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New Tax Laws Equal Less Tax Refund Money

New Tax Laws Equals Less Tax Refunds

Since there are new tax laws, many people will find themselves receiving a smaller tax refund this year. Due to the new tax law change, people will receive an average of a 15% drop in their total tax refund. This may sound confusing because in actuality the total amount of tax that most people must pay is actually less.

You Pay Less But Get Less Back

How is this possible? How can you pay less but then somehow get less of a refund? The reason why is because the new tax laws have made over-withholding more difficult as you pay your taxes throughout the year. Essentially, you are getting to use more of your money throughout the year instead of receiving it all at one time in your tax refund. This can be a surprise to some who believed they were over-withholding the same as last year. They can be surprised when they receive a smaller tax refund.

New Tax Laws – Simplifying the System 

One intent of the tax law change was to simplify the system. However, this simplification has also caused tax refunds on average to decrease. Certain provisions such as earned income credit and other required reporting on the forms are now designed also to not create excessive amounts for refunds. To further simplify, the government also wanted to put a stop to high over-withholding amounts. The simplification of the system has caused some people to not be eligible for certain provisions under the tax code that would have otherwise elevated their refund in the past.

What Does the Future Hold?

What does the future hold for high tax refunds? In all likelihood, tax refunds could very well even decrease further in the future as the government streamlines the tax system. With simplicity in the system, the government approach to completing tax forms and processing tax refunds would likely result in a more simple system all around. In such a modernized system, you would be forced to accurately pay your tax throughout the year. Then, basic returns may be simplified to the point in which they are nearly automated through an online, government interface. This system could take a huge burden off of what government funds are required to operate the IRS. However, it would likely further decrease the amount of the average tax refund.

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Car Loan Defaults Rising

Car loan defaults on the rise

Why Are Car Loan Defaults Rising?

Car loan defaults are rising and are now higher than ever. The numbers are staggering. They even exceed the peak of car default that occurred before the 2008 financial crisis. What is causing this new rate of default and what can we expect in the future?

Bad Car Loans Create Default

Nothing is worse at creating car loan default than horrible loan agreements. Statistics show that loan agreements entered at high-interest rates have a higher rate of default. This is due to two things. First, the higher-interest-rate loans usually require a higher monthly payment. This increases the total cost of the vehicle, regardless of the vehicle’s age or quality. Secondly, higher-interest-rate loans are usually given to “poor credit” borrowers who already have a more likely default potential.

A Strong Economy Does Not Guarantee Bill Payment

Even though more jobs are available in the current economy, this does not guarantee that monthly bill payments will be made. With the limited availability of real estate, most rental are mortgage payments are sharply increasing. Being employed does not guarantee that you can make payment for all of your bills. What it does virtually guarantee, however, is the availability of a car loan! Strong economies create greater availability of credit. Bad credit deals create increased defaults.

Epic Collapse is Possible But Unlikely

With record-breaking default on auto loans, some may expect an epic collapse of the economy to occur similar to 2008. However, it is very likely that much more expansion of the economy through credit must occur before this will happen. Before the previous crisis, the real estate market was elevated for some time. This created the expansion of housing through never-ending new housing projects. Although the increasing default of car loans is a bad sign, the debt-based, credit economy will likely need to expand quite a bit before it once again collapses.

Expect housing projects, free and open credit, and expansion of the economy to continue before any epic-style collapse once again occurs. In fact, default on loans may only be a sign that the open expansion of the economy is occurring once again. The inevitable collapse will likely only happen once it reaches this current expansion’s maximum.

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What Happens In Bankruptcy?

What actually happens during bankruptcy is the release (or total forgiveness) of your debts. To get this release, you must provide some financial documents and official government paperwork to formally request that your debts be forgiven. After the full bankruptcy process is completed, you will receive a “discharge” that permanently eliminates your debt.

Providing Paperwork and Finishing Forms

You will be required to provide certain paperwork including a list of your creditors, your current income, and at least two years of taxes. After you have provided the paperwork and take a small required bankruptcy class, you can then review and sign your petition with your attorney. This gets everything ready so that your case can be filed. There are usually also court costs and attorney fees required for the process as well.

Filing the Bankruptcy Case with Federal Court

Image depicting What happens in bankruptcy

You or your bankruptcy attorney will then file your bankruptcy request with the federal court. During a filing, you must submit a full, completed bankruptcy petition that is accompanied with other required paperwork and documentation. Usually, you must also submit your last 60 days of income and a copy of the certificate that shows that you have taken the required bankruptcy class. After the case is filed, a trustee (a bankruptcy-reviewer) will automatically be assigned to the matter to review the case. Also, a bankruptcy meeting will be set out 30-40 days into the futurewhere you will briefly meet with this trustee and any creditors who wish toattend.

The Bankruptcy Meeting and Required Follow-Up

After the case is filed, you will go to this single bankruptcy meeting.  The trustee will ask you a series of questions related to your case. Even though the bankruptcy case is already filed, certain follow-up work will be required with your attorney and sometimes the trustee. This follow-up work will likely occur both before and after the bankruptcy meeting.
It is critically important to follow the instructions of your attorney and bankruptcy trustee to make sure that your Chapter 7 Bankruptcy is successful. You also must take your second bankruptcy class and make sure that the certificate is filed with the court.

Do You Need Bankruptcy to Actually Happen for You?

The above description of the chapter 7 bankruptcy process hopefully dispels any initial fear of what actually happens during bankruptcy. The bankruptcy process is not as stressful as you may think.  In fact, the bankruptcy process usually instead brings desperately-needed stress relief. Contact a bankruptcy attorney for a free consultation to allow you to consider whether bankruptcy is right for you.


What are clear signs that you need to file for bankruptcy? This question can be answered by in a few basic ways.  There are three basic signs that strongly indicate that bankruptcy is something that you may want to consider.

Sign #1: Staying in the Same Place or Worse for Years

Are your finances currently impossible? If you believe that you will be in the same place still in 2 to 3 years, you should consider bankruptcy.  You should be able to substantially pay down or settle your debts within a reasonable time period such as 2 to 3 years.  If this is impossible, you should probably get theChapter 7 debt release to start over. Do not get into a situation where you were just “spinning your wheels.” If a 2-3 year plan to reduce your debt is not possible, all signs point to you needing to file bankruptcy.  

Sign # 2: Collection Destroying Your Ability to Pay Bills

Another sign that bankruptcy is right for you is when collection activity is destroying your ability to pay bills.  If your wages start getting garnished, it may quickly become impossible to pay your monthly bills.  A garnishment can easily “throw a wrench” into your finances that causes everything to shut down.   A bank account freeze can have an even worse effect.  Large amounts of money can become instantly frozen in your account.  If acollection is becoming as aggressive as a bank account freeze, then it is probably time to file bankruptcy.

Sign #3: Your Credit Future is Indefinitely On Hold

3 Signs that you need to file bankruptcy

When your credit future is on hold indefinitely due to defaulted accounts, you may need to file bankruptcy. Having bad credit can make life very difficult. It is also another clear sign that bankruptcy may be good for you. Do not put future dreams such as buying a house or other items on hold indefinitely. Protect yourself and provide for your future by exploring bankruptcy options.

Bymaster Bankruptcy Law Offices Offers Free Consultations.  To schedule your free initial visit, contact our office at 317-769-2244.

Cause of Bankruptcy

The Number One Cause of Bankruptcy: Lack of Financial Knowledge

Number One Cause of Bankruptcy: Lack of Financial Knowledge

You can always trace back an immediate cause for bankruptcy. Ultimately, the number one cause of bankruptcy is lack of financial knowledge. Without adequate financial understanding, you can easily set up your life in a way that leads to bankruptcy. There are, however, three basic financial concepts that if applied will usually prevent any future need for bankruptcy relief.

Live Way Under Your Means

Most people file bankruptcy because they are living paycheck to paycheck. The root of this cycle, however, is that most people live right at or above their means. The solution is simple: learn how to live way below your means. If your living expenses only consume 50% of your income, then your financial life will always be easier. You will also have money to save and invest.

Learn how to live well without paying the accompanying costs that most people accept as part of the package.  Many financially-savvy people are living practically for free due the living situation they have developed over the years. Still, others decide to spend every bit of their business or job income on their house mortgage, cars, and other frills of life.  The truth is in the numbers.  The truth can be found through gaining financial knowledge and then boldly applying it. Sometimes this even requires doing the opposite of everyone else with your income.

Save and Invest Left-Over Money

It almost goes without saying that the next step is to save and invest all leftover money each month.  Investments can increase your income.  Savings can also prevent financial disasters when something unpredictable happens.  As you save and invest, a cycle develops where life gets easier and easier.

Make Sure All Gaps are Covered

It is also important to cover all the gaps in life. This includes important things such as insurance, following legal requirements, and having a balanced and thoroughly-thought-out life.  Remember, all financial “gaps” should be covered in your life at all times.  A small hole in the armor of your financial life can allow a dart to pass through that can wreak havoc and lead to bankruptcy. You cannot plan for every possibility in life. It is vitally important, however, to close all obvious gaps that could lead to serious financial problems.

Conclusion: Application is the Key

Apply these three financial concepts to your life.  Your increased financial savvy will not only prevent bankruptcy but also make your financial life much easier.  Remember, you can actually end up acquiring large amounts of financial knowledge with very little real-life benefit.   Only bold and disciplined action will your life actually change for the better.