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Bankruptcy offers protection from your creditors and a chance to achieve your desirable outcome. But when dismissal looms, your future may not look so bright.
When you file for bankruptcy, you get the benefit of knowing that your creditors can’t take any action against you.
In return for the protections of the bankruptcy laws, you’ve got certain responsibilities. Fail to live up to your end of the bargain and you may find your case kicked out of court.
That’s dismissal – getting your bankruptcy case thrown out.
Before you decide whether that’s a good thing or not, you need to know what dismissal means for you down the road. These are the cold, hard realities of dismissal.

Creditors Can Take Action After Dismissal
When you filed your case, your creditors got notification that they couldn’t take action against you.

• No phone calls.
• No collection letters.
• Foreclosures had to stop.
• The car couldn’t be repossessed.
• Wage garnishees were halted.
• Bank account levies were lifted.

Though some types of legal action could continue – divorce-related matters, child custody and criminal cases to name a few – for the most part, it was as if someone had sprinkled magic pixie dust.
You weren’t officially out of debt but it sure felt that way.
Once a bankruptcy case is dismissed, however, that magic pixie dust is washed away.

• Creditors can start calling again.
• The car can be repossessed.
• The wage garnishee will reappear.
• The bank account can be levied.
• The foreclosure will continue.

And you’ll still owe the debts that you had hoped to wipe away.
You May Not Be Able to File Bankruptcy Again
There are different types of dismissal. Some dismissals allows you to file for bankruptcy again right away, others may prevent you from filing again for a period of time.
And if the judge decides there’s a good reason, you can be prevented from filing for bankruptcy at all again in the future and wiping out these debts.
If You Can File, Your Protection May Be Limited
If you have a case dismissed once in a year, the automatic stay may be temporary the second time around unless the judge extends it.
And if you have more than one bankruptcy case dismissed in a year, you may not get the protection of the automatic stay at all.
A Controllable Force
Don’t forget the beauty of a bankruptcy dismissal.
In a Chapter 13 repayment bankruptcy you can voluntarily dismiss your case if you no longer need the court’s protection.
You decide to sell the house or refinance, so you don’t need to worry about the pending foreclosure anymore. Or a windfall makes it possible to repay your debts on your own.
You don’t get the option to voluntarily dismiss a Chapter 7 bankruptcy, but chances are good that if you’re in a Chapter 7 then it’s for a good reason. Don’t mess up your chance to end your bill problems – pay attention to what your supposed to do, and things will work out for you.
In the end, it comes down to understanding the impact of dismissal. Use it as a tool when necessary, and avoid it otherwise.

By:  Steven P. Taylor, Indiana bankruptcy attorney on January 30, 2014
Posted in Chapter 13 Bankruptcy
On January 7, 2014, the 7th Circuit court of appeals issued an opinion that is a fantastic boon for struggling real estate property owners that have not been able to pay their real estate property taxes timely and have had those delinquent real estate taxes sold at a tax sale.   These sale are conducted by municipalities who, after waiting the time period required by state law, those unpaid property taxes up for auction (generally called the “tax sale”). In Indiana, it’s about 15 months before a “property goes to a tax sale.”  The tax sale is bid competitively, meaning high bid wins. Unfortunately, Indiana has the reputation for being an excellent state for tax lien certificate sales for all of the wrong reasons.  First,  he interest rate on the bid that must be paid to redeem the property is high (as high as 25%) is high and the redemption period of 1 year is very short.

Currently, under Indiana law, a tax lien purchaser in a tax sale gets a return on the investment in one ways: interest on the  bid amount, or eventual ownership of the property.
A.    Interest on Bid (Redemption of Tax Sale Certificate)
 If property for which a tax lien purchaser bought a tax sale certificate is redeemed during the redemption period,  the tax lien purchaser surrenders the  tax sale certificate upon that redemption, tax lien purchaser will receive a refund equal to one hundred ten percent (110%) of the minimum bid for which the tract or real property was offered at the time of sale, if the tract or item of real property is redeemed not more than six (6) months after the date of sale; or one hundred fifteen percent (115%) of the minimum bid for which the tract or real property was offered at the time of sale, if the tract or item of real property is redeemed more than six (6) months but not more than one (1) year after the date of sale. In addition to the refund of the minimum bid plus the above stated interest thereon, in the case of a redemption, the tax lien purchaser, upon surrendering a tax sale certificate, will receive a refund of the amount by which the purchase price exceeds the minimum bid (called the overbid), if any, on the real property plus ten percent (10%) per annum on the overbid.  I.C. §6-1.1-25-2 governs the amount required to redeem.
EXAMPLE:
Assume that an Indiana homeowner owed $500 in unpaid property taxes on a property that went to tax sale.  A $5,000 offer is the winning bid at the auction. If the homeowner redeems his property the day before the one year redemption period expires, per  Indiana law, the minimum, he’ll owe the tax lien purchaser is the initial $500, plus a 15 percent penalty, totaling $$565.00. He’ll also be required to pay 10 percent interest on the overbid ($4500.00), or $450. As the tax lien purchaser, you’ll get your capital investment of $5,000 back, plus $65.00 plus interest payment of $450.oo on the overbid for a total of $5,515.00.
B.     No Redemption
Generally, about three quarters (3/4) of real estate owners redeem their real property within a year. However, if an interested party fails to redeem the property, the winning bidder can petition the Court, upon the expiration of the redemption period, to have a tax deed issued as to the property. Once it’s complete, tax lien purchaser takes ownership.
Typically, in Indiana, this accelerated and short redemption period is an extreme hardship on struggling Indiana homeowners that are attempting to save their home in these harsh times.  In the above example, it would require a homeowner to save an additional $459.58 a month to be able to pay the redemption amount and save the residence at the minimum.  To date, homeowners have had to hope that the mortgage company would come in and protect its lien.  However, the mortgage company wants its money it paid out on the tax lien redemption and will declare an escrow shortage (because that is where the money came from) and require the homeowner to pay  that escrow shortage over a twelve (12) month period.
However, In Re Lamont, the Seventh Circuit changed the tax lien certificate landscape.  The debtor in this Chapter 13 case filed a bankruptcy before the redemption period ended.  The plan provided for payment of the delinquent taxes at zero (0) percent interest over the plan life.  The tax lien purchaser (which was not listed originally on the schedules) became aware of the bankruptcy when the state court refused to issue a tax deed due to the bankruptcy.   The tax lien purchaser asked the bankruptcy court to modify the stay to allow him to obtain a tax deed.  The bankruptcy court refused and appellate proceedings ensued.  Specifically, the Court held that for debtor that filed a Chapter 13 bankruptcy before the expiration of the redemption period that the tax lien was a (1) non-recourse secured claim against the real estate owner’s property; and  (2)  the claim was modifiable in a Chapter 13 bankruptcy; and, (3) the automatic stay applies to prohibit the tax lien purchaser from attempting to procure a tax deed during the plan; and (4) the tax lien purchaser’s ability to obtain a tax deed is extinguished by the successful completion of the Chapter 13 plan and discharge.
Given the difficulties that  Indiana homeowners have in redemption due to the short redemption period and high interest, the Seventh Circuit’s holding is a blessing.  Unfortunately, this stance will require that an experienced bankruptcy attorney will be required to make sure that proper parties are noticed and the bankruptcy plan has the appropriate language.   However, Indiana homeowners with delinquent real estate taxes have gained breathing room to reorganize and save the real estate.  Potentially, this means that an individual whose real estate taxes were sold at a tax sale has the one (1) year redemption period (minus one day) plus the five year Chapter 13 plan life to pay the delinquent property taxes.  Since the tax lien purchaser’s secured claim is modifiable, the interest rate can modified to  a market rate (usually Prime to Prime plus 3%), vs the statutory rates in effect at redemption.
When I’m visiting with you by phone or in my Kokomo or Indianapolis bankruptcy law office, one thing I’ll want to find out is when your redemption period ends and call the county treasurer to ascertain the redemption amount.    Once we have those facts, you will be surprised at how we can help you keep your home and other real estate in Chapter 13 Bankruptcy.
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Filed under: Chapter 13 Bankruptcy Tagged: bankruptcy attorney, Chapter 13 Bankruptcy, Delinquent real estate taxes, Indianapolis Chapter 13 bankruptcy, Kokomo Chapter 13 bankruptcy, Redemption Period, Tax Lien Certificates

Filing for bankruptcy doesn’t have to mean you’ve given up on your finances. You don’t have to keep struggling in figuring out how you will meet necessary financial obligations month after month.  Chapter 7 bankruptcy can help you wipe out debts while Chapter 13 bankruptcy can help you pay them with an affordable repayment plan. [...]

Etiquette experts say that sex, politics and religion are subjects to be avoided at dinner parties.
I’d add one more subject to that list – money.
Nobody wants to talk about their money problems except with their closest friends and loved one – and sometimes, not even with that intimate circle of confidantes.
That’s why people who are thinking about filing for bankruptcy are worried about the possibility that word will get out.
I’m here to tell you it probably won’t happen. In fact, most people probably will never know that you filed for bankruptcy unless you tell them.
Here’s why.

Nobody Goes To The Courthouse
Your bankruptcy filing is a court record, which can be pulled up on the court’s system.
That court system, PACER, can be accessed by anyone at no cost. But record searches are charged at a fee of $0.08 per page.
Someone could go to the courthouse and do a search at no cost, but most people don’t do that.
Why? Because most people don’t want to take the time to do so.
Beyond that, most people don’t even know about PACER unless they’ve got a case of their own.
Related:

• PACER – Track Your Bankruptcy Case Online

Neighbors Can’t Check Your Credit Report
Your bankruptcy case will show up on your credit report for a period of time; creditors will know about it, but that’s pretty much as far as it goes.
In order to get a copy of your credit report, someone must have a permissible purpose.  Nosy neighbors don’t have a legitimate reason for peeking your credit report, so you’re in the clear.
Related:

• How Long Bankruptcy Remains On Your Credit Report
• Who Can Check Your Credit Report

Won’t It Be In The Newspaper?
In Los Angeles, no newspapers publish the names of individuals who file for bankruptcy.
In New York City, none of the major daily newspapers publish bankruptcy information.
Most cities don’t publish listings of local people who filed for bankruptcy, so you’ve got nothing to worry about if you’re in a major metropolitan area.
People Care About Themselves More Than They Do About You
It’s tough to admit, but the person who cares about you the most is … well, you.
Everyone care more about their own problems, their own issues, and their own wallet.  They’ve got barely enough time to get through their own mental to-do lists each day without mucking around in your business.
Neighbors, friends, coworkers, and looky-loos won’t spend time or money to snoop into your private life. They won’t go out of their way to find out about your bankruptcy, and they sure won’t actively seek out your financial information.
You’re going to need to get over your bill problems without prying eyes over your shoulder.  And that’s not a terrible thing, is it?