Lake County Bankruptcy Lawyer
Financial problems can befall anyone, even those who are very careful with their money. Job loss, medical emergencies, and other crises can strike without warning, sending you into a tailspin.
If bills are piling up, then you might consider filing for bankruptcy. Bankruptcy is often the smart choice for people in Indiana drowning in debt and is a much better option than debt settlement or other debt management strategies.
Bankruptcy and Debt
Bankruptcy is a great way to get rid of unsecured debt like credit cards, medical debt, and personal loans. However, it cannot eliminate secured debts, which are those tied to an asset like your car loan or your home mortgage. The lender still retains a security interest in the asset and can foreclose, taking it back.
Other debts are not dischargeable under the bankruptcy code:
- Student loans (in most cases)
- Child support
- Any debt related to drunk driving
Nevertheless, wiping out credit cards and other secured debts often frees up money you can spend on these other debts.
Chapter 7 vs. Chapter 13
These are the two most popular bankruptcies for our clients. Chapter 7 is much quicker, allowing you to wipe out unsecured debts in a matter of months. However, there are income limitations, so not everyone will qualify.
Chapter 13 in Indiana takes longer — between three and five years. You enter a payment plan in which you contribute your disposable income to your creditors. If at the end of the payment plan, you have unsecured debts remaining, you can wipe them out.
Exempt and Non-Exempt Property
There is one huge advantage to a Chapter 13 — the bankruptcy trustee will not take your property and use it to pay off your creditors. This is a real possibility in Chapter 7.
Property is either exempt or non-exempt. Each state determines what property is exempt from the trustee, and some states let you exempt the entire value of your house. In Indiana, by contrast, a debtor can only exempt up to $17,600 in equity, double if he or she is married.
If your home is worth $200,000 and you have $100,000 left on the mortgage, then you have $100,000 of equity left in the house. If you are single, only $17,600 is exempt, meaning the trustee can force a sale and use the remaining $82,400 to pay creditors. This is usually a terrible option for homeowners, so many debtors in Indiana choose a Chapter 13.
Meet with a Lake County Bankruptcy Lawyer to Discuss Your Options
Deciding to file for bankruptcy is not an easy decision, and there are many considerations you must juggle. For help deciding whether you want to file, please contact the Law Office of Kevin M. Schmidt today.