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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.

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Local Farmers at Risk Through Tariffs

Farmers Tariffs - Bankruptcy

Indianapolis Bankruptcy News

Farming in central Indiana has already gone through difficult times. Many farmers have faced growing balances on operating lines of credit. Farmers near Indianapolis also always face the inherent instability of farm product markets. This particular problem, poor market prices, is being intensified by trade war tariffs.

Local Soy Bean Farms Hit Hard

One of the worst hit products is soybeans, which are now at a 10-year low. Many farmers refused to sell at these lower prices last year, hoping to ride out the market storm. However, farmers can only store soybeans for a limited period of time. They can also only store their full crop if they have the facilities for it. They will be forced to sell soon, regardless of market pricing.

Although there are numerous uses for soybeans, the market is being stunted by the retraction of the Chinese export market. The U.S. market still demands high amounts of soybean products, but the Chinese retraction as created a serious over-supply problem. Farmers may be forced to alter their operations in response to this demand change. To make matters worse, fears are growing that the Chinese market could eventually be fed by foreign markets instead of the U.S. market, permanently replacing this demand sector.

Other Farm Producers Also Hit Hard

Although the soybean market is a good example, other farm markets in Indiana are also being hit. With many farms operating on tight margins and operating loans, the smallest fluctuation in market prices can hit hard. To make matters worse, many of these market fluctuations are unprecedented in recent times. Many farm operations could face insolvency and bankruptcy. A trend towards more farm bankruptcy filings may be lurking right around the corner. Operations that were barely paying the bills may not be operating in the next 2-3 years.

Trade Negotiation Needed Soon

Although many farmers are not against these tariffs in principle, most farmers agree that major trade negotiations should be completed as soon as possible. Even beyond the farming sector, many other sectors of the economy are getting hard by the tariffs including tech industries, automobile markets, and steel. Although many favor trade negotiation, most people want to get these new agreements in place as soon as possible so that tariffs can stop across the board.

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Student Loan Crisis Looms – Are Current Solutions Constitutional?

Student Loan Crisis

As the student loan crisis looms, many proposals to this crisis are being presented in anticipation of the next presidential election. Various presidential candidates are presenting their own solutions. Questions come quickly into play – such as are these solutions constitutional? Is bankruptcy or something else the best solution?

Elizabeth Warren’s Student Loan Solution

Elizabeth Warren, a former law professor and current Democratic candidate for president, has proposed canceling $50,000 in student loan debt for individuals whose household income is below $100,000. This process would be automatic and apply to both private and government-backed student loan debt. This could effectively cause the forgiveness of up to 75% of those currently holding student loan debt in the United States. The process will happen directly with current credit information and former tax returns.

Although this proposal appears to be very powerful and desirable to many Americans, it appears to be blatantly unconstitutional. Without full government compensation (which would be devastating to the Treasury and tax burden), this proposal would directly violate the contracts clause and takings clause of the Constitution. To make matters worse, this proposal would relate the debt-forgiveness to income. The people paying the most taxes would likely receive the least benefit from the forgiveness program. They would also possibly be required to “pay the bill” dependent upon the method in which the loans are “forgiven.” Interestingly, many other programs proposed also follow Warren’s lead, making them income driven and a full, forced forgiveness.

Obvious and Simple: Bankruptcy is Constitutional

There is an obvious long-term solution to the student loan crisis. This obvious solution is to allow student loans to once again be fully dischargeable in bankruptcy. This would return to the root of the problem and fix it at its source. The entire student loan problem originated with “student loans” being put into a separate class in the first place.

Student loans are not the usual loan situation: they are heavily protected and easy to generate. What other unsecured loans can you generate in large amounts right when you reach the age of 18 for college? Student loans have turned education into big business. They have breached the sacred nature of education and turned everything into a big-business type model. The schools, even the best of them, have become predatory by aggressively seeking to fill up their rosters at the highest cost possible. All of the schools have systems for easily coupling each student with future, burdensome student loans

This can be seen the clearest by examining the recent wave of “for-profit” schools that have recently been shut down. These schools were enrolling the least qualified of students for meaningless educational programs. The predatory nature of these schools was obvious. They had entire classes of students burdened with high student loan debts with virtually no value received for their “educational” program. The one thing most of these schools had in common was an eager and convincing enrollment officer. Everything was set up for the young student to sign easily on all lines necessary for a student loan to pay for the school’s programs. Are the rest of the public and private schools honestly much different?

Student loan debts should have never been made non-dischargeable in bankruptcy. Returning student loans to a “dischargeable” status in bankruptcy would be the great equalizer. Over time, student loans would no longer retain a special, “god-like” status to oppress young people eager for higher education. Student loan decisions would be made like all other loan decisions: they would be based on the likelihood of the person actually to pay the loan back. Education would no longer be big-business funded by never-ending supplies of debt-based “funny-money.” Education instead would be about actually educating those who are best qualified and dedicated to receiving advanced education or training. The College and University system was just fine before student loans were made non-dischargeable. It will adapt to find the same balance after student loans are dischargeable in bankruptcy once again.

Dress Barn Closings – Indianapolis Bankruptcy News

Dress Barn Closing

As the retail apocalypse continues, Dress Barn decides to close all of its 650 stores. Although this kind of news seems like the new “norm,” the numbers are truly shocking. It is estimated that a total of almost 6,000 to 7,000 retail stores will close in 2019 alone. Dress Barn, however, will be a large hit across the United States. They currently employ about 6,800 people who could soon face losing their jobs.

Not Enough Profit to Warrant Continued Operations

Dress Barn’s chief executive officer has simply stated that Dress Barn has been unable to generate acceptable levels of profit for the company store to continue. The parent corporation for Dress Barn is Ascena Retail Group, INC has stated that it wants to build more successful brands that the company owns, including Lane Bryant and Ann Taylor clothing retailers. The rumors of such a massive closing have already caused the trading of the companies shares to drop to almost a 50% value.

The Closings Effect on Indianapolis

Currently, there are 16 Indiana Dress Barn locations. Several of these locations are located in the Indianapolis greater area. All these central locations will be eventually closing including Avon, Plainfield, and Noblesville. The retailer has been popular for quite some time in Indiana. The brand itself is 50 years old. It has served the retail market successfully for decades. It will be sorely missed by its Indianapolis customers, being a staple retailer in the area for years.

The Trend Continues

Retail stores have been closing in record numbers over the last 5 years. This trend is rooted in the online retail revolution and other changes in demographics.  

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Steak n Shake Temporary Closings Continue- Indianapolis Bankruptcy News

Steak n Shake

As sales decrease at Steak n Shake locations throughout the United States, the closing of multiple locations has begun in Indianapolis. The corporation who owns the corporate side to Steak n Shake is located in San Antonio, Texas. This company, called Biglari Holdings, Inc, has stated that these closings are only temporary.

Temporary Closings Making Way For Franchise Agreements

Steak n Shake locations are usually owned and operated by their corporate office. The company is now marketing a new franchising system where owner-operators can take over individual locations. These franchise opportunities are designed to create meaner, leaner operations where owner-operators can take pride in operating (and possibly also save) their individual locations. The corporate office wants to transition into a franchising system which it hopes will eventually generate good profit and make its own operations much more simple. The corporate office is stating that these Indianapolis closings are only temporary. These closings are part of the transition between corporate to franchise-style operations.

Indianapolis Steak n Shakes that Have Closed

Biglari Holdings has closed at least four Indianapolis locations. The closed locations are on the Northeast and West side of Indianapolis only. These temporarily closed locations are at the following addresses:

  • West Closings: 3810 West Washington Street, 5635 West 38th Street – Indianapolis
  • Northeast Closings: 5827 East 71st Street, 4105 East 96th Street

Remember, these closings are currently slated to be “temporary.” If a franchise agreement can be made for each location, it is possible that these locations could soon reopen.

Is Steak n Shake Bankruptcy Possible?

Even though Steak n Shake has been taking hits in comparison to its robust past, there is currently no indication that bankruptcy filings are expected or imminent. Steak n Shake’s corporate office has been taking serious steps to rectify many of the location’s poor earning records. This new franchising model could cause a major shift in operations that could also prevent future losses. Although Steak n Shake may have to close some locations and revamp operations, it appears too early to tell how the brand will fair after many of these much-needed changes are put into action.

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