An Alternative To Indiana Bankruptcy
As of 2021, Indiana’s total state debt was $23.8 billion. This includes both general obligation debt and revenue debt. The state’s debt per capita is $3,544, which is lower than the national average of $4,054. As of 2021, there were 12,565 bankruptcies filed in Indiana, according to the United States Courts. This includes both Chapter 7 and Chapter 13 bankruptcies. In terms of bankruptcy rates, Indiana has a slightly higher rate than the national average. In 2021, Indiana had a bankruptcy filing rate of 2.03 per 1,000 residents, compared to the national average of 1.96 per 1,000 residents.
Bankruptcy Laws in Indiana
In Indiana, bankruptcy laws are governed by both federal and state laws. The federal bankruptcy laws are found in Title 11 of the United States Code, while the Indiana bankruptcy laws are found in Title 32 of the Indiana Code. Under Indiana bankruptcy laws, individuals and businesses can file for bankruptcy under either Chapter 7 or Chapter 13 of the federal bankruptcy code. Chapter 7 bankruptcy is also known as liquidation bankruptcy and involves the liquidation of non-exempt assets to pay off creditors. Chapter 13 bankruptcy is known as reorganization bankruptcy and involves the debtor creating a repayment plan to pay off their debts over a period of time. In Indiana, the bankruptcy process begins by filing a petition with the bankruptcy court. The court will appoint a trustee to oversee the bankruptcy case, and the trustee will work with the debtor to ensure that their assets are properly distributed to creditors. The trustee may also sell any non-exempt assets to pay off creditors. Indiana also has its own set of exemptions that debtors can use to protect their assets during bankruptcy. These exemptions include homestead exemptions, personal property exemptions, and wage exemptions.
What You Should Know About Business Bankruptcy
If you’re a business owner considering bankruptcy in Indiana, there are several important things to keep in mind:
- Explore other options: Before filing for bankruptcy, it’s important to explore other options to address your financial situation. This could include negotiating with creditors, refinancing debt, or selling assets.
- Understand the different types of bankruptcy: There are different types of bankruptcy available to businesses, including Chapter 7, Chapter 11, and Chapter 13. Each type of bankruptcy has its own advantages and disadvantages, so it’s important to understand which type is best for your specific situation.Learn More about the 3 main types of bankruptcy
- Hire a qualified bankruptcy attorney: Bankruptcy law can be complex, and it’s important to work with an experienced bankruptcy attorney who can guide you through the process and ensure that your rights are protected.
- Prepare for the impact on your business: Filing for bankruptcy can have a significant impact on your business, including the potential loss of assets, disruption of operations, and damage to your credit rating. It’s important to be prepared for these consequences and to have a plan in place for how you will move forward after the bankruptcy is complete.
- Be honest and transparent: When filing for bankruptcy, it’s important to be honest and transparent with your creditors and the bankruptcy court. Failing to disclose all of your assets or debts could result in serious legal consequences.
- Take steps to avoid future financial problems: Finally, it’s important to take steps to avoid future financial problems once your bankruptcy is complete. This could include creating a realistic budget, reducing expenses, and working to improve your credit rating over time.
Are All Debts Discharged in Bankruptcy?
While bankruptcy can help individuals and businesses eliminate most types of debts, there are some debts that cannot be discharged through bankruptcy. The types of debts that cannot be discharged in bankruptcy include:
- Certain taxes: Income taxes that are less than three years old, as well as certain other types of taxes, cannot be discharged in bankruptcy.
- Student loans: Most student loans cannot be discharged in bankruptcy, although there are some limited circumstances where they can be discharged.
- Child support and alimony: Debts related to child support and alimony cannot be discharged in bankruptcy.
- Debts arising from fraudulent activities: Debts that were incurred through fraud, false pretenses, or embezzlement cannot be discharged in bankruptcy.
- Debts for willful or malicious injury: Debts that were incurred as a result of willful or malicious injury to another person or their property cannot be discharged in bankruptcy.
- Court fines and penalties: Debts for fines or penalties imposed by a court cannot be discharged in bankruptcy.
- Debts not listed on the bankruptcy petition: If a debtor fails to list a debt on their bankruptcy petition, that debt may not be discharged in bankruptcy.
What Happens To Your Credit Score and Future Ability To Take Out A Loan?
Bankruptcy can have a significant impact on an individual’s credit score and ability to obtain loans in the future. In Indiana, a bankruptcy filing will typically remain on a person’s credit report for up to ten years. During this time, the bankruptcy filing may negatively impact the person’s credit score, making it more difficult to obtain credit or loans at favorable terms.
Are Tax Debts Discharged?
Bankruptcy in Indiana can have an impact on tax debts, although the specific impact will depend on the type of tax debt involved and the type of bankruptcy filing. In general, income tax debts that are more than three years old can be discharged through Chapter 7 bankruptcy or Chapter 13 bankruptcy. However, any income tax debts that are less than three years old are generally not dischargeable. It’s important to note that while tax debts may be eligible for discharge through bankruptcy, there are some requirements that must be met. For example, the debtor must have filed tax returns for the relevant years, and the tax debt must have been assessed by the IRS at least 240 days before the bankruptcy petition is filed. In addition, it’s important to note that bankruptcy does not discharge all types of tax debts. For example, debts related to payroll taxes or fraud penalties are generally not dischargeable in bankruptcy.
Will You Lose Your Assets?
Whether or not you will lose your home or car in bankruptcy in Indiana depends on several factors, including the type of bankruptcy filing, the value of the property, and the amount of equity you have in the property. In Chapter 7 bankruptcy, which is a liquidation bankruptcy, a trustee is appointed to sell your non-exempt assets to pay off your debts. However, Indiana has exemptions that may allow you to keep your home and car. Under Indiana law, you may be able to exempt up to $19,300 in equity in your primary residence, and up to $9,350 in equity in a motor vehicle. If the equity in your home or car is below these limits, you may be able to keep the property. In Chapter 13 bankruptcy, which is a reorganization bankruptcy, you keep your property and repay your debts over a three to five-year period through a court-approved payment plan. As long as you continue to make your payments under the plan, you can keep your home and car. It’s important to note that if you have a mortgage or car loan, you will need to continue making your payments in order to keep the property. If you are behind on your mortgage or car payments, bankruptcy may provide you with an opportunity to catch up on these payments and avoid foreclosure or repossession.
Statute of Limitations for Collections in Indiana
In Indiana, the statute of limitations for collections varies depending on the type of debt involved. The statute of limitations is the time limit for creditors to sue a debtor for an unpaid debt. Once the statute of limitations has expired, the creditor can no longer sue the debtor for the debt. Here are the statute of limitations for collections in Indiana:
- Written contracts: The statute of limitations for collections on a written contract in Indiana is 10 years.
- Oral contracts: The statute of limitations for collections on an oral contract in Indiana is 6 years.
- Promissory notes: The statute of limitations for collections on a promissory note in Indiana is 6 years.
- Open accounts (credit cards, medical bills, etc.): The statute of limitations for collections on an open account in Indiana is 6 years.
Cons of Bankruptcy in Indiana
While bankruptcy can provide relief for individuals facing overwhelming debt, there are also some cons to consider when filing for bankruptcy in Indiana. Some of the potential cons of bankruptcy include:
- Impact on Credit Score: Bankruptcy can have a significant negative impact on an individual’s credit score, which can make it more difficult to obtain credit or loans in the future. A bankruptcy filing can remain on a person’s credit report for up to ten years.
- Public Record: Bankruptcy is a matter of public record, which means that anyone can access information about an individual’s bankruptcy filing.
- Possible Loss of Property: Depending on the type of bankruptcy filing and the value of the property, an individual may be required to sell some of their assets to pay off their debts.
- Costs and Fees: Filing for bankruptcy can be expensive, with fees and costs that can range from several hundred to several thousand dollars.
- Impact on Co-Signers: If an individual has co-signed a loan with someone else, the bankruptcy filing may impact the co-signer’s credit score and ability to obtain credit.
- Restrictions on Future Credit: After filing for bankruptcy, an individual may be subject to restrictions on obtaining credit, such as limitations on the amount of credit available and higher interest rates.
Compare the Pros and Cons of Bankruptcy: Pros and Cons of Filing Bankruptcy
Why People Regret Filing Bankruptcy
People may regret filing for bankruptcy for several reasons, including:
- Negative impact on credit: Filing for bankruptcy can have a significant negative impact on an individual’s credit score, which can make it more difficult to obtain credit or loans in the future. This can make it challenging to purchase a home, a car, or obtain credit for other needs.
- Public record: Bankruptcy is a matter of public record, which means that anyone can access information about an individual’s bankruptcy filing. This lack of privacy can be uncomfortable for some individuals.
- Emotional toll: Bankruptcy can be emotionally challenging for individuals who may feel ashamed or embarrassed about their financial situation. It can be difficult to accept that they were unable to manage their debts and to come to terms with the consequences of filing for bankruptcy.
- Loss of assets: Depending on the type of bankruptcy filing and the value of the property, an individual may be required to sell some of their assets to pay off their debts.
- Legal costs: Filing for bankruptcy can be expensive, with fees and costs that can range from several hundred to several thousand dollars. For some individuals, this cost may add to their financial burden.
What Are The Alternatives To Bankruptcy?
If you do not qualify for bankruptcy in Indiana, there may be other options available to you to help address your debt issues. One of which is debt settlement. Debt settlement involves negotiating with creditors to settle debts for less than the full amount owed. There are some potential benefits to debt settlement over bankruptcy that may make it a more favorable option for some individuals.
- No BK on your credit report: Filing for bankruptcy shows on your credit report for up to 10 years. On the other hand, debt settlement does not show as a bankruptcy.
- Cost: Filing for bankruptcy can be expensive, with filing fees, attorney fees, and other costs adding up quickly.
- Emotional Impact: People report horror stories of the negative emotional impact of BK.
- With a bankruptcy for the rest of their life: Employers or lenders can ask if someone has filed BK for the rest of their life. It is much less likely to be asked if one ever used debt settlement to pay back an agreed to amount.
- Control: With debt settlement, you may have more control over the process and negotiations with your creditors, whereas with bankruptcy, a court will make the final decision.
- Less severe consequences: Filing for bankruptcy can have significant consequences, such as the liquidation of your assets, whereas debt settlement may allow you to negotiate a more manageable repayment plan while keeping your assets.
CuraDebt – An Alternative To Consider
CuraDebt, a professional debt settlement firm, is a great alternative to bankruptcy. We have a team of debt professionals who are ready to help you better understand and potentially eliminate your debts. Contact us today for your free consultation. 1-877-850-3328