer Debt Mean?

Only those with over 50% of consumer debts need to take the bankruptcy means test, so if your debt is primarily consumer, you’ll need to take the means test.

Although those with more consumer debt need to take the bankruptcy means test, that doesn’t mean they won’t qualify for consumer debt relief through Chapter 7 bankruptcy. 

The means test that determines your ability to file bankruptcy contains two parts. The first part evaluates whether the person wanting to file has a monthly income that’s greater than the median income for their state. If their monthly income is lower, they qualify for Chapter 7 bankruptcy.

In the event their income is greater than the state median, they must undergo a more rigorous evaluation. The next part of the test involves comparing a person’s income with their expenses. If the potential bankruptcy filer reduces their monthly income by their expenses — such as food, out-of-pocket health care, housing, utilities, transportation, and other essentials — and they multiply the monthly difference between their income and expenses by 60, the amount determines whether they qualify for Chapter 7 or Chapter 13:

• If the amount is $12,850,000 or more, the person must file through Chapter 13 rather than Chapter 7.
• If the amount is over 25% of the unsecured debt, the person qualifies for Chapter 13.
• If the amount is 25% or less than the person’s unsecured debts, the person filing can choose either Chapter 7 or Chapter 13.
• If the amount is $7,700,000 or less, they can choose either Chapter 7 or Chapter 13.

Contact Indianapolis Bankruptcy Attorneys

Navigating the complex world of filing for Chapter 7 or Chapter 13 bankruptcy can be complicated, to say the least. If you’re considering filing, take the guesswork out of the process by contacting the Indiana bankruptcy lawyers at Sawin & Shea, LLC. 

Call us today at 317-759-1483, or you can request a FREE consultation with one of our bankruptcy attorneys by clicking here.  

The post Consumer Debt vs. Non Consumer Debt appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

To fully understand how this works, it helps to understand the basics of credit card debt when you are filing for bankruptcy, which we will dive into below. 

If you have further questions after reading this article or need help filing for your Chapter 7 bankruptcy or Chapter 13 bankruptcy, contact the Indianapolis bankruptcy attorneys at Sawin & Shea, LLC. 

Understanding Credit Card Debt and Bankruptcy

Most people file for bankruptcy in the hopes of having their debts that they are struggling to pay discharged. However, debt discharge for credit cards can work differently depending on the type of bankruptcy you file. 

Chapter 7: When you file for Chapter 7, you can have most, if not all, of your unsecured debts discharged, which includes your credit card debt. However, in exchange for having these debts wiped out, your non-exempt property could be sold by the bankruptcy trustee, and the funds will be used to pay off your creditors. 

Chapter 13: Filing for Chapter 13 works a little differently. With this type of bankruptcy, your credit card debts are generally not discharged upfront. Instead, you are given a more affordable payment plan that allows you to pay off your creditors with a monthly amount that is more suitable to your financial situation. 

This is important to understand because it can play a role in what happens if you run your credit card debt up. For example, if you run your credit card debt up and you file a Chapter 7, that debt could all get wiped out if the charges were necessary and not fraudulent. 

If you run the credit card debt up and then file a Chapter 13, you will still likely have to pay all of that debt off, but through a monthly payment—again, so long as the charges were legal and not found to be fraudulent.  

Running Up Credit Card Debt Prior to Bankruptcy

Generally, it is best not to use the credit card that you plan on including in your bankruptcy if you want your case to go as smoothly as possible. However, it is understandable that you may need to use your card for essential or necessary purchases, such as to pay for groceries, gas, or rent. 

However, if your creditors or bankruptcy trustee discover that you were running your balances up with fraudulent intent, it could result in serious consequences. For example, if you start making a bunch of unnecessary purchases knowing that you can just get away with not paying for them when you file for bankruptcy, this will likely be discovered. You could be charged with bankruptcy fraud or have your debt discharge denied. Likewise, taking out cash advances with your credit cards for unnecessary purchases can also be viewed as fraudulent. 

If your purchases are for necessary goods and services, then you should be fine, but if you made purchases with fraudulent intent, you could be asked to repay those debts. If you do not or cannot repay the debts, you could face an adversary proceeding lawsuit. 

Exceptions to Using Your Credit Card When Filing For Bankruptcy

Again, it is best to avoid using your credit card before filing for bankruptcy if you can, but the exception to using it will depend on whether you are purchasing what is considered necessary goods and services or luxury goods and services.

• Necessary goods and services: These are things that you need to live and support you and your family. This can include things like gas for your car to help you get to work, groceries to feed your family, or necessary clothing items, such as reasonably priced shoes for your child who needs them for physical education. 
• Luxury goods and services: These are things that you don’t need to work or live and are thus considered luxury and unnecessary. This can include buying designer brand items, vacation expenses, movie theater purchases, non-medical related spa purchases, etc.

How Sawin & Shea, LLC Can Help

At Sawin & Shea, we believe in providing compassionate and understanding representation to those struggling with debt and looking to file for bankruptcy. Being buried under overwhelming amounts of debt can be debilitating, and the last thing you need is to add more stress to the situation by worrying about your bankruptcy case. Our attorneys specialize in bankruptcy cases 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 Should I Max Out My Credit Cards Before Filing for Bankruptcy? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

Investment Real Estate in Chapter 7 Bankruptcy

Chapter 7 bankruptcy is a great option for those looking to discharge eligible debts. The process involves liquidating non-exempt assets property to pay creditors. There are protected exemptions in Chapter 7 bankruptcy that allow you to retain certain real and personal property.

The homestead exemption in Indiana allows homeowners to exempt up to $22,750 in home equity or another form of personal property. The homestead exemption can protect different types of homesteads such as a traditional home, mobile home, trailer, or farm, but it does not protect equity in investment property. If you don’t live inside of the property, you will not receive a homestead exemption for it. For example, if you have a property you rent out to others, you will not be able to retain equity through the homestead exemption.

Surrendering Investment Real Estate in Chapter 7 Bankruptcy

One benefit of filing Chapter 7 bankruptcy is that you can rid yourself of the property (and debt) easily in the event that you owe more on the property than it’s worth. You can surrender the property to creditors and discharge the debt associated with the investment property. Essentially, you can give the property back and walk away not owing anything additional to the creditor.

Investment Real Estate in Chapter 13 Bankruptcy

If you hold any substantial equity in your investment property, you likely won’t want to file for Chapter 7 bankruptcy. Chapter 13 bankruptcy allows you to retain your investment real estate. Instead of surrendering or liquidating the property, you repay part of your debts over time through a Chapter 13 repayment plan. 

Although this may sound more appealing if you own equity in your investment, there are critical factors you need to consider before filing. When filing under Chapter 13, you’re required to pay unsecured creditors — meaning they can’t recover physical property as collateral — the liquidated value of your nonexempt property. If there is non-exempt equity in your investment property you will need to pay creditors the value of that equity (minus estimated costs of sale). If you hold a great deal of unprotected equity, the amount you’ll need to pay in your Chapter 13 repayment plan can increase. In a Chapter 13 plan, you will have up to five years to pay these amounts back to creditors before receiving a discharge on the remaining balances of debt.

Investment Property Arrearages

In the event that you’ve missed payments on your investment property, you can pay back what you owe through a Chapter 13 repayment plan. The benefit of doing this is that you can pay it back over the course of three to five years rather than a lump sum, and you can avoid foreclosure as long as you are up to date with future payments and your Chapter 13 plan payment.

Chapter 13 Cramdowns

Some investment real estate properties qualify for cramdowns. When filing Chapter 13 bankruptcy, you can request for a judge to reduce the amount you owe based on the property’s value. If you owe $300,000 on an investment but it’s now only worth $250,000, a cramdown will reduce the amount you owe to the property’s value, $250,000 in this example.

The reason why most bankruptcy filers avoid cramdowns is that you’re required to pay back the loan within your Chapter 13 repayment plan. This means you’ll only have three to five years to pay whatever you owe on your mortgage. Additionally, you’re only allowed to cramdown a property that you don’t live in, so you can’t receive a cramdown for your residential home. 

Contact an Indianapolis Bankruptcy Attorney

Filing for bankruptcy is often confusing and challenging. Fortunately, a bankruptcy attorney can assist you through the process. For experienced bankruptcy attorneys in Indianapolis, contact the lawyers at Sawin & Shea. Our legal team has assisted numerous Indiana residents with overcoming debt through bankruptcy. Whether you’re considering filing Chapter 7 or Chapter 13, we can help you through the entire procedure. Take the first step in becoming debt-free by calling us at 317-759-1483, or you can click here to schedule a free consultation with one of our attorneys.

The post What Happens to Investment Real Estate in Bankruptcy? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

Below, we’ll explain what you need to know about your section 341 meeting and how to make sure you’re ready for it. With a bit of preparation, this is a simple part of the process that helps you move your bankruptcy along as quickly as possible.

The Basics of an Indiana 341 Bankruptcy Meeting

A 341 meeting is also known as a meeting of creditors or a bankruptcy hearing. It’s an opportunity for the official handling your case – an interim trustee in a Chapter 7 or a Chapter 13 Trustee – to meet you and ask questions about your background and financial status.

The hearing is reasonably informal. The Chapter 7 or Chapter 13 Trustee will ask you some questions. Your creditors may also attend, though they rarely do. The actual bankruptcy judge presiding over your case will not be present at this meeting, which helps preserve their neutrality in making a judgment about your case if there is cause for them to hear something out of the ordinary. Most Debtors in bankruptcy never have a hearing in front of the actual judge.

The meeting happens about 20 to 40 days after your initial bankruptcy filing. At this point in the bankruptcy process, the trustee in Chapter 7 cases is focusing on potential non-exempt assets that can be tapped to pay some of your debts. The Chapter 13 Trustee is looking at your situation to see if they think that your reorganization plan is going to do everything that the law requires. This means you may be expected to provide answers and/or documents to back up your statements.

The 341 meeting involves making sworn testimony, so you’ll be under oath. Answer the trustee’s questions honestly. However, the hearing is not a time to ramble on and talk about things not asked. Keep answers short and to the point. Listen to the guidance of your bankruptcy attorney and follow their instructions.

Questions to Answer at a 341 Meeting

Some of the questions the bankruptcy trustee asks might feel intrusive, but it’s just part of the process. It’s the trustee’s job to look out for fraud, undisclosed assets, undervalued assets, and other signs that someone might be manipulating the bankruptcy process.

During the meeting, maintain a pleasant attitude and stick with the facts. When the trustee asks a question, answer in a straightforward way based on your discussions with your bankruptcy attorney. Show the trustee that you’re an honest person acting in good faith and helping them get their job done.

Common questions bankruptcy trustees ask at 341 meetings include:

• Do you understand everything contained in your bankruptcy paperwork?
• Did you read and sign all of your bankruptcy documentation yourself?
• Are all possible creditors listed in your bankruptcy schedules?
• Have you ever filed for bankruptcy before?
• What is your monthly income?
• Do you pay child support?
• Are you current on paying your income taxes?
• Do you have a tax refund coming soon?
• Have you made any payments to any creditors within one year?
• Where do you reside?
• Have you lived at that residence for most of the last 180 days?
• Are you in the process of purchasing any real estate?
• What property do you own and how is it valued?
• Did you disclose all possible property?
• Are you part of a business partnership or corporation?
• Do you have homeowners’ insurance or car insurance?
• Does anyone owe you money?
• Are there any concerns, errors, or omissions you wish to bring to my attention?

Before you attend your 341 meeting, discuss the answers to the questions listed above with your bankruptcy attorney. If there’s anything you don’t understand, now’s your last chance to clear things up before the meeting takes place.

Tips for Attending Your 341 Meeting 

On the day of the meeting, dress professionally and not too casually, as if you’re attending a job interview. There are only a few things you’ll need to bring, but they’re essential to the meeting:

• Driver’s license or government-issued ID card
• Government issued social security card
• Any other documents requested

If the hearing is in person, arrive early to find parking so you’ll be on time for the meeting. Your creditors may or may not attend. If they’re present, the trustee might ask them questions and give them an opportunity to speak.

Stay positive and calm. Do not react negatively to any question a party to the hearing asks of you. You will have representation at the hearing that can handle improper questions. If you do not understand a question, say so and do not guess at an answer.

Have Questions About a 341 Meeting? We Can Help.

At Sawin & Shea, we have years of experience helping Hoosiers just like you change their lives through bankruptcy. Whether you have old bills that are still causing concern or new costs that you simply can’t handle, contact us as soon as possible.

We’ll help you address any concerns that arise during the bankruptcy process. Please reach out to the team at Sawin & Shea right away so you can feel fully prepared for your 341 meeting.

Sawin & Shea — Indianapolis Bankruptcy Attorneys

Filing for bankruptcy is the first step in a fresh financial future. The Indiana bankruptcy attorneys at Sawin & Shea can help you get rid of overwhelming debt and advise you on how to move forward after bankruptcy. We’re 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’re ready to help.

The post What Is a Section 341 Meeting and How Do I Prepare? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

As most of the information out there talks about joint property and debts being affected, many individuals think they can just transfer property to their spouse’s name to solve the issue. Unfortunately, it’s not so simple. In most cases, a judge will reverse the transfer, especially if it is apparent that it was done to evade creditors. If you are unsure of what you can and can’t do and what will happen when you file, you can reach out to an experienced bankruptcy attorney for help. They can guide you through the process to work towards the best possible outcome for you and your family.

What Happens to Our Property When I File for Bankruptcy?

Before we jump specifically into what happens when you transfer property, let’s first clarify the ways that property can be affected. In most situations, your bankruptcy will not affect property that is owned separately by your spouse. However, anything jointly owned is not necessarily safe, and how it is treated will depend on whether you live in a common-law or community property state.

Common-Law Property

Indiana is a common law property state, not community property. This means that any property your spouse owns separately in their name usually is not at risk. However, any property owned jointly is considered part of your bankruptcy estate. If you do not have enough exemptions to cover these assets, they can be taken and liquidated in a Chapter 7 bankruptcy. If the property is taken, the trustee responsible for selling the property to pay your creditors will pay your spouse the value of their interest in the property. In Chapter 13 bankruptcy, non-exempt interest in joint property affects the percentage of debt that you pay back to unsecured creditors and there is no liquidation of the property.

What Happens to Property Transfers When I File for Bankruptcy?

Even though common law property states do not typically include your spouse’s separately owned property in the bankruptcy estate, there are some situations when their property can still be affected. Property transfers, for example, are still susceptible to being reversed and taken.

Transfers Can Be Reversed

Large item transfers, such as a car, a house, a sizeable financial account, or any other significant property, are at risk of being reversed in a bankruptcy case by a judge. This is because when transfers like this occur, judges know that it is done to avoid the property being taken by creditors. Transfers made right before you file for bankruptcy will seem particularly suspicious, but even transfers made 2 to 4 years previously still have a high chance of being reversed.

Most people do not plan to file for bankruptcy years in advance. However, on the off chance that you do think it might be something you’ll have to do, you can transfer the property four years or more ahead of time, and it may reduce the likelihood of a reversal. In the rare case where a judge still attempts to reverse a transfer made four or more years previously, it may be necessary to work with an attorney to fight the reversal of the property. Even before you make a transfer, speaking with an attorney is wise. These situations are very complex, and you can easily lose your property entirely if you are not careful.

What About Non-Traditional Transfers?

Non-traditional transfers are situations that might not seem like a blatant transfer of ownership on an asset but may still be considered a transfer and reversed in the case of bankruptcy. For example, if you and your spouse receive joint-funds but invest in a property your spouse owns separately, a judge might still view that as a transfer. Or, perhaps you sell a property that was owned jointly and then buy a new property in your spouse’s name only—that can be viewed as a transfer as well. Even if these “transfers” were done without the intention of evading creditors and were decisions made before you were even considering bankruptcy, they might still be seen as assets and included in the bankruptcy estate.

How Sawin & Shea LLC Can Help

Filing for bankruptcy is a stressful and challenging process. We understand how devastating losing property to creditors can be in these cases. At Sawin & Shea, we believe in providing compassionate and understanding representation to all of our clients and are determined to help you achieve the best possible outcome. Our attorneys specialize in bankruptcy cases and are here to help you through the process every step of the way.

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

The post Can I Put My Property in My Spouse’s Name and File for Bankruptcy? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

How Do I Protect My Home During Bankruptcy?

During your bankruptcy, you can protect your home in two main ways. The first is through a homestead exemption, which covers residential real estate equity (what you own of your house when you consider what you owe against it) up to a certain amount. In Indiana, a debtor filing for Chapter 7 bankruptcy can protect up to $19,300 per person in residential real estate or mobile home. There is also a personal property exemption that protects equity in nonresidential real estate and personal property up to $10,250.

Another route to protecting your home is to use bankruptcy to halt a foreclosure, which is usually possible all the way up to the point of a sheriff’s sale. So if you’re about to lose your home, you may be able to use bankruptcy to stop the process.

How Can I Protect My Personal Property?

If you have personal property, you’d like to save during a Chapter 7 bankruptcy, there is a personal property exemption of up to $10,250 per person to protect it. This covers the (liquidation) value of your household goods, furniture, electronics, clothing, and equity in your vehicle. It is rare that there is a problem with a person having too much personal property. The other main category of exemptions is called intangible assets. This would include cash or cash equivalents such as bank accounts, claims against others for damages, bank accounts, non-retirement stock or bond holdings, tax refunds, and money people owe you. We can held each person in a bankruptcy hold onto $400 of intangibles available on the date the case is filed. In addition, there are exemptions for health aids, retirement plans, health savings accounts, spendthrift trusts and military equipment and others.

Do Exemptions Automatically Protect My Property?

Here’s something many people don’t realize: Exemptions are not automatic. Your belongings won’t automatically be protected, even if you qualify for exemptions. To ensure your property is covered by exemptions, you must apply for them when you file your other bankruptcy paperwork. A bankruptcy attorney can help you understand your exemption options and file for them efficiently and correctly.

Can Anyone Object to My Exemptions?

An interim bankruptcy trustee will review your exemptions and see if they are allowable under bankruptcy law. Usually, they will work with you to ensure you receive the right exemptions. But if they believe you are being deceptive or trying to use exemptions in bad faith, they may file an objection with the court to deny them. Seek the advice of a bankruptcy attorney who can help you use Indiana exemptions successfully.

What if I Have Assets that are Not Exempt?

If you have assets that exceed the allowed exemptions, your attorney will discuss options, such as a Chapter 13 bankruptcy, that can help you hang onto items that might be taken for the benefit of your creditors in a Chapter 7.

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 Can I Protect My Home and Personal Property in Bankruptcy? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.