Bankruptcy Lawyer Indiana

What obligations does a bankruptcy discharge cover?  During the past 20 years, the common practice among bankruptcy lawyers has been to assure debtors in no asset bankruptcy cases–cases in which there are not any non-exempt assets available for distribution to creditors–that even if the debtor failed to list a creditor on his schedules, the obligation will be discharged. This practice arose from a no harm, no foul reading of Bankruptcy Code section 523.

The federal bankruptcy rules permit a bankruptcy court in no asset cases to choose not to fix a bar date in which proofs of claim must be filed. Thus, courts adopting the no harm, no foul reasoning found that there was no date in which to timely file the proof of claim and therefore no triggering of Bankruptcy Code section 523(a)(3)(A). See, e.g., In re Beezley, 994 F.2d 1433, 1435-37 (9th Cir. 1993).

Recently, however, the First Circuit Court of Appeals rejected this reasoning, and held that even in a no asset case, if a debt or claim is not scheduled, then the debt is not discharged absent a reopening of the bankruptcy case.

The court’s reasoning in Colonial Surety Co. v. Weizman, 564 F.3d 526 (1st Cir. 2009), is based upon the equities of the situation. Providing notice, even in a no asset case, allows creditors to participate in the case and to argue that there may be assets available. An honest debtor can still have the debt discharged if he asks the bankruptcy court to reopen the case to list the creditor who was inadvertantly omitted and who would have received no benefit from the initial notice. This properly leaves the burden squarely on the debtor’s shoulders to disclose the debt or to explain why it was omitted.

The court appears to protect the institutional integrity of the bankruptcy court so that debtors can not argue that it doesn’t make any difference anyway. Creditors and parties in interest, by this decision, are being afforded a modicum of due process and an opportunity to be heard even in no asset bankruptcy cases.

The lesson to learn from Weizman is to include every possible claim or debt against a debtor on the bankruptcy schedules. We always advise clients to err on the side of over disclosure. Even if a debtor isn’t sure whether a particular debt has been paid or is still owed, we advise the debtor to list the claim. The debtor can always list the creditor as holding a disputed claim. However, by the Colonial Surety case, if a debtor inadvertantly omits a creditor from his bankruptcy filng, it becomes expensive later to move to reopen the case and amend the debtor’s schedules.

Claims that are omitted from the schedules may later be discharged but only after the debtor pays to reopen the case and only provided that the debtor can prove the omission was inadvertant and otherwise innocent.

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.

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.

The new credit card legislation enacted by Congress will take effect this week, forcing card issuers to provide consumers more time to pay their bills and to consider interest rate increases. This may be the first step toward stemming the tide of credit card based consumer bankruptcies.

Starting Thursday, issuers must give customers 45 days’ notice before raising their interest rates, instead of 15 days as previously required. Customers can then choose to pay what they owe at the original rate over time but they will not be able to use the card for future purchases.

The issuer reserves the right to increase the minimum payment. Card issuers will also have to mail bills 21 days–instead of 14 days–before the due date.

We believe this is a good first step toward credit card regulations but we won’t see dramatic relief until the balance of the regulations become effective in February.

Stay tuned……