In bankruptcy Chapter 7 in Indiana, it’s sort of over when it’s over. From the day a client of the Zuckerberg bankruptcy law offices files until that debtor is discharged, the process typically takes between 60 and 90 days.
Under Chapter 13 bankruptcy law, on the other hand, we’re looking at a three to five year period under the supervision of the bankruptcy court. That’s because, which some debts may be discharged right away, the rest are under a three to five year debt repayment plan. The debtor is making monthly payments to the bankruptcy trustee, who in turn is paying off creditors in installments.
As a debt consolidation lawyer, I can tell you that, in any kind of bankruptcy, we’re not talking about a one-day event, but an orderly legal process.
However (and that’s a key term for today’s Bankruptcy in Indiana readers to remember), the more different people are involved in any process, the more complicated matters are likely to become. Now, I’ve been an Indianapolis bankruptcy attorney for more than 26 years, but years before I even began my practice, the “however clause” came into being.
As one of my Columbus bankruptcy lawyer colleagues explains things, the one big principle underlying all Indiana bankruptcy law (in fact, behind federal bankruptcy law) is fairness.
If you stop to think about it, bankruptcy in itself is a compromise. On the one hand, people make financial mistakes, and bad things happen even to people who are very responsible with their money matters. Bankruptcy offers a safety net, a way to give those people a shot at a fresh financial start.
On the other hand, the creditors lent money expecting to get that money back with interest. So, while they may not be getting back everything, all the creditors need to be treated as fairly and equally as possible.
The “however clause” applies to situations where somebody else (a friend or family member, for example), co-signed for a loan. The question is, can the co-signer’s portion be counted as part of the Chapter 13 bankruptcy plan? On the face of it, that doesn’t seem fair to the creditors who loaned the money based on both people’s credit. However, the bankruptcy court ruled back in 1984 that, where there is a co-debtor, that debt may qualify for “special treatment”. The logic was, as a Senate Report expressed it, “Allowing repayment of co-debtor claims may be necessary to enable debtors to complete their plans.”
I always advise family members and business partners to be careful what they co-sign, because they must be ready to repay that debt. Since different courts interpret situations in different ways, don’t count on a “however clause” rescue!
Categorised in: Bankruptcy Indiana
This post was written by Mark Zuckerberg