Sharing Indiana bankruptcy information sometimes involves using examples from other states. And even though the Zuckerberg bankruptcy law offices serve only Hoosier debtors and their families, bankruptcy laws are constantly being refined as different situations come up across the country.
In fact, that’s one of the reasons all good bankruptcy attorneys in Indiana read professional journals. The other day, one of the Columbus bankruptcy lawyers who is my colleague called my attention to an article in Consumer Bankruptcy News, about a bankruptcy court that dismissed a bankruptcy Chapter 7 case on the grounds that the couple did not qualify to file that kind of bankruptcy.
These debtors owed an awful lot of money – millions of dollars, actually, in unsecured debt. The issue – they also had a lot of money coming in from their joint medical practice and lived a very high lifestyle (at least, in the judgment of the court). Since my goal in these Bankruptcy in Indiana articles is not only providing Indiana bankruptcy information, but also giving readers a better understanding of the whole idea behind the bankruptcy system, I thought this particular Michigan case would help in that regard.
As a longtime debt consolidation lawyer offering Indiana bankruptcy help, I realized right away that the couple in this real-life story, Dr. M. and Dr. A, had done several things “wrong”, which explains why the bankruptcy court rejected their petition.
- They didn’t disclose all the facts. For instance, they did not put down in their bankruptcy paperwork that their medical practice provided them with two cars. They didn’t tell the court about the $1000 per month payments they were making to support their niece.
- They didn’t show the court that they were trying to reduce spending. The bankruptcy judge noted that they needed to take steps to reduce their year expenditures, so that the money could go towards paying down their debt.
- They mixed their business affairs with their personal affairs. The debtors claimed that most of their debt was related to failed real estate investments, and that those were business debts. Therefore, they argued that they shouldn’t be expected to reduce their personal lifestyle to pay those debts.
As a longtime lawyer for small business bankruptcy in Indiana, I find this error in thinking is common. There is no protection from creditors, no separation when it comes to legal matters (such as bankruptcy in Indiana) when business owners mix their financial affairs with those of their business.
The court’s recommendation to the couple was that they reduce their personal spending by 50%, file a five year Chapter 11 bankruptcy plan that would pay their creditors at least a significant portion of what was owed.
Categorised in: Bankruptcy Indiana
This post was written by Mark Zuckerberg