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Will My Home Be Searched When Filing Bankruptcy?

Many people fear that a bankruptcy trustee will search their house or apartment during bankruptcy.  Many believe that a cataloging of property or an auction takes place during every bankruptcy case.  In reality, these things virtually never happen in bankruptcy.  In Indiana, no search or other intrusion into your household is likely to happen during bankruptcy.   This article explains why such personal intrusions are uncommon and unnecessary in most bankruptcy cases.

The Petition Already Lists All Property

Your petition for bankruptcy already lists all of your property and financial information.  When you file for bankruptcy, you sign under penalty of perjury that all the information is correct.  In addition, certain verifying documents are required to be presented to the bankruptcy court and trustee.   The trustee can review these documents and do their own due diligence searches if they desire.  With all this information at hand, it is rare that the trustee will need to do any personal examination of your property.

Indiana Bankruptcy Exemptions Protect Most People’s Property

In Indiana, the bankruptcy exemptions protect the vast majority of bankruptcy filer’s property in entirety.  Using these exemptions, you were allowed to keep over $10,000 of personal property per filer.  You are also allowed to keep almost $20,000 in residential real estate per filer.   This protects the vast majority of property held on most cases. It also makes excessive searches of property completely unnecessary.

The Trustee Will Not Do Anything That Does Not Benefit the Creditors

Excessive searches or research almost never proves to produce any more funds for creditors in bankruptcy.  Therefore, the  trustee will not waste their resources on such unnecessary matters.  In addition, the bankruptcy system is designed to be efficient and effective. Such searches or intrusions would be over burdensome and undesirable within the bankruptcy system.  Although the trustee has wide latitude in researching and cataloging assets, such actions are only necessary and a very limited amount of high asset Bankruptcy cases.

What Happens if I Default On My Credit Card Debt?

What happens if you default on your credit card debt?Credit card balances can increase in size easily.  The monthly payments can quickly become impossible to pay.   What happens if you are forced to default on your credit cards?  There are a few important things to know about what happens after you begin to default on your credit cards.

Your Rates Will Go Up

If you default on a monthly credit card payment, your interest rate will likely increase.  This can double or even triple your new minimum monthly payment.  Many credit cards offer low interest rates such as 8% or less.  These rates will increase to rates as high as 15% or even higher than 20% if you begin to default on your payments.

You Will Be Charged Late Fees

Most credit card payments charge late fees.  For the first offense, it is very common to charge $27 for being late.  Future offenses may increase the monthly late fee to as much as $38. These late fees coupled with higher interest rates can make credit card payments very difficult.   If you are planning to default on your credit cards, you may need to make a plan to get rid of your debts.  You may need to settle your credit card debts or file for bankruptcy.

Your Credit Score Will Decline

Another consequence of defaulting on credit cards is the lowering of your credit score.  Your credit score is determined by a carefully calculated system that takes into account the timeliness of your credit payments.  Any missed payments will very quickly effect your overall credit score.  This can prevent you from obtaining loans or other credit items due to concerns that you may be forced to default on all of your debt.

Default on Credit Cards Can Sometimes Be A Good Thing

If you have excessive credit cards or other debts, it may be a good thing to default on your credit cards if you do not have any other options.  Credit cards are “unsecured debts” which means that you will not generally lose a house, car, or other item if you stop paying on the debt.   In some situations, it is good to stop paying credit cards first as opposed to your mortgage or car payment.  If you are forced to default on your credit cards, you need to talk to a bankruptcy attorney as soon as possible.   An attorney can guide you through the bankruptcy process, the settlement of your debts, or some other debt relief option.

How Much Interest is Allowed on a Loan in Indiana?

In Indiana, loans are generally capped at a maximum interest rate.  Under new legislation, most loans under $50,000 are only allowed a maximum of 21% interest.  However, higher or lower maximum interest rates are allowed in various situations.

Loans Under $50,000 Are Now Capped at 21%

In Indiana, new legislation capped the maximum interest rate for loans under $50,000 at 21%.  Generally, loans in the past in Indiana were also capped for the most part at under 25% under general usury legal concepts.  Only recently have these 21% restrictions come into place.  It also applies only to loans under $50,000 only.

Various Types of Loans Still Greatly Exceed Interests Caps in Indiana

Payday loans and online loans can still greatly exceed the 21% maximum in practical operation.  These loans are non-conventional and high interest-rate. Many providers of these loans are even located outside of the United States.  With penalties, restrictions, and other harsh terms, you may end up paying a much higher interest rate than what may be generally considered legal or acceptable in Indiana.

The 10% Judgment Rate Maximum

If you receive a lawsuit that goes to judgment, you will be required to pay interest on the judgment amount.  Generally in Indiana, the maximum you will be charged on judgment interest is 10%.  For general purposes, Indiana considers 10% interest to be a fair and equitable rate.   

Indiana’s interest rate for judgments can also help you evaluate how good of an interest rate you are receiving on a personal loan.  If you are seeking a personal loan, a rate in excess of 10% could be logically considered a high interest rate.  A rate under 10% could be considered a lower, more desirable interest rate.

3 Warning Signs That Your Financial Life is Out of Control

Couple stressed out and holding up a help sign

Your financial life is important to your overall security and peace of mind. When your financial life becomes out of control, there always be warning signs. These warning signs may be the signal that you may need more powerful debt relief options such as bankruptcy.

Warning sign #1: Living paycheck to paycheck and it’s not enough

Life becomes difficult enough when you are living paycheck to paycheck.  When you are no longer able to live paycheck to paycheck, it is a sign that your financial life is out of control.  If you could no longer budget all of your expenses within the framework of your paycheck and income, you need to take drastic action.  You need to look into options such as reducing your overall expenses or even filing for bankruptcy.

Warning Sign #2: Spending more than 30% of your income on servicing debt

Another warning sign that your financial life is out of control is spending more than 30% of your income on servicing debt.  If you are paying more than 30% of your income towards credit cards or other high interest loans, your financial situation is likely becoming out-of-control.  

Using a large amount of your income to service your debts can become a vicious cycle.  Many times the debts are never significantly paid down.  Usually your debt totals only end up increasing.  In order to break this high-debt cycle, you may need to drastically change your financial set up.  You may also have to file for bankruptcy.

Warning Sign #3: Everything You Own is “Financed”

If everything in your possession is financed, your financial life is likely way out of control.  Mortgages and car loans are bad enough.   If you even have other financed items on the table, you are likely going down a very bad road financially.   This is because you are overextended.  Very little of what you own was paid for with savings or cash.   Such situations can quickly develop to where the payments to service the loans can no longer be afforded.  In order to get rid of the debt obligations, you may need to sell some of the items or pay off some of the loans.  If the situation is too severe, you may need to file for bankruptcy.

Speeding Up Your Bankruptcy Process

When people are overwhelmed with the debt, they many times want to get bankruptcy relief quickly.  It is possible to speed up your bankruptcy proceeding.   If you follow the suggestions below, then your bankruptcy proceeding will be completed at the fastest speed possible.

Get Your Required Documents Together Quickly

The bankruptcy court requires documents.  These documents will be turned into the bankruptcy court and the bankruptcy trustee in order to complete your case. One of the largest holdups when filing bankruptcy comes from not quickly providing the required documents. These documents are also required for the drafting of your bankruptcy petition.  

These documents are simple, consisting of a few years tax returns, some pay information, and the providing of bank statements.  In order to speed up your bankruptcy process, make a plan to provide your fees and required documents for your case immediately after speaking to your bankruptcy attorney.

Take your class as early as possible

Another way to speed up the bankruptcy process is to take your class as early as possible. Before you file for bankruptcy, you are required to take a one hour credit counseling course. If you desire to speed up your bankruptcy process, you should probably take this course immediately after speaking to your bankruptcy attorney.

Follow all requests of your attorney and the bankruptcy trustee as quickly as possible

The final resolution and closing of a bankruptcy case can also be held up by refusing to timely comply with the requests of your attorney or bankruptcy trustee.  Although the term “request” is used here, the reality behind any such request is that the desired items or actions are a non-negotiable case requirement. Your attorney and bankruptcy trustee only desire to complete their duties.  They will not ask for non-necessary documentation.  By not complying with these request timely, you will be holding up the bankruptcy process.