Bankruptcy is one of those things you wish you never need to consider. There are times, however, when you can’t recover from life’s curveballs. If bankruptcy seems like your only option, don’t worry – you aren’t alone.
In this blog, you’ll learn everything you need to know about filing for bankruptcy in Indiana. To learn more about the process and what to expect, continue reading.
What Is Bankruptcy and How Can It Help?
When a bankruptcy filing is made, an automatic stay is triggered. As a result, your creditors will be unable to collect your debts. The automatic stay also prevents foreclosures, wage garnishments, and other collection actions. The bankruptcy process can help you clear your debt and rebuild your credit afterward, giving you a fresh start.
Bankruptcy Warning Signs
Here are some warning signs that you may need to file for bankruptcy:
- Your mortgage payments are behind despite your best efforts.
- Your creditors aren’t able to help you resolve your debt.
- You depend on your credit cards to pay for basic living expenses.
- You’re getting calls from debt collectors or getting threatened with foreclosure.
Alternatives to Bankruptcy
It is essential to understand all of your options before filing for bankruptcy. Alternatives to bankruptcy include credit counseling or debt settlement. More importantly, before making any decisions, you should always consult with a financial advisor.
Consolidating your debts can also save you money on interest. As a final option, you can try to negotiate with creditors. Although this can be a complicated process, it is possible to avoid bankruptcy through an agreement.
The Different Types of Bankruptcy
There are two types of bankruptcy that individuals can file in Indiana: Chapter 7 and Chapter 13.
Chapter 7
In many cases, Chapter 7 bankruptcy is the first option a bankruptcy filer considers as it only takes a few months to complete and is cheap since creditors don’t get paid. Additionally, it works well for people who own only the essentials necessary for living and working.
In contrast, people who own unnecessary luxury items are more likely to lose their assets. Lastly, in a Chapter 7 bankruptcy, there is no option to catch up on mortgage or car payments, so if you are behind, you might lose them.
Chapter 13
Chapter 13 filers, on the other hand, can repay their debts over three to five years. The benefits of Chapter 13 differ from those of Chapter 7. For example, you can keep all your property while avoiding foreclosure and car repossession. Using this chapter, you can force your creditor to accept a payment plan if you cannot discharge the debt in bankruptcy.
How to File for Bankruptcy in Indiana
If you are considering filing for bankruptcy in Indiana, it’s important to know how the process works. The steps have been outlined below.
- Gather Your Indiana Bankruptcy Documents: You will need copies of your tax returns from the previous two years and your last 60-day pay stubs.
- Take a Credit Counseling Course: Learn more about the credit counseling course here.
- Fill Out the Bankruptcy Forms: You can download the forms free through USCOURTS.gov.
- Pay Your Filing Fee: Chapter 7 bankruptcy requires a court filing fee of $338. When your income does not exceed 150% of the poverty guidelines in Indiana, you can request a filing fee waiver.
- Print Your Bankruptcy Forms: Make sure to print all forms on regular, white 8.5″ x 11″ paper using black ink.
- File the Forms With the Indiana Bankruptcy Court: Indiana has two bankruptcy districts: the Northern District and the Southern District. There are different guidelines for bankruptcy filers in each district. Bankruptcies can only be filed electronically by attorneys in the Northern District, but the Southern District has an Electronic Self-Representation (eSR) filing system that individuals can use without an attorney.
- Mail Documents to Your Trustee: You will be assigned a trustee after filing for bankruptcy.
- Take Another Course: Attend a debtor education course within 60 days of the 341 meeting.
- Attend Your 341 Meeting: Your creditors can attend this meeting to ask questions.
What Happens After You File for Bankruptcy?
In bankruptcy, most of your unsecured debts will be forgiven, so you will no longer have to pay them back. Student loans, child support, and alimony, however, are not forgivable through bankruptcy. Depending on the type of bankruptcy you file, some belongings may also be forfeited.
Does Bankruptcy Affect Your Credit?
After filing for bankruptcy, your credit report will reflect the bankruptcy for seven to ten years. Because of this, you may have difficulty getting a loan or credit line approved. However, bankruptcy does not mean the end of your financial life. You can rebuild your credit by making on-time payments and maintaining a good payment history.
Rebuilding Your Credit Post Bankruptcy
After filing for bankruptcy, you can also rebuild your credit by:
- Applying for a secured credit card.
- Becoming an authorized user on a credit card.
- Requesting a small loan.
- Paying your bills on time.
- Staying on top of your credit report.
Sell Your House for Cash & Avoid Bankruptcy in Indiana
When faced with the possibility of bankruptcy, selling your house for cash can be a real lifesaver. At Favor Home Solutions, we buy houses as-is, allowing you to sell your house quickly and hassle-free.
With our experienced team, you can focus on getting back on your feet quickly instead of worrying about closing fees. We can put cash in your pocket in as little as ten days and prevent bankruptcy from negatively impacting your credit score. Contact us to learn more.
