Although most types of debt, including medical bills, mortgages, car loans and credit cards, are allowed to be discharged in bankruptcy, student loans generally cannot be discharged unless there has been a severe hardship. This applies to both federal student loans and loans from private lenders.
]]> Private loans in particular tend to cause borrowers financial troubles since they frequently don't offer the same protections as federal loans. Private loans usually have higher interest rates which can shoot up quickly. Lenders, knowing borrowers don't have the option of filing for bankruptcy, may also be more unwilling to arrange payment plans for struggling borrowers.Senator Richard Durbin (D-Illinois) is currently proposing that the 2005 law which made private loans non-dischargeable in bankruptcy be overturned. This would be welcome news for the estimated 5.4 million borrowers which have overdue student loan accounts. It may, however, be difficult to pass the bill in an election year with a divided Congress.
Filing for bankruptcy may still offer some financial relief for those struggling with student debt. By eliminating credit card debts and other financial obligations in bankruptcy, you may have more funds available for student loan payments.
Source: Pioneer Press, Student loans stick- even in bankruptcy, Justin Pope, 28 April 2012
]]>In its bankruptcy filing, the biodiesel producer cited over $17 million in debts and listed $11.4 million in assets, including property and equipment. The company has almost $12 million in secured liabilities, which includes $7.4 million in loans from First Merchants Bank located on Muncie.
]]> E-biofuels started producing biodiesel in 2007. Biodiesel can be used as diesel fuel in vehicles. It is manufactured from substances such as vegetable oils, restaurant grease and animal fats. According to the Indiana Department of Agriculture, the company had the ability to make 10 million gallons of biodiesel every year.As the result of a lawsuit by Vinmar Overseas Ltd., E-biofuels was ordered to pay over $930,000 for failing to supply 500,000 gallons of biodiesel. According to the bankruptcy filing, the judgment was paid off by E-biofuels in 2011.
Companies facing financial trouble, such as E-biofuels, have a number of options available to them. These include filing for Chapter 11 reorganization or liquidation. In a Chapter 11 reorganization, a business has the opportunity to develop a manageable repayment plan while still continuing operations.
If companies are unable to complete a successful reorganization, liquidation is an option. Debtors may choose to convert to a Chapter 11 liquidation plan or a Chapter 7 liquidation bankruptcy. An experienced business bankruptcy attorney can provide guidance regarding the best course of action based on a business' unique needs and goals.
Source: IBJ.com, Central Indiana biodiesel producer files for bankruptcy, Scott Olson, 11 April 2012
]]>Indiana had a foreclosure rate of one out of every 685 homes, ranking 13th nationwide. Default notices in the state rose 37 percent last month compared to 2011, and the number of home auctions scheduled was also up over 90 percent from last year.
]]> According to RealtyTrac, those states with the increase in foreclosures are those where the foreclosure process is supervised by the courts. Other states where the courts are not involved in the process actually saw a decline in foreclosure activity last month.It seems the increase in foreclosures stems from more cases moving through the judicial system in light of banks finally sorting out documentation issues, and the recent billion dollar settlement that was reached between state officials and the biggest lenders.
A spokesperson from RealtyTrac explained, "We're not just seeing an increase in properties starting the foreclosure process, as we have in previous months, but we're starting to see dramatic increases in properties completing the foreclosure process in many of those judicial foreclosure states."
Unfortunately, as more foreclosed Indiana homes hit the market, prices of neighboring properties may continue to fall. Hopefully as the backlog clears, foreclosures in the state will finally begin to decline, and property values will start to increase.
Source: Indianapolis Business Journal, Foreclosures surge in most states, including Indiana, 15 Mar. 2012
]]>If you are carrying significant credit card debt, you have a lot of company. Recent studies show that the average U.S. consumer has four credit cards and the average household carries $6,500 worth of debt. Nearly five percent of credit card holders are at least two months late on a payment.
Missing credit card payments can be stressful enough, but the credit card companies often turn up the heat with incessant phone calls from debt collectors.
"The later you are with your payment, the more calls you're going to get," says attorney Martin Sweet of legal information website THELAW.TV. "Anyone who's ever dealt with a debt collector knows it's not fun."
]]> Debt collectors often use sneaky tactics to get in touch with you. These tactics, which can be annoying but are perfectly legal, include:Fortunately, there are ways to fight the debt collectors. Your first move should be to consult with an attorney who specializes in debt defense.
"We can help in several ways," explains Indianapolis, Indiana consumer debt relief lawyer Keith Gifford of Redman Ludwig, P.C. "Credit card companies don't always have the proof it takes to win in court, and they're not prepared for you to have a lawyer. If you fight back, you can get back on your financial feet."
Even if you don't win in court, a debt defense lawyer might be able to negotiate a settlement that gives you much better terms than you have now.
Of course, the best way to avoid the debt collectors is to avoid credit card debt all together. Here are some ways you can do that:
If you fail to follow those tips, don't feel as if it's a lost cause. You always have options in your fight against debt collectors.
"Most people with significant credit card debt simply don't realize there are things they can do to help," adds Sweet.
]]>With regard to Hoosier Lotto tickets, sales are up over $7 million in the past fiscal year. Fewer but larger jackpots have attracted more people to the game. Overall, revenue from lottery games is up 26 percent during the past 10 years.
The recession previously caused a dip in Indiana's lottery ticket sales. John Kindt, a professor of business and legal policy, explained that during an economic downturn most lottery tickets are purchased by "problem gamblers" including gambling addicts and people desperate for money. Lotteries then may direct advertising toward these at-risk populations. "Millions lose," Kindt stated "so that a few winners can win."
]]> What if you are struggling with gambling debt?If you are struggling with gambling debt you are not alone. Increasingly people are filing for bankruptcy due to gambling debt. You also have options to get out of debt. Gambling debts are unsecured and may be discharged in bankruptcy. However, if it can be shown that you amassed a significant amount of gambling debt right before filing for bankruptcy you could face charges of federal fraud. An attorney can provide legal guidance based on your unique situation.
Source: Indystar.com, Hoosier Lotto amid 3rd-longest run of no big winners, Jon Murray, 8 February 2012
]]>Getting rid of debt and taking charge of your financial life may seem challenging, but it is also very possible. Below are some suggestions for getting your finances back on track:
1) Make a list of all your debts: Although it may be hard to face the total amount you owe, it is necessary to allow you to plan appropriately.
2) Don't be too hard on yourself: Once you realize how much debt you are carrying resist the temptation to beat up on yourself about how you got there. You want to learn from your mistakes, but focus on moving forward.
]]> 3) Develop a repayment plan: Although many argue that you should work to pay off the debt with the highest interest rate first, financial expert Michelle Singletary advocates aggressively attacking the debt with the smallest balance first. Her "debt dash" method aims to give you a sense of accomplishment and motivates you to continue.4) Consider your options: Think about ways you can earn or save extra money by taking on a second job or reducing some of your monthly expenses. These funds should then be allocated towards your debt repayment plan.
Sometimes you may feel so buried in debt that you are unable to develop a workable repayment plan. In cases such as this you may want to consider personal bankruptcy. Chapter 7 bankruptcy gives individuals a fresh start allowing them to eliminate unsecured debts. A Chapter 13 bankruptcy allows individuals with a steady income the opportunity to discharge certain debts and restructure others into a workable repayment plan.
Source: Washington Post, In 2012, finally pay off credit cards with the 'Debt Dash' method, Michelle Singletary, 3 January 2012
]]>Many families may be struggling with the issue of repaying credit card debt that is either the result of holiday spending, or general financial strain from the economic downturn. As 2012 begins, it is a time for fresh starts. You can start the New Year off on the right foot by developing a plan to eliminate your credit card debt.
]]> As a first step, consider tallying up all your holiday debts and other debts. This will help you put together a payoff plan, and give you a better sense of what to expect when the holidays roll around next year.Once you have figured out how much debt you have, develop a payoff plan. Keep in mind that you should be paying significantly over the minimum payment on credit cards if you actually want to pay your debts down.
Ideally, you should attempt to pay off credit cards within a few months of the holiday season to prevent your accounts from accumulating significant amounts of interest. If that is simply not a possibility, you may want to consider other options like transferring your balance to another credit card with a lower interest rate.
For those overwhelmed by debt, bankruptcy is an option to consider that provides credit card debt relief. In a Chapter 7 bankruptcy your credit card debt may be entirely discharged. A Chapter 13 bankruptcy allows you to reorganize your finances, and create a reasonable monthly repayment plan.
Source: US News Money, 6 Ways to Destroy Holiday Debt, 19 December 2011
]]>Filing for Chapter 7 or Chapter 13 bankruptcy may provide you with some tax relief. Not all tax debt, however, is able to be discharged. This list below provides several guidelines about which taxes are eligible:
If you file for a Chapter 13 bankruptcy, non-dischargeable tax debt can also be part of your repayment plan. Accumulation of additional tax penalties and interest will also be stopped.
An experienced bankruptcy attorney can provide further information about your options for tax debt relief.
Source: Bankruptcy and Tax Debts, William Perez
]]>For example, Chapter 11 may be well suited for high-income filers who are unable to qualify under Chapter 7 or Chapter 13. Chapter 11 offers these individuals the potential to protect certain assets while overcoming complex debt problems. Since the economic downtown has been affecting wealthier households, these types of cases will likely become more commonplace.
]]> Sole-proprietors may also seek debt relief under Chapter 11. In cases of sole-proprietorships, the bankruptcy would encompass both the personal and the business assets of the owner-debtor.Finally real-estate investors, or other individuals with substantial real estate holdings that have lost significant value, may also seek debt relief under Chapter 11. In states like Florida that have been particularly hard-hit by declining property values, there has been a surge of individuals filing Chapter 11. The Daily Record reports that last year in the Middle District of Florida individuals made up 40 percent of Chapter 11 filers, up from 10 percent in 2004-2005. Half of the filings in the district last year involved investment properties.
Debtors filing under Chapter 11 are given up to five years to financially reorganize. This can provide much needed breathing space for individuals being hounded by creditors. If you are considering filing for bankruptcy, contact an experienced bankruptcy attorney to discuss all your available options and find the plan best suited to your financial goals.
Source: United States Courts, Reorganization Under the Bankruptcy Code
]]>Two major loopholes are explained below. Both may be particularly harmful to consumers with significant credit card debt.
An interest rate increase may take effect in 14 days instead of 45 days:
Many consumers are under the impression that they have 45 days before an interest rate increase is applied. This is not really the case. Under the CARD Act credit card companies can actually start applying a higher interest rate/APR 14 days after sending you notice (according to the postmark). Consumers are allowed 45 days before they need to make a payment including the higher interest rate.
Sound confusing? Say your credit card company wants to increase your interest rate. If they send you a notice postmarked September 1st any purchases you make from September 15 onward will be subject to the higher interest rate. After 45 days, your statement will show the higher interest rate that has been applied to all your purchases since September 15th.
Essentially instead of a receiving a 45 day notice of an interest rate change, you are given 45 days to determine how you will pay your balance subject to the higher rate.
]]> You still may be subject to retroactive interest rate increases:When the CARD Act went into effect, many consumers thought that retroactive interest rate charges had been completely abolished, but this is not really so. Under certain exceptions they are still allowed.
For instance, if you are over 60 days late making a payment, a retroactive interest rate can be applied to your account. The new higher rate can be applied to your whole outstanding balance, which is considered the balance 14 days after notification is sent.
Unfortunately, both of these practices are legal, and there is not much you can do about them other than to be aware that they exist. However, if you find yourself struggling with unmanageable credit card debt consider speaking with a knowledgeable bankruptcy attorney to discuss your options.
Source: Business Insider, Two Credit CARD Act Loopholes You Need to Know About Right Now
]]>Small businesses bankruptcy filings enjoyed a significantly higher rate of decline than consumer bankruptcy filings - at least until the first half of 2011. The decline of small business bankruptcy filings has slowed the past few months, a trend that could mean the American dream - and the nation's economic recovery - is still largely out of reach.
]]> During the last quarter small business bankruptcies only declined one percent. Previously, after a 2009 peak, small business bankruptcies experienced a steady drop of at least 4.4 percent each quarter last year. Chapter 7, 11 and 13 bankruptcy filings for firms with less than 100 employees are compiled when determining the Small-Business Bankruptcy Index.Reduced consumer demand is a major cause for continued small business bankruptcies, but the potential impacts may not be as obvious. Small businesses create jobs, competition, opportunities for entrepreneurship, financial independence and social mobility. They are also largely responsible for new ideas, with small business employees receiving at least 13 times the amount of patents compared with their large business counterparts, according to a study out of the University of Central Arkansas entitled "Small Business: Cause of Bankruptcy."
The health of small businesses undoubtedly reflects the overall health of the American economy, the "Bankruptcy" study notes, meaning both might be much weaker than hoped.
]]>By filing for personal bankruptcy your credit may drop between 150-200 points. The plus side, however, is that you can begin to earn those points back through making consistent payments on your accounts going forward.
Without declaring bankruptcy, you may have developed a pattern of late or missed payments on multiple debts. Delinquent payments would register as late every following month. Consistently missed payments may cause your creditor to write the balance off as uncollectible and sell your debt to a collection agency.
]]> Once your debt is at a collection agency they will also report late payments, and your credit score will take another hit. Finally, your creditors may sue you in order to collect payment. A lawsuit and judgment would also be recorded in the "public records" of your report, thus causing another negative impact on your credit rating.Neither having a pattern of missed or late payments nor filing for bankruptcy is the ideal situation. For some people, however, bankruptcy may be the best option. Bankruptcy generally results in one significant hit to your credit, but then you can immediately start rebuilding. The alternative may just be to struggle with overwhelming debts and lose points little by little.
If you or someone you know is drowning in debt, talk to an experienced bankruptcy attorney today. A lawyer can explain your options and advise you about the best steps to take for your specific situation.
]]>A lender, without notifying you of its intention to repossess the vehicle, can show up and take the vehicle, even if the vehicle is on private property. A lender, however, cannot "breach the peace" while repossessing the vehicle. Breaching the peace includes actions such as breaking and entering a locked garage, impersonating a law enforcement officer, and engaging in or threatening a physical altercation.
Once the vehicle has been repossessed, the lender has the right to sell the vehicle. But, before doing so, the lender must notify the borrower of the sale. And, if the sale of the vehicle doesn't satisfy the entire debt, the lender could still sue the debtor for the deficiency (difference between what is owed and the price received at the sale).
]]> Therefore, once a debtor falls behind on car payments, it is important to investigate the steps that can be taken to prevent car repossession. Commonly, there are two types of bankruptcy protection that a debtor may turn to:Bankruptcy may not be the only option you have for preventing repossession or may not be the right step for you to take. To discuss the options for keeping your vehicle that are right for your situation, speak with an experienced bankruptcy attorney.
Sources: Vehicle Repossession
]]>According to the National Bankruptcy Research Center and the American Bankruptcy Institute, consumer bankruptcies decreased by almost 14.8 percent in May 2011 compared to April 2011; and in comparison to May 2010, bankruptcy filings decreased by nearly 15.7 percent. The first five months of 2011 have also shown an 8.4 percent decrease compared to the same time period in 2010.
Bankruptcies are even beginning to decline in states with the highest rates of filings. Nevada, which had the most bankruptcies per capita in 2010 and so far in 2011, has still seen a 17 percent decrease.
]]> Indiana has also been part of the rising tide of bankruptcies. Last year, the state ranked fifth in the country for personal bankruptcy filings, with 45,681 filings.Time will tell if Indiana and the country have seen the worst of the bankruptcy boom.
Do You Need Relief From Mounting Debts?
If you have been hit hard by the economic downturn, and are now feeling saddled with debt, you are not alone. Many Americans have felt financial pain in recent years and have turned to bankruptcy for a fresh start.
If you are drowning in debt and not sure where to turn, contact an experienced bankruptcy attorney. A bankruptcy lawyer can explain the options available to you and assist you in selecting the best plan of action.
Sources: Bankruptcy Filings Decline; State bankruptcy rankings, 2010: Nevada holds its sad crown
]]>Bankruptcy Myths
You can't file for bankruptcy: Although a 2005 change to bankruptcy laws made some requirements more stringent, a means test will help debtors determine whether they are eligible for Chapter 7 bankruptcy. If they aren't, Chapter 13 bankruptcy is an option. It is commonly believed that bankruptcy became much more difficult to file, but it is still available to a wide number of people. While there are limits on the number of times a person may file for personal bankruptcy, it is still possible to do so more than once.
Your credit will be trashed: Bankruptcy affects your credit rating for up to 10 years. The truth is, however, that most people considering bankruptcy have credit issues already. In addition, you can take steps to rebuild your credit before the 10-year period is over.
You'll lose your retirement savings, house and car: While Chapter 7 bankruptcy requires nonexempt assets to be sold, people with more significant assets typically choose Chapter 13 bankruptcy. No matter which bankruptcy plan you choose, 401(k)s and IRAs are exempt from liquidation.
]]> Bankruptcy BenefitsWhile it may be a difficult decision to go through Chapter 7 or Chapter 13 bankruptcy, the benefits can be significant:
For people for whom bankruptcy is the right choice, the benefits will outweigh the drawbacks. It is important to understand both, however, and that is why anyone considering bankruptcy should consult an experienced attorney.
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