When starting the filing process, the bankruptcy trustee will investigate your finances and assets to determine whether you’re eligible to file. Depending on whether you file under Chapter 7 or Chapter 13, the trustee has the power to liquidate non-exempt assets and determine whether you can discharge your debts in accordance with the United States Bankruptcy Code.

Here’s what you need to know about the bankruptcy trustee and what they will investigate.

What Is a Bankruptcy Trustee?

A bankruptcy trustee is an official representative appointed by the United States Trustee Program, which is part of the Department of Justice. Although the trustee will make recommendations to the Bankruptcy Court regarding what actions to take, the bankruptcy judge has the final authority.

Additionally, the bankruptcy trustee cannot take any steps without the Bankruptcy Court’s approval. The full scope of the bankruptcy trustee’s responsibilities will depend on whether you’re filing under Chapter 7 or Chapter 13.

Whether you’re filing Chapter 7 or Chapter 13, the bankruptcy trustee will hold the 341(a) Meeting of Creditors, an obligatory meeting for bankruptcy filers. At the meeting, the trustee asks the bankruptcy filer questions under oath to ensure that the filer didn’t lie or make mistakes when completing the bankruptcy paperwork. The trustee will ask questions verifying the filer’s assets and finances, and they’ll ask about any problems or inconsistencies with the filer’s paperwork.

What Does the Bankruptcy Trustee Investigate in Chapter 7?

A bankruptcy trustee overseeing a Chapter 7 bankruptcy has many responsibilities.

First, the trustee will review the debtor’s means test, and survey their financial information. The trustee may request documentation that corroborates the debtor’s financial situation and assets, and they’ll also inform the filer of any information they need for the 341(a) Meeting of Creditors.

If you file under Chapter 7, the bankruptcy trustee will investigate your assets and finances to determine your filing eligibility, and to determine if there are non-exempt assets they can liquidate.to pay back creditors. It’s important to remember that most Chapter 7 filers don’t lose any of their possessions during the liquidation process because of exemptions.

Finally, the trustee will determine whether or not there are grounds to deny the discharge your debts through Chapter 7. If you hid or lied about your finances and assets, the trustee will object to the Court discharging your debts. Other reasons why they may object to your discharge include:

• You deceived the trustee or the court.
• You already filed Chapter 7 bankruptcy in the last eight years.

What Does the Bankruptcy Trustee Investigate in Chapter 13?

When a debtor files under Chapter 13 bankruptcy, the trustee must verify their identity and review their finances and assets — as was the case with Chapter 7 — but they must also determine whether the debtor can fund their Chapter 13 repayment plan. In addition, the trustee will review to see if the Debtor’s Chapter 13 Plan meets all the requirements of approval or “confirmation”. The Trustee makes reports to the Court, but once again, the Judge in the bankruptcy process has the final say.

What If I Fail to Disclose Information About My Finances or Assets?

During the filing process, the trustee has the right to survey all of your finances and assets, and they can request any additional supporting documentation. The trustee will investigate whether any inconsistencies in your filing indicate fraud.

The trustee can also subpoena others to testify about your finances. For example, if the trustee suspects you have money or valuable assets you’re hiding, they can subpoena a friend or family member who may have information about the money.

During the Meeting of Creditors, the bankruptcy trustee will also ask questions you must answer under oath. These questions aim to clarify any red flags or inconsistencies within your finances that indicate dishonesty.

Some of these signs of fraud include undisclosed or undervalued property, transferring property in anticipation of filing, not verifying income, making preferential payments to a creditor — such as paying back a debt to a family member — and spending excessively.

Plus, the trustee will likely ask you questions to verify your identity and ensure you filed the paperwork correctly.

Suppose you knowingly or mistakenly hid or misrepresented your finances or assets, the bankruptcy trustee will likely object to the Court discharging your debts. Additionally, if you committed fraud during the bankruptcy process, you may face felony charges with hefty fines and possibly jail time.

Contact an Indianapolis Bankruptcy Attorney

If you’re considering filing Chapter 7 or Chapter 13 bankruptcy, don’t go through the process alone — contact an experienced bankruptcy attorney today. A bankruptcy attorney can help you ensure that you file correctly, and they’ll work to help you get your finances back on track.

For bankruptcy legal assistance you can count on, contact the Indianapolis bankruptcy attorneys at Sawin & Shea, LLC. Schedule a free consultation today by calling 317-759-1483, or you can request an appointment online here.

The post What Does the Bankruptcy Trustee Investigate? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

Does Bankruptcy Clear Tax Debt?

Some debtors can eliminate tax debts by filing bankruptcy Chapter 13 or Chapter 7, but it’s important to know what tax debts are eligible for discharge. It’s also critical to remember that you should never assume that you’ll be able to discharge your tax debts, so it’s best to avoid missing payments to the IRS when possible.

In order to discharge your tax debt, the debt must be at least three years old, and it has to be income tax debt. You also need to have filed a tax return for the debt at least two years before declaring bankruptcy. Additionally, the IRS needs to have recorded the debt at least 240 days before you file for bankruptcy.

Although Chapter 13 is the most common filing method for individuals to overcome tax debts, some can benefit from filing Chapter 7. With Chapter 7, a court-appointed bankruptcy trustee liquidates your non-exempt assets in order to pay back your creditors, including the IRS, and you receive a discharge on eligible debts once the liquidation process concludes.

If you have non-exempt assets that you’re wishing to keep or don’t pass the Chapter 7 means test, you’ll need to file through Chapter 13. Chapter 13 can make your non-dischargeable tax debts more manageable.

How Chapter 13 Bankruptcy Can Help with Your Tax Debts

Before filing for Chapter 13 bankruptcy, you’ll need to find out how much you owe the IRS. You need to contact the IRS and have them review your tax returns, and you need to ensure that you’re up to date with your tax filings. The IRS should provide you with your tax records, so you’ll know the age of your debts and whether you failed to file in a previous tax year. You’ll need to file your missing tax returns in order to declare bankruptcy.

Learning how much you owe and the age of your debt is an important first step in overcoming your back taxes. From there, you can determine whether you should go ahead and file for Chapter 13 or wait to increase your likelihood of discharging some of your debts. You’re required to pay back all tax amounts that are less than three years old, but if you have income tax debt that’s older than three years, you may only need to pay back 10% or none at all. However, if a tax lien is placed against you, then what was once a dischargeable tax debt is once again a debt that must get pain in a Chapter 13 plan. Some debtors choose to wait before filing in order for their existing tax debts to age to at least three years. That said, there’s a great deal of nuance in bankruptcy law, so you should consider contacting a Chapter 13 bankruptcy attorney to help you determine when to file.

Chapter 13 Bankruptcy Tax Debt Relief

When you file for Chapter 13, you present a three-to-five-year repayment plan to the bankruptcy court. This repayment plan pools your existing debts in order to pay back creditors, including the IRS. Those filing for Chapter 13 usually don’t pay off the entirety of their debts, but they can break down a sizable amount and discharge eligible tax debts.

Your repayment plan will depend on your financial situation as well as your other debts. Repayment plans are supposed to be realistic, and the amount you’ll need to pay for each installment will depend on your income, expenses, disposable income, and assets.

Because your repayment plan is largely based on your disposable income, you’ll need to avoid excessive spending that could jeopardize your ability to make on-time payments.

Once you complete your Chapter 13 repayment plan, you can discharge eligible tax debts as well as unpaid interest and penalties. Many Chapter 13 filers end up having to only pay back a portion of their tax debts to the IRS, and some are able to avoid paying back the IRS entirely.

Completing a Chapter 13 repayment plan doesn’t necessarily mean that you’ll be able to pay back the entirety of your tax debts, but you’ll likely be able to greatly reduce what you owe.

Contact an Indianapolis Bankruptcy Attorney

If you are considering filing for bankruptcy or are struggling with back taxes, consider contacting a bankruptcy attorney. For legal assistance in Indianapolis and surrounding counties, contact the lawyers at Sawin & Shea, LLC. You can request to schedule a FREE case consultation online or by calling our office at 317-759-1483.

The post Chapter 13 Bankruptcy and Tax Debt appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

In this blog, we’ll share the details regarding this exemption increase, the different exemption categories, and how these exemptions impact Chapter 7 and Chapter 13 bankruptcy.

What Are Bankruptcy Exemptions?

Bankruptcy exemptions refer to tangible or intangible assets protected from seizure when you file for bankruptcy.

If you’re filing for Chapter 7 bankruptcy, you can retain exempt assets and protect them from seizure but only up to a particular point. The court-appointed bankruptcy trustee can confiscate any non-exempt assets to liquidate in order to pay back some of your debts. That said, the majority of those who file for Chapter 7 bankruptcy are able to keep all of their possessions.   

In Chapter 13 bankruptcy, you pool your debts into a three-to-five-year repayment plan, and you get to keep your property. These exemptions still apply because they decrease the amount that you’ll need to pay back to creditors with your repayment plan.

Why Did Bankruptcy Exemptions Increase in Indiana?

Last year, the Indiana Department of Financial Institutions (IDFI) increased the bankruptcy exemption amounts. This is standard procedure, as the IDFI updates the allowable exemption amount every six years to reflect inflation.

How the IDFI calculates this increase is through the United States Department of Labor’s Consumer Price Index for All Urban Consumers. The economic disruption caused by the COVID-19 pandemic and other factors surged inflation rates, and the IDFI adjusted bankruptcy exemptions to keep pace with new rates. These exemptions went into effect on March 1, 2022.

What Assets Are Exempt When Filing for Bankruptcy?

Before we dive into the new exemption amounts, it’s worth noting these different exemption types. The two main exemptions you can expect when filing for bankruptcy are the homestead exemption and wildcard exemption.

The homestead exemption allows for debtors to protect their home’s equity, and this applies to either residential property or personal property that’s used as a residence, such as a trailer. It’s important to note that the homestead exemption will not protect your equity in a secondary residential property, such as a rental or lake house.

The personal property exemption protects a certain amount of tangible and.The tangible assets could include equity in secondary residential property, a vehicle, household items, furniture, clothing, jewelry, or any other personal property.

The intangible assets exemption looks at cash or cash equivalents and include money in a debtor’s bank account, inheritance, tax refunds, claims against others, or any other non-physical asset.

2023 Bankruptcy Exemptions Indiana

The new bankruptcy exemption amounts in Indiana are:

• Homestead Exemption: The amount of protected equity increased from $19,300 to $22,750.

• Wildcard Tangible Asset Exemption:  You can exempt tangible property that’s worth up to $12,100, an increase from $10,250.

• Wildcard Intangible Asset Exemption: You can now protect up to $450 in intangible personal property while the previous amount was only $400.

2023 Married Filing Jointly Bankruptcy Exemptions

You should note that the exemption amounts above apply to individual debtors. Those married and filing jointly can exempt twice the amount, meaning:

• Homestead Exemption: $45,500

• Wildcard Tangible Asset Exemption: $24,200

• Wildcard Intangible Asset Exemption: $900

Are There Any Other Bankruptcy Exemptions in Indiana?

In addition to these new exemption amounts, you may have other exemptions, including different types of benefits, accounts, and personal property.

• Personal Property: Includes health aids, spendthrift trusts, tuition programs, education savings accounts, and military uniforms and equipment.

• Benefits: Indiana protects retirement benefits, which can include pensions, IRA accounts, retirement funds, and other types of retirement benefit plans.

• Insurance: Insurance policies and benefits are exempt, including fraternal society benefits and life insurance policies in which the debtor’s children, spouse, or dependent relatives are beneficiaries.

• Miscellaneous: Other protected assets include unemployment benefits, some partnership properties, workers’ compensation, and a percentage of unpaid wages.

Contact an Indianapolis Bankruptcy Lawyer

Facing bankruptcy is a daunting prospect, and the process can be incredibly confusing. To ensure that you file correctly and receive the maximum exemptions, consider contacting a bankruptcy attorney who will assist you through the process. 

If you’re considering filing for bankruptcy in Indianapolis or surrounding counties, contact the lawyers at Sawin & Shea, LLC. We’ll untangle the complexities of filing for bankruptcy and will help you get your finances back on track so that you can eventually live debt free. Plus, we’ll help you deal with conflict that arises from your financial situation, such as creditor harassment.

You can schedule a free consultation today by calling 317-759-1483 or by contacting us online here.

The post Indiana Increased Bankruptcy Exemptions in 2022. Here’s How it Affects You. appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

In this blog, we’ll share details about loan modification, who is eligible, how to obtain one to stop foreclosure, and how a lawyer for foreclosure can help.

What is foreclosure?

Foreclosure is when a lender exercises its right to seize your mortgaged property if you fail to repay your loan. The process usually begins when you miss a mortgage payment. If you go 90 days without making a scheduled payment, your mortgage will go into default. Your lender will then notify you that you are in default and begin foreclosure proceedings. If your lender has gained legal authority to foreclose, you’ll have to vacate your property. It will then be sold “as-is.”

In 2022, the national foreclosure rate was .23 percent of all housing units, down from .36 percent in 2019 and the peak of 2.23 percent in 2010. While it is the 17^th largest state by population, in February 2023, Indiana had the 5^th highest foreclosure rate in the nation at a rate of one in every 2,956 homes.

What is a mortgage loan modification?

A loan modification is a change in your loan terms agreed upon between you and the loan owner to help you avoid default and avoid foreclosure to keep your home. In most cases, a loan modification makes your mortgage payments more affordable. The goal is to reduce your monthly payments so you can afford your loan each month.

In a loan modification, your lender would agree to one or more of the following options to reduce your monthly payments: 

      · Lower the interest rate if they are currently lower than when you originally locked in your loan

      · Extend the loan’s term, which gives you more time to repay your loan and lower your monthly payments 

      · Much less commonly, your lender may agree to allow you to pay some of your principal balance later to help reduce payments

      · Modify your loan from an adjustable interest structure to a fixed-rate loan, which is helpful if you need a predictable monthly payment.

Who is eligible for a mortgage loan modification?

Your home must be your primary residence to qualify for a loan modification. You will also have had to have gone through a financial hardship that caused an income loss or reduction, such as taking on a lower-paying job, being unable to make your monthly payments, or being in danger of falling behind. Many lenders require you to be in default before agreeing to a loan modification. 

Lastly, you’ll have to show that you can make regular payments under the terms of the loan modification agreement. Beyond that, different investors have specific terms under which they will approve loan modifications. Although loan modifications can stop foreclosure, they can also negatively impact your credit score, making it difficult for you to purchase property down the road.

How to get a loan modification

The process to obtain a loan modification varies for each lender. Still, in most cases, you need to apply through a “borrower response package” or a “loss mitigation application.” Some require a hardship letter that explains why you need the loan modification. Other lenders automatically evaluate you for a mortgage modification if you are behind by a certain number of payments. If you’re denied, you can file an appeal with your lender.

At Sawin & Shea LLC we use Chapter 13 bankruptcy in conjunction with a loan modification program to help people with significant delinquencies on mortgages. Through our program a personal modification representative will work with you and your lender though a Court approved document portal. This provides a great opportunity to get all involved on the same page and helps to facilitate a solution. If a modification is not forthcoming, the Chapter 13 plan provides other opportunities to get the mortgage back on track.

Bankruptcy assistance for Indianapolis area homeowners

The attorneys at Sawin & Shea, LLC have experience helping Indianapolis and surrounding county homeowners prevent foreclosure by combining Chapter 13 bankruptcy with mortgage modifications. If you are wondering, “Will loan modification stop foreclosure?”, our attorneys are committed to providing compassionate, non-judgmental representation to all our clients. Contact us today for help.

The post Will a Loan Modification Stop Foreclosure? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

If you’re at risk of losing your house because of missed mortgage payments, you need to take immediate steps to ensure that you retain your home. Fortunately, Chapter 13 bankruptcy offers debt relief and a solution for stopping mortgage servicers from repossessing your home.

What Is an Adjustable-Rate Mortgage?

An adjustable-rate mortgage is a home loan that features variable payments. Adjustable-rate mortgages’ interest rates and monthly payments are determined by market conditions. This differs from fixed-rate mortgages, where debtors pay a set interest rate for the entirety of the loan. Many Americans are not qualified for a fixed vs adjustable-rate mortgage because their qualifications tend to be more strict.

In addition to standard adjustable mortgage rates, many individuals and families obtain hybrid adjustable-rate mortgages, meaning the mortgage has a set introductory period in which the interest and payments are fixed. For example, if the introductory fixed rate is three years, the debtor would pay non-adjusted monthly payments for three years. After that, their payments would increase or decrease depending on the market.

Right now, hybrid adjustable-rate mortgages may appear appealing because their introductory interest rates are frequently lower than fixed-rate mortgages and have smaller monthly payments. Additionally, there’s a chance that market conditions will cause the mortgage interest rate to decrease, saving debtors money on their monthly mortgage payments.

Although adjustable-rate mortgages have potential advantages, they also come with significant risks that can potentially ruin you economically depending on your financial situation. Future interest rate adjustments can cause your mortgage interest rate and monthly payments to increase, creating financial discomfort.

In 2022, the Federal Reserve raised interest rates to 4.4%, which went into effect on December 15, 2022. That means that interest rates on adjustable-rate mortgages will also increase.

Of course, that doesn’t mean the Fed will continue raising interest rates soon, necessarily, but there’s always uncertainty with adjustable-rate mortgages. Interest rates and monthly payments can increase to the point in which debtors fall behind on their mortgages. 

Typically, mortgage servicers cannot foreclose on a home until 120 days after a debtor falls behind on monthly payments, but if you find yourself missing payments, you need to take immediate steps to protect your home.

Saving Your Home From Foreclosure Through Chapter 13 Bankruptcy

Chapter 13 bankruptcy offers a solution if you’ve fallen behind on monthly mortgage payments. Chapter 13 reorganizes your debt into a three-to-five-year repayment plan. Once you file, you’ll receive an automatic stay stopping any action against your home, meaning that mortgage servicers cannot repossess it as long as you make on-time payments according to your repayment plan. This is even the case if you already have a foreclosure up to the point of the Sheriff’s sale on the home.

This differs from Chapter 7 bankruptcy because debtors are at risk of losing their homes during the Chapter 7 liquidation process.

In addition to being able to keep your home with Chapter 13, you’ll also receive an automatic stay for your vehicle and other possessions.

What Happens to My Mortgage If I Declare Bankruptcy?

It’s important to note that declaring Chapter 13 bankruptcy will likely NOT wipe out your mortgage. Instead, it can help get you back in good standing with your mortgage servicer if you’ve fallen behind on payments. Your Chapter 13 repayment plan will reorganize your debt and include your overdue mortgage payments.

While you undergo Chapter 13 bankruptcy, your mortgage can accumulate late fees, but your mortgage servicer cannot charge you these fees unless you fail to complete your Chapter 13 repayment plan. They can charge you late fees if you drop out of the bankruptcy process or if the bankruptcy court dismisses your case. Additionally, the mortgage servicer can charge you late fees if you convert to Chapter 7 bankruptcy.

One final note is that your adjustable-rate mortgage payments can potentially increase according to your original contract once you file for Chapter 13 bankruptcy. The mortgage servicer is required to inform you or the bankruptcy court about your increased monthly payments. If they fail to offer proper notice and surprise you with increased payments after the bankruptcy process, they may not be legally able to charge you with the enlarged monthly payments.

In the event that the mortgage servicer surprises you with increased monthly payments or engages in another unlawful act, such as harassment, you need to contact a Chapter 13 bankruptcy attorney.

Can You Get a Mortgage After Bankruptcy?

Getting a mortgage after bankruptcy is not impossible, but you will need to be patient. All cases are different, but there are no legal restrictions to obtaining a mortgage or refinance post-bankruptcy. An experienced bankruptcy attorney can help you answer questions about mortgages during and after bankrutpcy.

Contact a Central Indiana Chapter 13 Bankruptcy Attorney

If you’re considering filing for Chapter 13 bankruptcy, you don’t need to go through it alone. Contact Sawin & Shea for experienced legal support in your bankruptcy case. We’ll help you on your journey to becoming debt free.

Get a FREE case consultation by calling our office at 317-759-1483, or you can contact us online here.

The post Adjustable-Rate Mortgages and Bankruptcy appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

However, for this reason, it’s not uncommon for people to want to know how to remove bankruptcy from a credit report. Whether you want to open new lines of credit, secure a new loan, or buy a home—there are many reasons why you might want to get rid of your bankruptcy to improve your credit score.

Unfortunately, most bankruptcies cannot be removed from a credit report, not unless you qualify under certain conditions. If you don’t qualify, you might simply have to wait until the bankruptcy leaves your report after the standard reporting time. You can, however, make your credit better post-filing. In many cases, the act of filing a bankruptcy makes credit better by ending ongoing negative information from continuing to appear on the reports. In either case, speaking with a bankruptcy attorney may help.

At Sawin & Shea, we understand how difficult going through bankruptcy can be and are dedicated to helping make the process as smooth and stress-free as possible for our clients. Whether you are filing for Chapter 7 or Chapter 13, we can assist you, both with the process of filing and even after your bankruptcy has been discharged.

Credit Scores: What Happens When You File for Bankruptcy?

When you file for Chapter 7 bankruptcy, you will list all of your debts, non-exempt assets can then be liquidated to pay back your creditors. Most Chapter 7 cases are what is called a “no-asset” case and the debtors keep everything they have. Most types of debts are typically discharged.

With Chapter 13 bankruptcy, instead of discharging all of your debt, a payment plan is worked out so that you can pay a percentage of your debts over a three to five-year period. In this situation, your creditors and lenders might get more money back than they would with a Chapter 7. This process can still hurt your credit, but it might not affect it as severely as it would if you filed Chapter 7.

How Long Does Bankruptcy Stay on Your Credit Report?

The length that a bankruptcy stays on your credit report will depend on the type of bankruptcy you filed. The two primary types of bankruptcy are Chapter 7 and Chapter 13.

A Chapter 7 bankruptcy can remain on your report for up to 10 years. Chapter 13 will stay on your credit report for 7 years.

Who Reports Bankruptcy to the Credit Bureaus?

Despite what some may believe, the Bankruptcy Court does not interact with credit bureaus, meaning they do not report your bankruptcy to them. However, the court has a legal obligation to maintain an accurate record of bankruptcy filings, and once a case is filed, it becomes permanent and public record.

As such, anyone or any organization can access bankruptcy files either by visiting the courthouse or through the online system. So, it is usually the creditors or the credit bureau themselves that access this information and report it. The Bankruptcy Court has no control over what credit bureaus do with the information once they access it.

How to Remove Bankruptcy from a Credit Report

No one can legally remove accurate information about bankruptcy from their credit report. However, under the Fair Credit Reporting Act, you can file a dispute with the credit bureau if the information on your report is inaccurate or incomplete.

If your bankruptcy is legitimate, you will not be able to legitimately dispute it. In this case, your only option is to wait until the credit bureau removes it after the standard seven to ten years. If the bankruptcy is not removed after that time, you can file a dispute to have it removed. In the meantime, make your credit better by doing all the things that make credit good. Do not overextend yourself on credit and make timely payments on credit accounts.

Common errors or mistakes that credit bureaus make regarding bankruptcies that you can file a dispute for include:

• Misspelling errors, wrong addresses, wrong dates, etc.
• Discharged debts still showing up on your credit report.
• Mistaken identity or someone else’s bankruptcy showing up on your credit report.
• The bankruptcy still showing after the seven to ten-year period.

If any of these mistakes show up, you have the right to dispute them. However, the bankruptcy itself will still appear on your report for the standard amount of time if it is legitimate.

You can file your dispute with the credit bureau by phone, by mail, or by using their online system. However, it is generally a complex process, and if you have concerns about your rights, you may want to work with a bankruptcy attorney to help you handle your case.

How Sawin & Shea, LLC Can Help

For help with your bankruptcy case, get in touch with the Indiana attorneys at Sawin & Shea. We provide compassionate and understanding representation to those struggling with debt.

Our attorneys can help walk you through the bankruptcy process every step of the way. We can even offer guidance after your bankruptcy case has ended to help you rebuild your credit.

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

The post How to Remove Bankruptcy from a Credit Report appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

Although bankruptcy can help you overcome debt, it will negatively impact your credit score, making it more challenging to obtain credit cards, loans, and other financial products. Here are some expert tips for rebuilding your credit and finding the best credit cards after bankruptcy.

Rebuilding Your Credit After Bankruptcy

Your bankruptcy will remain on your credit score for up to a decade. Those who declare Chapter 7 bankruptcy can expect it to remain on their report for 10 years after their filing date, and Chapter 13 will remain for seven years from your filing date.

Bankruptcies can impact your credit, but you can take steps today to rebuild your creditworthiness. It may take a bit of time, but with responsible financial management, such as paying bills on time, managing credit card balances, and building a savings account, you can begin to improve your credit score a lot in a short time following your bankruptcy case.

Find Bankruptcy-Friendly Credit Cards

One of the best tools at your disposal for rebuilding your credit is obtaining a credit card and using it responsibly. Typically, cards are available to people who have gone through bankruptcy. You may have to start small, with a secured card. But it should not take long for those who went through bankruptcy to qualify for a conventional, unsecured credit card. No matter what kind of card you end up with, make sure that they report to the three major credit reporting agencies so that you get the benefit of the work you are doing to improve your credit.

An unsecured credit card does not require collateral to obtain approval. Unlike secured credit cards, which require a security deposit that serves as collateral, unsecured credit cards are approved based on your creditworthiness, income, and other factors. With an unsecured credit card, the lender assumes the risk of lending money to the borrower without any collateral in case the borrower defaults on their payments.

If you’re looking to find unsecured credit cards that accept bankruptcy, initially you will only qualify for cards with high interest rates. According to Wallethub — a website that specializes in helping people find the best financial products — one of the best unsecured credit cards for those with bad credit is the Credit One Bank Platinum Visa for Rebuilding Credit. Unfortunately, it does have steep annual fees and a less-than-ideal APR: Its APR is 28.74% variable, and it comes with a $75 annual fee for the first year and $99 for each subsequent year.

Rather than getting an unsecured credit card, you may want to consider getting secured credit cards that accept bankruptcy, as these cards typically offer better terms and a lower APR. Deposits for a secured credit card typically range from $200 to $300, but with a higher deposit, you can expect a higher credit limit. According to Investopedia — an online educational resource for finance and investing — some of the best secured credit cards include Capital One Platinum Secured, Discover it Secured, and Self Visa.

Tips for Rebuilding Your Credit with Your Credit Card

Once you obtain your secured or unsecured credit card, you need to use it responsibly to build your score. Consider taking the following actions:

• Only make purchases you can afford. Consider creating a budget to ensure you don’t overspend.

• Pay your bills on time and in full. 

• Keep your credit utilization rate below 30% as it shows lenders that you can manage your credit responsibly.

• Avoid opening too many credit card accounts. While having multiple credit cards can be beneficial for your credit score, it’s important to avoid opening too many accounts at once, as this can make you appear risky to lenders.

Becoming an Authorized User

Another option you have for rebuilding your credit is becoming an authorized user on a friend or family member’s account. As an authorized user, you are not responsible for paying the credit card bill, but you are allowed to use the card for purchases up to a certain limit set by the account holder. The credit card issuer will report the authorized user’s activity to the credit bureaus, which can improve your credit score.

However, it’s important to note that becoming an authorized user on someone else’s credit card account carries some risks. If the account holder does not make payments on time, it could negatively impact your credit score. Additionally, you should only become an authorized user for an account holder who you trust because they’ll have access to your personal information, potentially leaving you vulnerable to identity theft or fraud. For that reason, only become an authorized user for someone who’s financially responsible and trustworthy.

Contact a Bankruptcy Attorney

Finding the right credit cards after bankruptcy is a great start for rebuilding your credit, but you may need additional assistance with your finances. If you’re considering bankruptcy or recently declared in or around Indianapolis, you can contact the Sawin & Shea bankruptcy team for support.

With over 65 years of combined legal experience, you can count on us to assist you through the bankruptcy process, and we’ll work with you to get your finances back on track and rebuild your credit. Give us a call today at 317-759-1483, or you can request to schedule a FREE consultation with one of our attorneys here.

The post Rebuilding Your Finances: Credit Cards After Bankruptcy | Credit Tips appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

Unfortunately, rising inflation impacts almost everything we purchase, such as cars, homes, clothes, food, and utilities. Increased inflation makes it all the more challenging to overcome existing debts, and the rising prices increase the likelihood of more Americans going into debt.

In response to these historic inflation rates, the Fed has raised the Prime Interest Rate to 7.75%. Raising interest rates typically slows down the economy as well as the rate of inflation, but these rates have a direct impact on people’s ability to obtain new loans.

Here’s what you need to know about getting a new loan and interest rate after bankruptcy.

Inflation and Existing Debts

The rising interest rates and inflation will severely impact those who have loans with variable interest rates. A variable interest rate means that the rate of interest is subject to market changes, such as inflated interest rates. When the Federal Reserve raises interest rates, financial institutions increase their rates accordingly, so those with variable interest rate loans may need to pay more interest than when they initially borrowed the money.

For example, if you have a variable interest rate on your home’s mortgage, that interest rate may increase to reflect market conditions.

When you have a fixed interest rate, your interest remains the same over the duration of the loan.

How Rising Interest Rates Impact New Loans

In current market conditions, you can expect new loans to feature higher interest rates. Sadly, numerous people struggle to obtain reasonable loans when interest rates are this high. Higher interest rates also mean that it’ll take longer to pay off a loan’s principal amount, and those needing a car loan, mortgage, or personal loan may find themselves paying an exorbitant amount of money in interest alone.

Why File for Bankruptcy with Rising Interest Rates

If you’re struggling with overwhelming debts made worse by increased interest rates, you may want to consider filing for Chapter 13 bankruptcy. Chapter 13 bankruptcy organizes your debts into a repayment plan that lasts three to five years. This simplifies your debts and structures them into a monthly plan with a fixed interest rate.

In a Chapter 13 Plan you may also be able to obtain an in-plan fixed rate that’s lower than your loan’s original rate. For example, you could start a repayment plan with a 9% interest rate on a car loan while your vehicle’s original loan had an 18% interest rate. Other types of debts, like credit cards and medical bills are forces to take what the law says you are required to pay under an income-based test and an asset based test. Usually, this is cents on the dollar.

Filing for Chapter 13 bankruptcy is also critically important if you’re at risk of home foreclosure. As long as you keep up with your repayment plan, you will be able to keep your home. Chapter 13 bankruptcy can even stop a home foreclosure up until the sheriff’s sale. Once you file Chapter 13, part of your repayment plan will go toward catching up on your housing payments.

People also frequently use Chapter 13 bankruptcy to overcome second and third mortgages, which may have cumbersome interest rates.

Tips for Getting a Desirable Interest Rate After Bankruptcy

Although Chapter 13 bankruptcy is a great option for those struggling with debts and high-interest rates, filing will negatively impact your credit, and this can make it more difficult to find desirable loans. For example, a new auto interest rate after bankruptcy may be higher than if you hadn’t filed, and your bankruptcy will also make it more challenging for you to qualify for a mortgage with a reasonable interest rate.

That said, Chapter 13 will only remain on your credit report for seven years, and there are ways in which you can increase your likelihood of finding favorable interest rates. You can improve your credit and ability to qualify for better loans by:

• Avoiding further debt: It’s critical to avoid accumulating more debts after going through Chapter 13 bankruptcy. Your debt-to-income rate directly impacts your ability to obtain favorable loans, so incurring more debt will prevent you from qualifying for loans with reasonable interest rates.

• Check Your Credit Score After Discharging Debt: Your Chapter 13 filing will discharge certain types of debt. You need to ensure that these debts are no longer listed on your credit score. If they’re still listed, the items will continue negatively impacting your credit.

• Make On-Time Monthly Payments: You need good financial health to obtain lower interest rates. Making consistent, on-time payments shows lenders that you’re a reliable borrower. Eventually, you’ll have an easier time obtaining better interest rates.

• Rebuild Your Credit Score: Rebuilding your credit takes time and consistency, and once you have a better score, you’ll have an easier time finding reasonable interest rates. You can build your credit back up by using a secured credit card, or you can become an authorized user on another person’s credit card. You can also build credit through on-time rent and utility payments.

Contact a Chapter 13 Bankruptcy Attorney

If you need assistance in filing for bankruptcy and becoming debt-free, contact a bankruptcy attorney today! A seasoned bankruptcy lawyer can help you navigate the complexities of filing so that you make the best financial decisions moving forward. They can also help you against creditor harassment.

For experienced Chapter 13 lawyers in Indianapolis, contact the Sawin & Shea legal team. Schedule a FREE case consultation today by contacting us online here or by calling 317-759-1483.

The post How Rising Interest Rates Can Affect Your Interest Rate After Bankruptcy appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

One common question we see with those considering bankruptcy is “How long after bankruptcy can I get a mortgage?” which is a valid concern.

If your financial situation improves, it’s understandable that you might want to take the step toward home ownership. And the simple answer is, yes, you can get a mortgage after bankruptcy. It will just depend on how long ago your bankruptcy was, the lender or type of mortgage loan you are applying for, and what type of bankruptcy you filed, such as a Chapter 7 or Chapter 13 bankruptcy. 

Getting a Mortgage After Chapter 7 Bankruptcy

Chapter 7 is the most common type of bankruptcy, but it is also the hardest to get a mortgage after. However, though you can expect your credit score to be impacted for 10 years after a Chapter 7 bankruptcy, you do not typically have to wait that long to apply for a mortgage. If you can re-establish your credit, or if you can find lenders that are willing to work with those who have gone through bankruptcy, you can apply for a mortgage as little as a year after your bankruptcy is discharged.

If you work on making your credit better after your discharge, most people are able to get a mortgage in 2 to 4 years after a Chapter 7. The exact timing can also depend on the specific type of mortgage loan you apply for, so keep that in mind when you start looking into buying a house.

Getting a Mortgage After Chapter 13 Bankruptcy

Getting a mortgage after a Chapter 13 Bankruptcy is often easier than after Chapter 7. This is because when you file for Chapter 13, you agree to a payment plan to repay your creditors over three to five years—and this has less of a negative impact on your credit score.

In fact, if you can show proof that you are making timely and consistent payments, you may be able to apply for a mortgage while you are still in the process of your Chapter 13 bankruptcy. FHA loans, for example, are available to those who are going through a Chapter 13 bankruptcy, so long as they meet certain conditions.

You will be more likely to be eligible for a mortgage during Chapter 13 if you:

• Have made 12 months of on-time payments in your Chapter 13 plan.
• Are approved by the court to purchase a house with an FHA loan.
• Can demonstrate that you are unlikely to have to file for bankruptcy again.

Other mortgage loans you may qualify for while still completing your Chapter 13 include VA and USDA loans. If you are trying to secure a conventional mortgage loan, however, you may need to wait at least two years.

Mortgage Companies That Deal with Bankruptcy

While there is no set list of specific companies that are bankruptcy-friendly, as every lender has different policies, and their policies can change from year to year, there are certain types of loans that you may be able to get more easily, as mentioned above.

• FHA mortgage loans: These are federally insured loans that are more attainable for cash-strapped borrowers and those going through or having just gone through bankruptcy. An FHA loan requires only a 3.5% down payment and only a 580 credit score. You can even go as low as a 500 credit score if you can put 10% down.
• USDA mortgage loans: These loans are also ideal as they offer low mortgage interest rates after bankruptcy and a 0 down payment option. For Chapter 7, you may still have to wait three years—unless you can demonstrate that the bankruptcy was beyond your control and not due to poor financial management. For Chapter 13, you can apply after 12 months of successful payment plan payments.
• VA mortgage loans: If you are a veteran who has gone through bankruptcy, VA loans are a potential option. They offer no down payment options, no minimum credit score requirement, and unlimited use of the loan program. For Chapter 7, however, you may still have to wait two years until you can apply.

Applying for a Mortgage After Bankruptcy

When you apply for a mortgage after bankruptcy, the process is generally the same as it would be if you hadn’t filed Chapter 7 or Chapter 13. However, there are some extra steps you should take to improve your chances of getting the loan.

1. Boost your credit score: If you can re-establish your credit and boost your score as much as possible, this will help before applying for a mortgage loan. You can do this by opening new credit accounts and using them wisely and making payments on time.
2. Letter of explanation: When you apply for a mortgage, including a letter of explanation for why your bankruptcy occurred can help as well. If you can demonstrate that the bankruptcy was beyond your control and that your finances have improved, the lender will potentially be more lenient.
3. Get a preapproval: Sellers and real estate agents will be more likely to accept your offer if you can show that you have already received mortgage preapproval from a lender.

How Sawin & Shea, LLC Can Help

At Sawin & Shea, we provide compassionate and understanding representation to those struggling with debt and filing for bankruptcy. Whether you are considering applying or need help with something during or after your bankruptcy, we are here to help.

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

The post How Long After Bankruptcy Can I Get a Mortgage? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

Fortunately, filing for bankruptcy offers debt relief to help you get your finances back in order, but you’ll need to avoid certain pitfalls when filing, such as overspending or accumulating more debt.

Here’s what you need to know about getting through the holidays during bankruptcy. 

Don’t Accumulate Any More Debt

If you’re already in the middle of filing for bankruptcy, any new debt that you accumulate will not be discharged. This includes credit card debt, so try to avoid racking up a substantial balance this season.

Those who are about to file for bankruptcy should also avoid accumulating substantial debt. Many debtors make the mistake of racking up more debt before filing because they figure that they’ll be able to discharge it. This is even more common during the holiday season because people spend a great deal on travel plans, gifts, and food. 

When you have a sudden increase in debt leading up to filing for bankruptcy, credit card companies may object to your bankruptcy discharge. They may even argue that you committed bankruptcy fraud, which is a federal felony. Those found guilty of bankruptcy fraud could face up to a five-year prison sentence and up to a $250,000 fine. 

Don’t Purchase Expensive Luxury Items

Although some holiday expenses are unavoidable, you should definitely avoid spending over $600 on a single luxury purchase. An item may be considered a “luxury” if it’s a product or service that’s not necessary to support you or your dependents. If you’re not sure whether some of your purchases are considered “luxury,” consult with a Chapter 7 or Chapter 13 bankruptcy attorney. 

If you make a luxury purchase of over $600 within 90 days of filing for bankruptcy, creditors will request for the bankruptcy court to not discharge the debt. This also includes gifts, so it’s critical not to spend over $600 on any one gift.

Some debtors attempt to avoid the luxury item bankruptcy provision by taking a cash advance on their credit card, but this will also likely not work. If you take a cash advance of over $950 within 70 days of filing for bankruptcy, the credit card company will argue against your debt being discharged. 

How to Cut Down on Spending This Holiday Season

It’s best to avoid accumulating more debt during the holidays, and you can do this by creating a tight budget and by staying clear of any holiday sales that may increase your spending. 

When creating your budget, calculate how much you can reasonably spend without falling into further debt. Then, create a list of necessary holiday expenses. It’s critically important to avoid going over budget this holiday season as you prepare to file for bankruptcy or continue going through the filing process.

You can also find creative ways to reduce your spending, such as introducing a Secret Santa gift exchange in your family. That way, you’re not having to purchase a gift for every member of your family. 

Additionally, if you’re hosting extended family or friends for the holidays, you can introduce a potluck system so that you don’t need to spend as much on food. 

Bankruptcy Automatic Stay

Although you need to tighten your belt and avoid more debt this holiday season, filing for bankruptcy does provide certain protections and benefits that may alleviate some of your financial stress, such as an automatic stay. 

When filing for Chapter 13 bankruptcy, your home’s mortgage payments will be restructured into your repayment plan, and creditors will not be able to repossess your home or take legal action against you thanks to the bankruptcy automatic stay. 

With Chapter 7 bankruptcy, you reaffirm your secured debts while discharging unsecured debts. Secured debts refer to debts with collateral, such as a home or car. Most of the time, Chapter 7 filers are able to reaffirm their mortgages as long as they are not behind on payments. 

If you are behind on a house or car payment, you may want to consider filing for Chapter 13 bankruptcy. 

Contact an Indiana Bankruptcy Attorney

If you need help getting started with filing bankruptcy this holiday season, consider enlisting the services of Chapter 13 or Chapter 7 bankruptcy lawyers. Qualified bankruptcy attorneys can help you improve your financial situation and can assist you if you’re the victim of creditor harassment. 
For seasoned bankruptcy attorneys in Indiana, contact Sawin & Shea, LLC. We have years of experience helping Indiana residents become debt free. Call us today at 317-759-1483, or you can schedule a FREE consultation online here.

The post How to Survive the Holidays During Bankruptcy appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.