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Retail Apocalypse: Will It Stop With Just the Retailers?

Indianapolis Bankruptcy Attorney John Bymaster analyzes the retail apocalypse

A common fear across the United States is that we are facing a “Retail Apocalypse.”   This new term has been coined to express how retailers  are filing bankruptcy and shutting down in droves across the United States.  As the transition from physical retail stores to online retailers continues, the damage to our economy may far surpass just losses in the retail industry .  It may mark a major shift in our economy.  A massive “domino effect” could likely occur that could send our nation into a deep recession.

Retail Stores Occupy Extensive Commercial Real Estate

Commercial real estate is already suffered high losses due to business shut-downs related to the 2008 financial crisis.  The progressive shutdown of retail stores such as Sears, American Apparel, and many others has caused immediate vacancies in commercial real estate across the United States.  Commercial real estate interdependent exists with a variety of other industries.  Many commercial hubs such as malls and strip stores cannot realize profits after they lose their neighbor business.  The loss of accompanying shops or anchor stores will also put them out of business.   

This progression appears to be creating a “domino effect” where more and more commercial space becomes vacant.  Countless jobs and revenue streams will be lost during this process.   Although this is obviously a transitory process related to new technology and online shopping to an extent, a major economic “foundation shaking” is occurring across the United States.  This trend may go far beyond what most people are realizing.

Are Traditional Consumer Products and Service Systems Coming to an End as We Know It?  

Trends towards digital products and electronic items such as phones or tablets are replacing the continual consumer product renewal focus in the United States.   With physical retailers going out, people have less incentive to leave their homes for consumer spending as well.  The trend towards digital products may end up destroying the physical consumer product and service spending dynamic that has driven our economy for the last 50 years or greater.   

Therefore, even domestic production and service industries could be in grave danger as this economic shift continues.   This shift from a “physical” goods and services concept to a more online, digital economic world may be insufficiently categorized as a mere “retailer apocalypse.”   It may simply be complete Economic Apocalypse.  It could very well be the destruction of  consumer economics as we have known and understood it for the last 50 years or greater.  Massive changes and a recession could be ahead of us.  On the other side of the coin, new opportunities will also likely abound. 

How to Identify and Avoid Loan Forgiveness Scams

Loan Forgiveness Scam

Large loans make the borrower feel trapped.  With this trapped feeling brings desperation to find any route of escape.  Loan forgiveness scams prey on this desperate, “trapped” feeling.  This is especially true for student loans.   Student loans create the perfect dynamic for loan forgiveness scams.   A loan forgiveness scam claims that you will be able to have your loans forgiven if you offer them payments or personal information.    To protect yourself, you must be able to quickly identify and avoid loan forgiveness scams.

How to Identify a Loan Forgiveness Scam: Know How Scammers Operate

The signs of a loan forgiveness scammer easily identifiable.  You just need to know the way they operate.  Below are a few common signs that you are dealing with a loan forgiveness scam.

Scammers Want Personal Information

Loan forgiveness scams focus on collecting personal information.  The person on the other side of the phone may sound convincing.  They will ask for your personal information such as your social security number, date of birth, or even bank account information.

You should never give anybody this information over the phone if at all possible.  This especially applies when someone you cannot identify initiates the contact with you over the phone.   If they are offering to enter you into a “loan forgiveness” program after you give them your personal information, then you are likely falling victim to a loan forgiveness scam.

Scammers Need Payments

Loan forgiveness scams will attempt to set up either a single payment or a series of future payments over the phone.  The scammer will claim that the payment(s) will qualify you for debt forgiveness of the entire loan.  Any attempt from an outside caller to collect payments over the phone should immediately serve as a warning sign.  Never give payments over the phone unless you initiate the call. The tell-tale sign of a scam artist is a request for payments over the phone.

Scammers Will “Promise the World”

If it sounds “too good to be true,” then you are probably dealing with a scammer.   Loan forgiveness scams sound convincing.   Many times there is even a fake application process that allows you to build your comfort level with the caller.  Make sure to analyze the entire situation.  By the end, they will promise an unbelievable benefit by your participation.  If what they promise is disproportionate to regular reality in some way, you are probably being scammed.

Scammers use Former President Obama’s and other Politicians’ Names

Scammers will frequently use Obama or other politicians’ names in order to make their claim of loan forgiveness more believable.  It is all part of the “act.”  The scammers will use well known names, cite legal programs, or use official-sounding language.  It is all part of the scam to make it sound more appealing and believable.   Do not be fooled. Learn how to identify scammers.   Get them off your phone or email feed as quickly as possible.


Business Debts and Personal Bankruptcy

Do You Need To File a Business or Personal Bankruptcy?

Businesses can be very successful. Other times businesses face severe financial difficulties.  If your business is failing, do you need to file a business or personal bankruptcy?

Business Debts Can “Get Personal”

With most small businesses, it is very common for the owners to make personal guarantees on the business’s debts.  Small businesses are not established sufficiently to obtain credit on their own. Usually the owners of the business find themselves in situations where lenders requires them to personally guarantee their debts.  

If a business fails, the only source of collection left are the owners of the business.  Creditors pursue the business owners as their primary source for collection.  Most business owners think that they can file bankruptcy on the business.   Usually this is insufficient to protect the owners:  the creditors will still come after them after the business bankruptcy is over.

Personal Bankruptcy May Be Required

Business or Personal Bankruptcy?

Personal bankruptcy may be required to get relief from the debts of a failed business.  In fact, many times a business bankruptcy is unnecessary. If the business has no assets, it may be unnecessary to file bankruptcy on the business entity.  The business bankruptcy may send a clear message to all creditors that the business is now closed with no assets.  However, business bankruptcy may do little or nothing to relieve the personal obligations of the owners.

Many business owners only file personal bankruptcy after their business fails.  This will usually eliminate all of their debt responsibilities associated with the business.  The business owner then may only shut down the business entity with the IRS, the State Revenue office, and the Indiana Secretary of State.  The business owner would usually also send a notice of closing to all creditors.  Although there are noticeable advantages sometimes in filing business bankruptcy, it may be unnecessary to communicate the proper closing of the business to all creditors.

Wage Garnishment Indiana

Wage Garnishment – How Much Is Allowable From Your Check?

How much can they garnish my wages in Indiana?

A wage garnishment in Indiana on your paycheck can instantly destroy your budget.    If you receive a lawsuit, your creditor may be able to obtain a judgment against you.  This judgment will allow the creditor to eventually garnish your wages.  How much is allowable from your paycheck to be taken in a wage garnishment?

Your Wages Can Be Garnished at 25% Usually in Indiana

The general rule for wage garnishments in Indiana is that the creditor can take 25% of your gross wages per paycheck.  Remember, the general rule for most people being garnished is to take 25% of your gross wages. This can be a considerable amount of your total income because it is taken out before taxes, insurance, and other deductions.  A 25% wage garnishment quickly cripples most people’s budget.   If you are already in debt, most likely you were facing a tight budget in the first place.  

Do They Ever Take Less than 25% in Indiana?

There are some situations where less than 25% is taken for a wage garnishment.  However, these less-than situations are limited in Indiana.  They are not as common as the standard 25% wage garnishment.

First, some federal and state government garnishments are for less than 25%.  These garnishments usually take only 15% of your gross wages.  These types of wage garnishments are usually categories such as unpaid taxes, unpaid federal-backed student loans, and over-payment of government benefits.

Second, some wage garnishments in Indiana are entered in at less than 25% according to agreement of the parties.  If you make an agreement with the creditor, the creditor will sometimes offer to garnish your wages at a lesser percentage.  This allows the sued party(s) to repay the debt through their paycheck without crippling their budget.   Some creditors agree to this lesser garnishment percentage to avoid forcing the debtor to file for bankruptcy.       

Third, some wage garnishments are ordered by the state court judge at a lesser amount than 25% due during limited income situations.   The judge is allowed to decrease the amount of the wage garnishment due to economic considerations.    The judge may not reduce this 25% figure automatically.  An argument in favor of a lesser amount than 25% may be necessary for judge to consider whether the lesser amount should be garnished.  In addition, an Indiana garnishment can sometimes be capped if the amount proposed to be taken is more than 30 times minimum wage.

Conclusion: Avoid the “25% Garnishment Trap”

Planning ahead can many times avoid the “25% garnishment trap.”  Most people cannot survive a 25% garnishment on their pay for very long.   If at all possible, it may be wise to negotiate a resolution of your debts far before they reach the garnishment stage.  If your debt situation is clearly impossible, you need to consider filing Chapter 7 or Chapter 13 bankruptcy.

Are There Any Rules to Follow at the Bankruptcy Meeting?

The bankruptcy meeting, sometimes called “the meeting of creditors” is an administrative hearing that requires the respect and timeliness of all who participate.   This “Section 341” bankruptcy meeting has a few rules that must be followed in order to have a successful meeting.  Let’s go over the few basic rules of the bankruptcy meeting of creditors.

Rule One: Be on Time and be Professional

Although the bankruptcy meeting is not as formal as some court hearings, it is critical to be on time and to act professional during the meeting.  Your bankruptcy meeting will be scheduled some 30 to 40 days in advance.  If you are not on time, then the court will know that it is your fault. The court and your attorney have given you several documents as to the nature and scheduled timing of the meeting.  If you are too late, the court will reset the meeting once.  A second late appearance could result in the case being dismissed.

During the bankruptcy meeting you must act and dress professionally.  You do not need to wear your best “high-dress” attire, but you need to come in a reasonable and respectful form of dress that is appropriate for a legal hearing. During the meeting, you should also remove any hats if you are a man.  Also, no one should be chewing gum or doing any other form of distracting activity.

Rule Number Two: Bring all Required Documents

The bankruptcy meeting also requires documents that must be brought to the meeting.  If these documents are not brought to the meeting, then you may have to come back because your meeting will be canceled or postponed.  First, you must bring your Drivers License and Social Security card: these two documents are absolutely necessary for the bankruptcy meeting to occur.  Second, you must bring your two most recent paycheck stubs.  Third, you must bring 90 days bank statements for each bank account.  This time period to bring must cover the 90 days directly before the bankruptcy case was filed.

In some cases you may already have brought these documents to your attorney at his or her office. However, the local rules require that you also bring these documents to the bankruptcy meeting. The above documents presented do not include every potential document that could be requested for your bankruptcy meeting. The above documents are only the basic documents that are required for every Chapter 7 case.

Rule Number Three: Tell the Truth

The most important rule to follow during the bankruptcy meeting is to tell the truth. The bankruptcy meeting is an examination where you are put under oath. If you do not tell the truth or be transparent during the examination, you will be breaking the law.  Not telling the truth can easily come back to haunt you later.  Resolve from the beginning to tell the truth every time both to your bankruptcy attorney and the bankruptcy trustee. If you always tell the truth, then your bankruptcy attorney can better guide you as to what your options may be an any particular situation.