Bankruptcy Lawyer Indiana

This article is the continuation of a September 2nd post on how to find a competent, experienced Indiana bankruptcy lawyer.  In that post, I offered six tips to retain the right lawyer that meets your needs and who will get the job done.  To that end, below are some more steps the reader should take to find a qualified Indiana bankruptcy attorney. 

7. Ask Questions.  Once you have found some candidates, interview them or someone in their law firm.  Be sure to ask:

a. How many bankruptcies do you handle in a month or in a year?

b. How many of those bankruptcies are consumer or business filings?

c. How much access will I have to an attorney during the pendency of my bankruptcy case?

d. If I’m not working directly with you (the lawyer), with whom will I be working?

e. Can I interview the person with whom I will be working?

f. How much of my time will you require throughout the bankruptcy case?

This is a critical decision, so if you get evasive answers, it is probably a red flag that this is not the firm for you.

8. Evaluate the responses.  Your attorney should be available to answer your questions and to timely return phone calls.  In the end, 90% to 95% of people who file for bankruptcy do not have comploicated issues.  It is, however, important to use the interview process to determine whether you can work well with the whole firm as well as a particular attorney.

9. Understand your role.  Go over time frames and filing requirements with the firm.  Make sure you know what is expected of you because if you do your part, you will increase the likelihood of a successful bankruptcy case.  A lawyer who briefs you on your role is probably a keeper.

10. Do Not Hire the Cheapest Lawyer.  You are obviously filing because you do not have alot of cash to spare.  But like most things in life, taking the cheap route in bankruptcy could cost you even more in the end if a bargain attorney makes mistakes.  If you suffered from brain cancer, would you hire the cheapest brain surgeon?

11. Get fee specifics. Find out exactly what the costs of bankruptcy are.  What services are included in your retention agreement and what are not?

12. Stay involved.  Once you hire a lawyer, do not be content to let him handle it alone.  Double check all filings.  Did any of your creditors get dropped off the list?  Remember, it is not just who you know, but what your lawyer knows, especially since the bankruptcy laws were changed in 2005.

Call our office for a free consultation to discuss personal and/or business issues.

Senate Majority Whip, Dick Durbin (D-Ill.), has renewed a pledge to again introduce legislation affording bankruptcy judges the power to modify and otherwise restructure home mortgage loans.  The senator’s last effort failed by 15 votes last April. Durbin’s bill, which is opposed by the mortgage lending industry, would be a welcome tool by debtors who need to restructure their home loans.

Durbin’s new bill might contain ”bank sweeteners” such as affording homeowners extra time to stay in their homes by letting them pay lenders reduced installment payments pending foreclosure.  Presently, in Indiana and many other states nationwide, it’s taking eight months or longer for lenders to foreclose mortgages. Generally, after a lender accelerates and makes demand on a note, the lender will no longer accept installment payments. Consequently, Debtors have been able to stay in their homes without paying their mortgage debt until the sheriff’s sale is completed. Apparently, Durbin may seek to change this practice with his new legislation.

Senator Durbin believes there should be federal funds for cities that implement mandatory mediation between parties to foreclosure proceedings. Further, Durbin posits that those banks failing to significantly contribute to the administration’s goal of 500,000 loan modifications by November 1, 2009 should be penalized. One of those penalties could be a cramdown option, in which judges would lower a loan amount to the fair value of the debtor’s home.

We will be following this legislation closely as it affects many of our clients and prospective clients..

Chapter 11 is the business reorganization section of the Bankruptcy Code.  Sometimes Chapter 11 must be applied to an ailing business so that it can continue operations while reorganizing.  Other times, alternatives to Chapter 11 may be applied that are less expensive and yet just as effective to reorganize a business.

Since last year, the housing bubble burst. The Dow fell over 6,500 points. The commercial credit markets rendered borrowing almost impossible. Lenders, who once competed over loans, are now declining everyone except for the most creditworthy borrowers. Consumers are starting to save, just when the government needs them to spend. As cash becomes scarce and loans become due, businesses need to assess their options.

Chapter 11 is still the first option that most decision-makers think of when grappling with an insolvency situation in their business. Still, that is appropriate. Bankruptcy offers features that are unavailable anywhere else. Under Chapter 11, debtors are afforded the automatic stay, the ability to reject burdensome contracts, and the power to impose a plan that most constituents agree upon and bind holdouts to the deal. These are powerful tools and bankruptcy is often the best, if not the only viable, option for some companies. But bankruptcy should not be the only option that businesses consider. The market for debtor in possession (“DIP”) financing has become scarce. Even when DIP financing is available, its pricing has increased and the usual term of the loan has been shortened.

If a company does not need the tools tafforded under the bankruptcy laws, there may be faster, less expensive, ways to reorganize or liquidate. This is especially true for smaller businesses.

For businesses that need to reorganize while continuing their operations, a composition may be attractive. A composition is simply an agreement between a company and its creditors to restructure the company’s debt. If it can be achieved, it can be quick, quiet, and less expensive than Chapter 11. The main obstacle to a composition’s success is the holdout. If one or more creditors refuse to compromise their claims, a composition does not offer a way to compel them to accept it. Everyone else takes a haircut, while the holdout keeps its full claim and reaps the benefit of an improved balance sheet for its borrower. Of course, that doesn’t sound fair. Well, compositions work only in situations where few creditors hold the majority of the company’s debt.

Shareholders and/or management who need to liquidate a company and provide a cost effective way for creditors to get the proceeds of liquidation have at least two non-bankruptcy options. First, the company’s management can oversee the company’s own liquidation subject to relevant state corporations law and “Going out of Business” statutes, if relevant. Second, they can use an assignment for the benefit of creditors (“ABC”), if the company is located in a state that offers an acceptable ABC process.

Under an ABC, the company chooses an assignee and conveys its assets to the person or entity to conduct that liquidation. Indiana boasts a favorable ABC statute but, interestingly, it is little used by insolvency lawyers. It’s one of Indiana’s best kept secrets!

Once the assignment is perfected, the assignee, not the company or its officers, directors, or shareholders, is responsible for the unpleasant tasks that accompany liquidation, like telling creditors that they will not be paid in full. It does allow, however, the company to choose its liquidator.

In contrast, in bankruptcy court, a trustee or a creditors’ committee is often perceived as always looking for someone to sue, to place blame for a corporate failure. And, while an assignee also has a duty to investigate potential causes of action, assignees are less likely to bring speculative suits viewed more as shakedowns than anything else.

Creditors of a company that undertakes an ABC are often satisfied that a third party is overseeing the liquidation. Moreover, the creditors will enjoy a larger recovery than would be otherwise available in a bankruptcy because of an ABC’s significantly reduced costs, including reduced professional fees.

ABC laws vary from state to state, and in some states an ABC is not a viable option. Many practitioners are unfamiliar with the process. I’ve served many times both as an assignee in an ABC and as bankruptcy trustee so this firm has ample experience in both of these types of proceedings. Where they fit, ABC’s offer significant advantages over bankruptcy.

While many situations, especially those involving companies with public securities, large numbers of executory contracts or unexpired leases, assets in multiple states, or union, pension, or mass tort liabilities require the supervision of a bankruptcy judge under Chapter 11, many other situations do not. You should understand all available alternatives before choosing the right one for your company’s situation.

Often, the first thing a prospective client says in a client meeting is that “I don’t want to be here and filing for bankruptcy relief is the last thing I ever wanted to do.” I’m sympathetic always. My response is usually words to the effect : “Yet, here you are so let’s analyze the problem.”

Depite the fact that a client may have little or no equity in his home (if he owns one), and despite the fact that the client does not have any assets that can be marshalled by a trustee in bankruptcy, the client still has a negative opinion about the word “bankruptcy.”

What I usually say is that bankruptcy makes more sense than decimating retirement accounts and depleting other assets otherwise protected under the bankruptcy laws. The federal bankruptcy laws enacted by Congress are uniform throughout the United States. Consequently, wherever you exercise your rights under the laws, the same statute applies subject to certain state law exemptions.

Unfortunately, when people are in real trouble, they often wait too long to get the relief they need. Bankruptcy is designed to afford folks with a fresh start when no other reasonable alternative exists.

Discharging debts and moving on with your life is often the smartest move a burdened consumer can choose. To those who qualify, Chapter 7 relief discharges most debts. A Chapter 7 discharge generally discharges credit card debts, medical bills, personal loans, and other unsecured debts.

For those who need to stop a foreclosure proceeding or sheriff’s sale, Chapter 13 enables the consumer to pay some or all of his debts through a payment plan but still being afforded protection under the automatic stay provisions of the Code.

Some prospective clients say they need to avoid bankruptcy because they think they have perfect credit. These folks, respectfully, are usually fooling themselves. When one has overwhelming debt, one’s credit isn’t perfect at all. In fact, one may be making timely minimum monthly payments on credit card and other debts, but I explain, if one now applies to a lender for additional loans, one’s application will be rejected based upon the amount of the prospective borrower’s existing debt compared to his income.

The first step to moving towards a debt free future is meeting with an experienced bankruptcy attorney. Our offices provide free, confidential consultations.

When any bankruptcy petition is filed, a powerful federal law immediately cloaks the debtor with protection from creditors. The protection is a federal injunction known as the automatic stay. The automatic stay is a stay of all collection actions against the debtor including, but not limited to, phone calls, dunning by letter or any other communication, collection lawsuits, foreclosures, repossessions, and other types of litigation. In other words, the stay prohibits any creditor from taking any action to collect a debt.

The minute your petition is filed, the law requires that debt collectors stop calling you. It could take a few days for creditors to receive notice of the filing which is mailed by the bankruptcy court.

If a creditor or creditor’s representative calls you after the bankruptcy petition is filed, you need to tell him that you filed for bankruptcy relief and give him the bankruptcy court case number and location.

Once clients retain our law firm, we direct them to tell their creditors they have retained our law firm.  Clients should give the creditors our telephone number. After that information is provided, the creditors are not permitted by law to contact the debtor again, unless the attorney/client arrangement dissolves, or if the debtor does not file for bankruptcy relief within a few months. If a creditor continues to contact the debtor, after the creditor learns that an attorney has been involved, the creditor violates the federal Fair Debt Collections Practices Act.  Consequently, the debtor has remedies against the creditor.

Once creditors know that their customer has retained counsel, they do not continue to call. Thus, once you retain our law firm, you will receive certain important and valuable protections immediately.

Marion attorney Jeffrey A. Schreiber has been invited to speak at an upcoming continuing legal education seminar entitled “Basic Bankruptcy” scheduled for presentation on October 16, 2009, at the Grand Wayne Convention Center in Fort Wayne. He will be accompanied by the Hon. Robert Grant, the presiding U.S. Bankruptcy Judge in Fort Wayne, along with other experts in the field.

The program is sponsored by the Indiana Continuing Legal Education Forum. It is the mission of the Commission for Continuing Legal Education to enhance the quality of legal services and professionalism in Indiana through administering, developing and regulating continuing legal education requirements, mediation training standards, and attorney specialization programs

In May of this year, Congress got it wrong.  This time it was the Senate. 

In a stunning 59-41 vote,  the Senate rejected the Durbin Amendment to the Helping Families Save Their Homes Act which would have sent much needed relief to American homeowners.

While Congress and the president are doling out billions of dollars to bail out, among others,  the banks, and the insurance and automotive industries, American consumers have taken the shaft.  And this legislation, which promised incredible amounts of relief to homeowners, would not have cost taxpayers a penny.

The legislation had significant bipartisan appeal.  It had the ingredients of a populist victory.  Only the Senate could grab defeat from the jaws of victory.  One of the most powerful lobby groups in America–the American Bankers Association–opposed the legislation which is what sounded its death knell.

By the Durbin amendment, 1.7 million mortgages would have been prevented from being foreclosed.  Over $300 billion in home equity for neighboring homeowners, who have made each of their own mortgage payments on time, would have been preserved.  The Durbin Amendment would have created the necessary lender incentives so that consumers could have modified home mortgage loans either outide or within the bankruptcy court.

The objective of the amendment was to encourage mortgage servicers to offer aggressive loan modification to homeowners unable to  pay their mortgage loans.  Compared to the foreclosure alternative, these modifications would be more profitable for the banks, more secure for the families, and more stable for the surrounding neighborhoods.  Borrowers at risk would have received assistance from the bankruptcy courts to restructure loans, but only if the servicer had not first offered to modify the loan outside of court.

If a mortgage servicer provided either a modification offer that reduced the family’s monthly payment to 31 percent or less of their income, or a refinancing offer at conventional rates, the offer would have precluded a borrower from trying to rewrite the terms of his mortgage loan in Chapter 13 of the Bankruptcy Code.  In addition, only first mortgages originated before 2009, with outstanding principal less than $729,750, that are at least 60 days delinquent, and for which a foreclosure notice has been sent, would have qualified for modification under Chapter 13.

For those borrowers who did not receive a modification offer from their servicer, the bankruptcy court would have been able to reduce the loan principal to the fair market value of the home, reduce the interest rate to a conventional rate plus a reasonable premium for risk (which currently would be approximately 5.5 percent), and lengthen the term of the loan.

Furthermore, the debtor would have been required to evenly split any price appreciation with the lender to the original principal amount if the home was sold during the term of the Chapter 13 plan.  After all, if we expect the banks to share the downside with the consumer, it’s only fair that that they share in the upside as well.

So, why is a post mortem so important?  We need to know what’s happening on Capitol Hill.  This time the Senate failed.  The next time these issues are raised, we need consumer lobyists, as well as lobbyists for the National Association of Consumer Bankruptcy Attorneys, to swing into action and persuade our reps in the senate to vote for this common-sense proposal.

Chapter 7 bankruptcy is a way out of the credit card trap. It can mean the difference between getting a fresh start or being burdened by credit card payments for 20 years.

Too many consumers do not understand the consequences of unpaid or otherwise delinquent credit card debt.

It is in the creditor’s best interest to keep a consumer in debt. The reason is that’s how the creditor earns money–by collecting interest on the debt. Many people don’t realize the cost of credit and the dangerous cycle of monthly interest payments.

For example, a family, who already carries a significant balance on their credit cards, wants to buy the latest flat panel TV and entertainment system for $3,000. Of course, they charge it. When it comes to paying the credit card bill, they only make the minimum payment. Assuming that the interest rate is about 20%, it will take them about 39 years to pay off the bill.

For individuals that qualify, filing a Chapter 7 bankruptcy will discharge all dischargeable credit card debt thereby affording debtors a fresh financial start.

Consequently, exercising your rights under Chapter 7 of the Bankruptcy Code is an option that should be considered.

Disagreement about finances can lead to divorce as debt is a marriage killer.

I see it frequently–couples fighting over financial problems;–sometimes in front of me in my office. One of the leading causes of divorce is the strain between couples caused by money issues.

In these troubled times, more and more families are facing overwhelming debt. Whether caused by loss of a job, poor money management, reduced income, or increased expenses, financial pressures seem to be at an all time high.

The stress of fighting over bills and money can take its toll on the marriage, straining couples to the brink of disaster. Most marital aruments are over financial issues. Many divorces are the result of stress and constant fighting over lack of money.

Although there are many elements to a healthy marriage, statistics show that divorce occurs more often due to financial troubles than any other issue, including a spouse’s infidelity, health problems, and couples “growing apart.”

Financial stress can quickly build to a marriage’s breaking point. But if you could save your marriage, wouldn’t you?

Bankruptcy can rescue a marriage. For those who qualify for a Chapter 7 bankruptcy filing, the bankruptcy will eliminate credit card debt, medical debt, and loans, extinguishing major sources of marital strife.

Many of my clients have confided in me after the bankruptcy proceeding was concluded that I rescued their marriage.

Couples with excessive debt must understand that filing for bankruptcy relief is an option that may work to save the marriage.

Financial stress is overwhelming but divorce is infinitely worst. Seeking relief under the bankruptcy laws is a way to regain control over both your marriage and your finances.

President Obama is worried about rising home foreclosures. He is exploring options to increase aid to troubled homeowners.

The president, however, has already rejected a proposal by the Mortgage Bankers Association. The bankers’ proposal is to reorganize and otherwise restructure Fannie Mae and Freddie Mac by creating several smaller, privately held companies, that would issue mortgage securities backed by a government guaranty–not a bad idea.

The U.S. Treasury placed both Fannie Mae and Freeddie Mac into conservatorships with new management nearly a year ago. This was done as banks nationwide were (and still are) sustaining huge losses caused by borrower defaults in subprime and other mortgage loans. The government guaranteed this debt and other morgage-backed securities and has committed up to $400 billion in taxpayer capital (aka bailout money) to fund operating losses caused by the deterioration of subprime products.

The administration has not yet committed to extending its program affording an $8,000 tax credit to first time homebuyers. This tax credit, which has helped to increase the first time homebuyer market, will expire in November of this year.

The government may extend unemployment benefits that are due to expire by year end thereby helping the jobless avoid home foreclosure. Also, it may increase programs to accelerate small business lending. Some of these programs (as extended) could be funded from the already existing $700 billion bank rescue fund which has not yet been depleted.

The Federal Reserve is expected to wind down its purchases of $1.25 trillion in mortgage backed securities and $300 billion in U.S. Treasury debt. These purchases are the main reason mortgage rates have been close to record lows for most of this year.

But, what happens to the economy when these programs which, arguably, have artifically inflated certain segments, have been eliminated? Will the economy revert to the malaise that existed before the first of this year?

The president is doing what he can to increase economic indicators by spending taxpayer money but it’s our fear that once these programs are eliminated, we will be left with another trillion dollars of unpaid debt and very little, or nothing, to show for it.