Chapter 7 is called a liquidation bankruptcy, which sounds worse than it is. A trustee is appointed to look for property that is not protected by Indiana’s exemptions and could be sold for creditors. In the large majority of consumer cases there is nothing to sell: the exemptions cover the equity in the home and the car, household goods, and retirement savings, and the case is what lawyers call a “no-asset” case. The debts are discharged, meaning you no longer owe them and creditors can never collect them.
The moment the petition is filed, the automatic stay takes effect. Collection calls, lawsuits, wage garnishments, and repossessions stop by federal law. A creditor who keeps going after being told about the filing can be ordered to pay damages.
Chapter 7 has an income screen called the means test. If your household income over the past six months is below the Indiana median for a household your size, you pass. If it is above the median, the test looks at your actual expenses and secured debt payments to decide whether you could fund a Chapter 13 plan instead. Most people who come to us worried about the means test pass it; the ones who do not usually have a good reason to prefer Chapter 13 anyway.
Two short courses are required: a credit counseling session before the case is filed and a financial management course before the discharge. Both are done online or by phone in about an hour each. You also cannot have received a Chapter 7 discharge in a case filed within the previous eight years.
Indiana has opted out of the federal exemptions and uses its own list, which protects a set amount of equity in your residence, a separate amount in other property such as a vehicle and bank accounts, your retirement accounts in full, health aids, and most insurance and public benefits. The amounts are adjusted for inflation every few years. Before anything is filed we run every asset against the current figures so you know exactly where you stand.
Secured debts such as a mortgage or a car loan are a separate question. You can keep the property by keeping the payments current, usually by signing a reaffirmation agreement for the vehicle, or you can surrender it and walk away from the balance. Either way the choice is yours, made with full information.
Some debts survive a Chapter 7 discharge: most student loans, child support and alimony, recent income taxes, criminal fines and restitution, debts for injuries caused by drunk driving, and debts a creditor proves were incurred by fraud. Large luxury purchases or cash advances taken shortly before filing can also be challenged. If any of these apply to you, we will tell you before you file, and Chapter 13 may handle them better.
A typical Chapter 7 in the Northern District of Indiana runs about three to four months. The petition, schedules, and means test are filed; about a month later you attend a short meeting of creditors with the trustee, which we attend with you and which creditors almost never bother to come to; roughly sixty days after that meeting the court enters the discharge. From the first call to the discharge order, most clients are done in under five months.
Bankruptcy at this firm is not a form-filling service. We have filed thousands of cases in Hammond and South Bend. We sit down with you, go through the whole picture, and tell you plainly whether Chapter 7 is the right tool, whether Chapter 13 would protect something Chapter 7 would not, or whether you do not need to file at all. We offer flat fees and payment plans, and we handle the trustee, the creditors, and the court so you can get back to your life.
The first meeting is free, in person at either office or by phone or video. Bring whatever you have: bills, collection letters, pay stubs, a tax return if it is handy. We go through the whole picture, tell you whether bankruptcy is the right tool and which chapter, and quote a flat fee with a payment plan. Nothing is filed until you are comfortable with the plan. More about how we handle bankruptcy cases.
Admitted to the Indiana bar at 24, the youngest licensed attorney in the state at the time, Miguel pairs that early start with more than fifteen years helping Northwest Indiana families through injury claims and bankruptcy.
Almost never. Indiana’s exemptions protect a set amount of equity in your home and in other property, and most families owe close to what the house and car are worth. If you keep the payments current, you keep the property. We check every asset against the exemptions before filing so there are no surprises.
About three to four months from filing to discharge in most cases. The meeting of creditors is roughly a month after filing and the discharge follows about sixty days later.
A Chapter 7 can be reported for up to ten years. In practice most of our clients see their scores recover within one to two years, because the balances that were dragging the score down are gone and new credit is reported on time.
Yes, as long as eight years have passed since the earlier Chapter 7 was filed. Different waiting periods apply after a Chapter 13.
Call either office or send a message. We will tell you plainly whether bankruptcy is the right tool, and which one.