Following the Debt Trail in Filing Bankruptcy in Indiana

December 27, 2012 7:59 pm Published by

This week, I’m using the professional journal Consumer Bankruptcy News (the professional journal that helps our debt consolidation attorneys stay current with how the Bankruptcy Code is being interpreted by judges nationwide) to help clarify to Bankruptcy in Indiana readers some of the principles that underlie Indiana bankruptcy law.

After more than twenty-six years offering Indiana bankruptcy help, one thing I’ve learned is that situations are rarely simple and cut-and-dried. The fact that there are so many different convolutions in people’s financial affairs is one of the reasons we offer a no-cost, no-obligation meeting when clients first turn to the Zuckerberg bankruptcy law offices for help. As one of our Anderson bankruptcy attorneys puts it, “We know we’re going to have to follow the debt trail.”

That statement is particularly true when it comes to small business bankruptcy in Indiana. With our state being home to more than half a million small businesses, and with 90% of small business loans personally guaranteed by the owners, as one of our Columbus bankruptcy lawyers points out, that makes following the trail of “who owes who what” that much more complicated.

Well, in this particular case in North Carolina, Mr. & Mrs. L. filed small business bankruptcy.

  • The debtor, who owned a plumbing and heating company, was the contractor on a residential remodeling project, and hired a subcontractor named R. to do plumbing work.
     
  • R. submitted an invoice to L. and refused to return to the job until he was paid.  L. wrote a check, and R. returned to finish the plumbing job.
     
  • Meanwhile, L. had a dispute with the homeowner and it was agreed all work would stop immediately and that the homeowner would pay the subcontractors directly.  Thinking that included R., L. stopped payment on the check he’d written to R.
     
  • Long story short, R. sued and L. was forced into bankruptcy. As a bankruptcy lawyer in Indiana, I find that, so often, legal judgments are the straw that breaks the camel’s back for small businesses, especially when the personal finances and small business finances are intertwined.
     
  • The court ruled that L. had not intended to commit fraud, but honestly thought the homeowner would be paying R.  Therefore, the court ruled that the debt WAS dischargeable, and that through filing small business bankruptcy, L. was able to have unsecured debt he owed R. forgiven.

With five Zuckerberg bankruptcy law offices around central and southern Indiana, we attorneys see many different situations, some quite simple and straightforward, others very complex. But complex is more common.  Why? Clients own assets jointly with others. Clients are co-signators on leases, loans, and mortgages. Clients have all kinds of business deals going on. What that all means is that filling out the paperwork to submit to the bankruptcy court starts with following the debt trail!

 

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This post was written by Mark Zuckerberg

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