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Can Bankruptcy Affect my Business?

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Can Bankruptcy Affect my Business? Filing Chapter 7 May Not Affect Your Business

If you file for Chapter 7 bankruptcy, it may not necessarily affect your business. A personal bankruptcy is designed to eliminate your personal liability for your debts. Bankruptcy many times will not affect your business: a few examples below, however, will show how bankruptcy in some situations can drastically affect your business. 

Business High Property Amounts or High Business Value Can Be a Problem

Whether your business is a separate entity (such as a corporation or LLC) or a sole proprietorship, you OWN your business. Therefore, whether you own 100%, 50%, or whatever the percentage, it can become property that your bankruptcy trustee can use to help repay some creditors in your case. The general rule is whether non-exempt assets in the business or the business itself can be sold to repay creditors. If your business does not have high amounts of property or value, it may likely be okay. 

In addition, if your business is also heavily laden with debt, your business debts may greatly exceed your business assets. In such a debt laden situation, it is much less likely the business or the assets can be sold. Any business property situation MUST be assessed by an attorney because every situation is different. Without proper complete evaluation, you could put yourself unwittingly in a position where business property or the business itself can be sold!

Co-Mingle Problems Such as Accounts Receivable and Business Bank Accounts

Many times small business owners will co-mingle their business and personal lives. At the time of their bankruptcy, there may be large amounts of accounts receivables or bank accounts balances unrelated to their personal life but still exposable as an asset to the bankruptcy trustee. The Debtor that was $2500 in their checking account for a construction job’s materials may have a problem. The same Debtor if still owed $3500 for a previous construction job may have a double-problem. As an example, this $6,000 (especially if it is being run under personal accounts) could have to turn over those amounts to the bankruptcy estate. 

Such situations are not “fair” per say, but meet the “black and white letter” of the bankruptcy code and state exemption amounts. It may be best to have no business money in possession or owed to you at the time in which you file for Chapter 7 relief. Of course, separately held and clearly operated corporations (or other entities) may have a greater level of protection from in such matters. In separate entity situations, the entire entity is usually assessed by the trustee as opposed to individual amounts owed or in possession of the corporation at the time of filing. Because of abuse sections in the bankruptcy code and differing situations, this may not always be the case, however. Once again, consultation and guidance of an attorney are very important. 

Filing Bankruptcy on Your Business Instead of Personal Bankruptcy

Of course, multiple articles or even books would be required to fully discuss business bankruptcy. But, within the scope of this article, it is important to point out a couple aspects. First, if you file business bankruptcy (unless Chapter 11), the court will assume that you are no longer going to continue with operations. All remaining assets of the business are solid to creditors and you will close the business. You will then need to start a new corporation or entity if you desire to engage in similar business in the future. 

Second, sometimes a personal and business bankruptcy should be both be filed. In this way, a clear message is sent to all creditors that the old business is over and no assets (or whatever assets administered) are available. Then, if future desire to participate in some similar business is desired, a completely new corporation (or set of books) should be used in the future. Business bankruptcy is very complex and should not be attempted without the aid of an attorney and an accountant. 

Chapter 7 May Not Be The “End” For Your Business

Filing a Chapter 7 case may signal the end of your business: sometimes it can signal a new beginning. If your former debt situation was impossible to resolve, sometimes the only way you can continue in your same line of business may be to get relief in Chapter 7. Starting over can be difficult, but staying in a crushing debt situation can be much worse or even impossible. Do not stay forever in an unprofitable, impossible business situation. Contact a our office and get a free consultation to see what options you have. 

~Indianapolis Bankruptcy Attorney John Bymaster


My Chapter 13 Case Dismissed: What’s Next?

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Indianapolis Chapter 13 Bankruptcy Attorney Explaining, “My Chapter 13 Case Dismissed:  What’s Next?”

When your case gets dismissed in your Indianapolis Chapter 13 Bankruptcy, you are faced with having to come up with a new solution for your debt problems. Regardless of the reason why your case got dismissed such as for non-payment or because you needed to look into other options, a new direction maybe needed. Let’s discuss some options that are available after a Chapter 13 Bankruptcy case is dismissed.

Filing a New Chapter 7 Case

One of the most common options that people choose after a failed Indianapolis Chapter 13 case is filing a new Chapter 7 case. A Chapter 7 case can eliminate all of your unsecured debts and make your financial situation much easier. Many times when a debtor cannot afford the payments in their Chapter 13 to repay their house or the cars, the debtor switches to Chapter 7 to surrender the house or car(s) they cannot afford. Other times the debtor will switch to Chapter 7 and then try to work out a loan modification or other options with their creditors in order to keep their house or cars.

Working With Your Creditors Directly To Make An Agreement

Many times we help our Indianapolis Bankruptcy clients work out agreements directly with their creditors. Agreements such as loan modifications, tax settlement agreements, or other pursuits such as child-support reductions can greatly decrease the amount of total debt obligations that the debtor is facing. Sometimes after the agreements are made, the debtor can then file Chapter 7 bankruptcy to address large amounts of remaining unsecured debts.

Filing a Second Chapter 13 Case

When your Chapter 13 case is dismissed due to uncontrollable circumstances, sometimes the best remedy is to file a second Chapter 13 case.  Many people encounter job loss or other insurmountable circumstances in their first Chapter 13.  If your circumstances have improved after the dismissal of the first Chapter 13, you may be successful using a second Chapter 13 case.

Keep in mind two things, however. First, if nothing very substantial has changed, you may be doomed to a failed case eventually the second time following the pattern of the first. Numbers do not lie: you may be up against an impossible situation just like the first time. Secondly, your next Chapter 13 may be challenged for “bad” faith and your automatic stay protection can be limited depending on the situation. However, many “second attempt” Chapter 13’s are successful and do not face creditors objections: the creditors WANT the debts to be repaid as long you are serious about the case.

Chapter 13 Dismissals are not the “End of the Road”

Just because your Chapter 13 case got dismissed, it is not the “End of the Road.” Many other options to address your financial situation are still available after the dismissal. We are an Indianapolis and All-Indiana Chapter 13 attorney office that know all the options. Give us a call and we will give you options even if your Chapter 13 case has been dismissed.

~Indianapolis Chapter 13 Bankruptcy Attorney John F. Bymaster on My Chapter 13 Case Dismissed:  What’s Next?

Can My Bankruptcy Be Rejected or Turn Down?

Indianapolis Bankruptcy Attorney Explains “Bankruptcy Rejection”

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Can My Bankruptcy Be Rejected or Turn Down? – Practicing Bankruptcy Law near Indianapolis, Indiana, we are many times asked whether a bankruptcy can be rejected or turned down. Can your case be rejected or turn down? The answer is “No.” If you follow the rules of Chapter 7, you generally cannot be “rejected” or “turned down” for bankruptcy relief. Therefore, the question becomes how do you not follow the rules of bankruptcy so that your Chapter 7 case could be rejected.

Rejection in Chapter 7 Due To Too Much Income

If your attorney’s interpretation of the Chapter 7 Means Test does not match up to the United States Trustee’s interpretation, you may have your case rejected in Chapter 7. Therefore, if you are “very close” or “right on the line” on whether you can file Chapter 7 bankruptcy, the United States Trustee may file a motion to dismiss the case or alternatively to convert to Chapter 13. You would be “forced out” of Chapter 7 into Chapter 13 or your case would be dismissed. Although this scenario is not very common, it can happen on very close cases.

Rejection Due To Not Following The Rules of the Trustee and Bankruptcy Court

If you ask for Chapter 7 relief, you have to follow the rules after you file your case. If the Trustee (the overseer of your case) holds that an asset or information needs to be turned over, then you must comply quickly. If you refuse to turn over an asset or spent up the asset and cannot repay it, the Trustee will eventually revoke your discharge and your original Chapter 7 case will be rejected.  Do not worry: if you follow the rules and request of the Bankruptcy Trustee, this should never happen.

Rejection For Fraud

The final cause for rejection of your Chapter 7 case is for fraud. Although findings of fraud are rare in Chapter 7 bankruptcy, your bankruptcy case can be rejected and your discharge can be revoked if you are caught lying to the court or trying to abuse the system. With fraud, you can also face criminal charges. Once again, this is very rare and you do not need to worry about this more than likely if you are a genuine, regular bankruptcy filer.

Just Follow the Rules and You Will Not Be Turned Down or Rejected for Bankruptcy

If you follow the rules, you have nothing to worry about with bankruptcy. You are entitled to the relief and it will not be held back from you. Do not be afraid of being rejected for Chapter 7 relief. Call our Indiana Bankruptcy office and get relief today.

– Indianapolis Bankruptcy Attorney John Bymaster

Rare Chapter 7 Bankruptcy Dismissals

Rare Reasons Why a Chapter 7 Bankruptcy Case Can Be Dismissed

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Rare Chapter 7 Bankruptcy Dismissals – When it comes to dismissals and bankruptcy, the general rule is that Chapter 7 cases are rarely dismissed but Chapter 13’s are very commonly dismissed. Bankruptcies can be dismissed for various reasons -some good and some bad. Let’s discuss the dismissal of Chapter 7 bankruptcies and what types of dismissals are encountered.

Chapter 7 Bankruptcy Dismissals By The Trustee

Chapter 7 cases are rarely dismissed in the bankruptcy system. The usual outcome of a Chapter 7 is the discharge order and closing of the bankruptcy case. This is the normal desirable outcome in which all of your debts are eliminated.

However, on rare occasions the dismissal of a Chapter 7 bankruptcy can be necessary. First, a case can be dismissed by the Chapter 7 Trustee or United States Trustee due to an ineligibility for Chapter 7 or some other bad faith circumstance. The Trustee and United States Trustee are responsible for maintaining the proper application of the bankruptcy code. In rare cases when the eligibility for Chapter 7 is questionable, a motion to dismiss can be filed.

The most common motion to dismiss in a Chapter 7 is due to an interpretation by the United States Trustees Office that the debtor is not eligible for Chapter 7 according to their means testing. To put it simply, the United States Trustee believes that the debtor is making too much money to be in Chapter 7. The debtor may have sufficient income to pay back some of their creditors in a Chapter 13 case. In such a situation, the debtor will be given the choice to either dismiss their Chapter 7 case or convert their current Chapter 7 case to Chapter 13.

Voluntary Motions to Dismiss Brought By The Debtor in Chapter 7 Bankruptcy

Sometimes there are good, acceptable reasons for a Chapter 7 debtor to dismiss their case. For instance, a Chapter 7 case can be voluntarily dismissed by the debtor in order to address new large unexpected debts such as medical bills from a heart attack or stroke. In such a situation, the new medical bill would have to have occurred almost immediately after the bankruptcy case was filed. The Bankruptcy Trustee would likely not have an objection to such a motion to dismiss as long as the debtor still turns over any non-exempt assets into the bankruptcy estate.

Keep in mind, however, that not all voluntary motions to dismiss in Chapter 7 will be granted. The Trustee has a duty to administer an estate with assets in order to protect the creditors. If a Chapter 7 debtor plans to file bankruptcy, he cannot rely 100% upon any ability to get out of the Chapter 7 process after it has started. The attitude of “let’s do this and see what happens” is not the proper attitude to have when you file for Chapter 7 Bankruptcy. Chapter 7 should be thought of more like a potentially irreversible process that can have consequence that include losing certain types of assets.

Conclusion: Chapter 7 Rarely Produces Dismissal of Your Case

Chapter 7’s are rarely denied and are very infrequently dismissed. If you need to get relief from your debts, Chapter 7 is a relatively simple process that can eliminate your debts in a short time. Although dismissals do occur in Chapter 7 bankruptcy, they are very rare and do not affect most cases.

– Indianapolis Chapter 7 Bankruptcy Attorney John Bymaster

Indianapolis Bankruptcy and Inheritance

Indianapolis Bankruptcy and Inheritance: What You Need to Know

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The rules of bankruptcy and inheritances can protect you from losing an inheritance to creditors.  In Indiana, there is no special bankruptcy exemption that allows you to keep your inheritance when you file for bankruptcy. Therefore, it is very important in Indiana to understand clearly which inheritances can be come part of your bankruptcy estate.

Inheritances and Chapter 7 Bankruptcy

There are special rules that apply to bankruptcy and inheritances in Indiana. When you file for bankruptcy under Chapter 7, any inheritance that you are already due to receive is part of the bankruptcy estate automatically. Therefore, if someone has already died and your bankruptcy case has been filed, you will be required to turn over the proceeds of your inheritance to the Bankruptcy Trustee to repay creditors. The special rule applies, however, where inheritances become due for up to six months after the bankruptcy case is filed. For this six month, 180 day period, the inheritance must still be turned over to the bankruptcy estate to help repay your debts.

Chapter 13 Bankruptcy and Inheritances

Chapter 13 bankruptcy can even create a larger period of time where any inheritances could be forced to be paid to the Bankruptcy Trustee to repay creditors. This is because during the entire life of the Chapter 13 repayment plan, you will be required to turn over any inheritance received at that time to help repay some of your creditors. Therefore, if you are expecting to receive an inheritance during your Chapter 13 bankruptcy case, it is very important to make plans accordingly. Perhaps a Chapter 7 case could be advisable if you are eligible to reduce this time period in which inheritances must be turned over to the Bankruptcy Trustee.

Conclusion:  Inheritances and Bankruptcy Require Guidance By An Attorney

If you are anticipating an inheritance sometime in the future, careful debt relief planning will be required to make sure that you can enjoy the maximum benefits possible. Bankruptcy can be a powerful tool in planning for debt relief even if you may receive an inheritance sometime in the future. If your plan includes bankruptcy, make sure to understand the ramifications of family member’s early passing.

~Indianapolis Bankruptcy Attorney John F. Bymaster on Inheritances and Bankruptcy