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$500 Bankruptcy

$500 Bankruptcy

Have you heard the popular advertisement for $500 bankruptcy? These advertisements usually have more truth and substance behind them than $0 or $200 bankruptcy and similar ads. What are you actually getting for these $500 bankruptcy offers? The answer may surprise you.

$500 Bankruptcy May Only Be Partially Accurate

When you hear an advertisement for $500 bankruptcy, you need to look into the reality behind the offer. Many times these offers are simpy inaccurate. At best, they may only be telling you part of the information or cost.

For instance, some discount, high volume bankruptcy firms may offer a $500 discount bankruptcy. However, this price will rarely if ever cover the $335 court costs. It also may not cover hidden charges for credit reports and required classes. To make matters worse, sometimes this rate will only apply to certain limited customers. It may only apply to filers who are only on social security or minimal income. It may also not apply to those who have car loans or real estate. Essentially, it may be very likely that they are advertising a $500 bankruptcy for the most basic cases only with and abudance of many hidden charges waiting!

Be careful and examine the entire situation, reputation of the firm, and the costs required before making any appointment. Surpisingly, you may get a better price and service at a firm advertising $800 to $1200 because these prices are low but still very possble for a firm to charge with no hidden charges. A real (including the $335 court cost) $500 bankrputcy price would only give the lawfirm $165 per case for their extensive hours of legal work! This price is simply too low to be possible. The only exception would possibly be a pro-bono, non-profit charity organization (someone who would be doing the work mostly for free!).

$500 Bankruptcy May Not Be Accurate at All

Many times a $500 bankruptcy advertisement is not accurate at all. Many firms will charge this amount (or more) only for a Chapter 13 case. Chapter 13 cases always require a $310 for the court cost. However, there are likely approximately $4000 in fees total for these cases that will be paid through your bankrupty plan. This $4000 approximate amount is court-set in many U.S. districts, resulting in most places ulitmately charging about the same amount for the 3-5 year representation required for a Chapter 13 case.

Remember, most bankruptcy firms charge somewhere between $800-$2500 for a Chapter 7 plus the $335 court cost. This represents the lower and higher end of the spectrum. This simply does not align with an advertisement claiming $500 bankrutcy. You could even be signing up for a forms provider instead of an attorney. This means that you would be essentially doing your bankruptcy yourself. Alternatively, you may just be dealing with a very cheap bankruptcy office that may nickel and dime you to death with an actual, basic-case-only price of about $835 plus some hidden fees. Although there are many lower priced bankruptcy offices accross the U.S., beware of advertisements like this. Make sure to get all of the details first. Or, possibly just pursue someone else adverising a more realistic low price.

Do you need debt relief?  Call Bymaster Bankruptcy Law Offices for a FREE initial consultation.

ITT Tech: Student Loan Collapse

ITT Tech Student Loan Collapse

From Former Glory Years to Student Loan Collapse

ITT Tech was once a well-respected technical training school that orignated in 1969. The headquaters was in Carmel, Indiana. By the 1980’s and 1990’s, ITT Technical Institute was synonomous with high-quality, no-nonsense education. Both young students right out of high school and older adult students would flock to ITT tech to learn the “skills of tomorrow” today (or at least according to it’s former exciting commericials).

Countless graduates of ITT Tech of older generations have successfully enjoyed entire careers based on their educational start at ITT Tech. The question immediately comes – what happened? How did this “for-profit” training school decline into a lawsuit-ridden mess that eventually closed all of its operations?


ITT Tech found itself in the midst of the student loan system collapse. Many “for-profit” schools are now falling into this mess. Apparanetly, “for-profit” schools were once a feasible, even admirable pursuit. Then, student loan federal funding came. Once student loan and federal funding became the “norm,” many for-profit schools descended into a frenzy of bad business and recruitment activities. They had to deal with this new reality of “for-profit” schooling. It all became about student loan salesmanship.

How did the school decline? How did the school generate numerous worthless education programs that would never actually benefit the students? Part of this answer was marketing and salesmanship. The school was not marketing any more to student who would actually pay for their education. They instead marketed to students who did not understand the magnitude of student loans or federal aid that they were getting from the government. You get more creative (to say it nicely) in your marketing and program focus when you are selling something with “funny money” instead of cold, hard cash.


Many public schools have also followed suit. The damage to public higher educational institutions cannot be measured. Now is a crucial time because many public institutions have long followed the same road as the for-profit schools. Although many politicians are calling for elaborate fixes to the student loans system, the best option would be simple. The solution is to treat student loans the same as all other loans in bankruptcy. Currently student loans cannot be discharged in bankruptcy. Allowing student loans to be discharged in bankruptcy will “pull the plug” on the funny money of student loans. It will protect future generations from a bad educational system that saddles them with lifetime debt. It will also prevent a magnitude of previously respectable schools like ITT Tech from being brought into ruin.

Bankruptcy Exemptions Now Too Low For Indiana

Bankruptcy Exemptions Indiana

Indiana bankruptcy exemptions are quite low compared to other states. The recent housing value boom has left the residence exemption for bankruptcy in Indiana more lacking than ever. Indiana, like a minority of other states, has a very limited residence protection amount in bankruptcy. Coming in at a meager $19,300 per bankruptcy filer, this amount of equity protection that is allowed during Chapter 7 is making bankruptcy relief hard or out of reach for certain segments of Indiana’s public. It is even causing some bankruptcy filers who only purchased their home a few years ago to now to have too much equity in their homes for that purpose.

How Does Indiana’s Bankruptcy Exemption Work?

In Indiana, you are allowed to keep up to $19,300 worth of the house for your residence when you file for bankruptcy. This amount also doubles to $38,600 if you have a married couple filing who are both on the deed of their residential home. Outside of mobile homes, there are virtually no homes in Indiana that fit into the $19,300 protection when they are paid in full. Therefore, it usually plays out that you must have approximately $19,300 (or less) of equity in your home (due to a large mortgage being on your property) if you want to keep your residence. It does not matter if your residence has been paid off for 20 years or even generationally as your family home. You will lose your house most likely if you need bankruptcy relief if the value significantly exceeds this $19,300 amount in the State of Indiana.

How Does Indiana’s Residence Exemption Stack up Against Neighbor States?

It does not stack up very well. For instance, the State of Ohio has a residence exemption of $145,425. This is 7.5 times larger than Indiana’s exemption. Ohio’s exemption also can actually protect the full value of a modest residence, which is a near impossibility in Indiana. Michigan’s exemption is $38,225 per bankruptcy filer. In Michigan, this amount also increases after you reach the age of 65 or if you become disabled. The increased exemption for Michigan is $57,350 per filer. Flordia and Texas homestead exemptions are very large with Texas being unlimited in value and Flordia reaching the millions.

On the lesser ends, the Federal Exemption for residence (which is available in many states, but not Indiana) is still also larger than Indiana at $25,150. Indiana’s neighbors Kentucky and Illinois have some of the most dismal and low residence exemptions in the entire nation, coming in at only $5,000 for Kentucky and $15,000 for Illinois. However, it is important to point out that federal bankruptcy exemptions are allowed to be taken in Kentucky, effectively raising their $5,000 to $25,150 per person for any person who opts for such protection. Essentially, Indiana stacks up very poorly compared to the national average for residence protection. It also stacks up very poorly to that of Indiana’s immediate neighbors except for Illinois as the only exception.

Why Does This Matter?

Central Indiana has been reported as one of the fastest real estate value growth areas in the nation. Coupling this fact with very restrictive residence exemptions, many home values are increasing too quickly to be clearly protected during bankruptcy filings. Even some mortgage holders who put little or no money down are finding this problem only a few years after their home purchase. These elevated values may only be temporary, but it is currently it could effect the bankruptcy analysis and which Bankruptcy Chapter Indiana residents choose to file under.

A greater wrong hood, however, is more simple and obvious: no person’s paid-in-full home is ever truly “safe” in Indiana. The state legislature must believe that it is okay for a person’s paid-in-full residence to be “up for grabs” in Indiana at all times by creditors. It does not matter if you incurred unexpected hardship or medical debts. It does not matter if your home has been paid-in-full in your family for generations. You will lose your paid-in-full residence if you manage to incur too much debt in Indiana. The circumstances do not matter. It’s currently Indiana law.

Did you like this blog about Indiana Bankruptcy Exemptions? For more Indiana Bankruptcy Blogs, click here.

How Long Can I Stay in My House if I Stop Paying?

Mortgage Foreclosure

How long can you usually stay in your house if you stop paying your mortgage? This most simple answer is 8 to 10 months. You can usually stay in your house for 8 to 10 months for free after you stop paying on the mortgage. Sometimes this amount of time can even be longer, ranging up to 2 to 3 years.

The Mortgage Foreclosure Action Will Come

After about 3 to 5 months, you will usually receive a lawsuit at your residence called a Mortgage Foreclosure action. This Mortgage Foreclosure lawsuit will be asking your state court to start the legal process of taking your home back. You will receive the mortgage foreclosure complaint and summons. The instructions will usually explain that you will have about 20-30 days to make an “answer” with the court. You may also have the opportunity to ask for a settlement conference.

If you plan to keep your house or want to defend against the foreclosure, this is probably a good time to hire a local attorney. The attorney can help you answer the lawsuit and start settlement negotiations. Try to find an attorney that will work for a flat, upfront fee for the entire foreclosure defense. Getting an attorney can also add significantly to the amount of time you can stay in the house even if you are eventually unable to work out a deal. Remember, you can also file bankruptcy many times to either stop or slow down foreclosure proceedings and possibly save your house.

Stay in the House and Keep it Secure Until Sheriff Sale

If you stop paying on your house, you can many times stay there for a very long time for free. However, it is very important to keep living in the house and keep it secure. The mortgage company greatly prefers that you stay in the house and keep it secure. Stay there right up to the time that you let it go back to the lender or someone else during the sheriff sale.

The sheriff sale date will be set after the full mortgage foreclosure process is complete. Most states usually require that the creditor goes to the full judgment stage until they are even allowed to go back to the court to ask for a sheriff sale date. After the mortgage company asks for a sheriff sale, the date will usually be set out about 45-60 days giving you notice. You will need to be out of the house the day of the sheriff sale. Therefore, it would be wise to complete your moving the day before if possible.

Remember, although you were able to live in the home for “free” until sheriff sale, eventually the mortgage lender can come back and collect against you. If there was a deficiency on the mortgage after the sale, you would be liable for it in the future. The mortgage company could come back after you for the balance. Therefore, it may be wise to consider Chapter 7 or a settlement option after the mortgage foreclosure has come to completion.

Chapter 13 Cannot Modify Mortgages

Chapter 13 Cannot Modify Mortgages

Chapter 13 cases are very powerful at stopping foreclosure or forcing payments. Yet, Chapter 13 bankruptcy cases cannot modify mortgages. It has been proposed many times in Congress or in legal circles that Chapter 13’s should be able to alter mortgage terms. No changes to the bankruptcy code have been made for this purpose. Explaining what Chapter 13’s can and cannot do with mortgages will help clarify what is actually available in a Chapter 13 case.

What Chapter 13’s CAN Do with Mortgages

Chapter 13’s are powerful because they can always stop foreclosure and even sheriff sales. If you are filing your first Chapter 13 case, you can almost always stop your foreclosure or sheriff sale. This is almost a “given.” It is a near 100%, “bullet-proof” way of stopping the foreclosure process.

Chapter 13 also provides a built-in mechanism for curing arrears (behind amounts that you owe to the mortgage). Chapter 13 also forces the mortgage company to take ongoing payments usually through paying these amounts to the Chapter 13 trustee. This is a wonderful system because it works every time. It also is very predictable because the same thing happens every time.

What Chapter 13’s CANNOT Do with Mortgages

Chapter 13’s cannot “modify” mortgages generally in any way. This means that the terms, the monthly payment, and any amount behind are generally non-negotiable and non-alterable in Chapter 13. Because there are no provisions in the bankruptcy code (and case law) for forcefully modifying a mortgage through bankruptcy, the mortgage company generally expects everything to stay exactly the same. The mortgage company expects to receive full payment for their arrears amount and any monthly ongoing payment. This expectation is so strong and well known that it is virtually impossible for anything else to happen through a Chapter 13 plan even if the creditor is willing to agree otherwise.

Therefore, even though Chapter 13 is very powerful, sometimes getting a loan modification can be a more affordable option if it becomes available. Some mortgage holders will file a Chapter 13 case to stop a sheriff sale or foreclosure only to later negotiate a loan modification. By paying the mortgage for 6-18 months through the Chapter 13 plan, it can prove that debtor can afford loan modification payments. It may actually be in the mortgage holder and the debtor’s best interest to make a loan modification agreement. Eventually, Chapter 13 can even be dismissed in such cases. Sometimes a loan modification can be a much more stable, long-term solution than the Chapter 13 case. This is especially true if the Chapter 13 payment is excessively high due to the amount of the arrears or current monthly required mortgage payment.

Because Chapter 13’s cannot modify mortgages, many battles never occur in the Chapter 13 case. If the loans could be modified, it would be normal to expect opposition and heavy negotiation in bankruptcy. Not having to deal with these battles does have an advantage. It makes Chapter 13 very predictable and reliable. The powers of Chapter 13 are then loaded and ready to save any mortgage situation.

More on Chapter 13 Bankruptcy

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