This week, I’m helping Bankruptcy in Indiana readers understand the different types or “chapters” of bankruptcy. It’s interesting. Even though, on the surface of things, individuals or couples filing personal bankruptcy in Indiana have a “choice” between using bankruptcy Chapter 7 or filing using Chapter 13 bankruptcy law, in reality the choice will be determined by the facts.
A big part of the work that we professionals in the Zuckerberg bankruptcy law offices do during the initial stages of meeting with clients centers around gathering the information needed to make that initial choice about which kind of bankruptcy would best fit that client’s situation.
What facts are needed?
- Unsecured debts (such as credit card bills, utility bills, and medical bills)
- Secured debt (such as car payments and mortgage)
- Income from work, pensions, other sources.
- Is the client trying to save a home from foreclosure?
Once the decision is made as to which type of personal bankruptcy in Indiana is going to be filed, we can move forward with preparing and submitting the bankruptcy petition to the court.
Even if the attorney and the client believe they have made the best choice of “chapter”, the bankruptcy court must be satisfied that it’s appropriate.
To give my Bankruptcy in Indiana readers some insight into the thinking, remember that the bankruptcy court is going to go with the plan they think will have the greatest chance for getting creditors repaid the largest possible percentage of the money. If, for example, the court thinks clients have enough income coming in to make regular payments to creditors, they might not want to approve a Chapter 7 liquidation plan. On the other hand, since a Chapter 13 debt repayment plan will be extended three to five years, it needs to be sustainable. The court doesn’t want the plan to fall apart because the debtors can’t keep up the payments.
As a debt consolidation lawyer who’s been offering Indiana bankruptcy help for more than 26 years, I’ve observed the process thousands upon thousands of times. In an interesting Alabama bankruptcy case featured in Consumer Bankruptcy News, a bankruptcy judge felt that a debtor had chosen Chapter 13 for the wrong reasons. “Chapter 13 is intended to reorganize debts,” he said, “not to provide a way for debtors to pay their attorneys’ fees in installments.”
That judge had noted that the client was not trying to help stop foreclosure or to preserve assets from being liquidated in a Chapter 7 bankruptcy, and was worried that the client wouldn’t complete the installment debt repayment plan and would end up defaulting, then filing another Chapter 13 to do it all over again.
The “chapter and verse” of it is that the new bankruptcy laws of Indiana are designed to offer debtors a choice and a chance for a fresh financial start. But the bankruptcy court’s “choice” will be to try to treat both debtor and creditor as fairly and equally as possible!
Categorised in: Bankruptcy Indiana
This post was written by Mark Zuckerberg