The Egg or Chicken Decision – Finding that New Job or Filing Indiana Bankruptcy

August 4, 2013 12:19 pm Published by

Getting rid of certain types of debt – permanently, well, that’s just huge. There’s nothing else like it in the world, is what clients of our Zuckerberg bankruptcy law offices tell us after the fact. And that fact is, bankruptcy Chapter 7 gives you the right to get rid of most of the common types of unsecured debts, including:

  • credit card debt
  • medical bills
  • bank loans
  • finance company loans
  • credit union loans
  • personal guarantees
  • debts from a failed small business in Indiana

Think about what all that could mean.  You not only get rid of the debt, you get rid of the obligation to pay interest on that debt.  It can even mean getting rid of income tax debts that are more than three years old. Most important, you get rid of the phone calls and the harassment.

However, (and here’s the big caveat, the big “but”…) you have to qualify to file Chapter 7 in Indiana. That where the means test comes in. That isn’t an exam you take; it’s a measurement used to determine whether you qualify for a Chapter 7, and, if not, whether your Chapter 13 debt repayment plan will include a three or a five year period. The numbers for the measurement are based on data from the U.S. Bureau of Labor Statistics about the median income for each area of our country.

The latest Indiana numbers, for example are $42,089 in annual income for one earner households, $52,618 for two people, and $58,916 for three-person households.

Okay, so now given those numbers of the means test, suppose the reason you’ve fallen into financial trouble is that you or your spouse were laid off from a job. You’ve been putting off even thinking about filing personal bankruptcy in Indiana, hoping to find work and get back on your feet.  The debt, though, have been continuing to pile up. You think you’ve finally lined up a full time job, and you’re due to start soon. But, so much time has gone by without enough income coming in that the creditors are starting to make your life miserable by calling all the time.  You’re behind on your mortgage and hoping you can “pull it out” without losing your home.

As a debt consolidation lawyer, I’ve seen this scenario play out again and again.  This is what I refer to as the “Which-comes-first-the-chicken-or-the-egg?” decision. Go back to work and try your hardest to keep the wolves at bay until you can catch up on all your payments?  Or file individual bankruptcy now, before you start the new job, while you can still qualify under the means test to have your debts discharged through bankruptcy?

Remember, once that salary starts up again, you might lose the opportunity to stay below those numbers I mentioned.  Shouldn’t you visit with an experienced bankruptcy professional now, before that opportunity for relief goes away? With many of your major debts discharged, you can begin the new job free of harassment and begin the rebuilding process with peace of mind.


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This post was written by Mark Zuckerberg

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