Free Consultation

Call us right now. Or let us Call You!

(317) 769-2244
Fields marked with an * are required

The Best Bankruptcy Advice Ever?

What is the Best Bankruptcy Advice Ever?  The best bankruptcy advice is extremely simple: only take bankruptcy advice from a Bankruptcy Attorney.  The worst bankruptcy advice ever usually comes from friends, family, co-workers and misinterpreted internet searches.   The best bankruptcy advice comes from bankruptcy attorneys.   Let’s give a few examples where the best bankruptcy advice would have prevented the needless waste that resulted from receiving bad bankruptcy advice.  The “best bankruptcy advice” here is being used as a general expression.   Remember, every legal situation is different and requires specifically-tailored legal advice to know what is “best.”

 1:  Exhausting your 401(k) or IRA Paying Debts

Using a 401(k) or IRA to repay debts can be horrible advice which can create the needless waste of hard-earned retirement funds.   Because 401(k) and IRA accounts (or any other tax-exempt, tax-deferred retirement account) are designed for retirement, they are 100% exempt from any creditor collection.  Therefore, in many situations, it can be inferior advice to use loans or disbursements from these accounts to repay debts.   Frequently, we have seen clients needlessly exhaust their retirement accounts by paying on their debts only still file bankruptcy some short time in the future.   They would have frequently received different, better advice if they had consulted our office first.

2: Transferring Property Out of Your Name

We have seen numerous clients over the years transfer property out of their name due to bad bankruptcy advice before they came to our office.  Most of the time these transfers were very minor, but sometimes they have been substantial.  At times, we could not help them because of some kind of transfer that had been made.   The best bankruptcy advice is to let your attorney guide you on all matters in the bankruptcy.   Do not make any large changes or do any transfers before talking to a bankruptcy attorney.  Remember, the attorney will know what is the best course of action.

3: Refusing to File Bankruptcy or Waiting Too Long

We have encountered endless amounts of people who have needlessly suffered by waiting too long to file for bankruptcy or even refusing to file.  “Demonizing” bankruptcy is horribly irresponsible and cruel: it is likely the absolute worst sort of advice you can give to somebody who desperately needs bankruptcy relief.   Even misinformation can be very damaging to someone considering bankruptcy.   The best bankruptcy advice is to seek a bankruptcy attorney early in the process and get the whatever appropriate relief you need to recover from your economic situation.

rsz_8ph_8102

 

What Happens To Your Car Payment When You File For Chapter 13?

When you file for Chapter 13, what happens to your car payment?    Usually you will be required to pay car payments through the Chapter 13 plan.  Also, the Chapter 13 case can make your car payments much lower and much easier to pay.

Who pays my car payment during the 13?

The Chapter 13 Trustee usually pays your car payments through the terms directed on your Chapter 13 plan. During the Chapter 13 case, the Trustee usually pays off your automobiles first because they are “secured” debts.   After the cars are paid, the Trustee then switches to paying your unsecured creditors.   A monthly prearranged payment is made to each automobile creditor that follows the terms of your plan.  If there are no specific terms, the Trustee just pays the maximum amount possible to the automobiles at each stage of the plan.  Essentially, the Chapter 13 Trustee ensures that your cars are paid an appropriate amount and that all terms of the plan are followed.

Can I pay my automobiles directly instead of having the Chapter 13 trustee pay them?

Generally, in the Indiana Southern District for Bankruptcy, the Chapter 13 trustee requires all short-term debts to be paid through the plan. Therefore, if you have a conventional automobile loan, the Trustee will usually request that it be paid through the Chapter 13 plan.   In some cases for appropriate reasons, the Trustee will allow direct payments to automobile creditors. Usually, the Trustee prefers that only almost-paid-off automobiles have their payments made directly to the creditor.  Remember, that the Trustee can bring an objection to your plan.  If you are not following the requirements for paying an automobile properly through Chapter 13 plan, it may slow down the confirmation of your Chapter 13 case.   Later you may be forced to amend your plan to have the TImage depicting that a vehicle can be surrendered in bankruptcyrustee pay the automobile payment.

Leases and Other Special Circumstances

Generally, all lease automobile payments are paid directly to the lease creditor. If you are leasing an automobile, you need to make those payments directly.   In other rare circumstances, it may also be appropriate to structure an automobile payment to be paid outside the plan.   Keep in mind that all Chapter 13 plans are different. Ultimately, it is your responsibility to both read and understand the terms of the plan.   The debtor signs the Chapter 13 plan, pledging that they will follow its terms and conditions.  If you have questions about your Chapter 13 plan, you need to ask your attorney immediately.

What Happens to Your Chapter 13 Case if Your Spouse Files For Divorce?

What happens to your Chapter 13 case if your spouse files for divorce?  If your spouse has filed for divorce, major changes can come quickly to your financial situation.  Your Chapter 13 case can be handled in two primary ways if a divorce situation develops.  You can either “stay the course” or consider other options.

Remaining in Chapter 13 despite the divorce: Staying the Course

Even though your spouse has filed for divorce during Chapter 13, you both may still be entitled to receive relief in Chapter 13.  If you stay the course, you will eventually receive your discharge of debts.  If you are capable of making the ongoing Chapter 13 payment yourself, then you may not need to make any changes to your case.  In other cases – although this may not be recommended – both parties in the divorce situation can agree to make a portion of the Chapter 13 payment.   If a Chapter 13 case is almost complete, continuing in the Chapter 13 could be more feasible than if the Chapter 13 case has just begun.

Considering Other Options

You may instead consider other options besides Chapter 13 if a divorce situation develops.  You may not want to be locked down in a Chapter 13 plan for several years if you are no longer on good terms with your spouse. Other possible options may include both spouses converting the case to Chapter 7.    Another option may be bifurcating the case into two separate cases in which one spouse stays in the Chapter 13 and the other spouse converts their part to Chapter 7. Because your financial situation is changing, it is very likely that additional options outside of the Chapter 13 will become available.

Remember, divorce actions can bring a conflict of interest or the lack of trustworthiness. Therefore, if an option outside of a combined Chapter 13 case is available, you may want to take advantage of that option quickly. It is not advisable to wait because in the future you may not be eligible for options present in a quickly changing financial situation.  In addition, if sufficient conflict or disharmony arises, you may even need to seek separate bankruptcy or debt relief counsel.

Options outside of bankruptcy may also become available in a divorce situation.   Depending on the amount of each party’s debts, you may be able to seek outside options.  Plans can change dramatically in a divorce situation.  When plans change, non-bankruptcy options may open up to deal with your debts.

There are many options available if divorced during a confirmed Chapter 13 bankruptcy.

Will Bankruptcy Affect My Employment?

“Will bankruptcy affect my job?”  We are frequently asked this question at our office.  Will bankruptcy affect your employment?   The answer is usually “No.”  Bankruptcy will NOT usually affect your job in any way – except for rare job-type exceptions.

You cannot fire someone because they filed for bankruptcy because it is considered illegal discrimination.  The only exceptions to this rule are jobs that require you to manage financial information or certain upper-level security positions.  These “exception” situations are rare and never come up in the vast majority of bankruptcy filings.

Bankruptcy can actually have the opposite effect on your employer: it may increase your chances of either getting a new job or retaining an existing job.  Employers do not want their employees to be stressed or even a security threat because they have too many debts.  Chapter 7 bankruptcy eliminates your debt and Chapter 13 reorganizes it.  Therefore, a bankruptcy filing eliminates financial dilemmas employers prefer to not have present within their ranks.

Many states still allow credit checks to be preformed before hiring an employee.   Still, bankruptcy will likely not have a strong bearing in these situations.  Bankruptcy many times improves your credit.  It also always eliminates your debts.   Therefore, your credit or overall debt situation could likely improve from filing bankruptcy.  Once again, in certain finance-type jobs, employers are still legally able to discriminate because you filed for bankruptcy.  These financial-based jobs propositions are among the rare exceptions.  They are not the rule.

In practical application, bankruptcy virtually never affects employment. It’s simply illegal and undesirable.  Of course, not all employers follow the laws, but this is rare.    These situations are so rare, that our office has never witnessed them among the thousands of cases that we have filed.  What we usually witness is employers taking bankruptcy filings very seriously. Employers even make special accommodations to help with their employees’ debt matters.   We have witness multiple employers strongly recommending that their employee file bankruptcy to get much needed relief.    Bankruptcy – even among employers – simply no longer retains its traditional stigma: it is usually viewed as a positive, much-needed step toward financial recovery.

Image of woman on phone with a creditor

 

 

 

 

 

What Can I Do If My Bank Account Is Frozen?

What can you do if your bank account is frozen?   A frozen bank account can be a very stressful situation.  If the lawsuit creditor has frozen a large amount, it can be devastating to your budget.   You may not be able to pay any of your bills.  Bank account freeze can be a challenge, but there are some things you can do to repair the situation.

How does a Bank Account “Freeze” Happen?

A bank account “freeze” is a common expression for a bank deposit account garnishment.  This is a type of garnishment allowed under Indiana collection statute.  It is also called a bank account “levy.”  It is a procedure that can only be pursued after a lawsuit reaches the judgment phase.  The process happens quickly and usually with no warning.  You are simply notified that the balance of your account (on that day) has been frozen.  You can usually use additional amounts deposited after the “freeze” day.  A hearing is usually set out approximately 60 days later to determine the fate of the frozen funds.  Some of the”frozen” funds can be found to be exempt or protected under Indiana statute.   Usually, however, you will permanently lose the majority of the “frozen” funds after the day of your hearing.   The funds are then applied towards the satisfaction of the judgment the creditor has held against you.

What can I do when my Bank Account is “Frozen?”

When your bank account is “frozen,” you need to quickly assess your entire debt situation.  If you have excessive debts, you may need to file bankruptcy.  Bankruptcy is the most powerful tool for shutting down a bank account “freeze.”   If you file bankruptcy before bank account “freeze” hearing, the court will require the creditor to return the funds.   Do not expect this process of returning access to the “frozen” funds to be instantaneous.   The process of having the funds released to you usually takes 2-3 weeks.  An order from the creditor must be generated and then signed by the judge for the bank to release the funds.

You may, however, be required to turnover your newly released funds to the bankruptcy trustee.  In such cases, you will lose part or all of the released funds.  However, many bank account “freeze” situations are not of sufficient size for a Chapter 7 bankruptcy trustee to open a bankruptcy estate.   If you had less than $1,000 frozen, the Chapter 7 bankruptcy trustee may be more likely to just let you keep the funds.

In Chapter 13 cases, many times the bankruptcy trustee is not interested in any frozen amount unless it is very large.   Because you are already planning on paying back your creditors through Chapter 13, the trustee may not be as interested in your bank account status at the time the case was filed.   Usually, only large bank account balances cause further inquiry in Chapter 13 cases that may result in additional turnover of funds.      Therefore, it is very possible (if the frozen funds are not excessive) that you can keep the frozen funds after they are released to you.  Whether it is a Chapter 7 or Chapter 13 case, make sure to follow all the instructions of your attorney and the trustee.

Image depicting a frozen bank account