Our law office practices virtually exclusively in the area of bankruptcy. We are dedicated to helping honest people get a fresh start, and we pride ourselves in assisting each and every client in resolving their financial difficulties in the most efficient and economically beneficial manner possible.
We understand that financial burdens and creditor harassment can become very stressful, and we seek to alleviate as much of the stress suffered by our clients as possible. Obtaining a fresh start for our clients is always our goal.
We provide every client with a free, no-obligation, confidential consultation, and we charge flat rate fees which are discussed up front.
Evening appointments are available, and payment plans may be available depending on the case. If you live in the southern-Indiana area, please contact our office at (812) 339-3440 if you would like a confidential consultation to discuss if bankruptcy is a viable option for you.
Bankruptcy is the legal process in which a person or business that has become unable to pay its bills may have those debts canceled, or "discharged," thereby relieving the individual or business from having to pay those debts. The purpose of bankruptcy is to allow one who has suffered financial hardship to receive a fresh start.
Bankruptcy law is federal law and is thus drafted by Congress in accordance with Article I, Section 8 of the United States Constitution, which authorizes Congress to enact "uniform Laws on the subject of Bankruptcies...." Title 11 of the United States Code is where Congress wrote the bulk of the law regarding bankruptcy, and therefore Title 11 is commonly referred to as "the Bankruptcy Code."
The Bankruptcy Code currently provides five different chapters under which a person or business may file a bankruptcy proceeding: Chapters 7, 9, 11, 12, and 13.
Chapter 7 is available to individuals and to corporations, and is commonly known as "total bankruptcy" or "liquidation." This is the most commonly filed chapter of bankruptcy, and it is discussed in greater detail in the "Chapter 7 vs. Chapter 13" link on our website.
Chapter 9 is available only to municipalities, and is therefore an extremely rare form of bankruptcy.
Chapter 11 is utilized principally by businesses, and is often referred to as "business reorganization." It is generally rather expensive and is usually only filed by sizable companies or by people who owe too much to file Chapter 13 and have too many assets or too much income to file Chapter 7.
Chapter 12 is available only to farmers or businesses engaged in farming operations. This is a reorganization chapter similar to Chapter 13, but is only available to persons who derive around 80% or more of their income from farming.
Chapter 13 is available to individuals and sole proprietorship businesses, but not to corporations or partnerships. This chapter is commonly known as a "wage earner plan" or "individual reorganization." This is the second most common form of bankruptcy, and is discussed in greater detail in the "Chapter 7 vs. Chapter 13" link on our website.
The first step one generally takes in filing for bankruptcy is to contact a bankruptcy attorney and set up a consultation. After the consultation, the attorney will advise the person to either file a bankruptcy or pursue some other course of action, as circumstances dictate. If one does opt to file bankruptcy, that person must consult with an approved credit counseling agency either on the internet, by telephone, or in person for approximately one hour and obtain a certificate of credit counseling from that agency, sometimes also called a pre-bankruptcy certificate. This certificate is good for 180 days and must be obtained before the bankruptcy case is filed unless certain, rare exceptions are met (such as the debt is mostly commercial debt rather than consumer debt). Also, the person seeking to file bankruptcy has to complete an approximately two-hour online course after their bankruptcy case is filed but before their case is over. Upon completing the online course, sometimes called a financial management course, the person must file the financial management course certificate, sometimes called a post-bankruptcy certificate, with the court prior to the case closing. Only certain companies are approved to provide both the certificate and the course, and it is often easier if you use a company that is authorized to do both since you only have to pay one time to do this. There is a list of companies that provide both services for Southern District of Indiana on our website.
If the attorney recommends bankruptcy, then the attorney will explain the various chapters of bankruptcy that are available and which chapter he or she believes best suits the individual's situation. Chapter 7 is generally over in about three to four months, and Chapter 13 usually lasts 36 to 60 months, during which time the person who filed bankruptcy makes monthly payments to the bankruptcy court to pay back a portion of his or her debt, depending on what he or she can afford to repay (see the "Chapter 7 vs. Chapter 13" link on our website for more detail).
The attorney will also discuss which debts are "dischargeable" and which debts are "nondischargeable" by the bankruptcy case. In other words, not all debts may be discharged by bankruptcy, and some chapters of bankruptcy discharge certain types of debts that other chapters will not discharge. Generally speaking, debts which bankruptcy normally will not discharge include taxes that are less than three years old, student loans, back child support, alimony, injuries or damages caused by an accident in which alcohol or drugs were involved, criminal restitution, and certain other specifically defined types of debt. Bankruptcy generally will discharge virtually every other kind of debt, including credit cards, medical bills, utility bills, collection judgments, personal loans, etc.
Finally, the attorney will discuss the "exemptions" which apply to the individual's bankruptcy case. An "exemption" is a certain dollar value worth of real estate and personal property that a person who files bankruptcy may keep. All real estate and personal property which is "exempt" may be retained by the person filing bankruptcy, but all property which is not exempt may be sold by the bankruptcy court, with the proceeds of the sale being given to the creditors. Each State determines how much property a person may retain when filing bankruptcy in that State, so how much real estate and personal property one may retain depends on the law of the particular State in which the person resides.
Questions one should remember to ask during a consultation include:
(1) Are there any viable non-bankruptcy alternatives available? (such as deeds in lieu of foreclosure, short sales, debt settlement, credit counseling, etc)
(2) What will happen to one's property, including real estate and personal property, if one files bankruptcy? (i.e. is everything exempt or will you lose some asset?)
(3) Is it best to file alone or with one's spouse (if married)?
(4) How much will the bankruptcy cost and what other fees may apply?
(5) What debts will be discharged and what debts will still have to be paid when the bankruptcy is over?
If one decides to file bankruptcy, he or she will then provide information to the attorney regarding all of his or her assets, debts, income, and expenses (among other things). The attorney will prepare the paperwork for the person's review, which the individual will then sign. One should be sure to review all of the paperwork carefully, and ask any questions that one may have regarding the information contained in the paperwork. Thoroughness and accuracy are both very important.
A person who files bankruptcy is referred to by the Bankruptcy Code as the "debtor," and the persons and businesses to whom the debtor owes money, goods or services are the "creditors." The debtor initiates his or her bankruptcy proceeding by filing a "bankruptcy petition," also called a "voluntary petition," with the United States Bankruptcy Court that presides over the district in which the debtor resides. The bankruptcy petition is the document one signs in the attorney's office.
Once the bankruptcy petition is filed, the bankruptcy court assigns a unique Bankruptcy Case Number to the bankruptcy petition and will appoint a "bankruptcy trustee," also called simply a "trustee," to oversee the debtor's case. The job of the trustee is to ensure that both the debtor and the creditors are treated fairly, and if the trustee feels that some inequity is taking place or that the Bankruptcy Code is not being followed by either the debtor or a creditor, the trustee may refer these issues to the bankruptcy judge for resolution.
Immediately upon filing the bankruptcy petition, the debtor is protected by the "automatic stay" in most cases, which simply means that creditors are automatically ordered by the bankruptcy court to stop all collection attempts against the debtor. This means that creditors cannot call or bill the debtor, or even repossess a car or foreclose on a home, once the bankruptcy petition is filed unless those creditors first get permission from the bankruptcy court to do so. If creditors do call, bill, or otherwise continue to harass the debtor after the petition is filed, debtors are generally advised to provide their Bankruptcy Case Number to the creditor and ask the creditor to call the debtor's attorney for verification. The bankruptcy filing generally stops garnishments, lawsuits, foreclosures, and writs of attachment as well. In some cases, the automatic stay may only remain in effect for 30 days, or not go into effect at all, if the debtor has been involved in previous bankruptcy cases within the prior year (see your attorney for details).
The Bankruptcy Code requires every debtor to attend a brief hearing regarding his or her bankruptcy case, and this hearing is called the "First Meeting of Creditors" or the "341 Hearing" (since section 341 of the Bankruptcy Code is the section which requires that this hearing be held). A week or so after the bankruptcy petition is filed with the bankruptcy court, the debtor will receive a letter from the bankruptcy court advising the debtor of the date, time, and location of the debtor's First Meeting of Creditors. The hearing date is generally around five weeks after the date on which the bankruptcy petition was filed. The location of your hearing usually depends on the County in which you reside. See our website to see which Court you will go to based on the County in which you live.
It should be noted that the name "First Meeting of Creditors" is misleading for a couple of reasons: First, there is no "Second" Meeting of Creditors, and the First Meeting of Creditors is generally the only hearing that takes place in the typical bankruptcy case (though there are in some cases a second or third hearing, and one should discuss this possibility with his or her attorney), and secondly, this hearing is hardly a "meeting of creditors" since creditors usually do not even attend at all. Typically, the hearing is comprised only of the trustee, the debtor, and the debtor's attorney. Creditors have the right to appear at the hearing and ask the debtor questions if they wish, but they seldom do.
After the hearing is over, in a Chapter 7 case the debtor will normally receive an "Order of Discharge" in the mail about 60 to 70 days after the date of the hearing, which is the bankruptcy court's order that the Chapter 7 debtor's dischargeable debts are officially discharged. Upon receiving this Order of Discharge, the Chapter 7 bankruptcy case is basically over, though it may be held open for the completion of administrative tasks, such as disbursing funds to creditors, etc. In a Chapter 13 case, after the hearing the Chapter 13 debtor will normally receive an "Order of Confirmation" in the mail about 30 to 60 days after the date of the hearing, which is the bankruptcy court's order approving the debtor's Chapter 13 Plan (see the "Chapter 7 vs. Chapter 13" link on our website for more details). Once the Chapter 13 debtor makes all of the monthly payments required by the Chapter 13 Plan (which takes 36 to 60 months depending on the terms of each debtor's Chapter 13 Plan), then the Chapter 13 debtor will apply for discharge, and normally receive an Order of Discharge in the mail, at which time the Chapter 13 bankruptcy case is over.
Chapter 7 is on one's credit report for ten years, and Chapter 13 is typically on one's credit report for seven years, though according to 15 U.S.C. §1681c (a)(1), a section in the Fair Credit Reporting Act, they can both be on the credit report for up to 10 years (see 15 U.S.C. §1681c here). Bankruptcy typically reduces one's credit rating initially, but most of my clients have a higher credit score 15 months after the bankruptcy than they had before the bankruptcy was filed. Bankruptcy will realistically affect one's ability to get credit for twelve to thirty-six months, depending on the type of credit the debtor is seeking to acquire and the particular lender's policies from whom the debtor is seeking the credit.
