If there’s any principle at work in the bankruptcy process, I’ve learned, that principle is this: IT DEPENDS. Even though I’ve been a consumer bankruptcy specialist for more than 26 years, I’ve learned that each and every situation of personal bankruptcy in Indiana is different. As well as I and my colleagues in the five Zuckerberg bankruptcy law offices around central and southern Indiana know the new bankruptcy laws of Indiana, we all know: the final rulings by the bankruptcy court are going to depend on the information about each debtor’s specific situation.
This week, I’ve been “proving” that point to my Bankruptcy in Indiana readers, first with a case from Wisconsin where a debtor owned two cars, and then with a case where a personal injury settlement was partially devoted to a debt repayment plan.
Today’s case comes from the Michigan bankruptcy courts The quote from the judge says it all: “In those cases where …bad faith is not a factor, the Court is directed to consider the totality of the circumstances in determining whether dismissal is warranted”. In simple terms, the court’s decisions are not “cookie-cutter” – each person’s or each couple’s situation is carefully examined. The more complete the information on the paperwork I help prepare for submission to the court, the better and faster good decisions can be made.
In the case involving Mr. & Mrs. K. in Michigan, the court concluded that the “debtors were honest, but not needy.”
- The couple were in their early 30’s and had $22,000 saved for retirement.
- They had an income sufficient to maintain 401K payments if they did some belt tightening.
- Even if they did stop paying into their 401K’s in order to keep up with their debt repayment plan, the K’s would still be OK by contributing after they’d completed their Chapter 13 debt repayment plan.
- Future income tax refunds, the court ruled, should go towards the debt repayment plan.
- Considering all these factors, the court ruled that the K’s needed to convert to filing under Chapter 13 bankruptcy law.
What is so very interesting is that, four years ago, I wrote about a bankruptcy case in Massachusetts, in which the court did NOT tell the debtor to stop contributing to 401k and to use the money towards debt repayment. Instead, the court ruled that she should be allowed to “pay herself first” by saving for retirement.
In that Massachusetts case the woman was older, closer to retirement. Can you see what I mean about considering each clients special circumstances?
I continue to be a student of bankruptcy law in action. Even after more than twenty six years serving as a consumer bankruptcy specialist in Indiana, in order for me to offer my clients the most accurate information and advice I follow bankruptcy court cases in other states as well as here. Helping people navigate through the system has been my work for all my professional life, and I am always gratified to about way in which the system continues to consider each case on its own merit!
Categorised in: Bankruptcy Indiana
This post was written by Mark Zuckerberg