Student Loan Collection and Bankruptcy

Chapter 13 bankruptcy has become an attractive solution for those facing student loan collection including garnishments. While student loans are still not dischargable, collection can be halted for up to 60 months while in a chapter 13 bankruptcy plan. Chapter 13 plans allow debtors to postpone student loan collection by pledging to pay their disposable monthly income, or what they can afford, into a chapter 13 bankruptcy plan. This buys consumers time, but is not a permanent solution since the loans will not be discharged.

At the end of the Chapter 13 plan student loan collection can resume. The goal is to have a change in circumstances that will allow the borrower to afford their student loan payments after bankruptcy. However, if this is not the case, the option to file a new bankruptcy case is available. By the end of the plan laws could also change that give student loan debtors more repayment or forgiveness options.

The Chapter 13 bankruptcy also allows protection from other creditors while in the plan. It consolidates all debts into one affordable monthly payment while stopping all collection. This allows debtors to get their finances back on track while relieving the stress caused by harassing debt collectors. Although the Chapter 13 will not discharge the student loan debt it will give borrowers the breathing room they need to financially provide for their families.

If you have questions regarding bankruptcy in Indiana please contact Jackson & Oglesby Law at (877) 489-0908 or visit us at www.IndyBankruptcyLaw.com.  We are experienced bankruptcy attorneys and can help guide you through the entire bankruptcy process. Call us today to schedule your free consultation.

Bankruptcy Today for Retirement Tomorrow

Most people plan to retire when they reach a certain age, and leave the stress of working everyday behind.  Retirement brings with it its own stresses.  Especially if you have not saved adequately to support your lifestyle.  Saving for retirement in today's economy may seem like an enormous obstacle.

People who are making their monthly payments, but have nothing left to put aside for retirement are some of the best candidates for bankruptcy.  Not putting money away for retirement now can lead to poor living conditions later in life or becoming a financial burden on your family.  The amount of money a family spends on just the minimum payments toward their credit cards, could instead be used to put quite a bit of money away for retirement.  Retirement savings, no matter the amount, can help ease the financial burden of getting older.  Retirement savings is next to impossible for people struggling with credit card debt.  Bankruptcy can help people start planning for the future instead of simply living paycheck to paycheck. 

Experienced bankruptcy attorneys can always go over all your options with you to determine if bankruptcy is the right path for you.  I urge everyone to look at their finances and if you simply cannot save any money for the future I urge you to contact a bankruptcy attorney today.  Filing bankruptcy to prepare for life down the road is not being financially irresponsible.  I argue that by planning for the future you are being financially savvy, and trying to correct a situation that could affect your quality of life in your later years. 

Alternatively one of the worst mistakes I see people make when they come into my office is throwing good money after bad debt.  I see so many people who have tried to dig out of their debt to no avail by emptying their 401k accounts.  These accounts are completely protected from creditors, and should not be used to pay current creditors.  Do not leverage your future for a short term solution today.

If you have questions regarding bankruptcy in Indiana please contact Jackson & Oglesby Law at (877) 489-0908 or visit us at www.IndyBankruptcyLaw.com. Jackson & Oglesby Law can assist you with all aspects of your bankruptcy case. If you have questions regarding Chapter 7 bankruptcy, Chapter 13 bankruptcy, stopping foreclosure or wage garnishment, avoiding liens, stopping law suits, discharging debt, etc. we can help! Please call us today for your free phone consultation to determine which bankruptcy may be right for you.

Will I Be Able to Get Credit After Bankruptcy?

Worried about obtaining credit after bankruptcy?  This is a common concern by many people contemplating bankruptcy.  Most people are scared that filing bankruptcy will prevent them from having any type of credit for the next ten years.  Nothing could be further from the truth.

This pesky myth has been around for quite some time now.  Most often people are told from well-meaning friends and family that if they file for bankruptcy they will never get credit again.  This is one
reason why seeking the advice of a qualified Indianapolis bankruptcy attorney is important.  Filing for bankruptcy actually decreases your debt to income ratio which makes it more likely that you will be able to get credit.  Bankruptcy allows an individual to manage new credit obligation by eliminating the burden of prior debt.  Most bankruptcy filers will start to receive credit card offers in the mail as soon as they have received their bankruptcy discharge order. 

Filing bankruptcy, especially in today’s economic climate, is no longer the financial death sentence that it might have been twenty years ago.  Today people who have filed bankruptcy are able to get car loans and refinance mortgages while still in an open bankruptcy case.  The majority of bankruptcy filers will be able to get car loans immediately following the filing of their bankruptcy petition or as soon as receiving their discharge in a chapter 7 case.

Creditors are now looking at bankruptcy as an invitation to extend credit to previously troubled people.  The fact that one has just filed bankruptcy will usually mean that person cannot file bankruptcy again for at least 8 years.  This makes someone who has just filed bankruptcy a much safer credit risk than they were previously.

We don’t recommend racking up credit card debt after filing bankruptcy, but an emergency card is okay.  It is also okay to use a card each month for things such as gas and groceries, but pay off the balance in full each month to help rebuild credit.  It is important that credit is used responsibly post-bankruptcy.  The bankruptcy will be a stepping stone to rebuilding credit, but responsible credit use is a key factor to rebuilding credit after bankruptcy.  By using credit responsibly after bankruptcy debtors will soon move on from bankruptcy and begin their new life with financial freedom.   If you would like to see how bankruptcy can help jump start your credit repair call an experienced bankruptcy attorney today.

If you have questions regarding bankruptcy in Indiana please contact Jackson & Oglesby Law at (877) 489-0908 or visit us at www.IndyBankruptcyLaw.com. Jackson & Oglesby Law can assist you with all aspects of your bankruptcy case. If you have questions regarding Chapter 7 bankruptcy, Chapter 13 bankruptcy, stopping foreclosure or wage garnishment, avoiding liens, stopping law suits, discharging debt, etc. we can help! Please call us today for your free phone consultation to determine which bankruptcy may be right for you.

What Are the Time Limits Between Bankruptcy Filings and How Many Times Can I File Bankruptcy?

Have you filed bankruptcy before and are wondering if you are eligible to file again?  First, there is no limit on how many times a person can file bankruptcy.  You can file as many times as needed so long as you qualify.  However, there are time limits that restrict the frequency of which a person can file.   The time limits vary depending on whether you plan to file Chapter 7 or Chapter 13.  The time limit also depends on which chapter of bankruptcy was previously filed.

Prior Chapter 7 and Wants to File a Chapter 7:  The prior chapter 7 must have been filed over 8 years ago.  There is an absolute bar from receiving a discharge in a new chapter 7 if a previous chapter 7 was filed within 8 years of current filing.

Prior Chapter 7 and Wants to File a Chapter 13:  If a prior chapter 7, that was discharged, was filed within 4 years of current filing the debtor will NOT receive a discharge but can still file a chapter 13 (these cases, if filed, should always be a 100% repayment plan otherwise it doesn't help the debtor much; however, the debtor will receive protection of the automatic stay while in the chapter 13 even though no discharge will be entered).  If the prior chapter 7 was filed over 4 years ago the debtor will be eligible to receive a discharge in new chapter 13.

Prior Chapter 13 and Wants to File a Chapter 7:  If a prior chapter 13 was filed within 6 years of current chapter 7 filing there is no discharge unless:

a) Payments under the prior chapter 13 plan totaled 100% of the allowed general unsecured claims; or

b) Payments under the prior chapter 13 plan totaled at least 70% of the allowed general unsecured claims  

        and the chapter 13 plan was proposed in good faith and was the debtor’s best effort.

Prior Chapter 13 and Wants to File a Chapter 13:  If a prior chapter 13 was filed and discharged within 2 years of the current filing, the debtor will not be eligible for a discharge in the current chapter 13. 

It is important to note that the discharge date of the previous filing is irrelevant.  The date the case was filed is the date that determines whether a debtor will be eligible to file a new case.  If the previous case was dismissed without a discharge the previous filing will not affect eligibility for future cases.  

If you have questions regarding bankruptcy in Indiana please contact Jackson & Oglesby Law at (877) 489-0908 or visit us at www.IndyBankruptcyLaw.com. Jackson & Oglesby Law can assist you with all aspects of your bankruptcy case. If you have questions regarding Chapter 7 bankruptcy, Chapter 13 bankruptcy, stopping foreclosure or wage garnishment, avoiding liens, stopping law suits, discharging debt, etc. we can help! Please call us today for your free phone consultation to determine which bankruptcy may be right for you.

Benefits of Filing Chapter 13 Bankruptcy

There are two types of bankruptcies consumers most often file.  The most common is a Chapter 7 bankruptcy but many people find Chapter 13 to be more beneficial.  While it’s true that some people must file a Chapter 13 because they do not qualify for a Chapter 7, others file Chapter 13 because of the many benefits it has over a Chapter 7.  Below are some reasons to consider filing a Chapter 13 bankruptcy.

•  Save a Home from Foreclosure – Chapter 13 allows mortgage arrears to be paid over the life of the Chapter 13 plan (36-60 months).  The bankruptcy will stop the foreclosure and allow the homeowner time to get caught up on payments to save the home.
•  Avoid or Strip a Second Mortgage – If a homeowner owes more on their first mortgage than their home is currently worth they may be able to eliminate or strip the second mortgage lien from a property’s title in a Chapter 13 bankruptcy. 
• Cram Down Interest Rates – In most cases interest rates can be lowered for secured debt in a Chapter 13.  This includes secured debt for cars and even household goods. 
• Cram Down Car Value – If more is owed on the vehicle than it is worth the amount paid to the car creditor in a Chapter 13 can be crammed down to the fair market value. 
•  Preserve Your Chapter 7 Option – Chapter 7 can only be filed once every eight years.  While a person may need bankruptcy protection now to stop wage garnishment or creditor harassment they may also be anticipating more debt.  For example if a person has a medical condition and know they will be incurring medical bills due to cancer or another illness they may need the option of including the new debt in the future.  A Chapter 13 can be converted to a Chapter 7 in the future and debt incurred after the original Chapter 13 filing can be included in the converted Chapter 7 case.   To convert a person still must qualify for a Chapter 7 based on income and other factors that a bankruptcy attorney can explain in detail. 
• Length of Time on Credit Report – A Chapter 13 bankruptcy remains on a person’s credit report for seven years whereas a Chapter 7 will show up for 10 years.
• More Affordable – In some cases a Chapter 13 plan payment may be less than what a person is paying for their car, and the car would be included in the Chapter 13 plan payment.  By cramming down interest rates and loan values a Chapter 13 could save money in the long run compared to keeping the car in a Chapter 7 bankruptcy.

There are many factors to consider when deciding which bankruptcy case may be right for you.  Chapter 7 and Chapter 13 are both great options for solving financial problems.  However, before you choose which chapter to file, make sure you have all the facts and speak to an experienced bankruptcy attorney.    Most offer free initial consultations and I would recommend speaking to a local attorney in your area about what benefits you may expect from filing a Chapter 13 bankruptcy.

If you have questions regarding bankruptcy in Indiana please contact Jackson & Oglesby Law at (877) 489-0908 or visit us at www.IndyBankruptcyLaw.com. Jackson & Oglesby Law can assist you with all aspects of your bankruptcy case. If you have questions regarding Chapter 7 bankruptcy, Chapter 13 bankruptcy, stopping foreclosure or wage garnishment, avoiding liens, stopping law suits, discharging debt, etc. we can help! Please call us today for your free phone consultation to determine which bankruptcy may be right for you.

Tax Time and Bankruptcy...Is My Refund Protected?

Tax time is fast approaching and a common question is “Will I get to keep my tax refund if I file bankruptcy”?  With some careful planning you should be able to protect your tax refund from the Chapter 7 Trustee when filing bankruptcy.  Several factors do come into play so it is always a good idea to consult a bankruptcy attorney with regard to your taxes and bankruptcy.

A Trustee in a debtor’s bankruptcy case can intercept a tax refund for the benefit of the creditors.  To do so, the bankruptcy must have been filed prior to receiving and spending the tax refund.  Therefore, one sure way to protect your tax refund in a Chapter 7 bankruptcy is to file bankruptcy after the tax refund has been received and spent.  It is important to note that the refund must be spent on necessary living expenses and it is a good idea to keep a list of what the money was actually used for prior to filing bankruptcy.

Even if the bankruptcy case has been filed prior to receiving your tax refund the refund still may not be taken.  Some factors the Trustee will consider:

·        How much of the refund is Earned Income Credit?  EIC is protected and cannot be taken for the benefit of creditors.

·        Does the debtor owe past tax debt?  If so, the IRS or State may be entitled to the refund to offset liability.

·        How large is the refund?  The amount must be enough to be a meaningful distribution to creditors.  In Indiana the refund typically needs to be around $1,000 or more before the Trustee will be interested in taking it.

·        Can the debtor exempt any of the refund?  In Indiana each individual debtor may exempt up to $350 of intangible property.  Therefore, part of the tax refund may be exempt depending on how much other intangible property was owned by the debtor when the case was filed.

·        When was the bankruptcy filed?  The amount of the tax refund allowed to be administered by the Trustee is pro-rated over the year.  Therefore, the Trustee may only be able to take 75% for instance.

The rules can change from state to state and Trustees’ decisions can vary regarding the tax refund.  Therefore, to ensure your tax refund is protected when filing Chapter 7 bankruptcy, consult a local bankruptcy attorney.  A bankruptcy attorney will be able to determine when the best time to file will be and can give advice on how to spend the refund prior to filing the bankruptcy case.

If you have questions regarding bankruptcy in Indiana please contact Jackson & Oglesby Law at (877) 489-0908 or visit us at www.IndyBankruptcyLaw.com. Jackson & Oglesby Law can assist you with all aspects of your bankruptcy case. If you have questions regarding Chapter 7 bankruptcy, Chapter 13 bankruptcy, stopping foreclosure or wage garnishment, avoiding liens, stopping law suits, discharging debt, etc. we can help! Please call us today for your free phone consultation to determine which bankruptcy may be right for you.

Is Tax Debt Dischargeable in Bankruptcy?

Most people who come into my office are very confused about past tax debt. Some think that taxes are never dischargeable while others believe they always are. The truth lies somewhere in between. Tax debt is considered a dischargeable debt in bankruptcy so long as certain requirements are met. Bankruptcy Code §523(a)(1) lists the requirements that must be met for taxes to be discharged in bankruptcy.

The first requirement for determining whether tax debt is dischargeable is to look at how recent the debt has been incurred. If the tax debt was incurred over three years ago it is presumed to be dischargeable. If the tax debt has been incurred within the previous three years, the debt is considered to be a priority debt and will not be dischargeable. Taxes are typically due on April 15th, every year. Thus, making the debt incurred when the taxes are due. For example, tax year 2011 will not be considered incurred until the taxes are filed which is generally by April 15th, of the following year.

The second requirement is that the tax return must have been filed more than two years ago. This rule is meant for people who file their tax returns late. You cannot wait until you are filing for bankruptcy and then file on the eve of bankruptcy to discharge tax debt. You must make an effort to timely file your taxes.

The third requirement is that the taxes cannot have been assessed within the last 240 days.This is typically a problem if the tax return was not accurate and the IRS has corrected your return recently.

The fourth requirement states that you cannot have willfully made an effort to defeat or evade your tax debt. If you have engaged in some type of fraud to avoid owing tax debt then the debt will be non-dischargeable. The good news is that simply not paying your taxes is not reason enough for the court to deny the dischargeability of tax debt.

The fifth requirement to dischargeability is that a lien cannot have been placed on any property. If a tax lien has already been instituted against any of your property then the lien will not be discharged in the bankruptcy and the property will still be encumbered.

There are additional factors that may contribute to the dischargeability of tax debt that have not been discussed here. If you are facing a large amount of tax debt I recommend that you speak with a bankruptcy attorney in your area. Tax law is complicated and the best way to determine if your tax debt is dischargeable it to contact the IRS directly and obtain a decision from them regarding your specific tax situation. A bankruptcy attorney will then be able to help you possibly eliminate your tax debt through bankruptcy.

If you have questions regarding bankruptcy in Indiana please contact Jackson & Oglesby Law at (877) 489-0908 or visit us at www.IndyBankruptcyLaw.com. Jackson & Oglesby Law can assist you with all aspects of your bankruptcy case. If you have questions regarding Chapter 7 bankruptcy, Chapter 13 bankruptcy, stopping foreclosure or wage garnishment, avoiding liens, stopping law suits, discharging debt, etc. we can help! Please call us today for your free phone consultation to determine which bankruptcy may be right for you.

What is the Principal Paydown Plan?

Lawmakers in Congress have been struggling with a solution to the foreclosure crisis for nearly five years.  The fact is, many Americans want to keep their homes, but falling housing prices and a somewhat stale economy have forced many to walk away from the place they call home.  Unfortunately, many people are upside down on their mortgages and cannot sell their property for what it’s worth.  Chapter 13 bankruptcy can help those mortgagees who have a second under-secured mortgage but it does nothing to alter the terms of the first under-secured mortgage.

The proposed Principal Paydown Plan (“PPP”) offers some help to homeowners who are upside down on their first mortgage.  If enacted, the Principal Paydown Plan would restructure underwater mortgages in Chapter 13 bankruptcy.  Homeowners would continue to pay their current mortgage rate while in the Chapter 13, but all payments would go towards the principal loan balance.  The mortgage company would not be allowed to collect interest during the life of the Chapter 13 bankruptcy, which can be up to 60 months or five years.   Homeowners would be able to eliminate negative equity during this time, acquiring positive equity and then refinance the mortgage into a market rate loan at the end of the bankruptcy.

There is obviously no “easy fix” for the mortgage crisis, and this plan will not help every home owner, but I believe it is a step in the right direction.  According to the NACBA, recent research has shown a strong correlation between negative equity and mortgage delinquency.  Homeowners may have less incentive to stay in the home if they are unlikely to move into a positive equity position in the near future.  For these homeowners, reducing the monthly payment to a more affordable level does not solve the underlying problem of negative equity.  Through Chapter 13 bankruptcy and the Principal Paydown Plan, homeowners now have a possible solution to their negative equity nightmares. 

There are approximately 1.6 million active and pending Chapter 13 bankruptcy cases in the country, and of those, approximately 880,000 include mortgages.  The Principal Paydown Plan could apply to most if not all of these cases.  This plan hopes to help stabilize the housing market, as well as individual communities across the country.  If you’d like to help support the effort to get the Principal Paydown Plan enacted into law simply go to http://wh.gov/g8d and click “sign the petition” after you have created an account.

If you have questions regarding bankruptcy in Indiana please contact Jackson & Oglesby Law at (877) 489-0908 or visit us at www.IndyBankruptcyLaw.com. Jackson & Oglesby Law can assist you with all aspects of your bankruptcy case. If you have questions regarding Chapter 7 bankruptcy, Chapter 13 bankruptcy, stopping foreclosure or wage garnishment, avoiding liens, stopping law suits, discharging debt, etc. we can help! Please call us today for your free phone consultation to determine which bankruptcy may be right for you.

Can I Be Thrown in Jail For Not Paying My Creditors?

I find this to be a fairly common question among my clients. Collection agents frequently advise clients that if they do not pay their debts then they will have them thrown in jail. The practice of putting people in jail for not paying private debts was done away with in the 1800's. There are no longer Debtor Prisons in the United States. Don't be too happy though, because there just maybe a grain of truth to the creditors assertion that you could go to jail. How can you be sent to jail if it is illegal? Simple, disobey the court and be held in contempt.

Many people find it difficult to make their debt payments whether they be for credit cards, medical bills, home, or cars. If the situation becomes too difficult most people will only pay the things that are the most important. When this starts to happen creditors will start calling. After the creditor has tried to call, and still not received payment they will likely refer your case to a collection agency. Collection agents often tell all kinds of lies to people in the hopes of trying to collect payment for their debts. The most common threat is that the person could be thrown in jail.

After calling with no result, the collection agency might file a lawsuit. A lot of people who receive a lawsuit like to bury their heads in the sand and not respond. Many people even fail to attend the court date. This will result in a default judgment being entered against you. Even if you do not attend this hearing you still will not be thrown in jail. After the judgment is entered, the creditor will try to the have the court seize your assets in some way or another. If the creditor is unsuccessful they will then ask the court to make you appear with a list of your assets. This is known as an asset citation hearing.

This is where things become tricky. If you do not show up with a list of your assets at this meeting then you are directly defying a court order. The court will order that you are in contempt of court and issue a body attachment. Once this has been done you can be arrested until you comply with the court order and provide a list of your assets. If you think you are in danger of having a lawsuit filed against you and cannot pay the debt speak to an experienced bankruptcy attorney immediately.

If you have questions regarding bankruptcy in Indiana please contact Jackson & Oglesby Law at (877) 489-0908 or visit us at www.IndyBankruptcyLaw.com. Jackson & Oglesby Law can assist you with all aspects of your bankruptcy case. If you have questions regarding Chapter 7 bankruptcy, Chapter 13 bankruptcy, stopping foreclosure or wage garnishment, avoiding liens, stopping law suits, discharging debt, etc. we can help! Please call us today for your free phone consultation to determine which bankruptcy may be right for you.

Bankruptcy Relief in Sight for Private Student Loan Debtors?

Since the decline in the economy, a staggering number of Americans have returned to school to better their employment prospects.   Regrettably, many of these students enroll in private for-profit schools and end up with a mountain of debt they can never hope to repay.  Exceedingly too many students have little to show in the way of credentials or skills for all their hard work.  Students are often forced into private student loans to fund their education.  Sky-high interest rates on private loans and fewer relief options for consumers like hardship deferments have left borrowers with little choice but to default.  Currently there is no relief for these debtors.   These loans and bad credit history can follow students for life.  Even bankruptcy doesn’t offer a fresh start.   

A bill was recently introduced that would allow private student loans to be discharged through bankruptcy.  The Private Student Loan Bankruptcy Fairness Act of 2011 was introduced to Congress May 26, 2011, by Representative Steve Cohen, Democrat of Tennessee and Senator Dick Durbin, Democrat of Illinois.  The act seeks to amend the federal bankruptcy code to remove qualified educational loans as an exception to discharge from bankruptcy.  Most private student loans were dischargeable through bankruptcy before Congress changed the law in 2005.  The Bankruptcy Abuse Prevention and Consumer Protection Act was signed into law by then President George W. Bush, this current law treats private students loans the same as federal or non-profit loans which are non-dischargeable through bankruptcy.

The current law provides no relief for debtors faced with overwhelming private student loan debt.  While, the country has a compelling interest in making it extremely difficult to evade payments for federal or non-profit debt, there is no reason to extend that protection to private student loan lenders.  High-cost private loan lenders, who often turn an enormous profit, have been given an unfair advantage over other unsecured lenders such as credit card issuers whose debts are still subject to discharge in bankruptcy.  The law change in 2005, no doubt, brought about careless lending by underwriters who no longer felt obligated to determine the borrower’s ability to pay.  Student loan debtors are now struggling to repay these pricey private loans with no chance for relief.

If the Private Student Loan Bankruptcy Fairness Act of 2011 is enacted into law, it would eliminate the undeserved protections for private student loan lenders and give struggling borrowers the possibility of a fresh start.  To show your support for H.R. 2028: Private Student Loan Bankruptcy Fairness Act of 2011 go to:  https://www.popvox.com/bills/us/112/hr2028     

If you have questions regarding bankruptcy in Indiana please contact Jackson & Oglesby Law at (877) 489-0908 or visit us at www.IndyBankruptcyLaw.com. Jackson & Oglesby Law can assist you with all aspects of your bankruptcy case. If you have questions regarding Chapter 7 bankruptcy, Chapter 13 bankruptcy, stopping foreclosure or wage garnishment, avoiding liens, stopping law suits, discharging debt, etc. we can help! Please call us today for your free phone consultation to determine which bankruptcy may be right for you.

Federal Rule Protects Exempt Bank Funds from Garnishment

On May 1, 2011, a new federal rule went into effect.  The new rule increases protection for exempt funds in a garnished bank account.  It had become commonplace for banks, upon receiving a garnishment order from a judgment creditor to freeze the account of the judgment debtor without regard to whether the account contained exempt federal funds such as Social Security.  The result of this practice left many retirees with no income and unable to meet their basic needs.  Under the new Treasury Department rule, an electronic tag will be added to automatic deposits from government agencies.  These funds include, Social Security, Supplemental Security Income (“SSI”), Veteran’s Administration benefits (“VA”), federal Railroad Retirement, federal Railroad Unemployment and Sickness benefits, federal Civil Service Retirement benefits and federal Employee Retirement System benefits.  The rule does not apply to military retirement or state issued benefits.   

Banks must now exempt all tagged deposits made during the previous 60 days and protect those deposits from garnishment.  The account holder must have access to the sum of the deposits made within the last 60 days or to the current balance, whichever is lower.  Even if there is exempt money co-mingled with non-exempt money, banks will not be held liable to creditors for refusing to garnish the tagged funds.  Garnishment orders obtained by the United States are not covered by this regulation.

While the new rule is a step in the right direction there are gaps in its coverage.  Setoffs are not covered by the new rule.  This means that a financial institution can still obtain these “exempt” funds to set off overdrafts and other debts owed to the financial institution such as credit card debt.  The rule also does not apply to bank fees.  The 60 day look-back period is being criticized as well.  In some instances when there are 31 days in a month, only one month’s worth of benefits will be protected.

Garnishment orders affect more than 1 million people each year according to the National Consumer Law Center.  Many of these people are often elderly and on a fixed income.  A frozen bank account can cause these people significant hardship forcing them to go without needed medicine or food.  This new rule is just one of many powerful consumer protection laws currently in effect designed to help people in need.  The new rule applies to all federally chartered federal and state banks and credit unions.  Exempt funds must be electronically deposited to be tagged as exempt.  Deposits made by paper checks are still exempt, but the bank is not obligated to identify these funds or protect them from garnishment. 

  

The interim final rule may be reviewed at http://edocket.access.gpo.gov/2011/pdf/2011-3782.pdf.  Guidelines issued by the Department of the Treasury, Financial Management Services, may be accessed at www.fms.treas.gov/greenbook/guidelines_garnish0311.pdf.

If you have questions regarding bankruptcy in Indiana please contact Jackson & Oglesby Law at (877) 489-0908 or visit us as www.IndyBankruptcyLaw.com. Jackson & Oglesby Law can assist you with all aspects of your bankruptcy case. If you have questions regarding Chapter 7 bankruptcy, Chapter 13 bankruptcy, stopping foreclosure or wage garnishment, avoiding liens, stopping law suits, discharging debt, etc. we can help! Please call us today for your free phone consultation to determine which bankruptcy may be right for you.

Lien Stripping in Chapter 13 Bankruptcy

In Chapter 13 bankruptcy, liens such as mortgages, security interests and even voluntary liens can be stripped or reduced to the actual fair market value of the collateral.  This is often called lien stripping, lien avoidance, and cram downs.

Home Mortgage Liens

In today's economy many people have multiple mortgages on their property.  Those mortgages were lended when property values were high.  The downturn in the economy has caused home prices to plummet leaving some home owners owing substantially more on their home than it is worth. 

A home mortgage lien can be stripped in Chapter 13.  The second or third mortgage must be wholly unsecured.  Which means the home must be worth less than what is owed on the first mortgage.  To obtain the most accurate value of your home we recommend getting a Comparative Market Analysis (CMA).  Any realtor will be able to complete this and it should be done free of charge.  They will look at comparable homes in your area and base the value on recent sales. 

To successfully strip the lien a Chapter 13 must be filed.  The attorney will then file a Motion to Avoid the Lien of the mortgage company.  Once the court enters the order avoiding the lien the Debtor needs to record the order at their local recorders office.  The Chapter 13 must also be successfully completed.  If the case is dismissed without a discharge the lien will re-attach to the property.

Vehicle Liens

The most common form of lien stripping involves personal vehicles.  For instance, if the vehicle is worth $6,000 and the consumer owes $8,000 to the secured creditor the consumer can pay $6,000 plus interest in a Chapter 13.  Two thousand dollars is then stripped off the collateral (car).  This is commonly referred to as "cramming down" the loan.  The Chapter 13 plan must provide for the secured portion of the debt to be paid in full over the life of the plan.  The interest paid is generally lowered as well to approximately 4.25%.  The $2,000 that is now unsecured can be paid less than 10% along with other unsecured claims.

According to §506 of the bankruptcy code, vehicles purchased within 910 days of filing are not eligible to be crammed down.  This rule, unfortunately, eliminates many consumers.  However, if the vehicle was purchases more than 910 days (2.5 years) ago the vehicle will be eligible for lien stripping in a Chapter 13.  It may also be advantageous for some consumers to wait until the 910 have passed to file bankruptcy if they are significantly upside down on a vehicle they wish to keep.      

If you have questions regarding bankruptcy in Indiana please contact Jackson & Oglesby Law at (877) 489-0908 or visit us at www.IndyBankruptcyLaw.com. Jackson & Oglesby Law can assist you with all aspects of your bankruptcy case. If you have questions regarding Chapter 7 bankruptcy, Chapter 13 bankruptcy, stopping foreclosure or wage garnishment, avoiding liens, stopping law suits, ending creditor harassment, discharging debt, etc. we can help! Please call us today for your free consultation to determine which bankruptcy may be right for you.

What Debt will Bankruptcy Discharge?

Bankruptcy will discharge most general unsecured debt.  Receiving a "discharge" in bankruptcy means a person will no longer be legally responsible for paying the debts after bankruptcy.  Most debt is dischargeable through bankruptcy. However, there is some debt that bankruptcy will not discharge.  

The most common types of non-dischargeable debts are student loans, tax debt assessed within the past three years, child support or maintenance, debts caused by willful and malicious injuries to person or property, government fines and penalties, debts for personal injury or death caused by intoxicated driving, certain condominium or home owners association dues and fees, debts not listed by the debtor on the bankruptcy schedules filed with the court, debts incurred by lying or fraud, debts from embezzlement and larceny, and debts you owe under a divorce decree or settlement.  

Slightly more debts can be discharged through a chapter 13, than in a chapter 7.  These debts include debts arising from a divorce decree or settlement, debts for willful and malicious injury to property, and debts incurred to pay non-dischargeable tax obligations.  The discharge will not occur immediately in a chapter 13.  To receive the discharge a debtor must generally complete their chapter 13 plan payments which can last from 36-60 months. 

Most people file bankruptcy to discharge or stop the following:

• Credit Card Debt
• Medical Bills
• Income taxes assessed more than three years ago
• Creditor Lawsuits
• Repossessions
• Foreclosure
• Wage and Bank Garnishments 
• Creditor Harassment
• Discharge Debt from an Accident to Reinstate a Suspended Driver's License

The main goal of bankruptcy, for most people, is to obtain a financial fresh start.  This can be obtained by discharging debt through bankruptcy.  The process may seem stressful, but most debtors feel an immense sense of relief from stress once the mountain of debt is discharged.

If you have questions regarding bankruptcy in Indiana please contact Jackson & Oglesby Law at (877) 489-0908 or visit us at www.IndyBankruptcyLaw.com. Jackson & Oglesby Law can assist you with all aspects of your bankruptcy case. If you have questions regarding Chapter 7 bankruptcy, Chapter 13 bankruptcy, stopping foreclosure or wage garnishment, avoiding liens, stopping law suits, discharging debt, etc. we can help! Please call us today for your free phone consultation to determine which bankruptcy may be right for you.

How Can I Stop Wage Garnishments?

If you have a wage garnishment this likely means that you should have consulted a bankruptcy attorney a long time ago. Wage garnishments can kill a families ability to support itself. A family who has a wage garnishment was usually struggling to just make ends meet before the garnishment. After the garnishment starts having 25% of gross wages taken away can literally make it impossible for a family to pay for its needs. I am often asked what are my options to stop a wage garnishment. Assuming the debt is a legitimate debt that you owe you will usually only have two options to stop the garnishment.

• The first option to stopping a wage garnishment is to make arrangements with the creditor to make a one time payment where you will pay the debt in full. This is not something the typical family can afford. If they could have afforded to pay the debt they would likely have done so in the first place.
• The second option is to file for protection under the bankruptcy code. As soon as you file you are protected by the automatic stay which prohibits any further debt collection activities by any creditor. The automatic stay is one of the most powerful consumer protections offered by the federal government.

If you are either facing having your wages garnished or are currently being garnished I recommend that you consult a qualified bankruptcy attorney today. Even if you decide that bankruptcy is not for you it is always better to know ones options than to be ignorant of the help that may be available to you.

If you have questions regarding bankruptcy in Indiana please contact Jackson & Oglesby Law at (877) 489-0908 or visit us at www.IndyBankruptcyLaw.com. Jackson & Oglesby Law can assist you with all aspects of your bankruptcy case. If you have questions regarding Chapter 7 bankruptcy, Chapter 13 bankruptcy, stopping foreclosure or wage garnishment, avoiding liens, stopping law suits, discharging debt, etc. we can help! Please call us today for your free phone consultation to determine which bankruptcy may be right for you.

Should I File Bankruptcy in 2011?

The economic meltdown has caused many Americans to find themselves drowning in debt.  No doubt this contributed to the new data that shows that 2010, was marked by more personal bankruptcies than any other year since the stricter federal bankruptcy laws were enacted in 2005.  According to the American Bankruptcy Institute, roughly 1.53 million consumer bankruptcy petitions were filed in 2010.  This is up 9% from 2009.  This data was compiled by the National Bankruptcy Research Center.

With so many people seeking the protection the bankruptcy laws have to offer you may be wondering, "should I file?"  The answer is going to depend on your personal financial situation, but you ultimately need to understand what type of protection and advantages bankruptcy offers.

Consider the Advantages:

At the Heart of Bankruptcy is Debt Discharge
Personal bankruptcy offers a very basic advantage.  The discharge of insurmountable debt.  After receiving a bankruptcy discharge, all creditors are prohibited from collecting on those discharged debts.  Debt is simply wiped away giving you a fresh financial start.  If  you have unmanageable debt including credit cards, medical bills, personal loans, etc. bankruptcy can be the solution you need.

Protection from Creditor Harassment
If you have debt you cannot afford to pay and have fallen behind on payments you likely know, all too well, about the tactics creditors will use to collect on those debts.  Whether it be harassing phone calls or letters in the mail, a bankruptcy filing will stop all collection actions.  The Automatic Stay in bankruptcy protects you from your harassing creditors.  They are not allowed to collect from you outside the bankruptcy process.  This also means all wage garnishments must stop one you have a bankruptcy case number.

Saving a Home from Foreclosure
Scared you may lose your home?  Did you fall behind on payments due to job loss or illness?  If you simply need more time to get caught up on payments than the mortgage company is willing to allow, bankruptcy could be your solution.  Regardless of the reason for falling behind on payments a Chapter 13 bankruptcy can help save your home.  The Chapter 13 allows you to put the amount you are down on the mortgage into a manageable Chapter 13 plan payment.  This prevents the mortgage company from selling your home and allows you time to get caught up on payments.  The bankruptcy also prevents other creditors from collecting from you giving you the extra money you need to stay current on your mortgage.

Protecting Your Personal Property
Will I lose my car or personal possessions if I file bankruptcy.  This is a common question when thinking about bankruptcy.  The bankruptcy laws allow a person to typically keep all personal property including cars and household items.  The property is considered "exempt" and protected from creditors.  There are exemption limits so verify with your bankruptcy attorney that all your property is exempt.

For millions of Americans bankruptcy has become a safety net when faced with financial crisis.  While bankruptcy can seem scary or complicated, experienced bankruptcy attorneys can guide you through the entire process.  Before making a decision about your debt resolution options, make sure to take advantage of a free bankruptcy consultation from an experience bankruptcy attorney.   

If you have questions regarding bankruptcy in Indiana please contact Jackson & Oglesby Law at (877) 489-0908 or visit us at www.IndyBankruptcyLaw.com. Jackson & Oglesby Law can assist you with all aspects of your bankruptcy case. If you have questions regarding Chapter 7 bankruptcy, Chapter 13 bankruptcy, stopping foreclosure or wage garnishment, avoiding liens, stopping law suits, discharging debt, etc. we can help! Please call us today for your free consultation to determine which bankruptcy may be right for you.

Do You Need to Hire a Bankruptcy Attorney?

Many people who find themselves considering bankruptcy as a option are often tempted to try and file it themselves. Someone who is considering bankruptcy obviously has financial issues, and the idea of having to come up with the money to pay an attorney may seem like an insurmountable obstacle. As the economy continues to stagnate many people are returning to the do it yourself mentality. The Federal court system is not the place to take this approach. Every person who files their own bankruptcy petition is expected to know the law as well as any bankruptcy attorney. Most often the decision to file ones own bankruptcy petition is a more expensive decision than simply hiring an attorney from the start. To illustrate this point I will share a story that I witnessed personally in court just the other day.

This was the debtors third appearance at her creditors meeting because they had not previously provided the Trustee the documents they are legally required to. The Trustee agreed to hold the meeting this time, but cautioned her that if he did not receive the documents by the end of the day he would file to dismiss her case.

• Even though the debtor had failed to provide the required documents to the Trustee before the meeting, and she was now facing having her case dismissed this was not the biggest of her concerns. The Trustee when questioning the client learned that she had filed the case the day her paycheck was direct deposited into her account. In Indiana a single filer can exempt $350.00 in the bank anything over that amount the Trustee can claim as an asset of the bankruptcy estate. Her balance in her bank account on the date of filing was over $1,200.00.


• The debtor also disclosed that she was on her mother's bank account. She did not know the balance in this account that day, but the Trustee is requiring that she turn over 50% of the funds in that account.


• The debtor also failed to properly exempt her cars. The Trustee is requiring that she amend her schedules in order to prevent the cars from becoming assets of the bankruptcy estate.

Now because the debtor decided that she would not hire an attorney she now owes the Trustee over $1,000.00 plus the amount of time she had to take off work to attend 3 different meeting. She will also have to either amend her schedules to properly exempt her car or hire someone to do that for her. If she does not amend her schedules then the Trustee will be able to seize the car and sell it at auction. She has also placed her mother's assets in jeopardy. This debtor would have saved money, time, and stress by hiring an experience bankruptcy attorney.

If you do not readily know what the exemption laws are regarding your home, personal property, and savings you should NOT attempt to file your own bankruptcy. The bankruptcy code is complex, and requires an attorney who is familiar with the code.

If you have questions regarding bankruptcy in Indiana please contact Jackson & Oglesby Law at (877) 489-0908 or visit us at www.IndyBankruptcyLaw.com. Jackson & Oglesby Law can assist you with all aspects of your bankruptcy case. If you have questions regarding Chapter 7 bankruptcy, Chapter 13 bankruptcy, stopping foreclosure or wage garnishment, avoiding liens, stopping law suits, discharging debt, etc. we can help! Please call us today for your free phone consultation to determine which bankruptcy may be right for you.

Medical Expenses - #1 Reason for Personal Bankruptcy

Forbes magazine last March cited medical costs as the number one reason for filing personal bankruptcy.  There is a good chance that high medical costs will remain constant into the foreseeable future.  Even with new legislation making health care insurance more available taken into consideration, medical costs are still rising with no end in sight.  The situation in Indiana will most likely mirror the rest of the country.  If it doesn't, all that will mean is some other reason will be the number one cause for personal bankruptcy.

If medical bills or any other unforeseen financial situation has caused you to fall behind on your mortgage, utility bills, and credit card payments, bankruptcy may be a smart decision.  Meeting with an experienced bankruptcy attorney will be your best chance to become debt free. The harassing creditor phone calls can be hard to take.  Ignoring them is no solution.  Bankruptcy is one avenue millions of Americans have taken advantage of, and in doing so, have gotten their lives back on the right financial track.

An Attorney at Jackson & Oglesby will review your personal situation with you and determine if bankruptcy would be a good option.  An experienced attorney can also help determine which bankruptcy is right for you.  In a Chapter 7 bankruptcy medical bills and all other unsecured debt will typically be discharged.  In a Chapter 13 bankruptcy, debt including medical bills will be consolidated into an affordable monthly payment that is based on what you can afford to pay.   Filing bankruptcy will stop creditor collection and give you the fresh start you need.  It is true that your credit rating will be affected, but there is plenty of damage that your late payments have already done. The best strategy for repairing this damage is what you will need. The attorneys at Jackson & Oglesby can give advice on what steps are needed to put that strategy into motion.

Too many people get paralyzed by all the hopelessness that financial problems can cause, especially when it is compounded by having to fight through a medical problem. The stress of medical illness along with that of financial anxiety must be alleviated. You can accomplish this by contacting an experienced bankruptcy attorney. 

If you have questions regarding bankruptcy in Indiana please contact Jackson & Oglesby Law at (877) 489-0908 or visit us at www.IndyBankruptcyLaw.com. Jackson & Oglesby Law can assist you with all aspects of your bankruptcy case. If you have questions regarding Chapter 7 bankruptcy, Chapter 13 bankruptcy, stopping foreclosure or wage garnishment, avoiding liens, stopping law suits, discharging debt, etc. we can help! Please call us today for your free phone consultation to determine which bankruptcy may be right for you.

Posted by Dana L. Oglesby

Foreclosures and Bankruptcy - Protecting Your Home

Losing a home to foreclosure can be a stressful occurrence.  When a person can no longer make payments on the home for whatever reason the result is a bank foreclosure.  The bank can then take and sell the home unless the homeowner takes some action to stop the foreclosure. 

The first question people normally ask is "what should I do if I'm facing foreclosure?"  If refinancing is not an option and the payments cannot be brought up to date the homeowner should consider a Chapter 13 bankruptcy.  Chapter 13 can save the home from foreclosure by consolidating the arrears into a manageable Chapter 13 plan payment.  The Chapter 13 plan can last from three to five years depending on a person's individual circumstances.

Through bankruptcy a homeowner is able to eliminate other debt that can help them afford their mortgage again.  A homeowner may have had a job loss and temporarily could not make payments.  Bankruptcy can help that homeowner get back on track with their finances and save their home from being sold.
  
A qualified bankruptcy attorney is needed to evaluate the situation and determine if proceeding with bankruptcy will be beneficial to the homeowner.  If you are asking what should I do in a home foreclosure?  You may want to contact a bankruptcy attorney to discuss the options.

If you have questions regarding bankruptcy in Indiana please contact Jackson & Oglesby Law at (877) 489-0908 or visit us at www.IndyBankruptcyLaw.com.  Jackson & Oglesby Law can assist you with all aspects of your bankruptcy case.  If you have questions regarding Chapter 7 bankruptcy, Chapter 13 bankruptcy, stopping foreclosure or wage garnishment, avoiding liens, stopping law suits, discharging debt, etc.  we can help!  Please call us today for your free phone consultation to determine which bankruptcy may be right for you.