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Jason Wischmeyer, J.D. | Blog
Bankruptcy Vs. Debt Settlement
3/26/13
There are a number of questions and concerns that clients must consider when thinking bankruptcy vs. debt settlement. Jason Wischmeyer has addressed these questions many of times and has helped clients with both bankruptcy and debt settlement based on their situation. Bankruptcy vs. debt settlement depends on your financial situation and both have financial and credit benefits and issues that a client must consider.

Debt Settlement is a process where a client takes his or her debt and negotiations are made with the credit lending institution to pay less than the total amount of debt owed. Often, in order to qualify, a client must be behind on the payments of this debt and is generally strongly considering the question of debt settlement vs. bankruptcy.

Bankruptcy is a federal court process provided by the United States Constitution that allows filers to eliminate debt and keep certain exempt assets (most if not all of your stuff). Bankruptcy for individuals generally will be a Chapter 7 Bankruptcy which allows you to discharge all of your debts after about 5 months with no or minimal loss of assets and no payments to creditors. In certain circumstances based on prior bankruptcy filings, desire to catch up on car or mortgage payments or a client’s income level, some individual clients will file Chapter 13 bankruptcy which allows discharge of your debts after making payments based on your disposable income over a 3-5 year time period.

With debt settlement, often negotiations can result in a client paying 40% – 60% of what is owed on the debt, sometimes even less. The creditor has an incentive to get paid some of the debt owed versus risk a bankruptcy filing where they could get little or no money from the person owing the debt. The most logical reason to consider debt settlement is when a client has a lump sum of money that can be paid toward the debt from an inheritance, loan, tax refund or some other type of source.

One issue with debt settlement that the credit counseling companies are not upfront in telling people is that the creditor will often issue a 1099 for the amount that is written off and the client will be required to pay taxes on the amount written off. This creates a big issue if a bankruptcy is later filed as taxes are not generally dischargeable unless at least 3 years old. So, you may settle a $10,000 debt for $5,000 but the other $5,000 is going to create taxes which, depending on your tax bracket, can be an additional cost of $750-$1,800 in tax liability that is not dischargeable.

When the creditor considers your financial situation for a debt settlement, the creditor is going to look at all of your assets, including assets that would be exempt under bankruptcy. So, something such as a retirement account that is exempt in bankruptcy and cannot be taken from you will be utilized when the creditor decides whether to do a debt settlement with a client.

Clients are generally surprised when considering bankruptcy vs. debt settlement that their credit rating will be negatively affected by either. Because of the exemptions, often clients can save more money and keep more of their assets in filing bankruptcy and getting a fresh financial start versus working out a debt settlement. Attorney fees for either are often very similar costs and, in some circumstances, bankruptcy attorney fees will be significantly less.

Unfortunately, many of my bankruptcy clients get involved with debt settlement companies before they talk to a bankruptcy attorney and, ultimately, cost themselves unnecessary money or assets. The debt settlement companies will not discuss bankruptcy and if they did understand how it works they would have to explain to you that is in your best interest to file bankruptcy – and not hire them. If you are considering bankruptcy or debt settlement, a consultation with an attorney experienced in both debt settlement and bankruptcy should help you clear up your questions.
Should Retirement Money Be Used to Pay Off Debt Before Filing Bankruptcy?
12/16/12
Over the years, I have yet to meet someone who spent money, incurred debt or owed a medical debt with the goal of filing bankruptcy. Time and time again, I find that people want to avoid bankruptcy and, in the process, make the mistake of using retirement money to pay bills instead of filing for bankruptcy. Although I understand their reasoning, many that still end up in my office have made a BIG mistake.

When a person accesses retirement money there was likely some cost involved. If the retirement money was cashed out before retirement age then there were taxes incurred and a penalty. If the taxes were not paid or enough money was not set aside then the taxes owed will still be owed after bankruptcy most likely and are generally not dischargeable. The penalty money is simply lost with no mechanism to seek reimbursement. If the money was taken as a loan, then the bankruptcy will not discharge the loan and principal and interest payments will continue. If you are unable to repay the loan then, again, there are tax consequences. Either option cost you money.

Assume that you did use retirement money to settle some of your debt, but it did not go far enough. Now you have paid out retirement money that will no longer be available to you in the future and your financial position has not changed. In the meantime, if you settled your debt for less than what was owed on consumer debts then you will receive a 1099 at the end of the year and, again, this will result in tax consequences. Again, taxes are generally not dischargeable and you will likely have to pay these taxes. You have again cost yourself money and not avoided going to the attorney’s office.

Finally, and most importantly, if you had not withdrawn or do not withdraw your retirement money then ALL of your retirement money is exempt and you will get to keep this money The money will remain invested, hopefully earning dividends, interests and capital gains and be available to you in the future. And, as is the theme of this article, you have cost yourself the money your retirement will likely earn. However, if no money is withdrawn then you have saved yourself money and, if bankruptcy is imminent, this money will remain yours after filing bankruptcy.

Do not cost yourself money. There are times where it might make sense to withdraw retirement funds and try to settle your debt, but there are legal maneuvers that can cost and save you money even if this is the path you choose. Whichever option you decide to try, make sure you speak with an experienced bankruptcy and debt settlement attorney such as Jason Wischmeyer to make sure you are making a wise financial and legal choice.

On a side note, our office does not immediately slot you into a bankruptcy. We evaluate your situation to advise you of the best outcome with the least overall cost which is very different from many bankruptcy law offices as they are focused on, and all they know, is how to file bankruptcies. They may not look at your actual situation and try to help you avoid bankruptcy because it is not in their financial best interest. We have the experience and will advise you properly and help you with whatever solution is best for you.

Welcome to Wischmeyer Law Office – A different kind of attorney that seeks solutions for you first NOT what is in the law firm’s best interest first.
Lawsuit Against the State of Indiana
12/16/12
On occasion, Wischmeyer Law Office will receive an inquiry about a claim against the State of Indiana for negligence. All too often, I am unable to assist the potential client because of limits that exist in the State of Indiana for negligence lawsuits. Still, if I am called early enough in the process there is a chance of recovery against the State so long as the call to my office is made early enough.

What a client needs to know is there are time limits that must to be followed to file a claim against the State of Indiana that start with the filing of a Tort Claim Notice within 180 days of the date of the alleged negligent act. The State of Indiana receives notice to a few different agencies and then a notice is returned to advice if the agency is entitled to governmental protections. Almost always, a political subdivision will be notified and a denial letter related to the Tort Claim Notice is issued within thirty (30) days of receipt of the client’s Notice. At that point, a lawsuit can be filed.

Governmental entities continue to receive special treatment in negligence law after the filing of a lawsuit. Generally, the State of Indiana representatives receive personal immunity for actions taken in the scope of their employment. In addition, an injured person is limited to a recovery cap of $300,000 for their claims without regard to the amount of damages a person has incurred as a result of the State’s negligence.
In addition, the State enjoys a contributory fault standard meaning that you must prove you are not at all responsible for the alleged conduct. If a judge or jury were to find the person even 1% at fault then that person cannot recover any money from the State of Indiana for their damages. This is a significant impediment to recovery and must be strongly considered before proceeding with any claim.

Claims against the State of Indiana are difficult, but not impossible for an experienced personal injury attorney such as Jason P. Wischmeyer. Please contact my office to discuss your potential case at phone_num and we can set up a time to talk if I am not available when you call.

Thank you for your inquiry.

Jason Wischmeyer
Should Retirement Money Be Used to Pay Off Debt? if You Do, You Are Likely Costing Yourself Money
12/4/12
Over the years, I have yet to meet someone who spent money, incurred debt or owed a medical debt with the goal of filing bankruptcy. Time and time again, I find that people want to avoid bankruptcy and, in the process, make the mistake of using retirement money to pay bills instead of filing for bankruptcy. Although I understand their reasoning, many that still end up in my office have made a BIG mistake.

When a person accesses retirement money there was likely some cost involved. If the retirement money was cashed out before retirement age then there were taxes incurred and a penalty. If the taxes were not paid or enough money was not set aside then the taxes owed will still be owed after bankruptcy most likely and are generally nondischargeable. The penalty money is simply lost with no mechanism to seek reimbursement. If the money was taken as a loan, then the bankruptcy will not discharge the loan and principal and interest payments will continue. If you are unable to repay the loan then, again, there are tax consequences. Either option cost you money.

Assume that you did use retirement money to settle some of your debt, but it did not go far enough. Now you have paid out retirement money that will no longer be available to you in the future and your financial position has not changed. In the meantime, if you settled your debt for less than what was owed on consumer debts then you will receive a 1099 at the end of the year and, again, this will result in tax consequences. Again, taxes are generally nondischargeable and you will likely have to pay these taxes. You have again cost yourself money and not avoided going to the attorney’s office.

Finally, and most importantly, if you had not withdrawn your retirement money then ALL of your retirement money is exempt and you will get to keep this money The money will remain invested, hopefully earning dividends, interests and capital gains and be available to you in the future. And, as is the theme of this article, you have cost yourself money.

Do not cost yourself money. There are times where it might make sense to withdraw retirement funds and try to settle your debt, but there are legal maneuvers that can save you money even if this is the path you choose. Whichever option you decide to try, make sure you speak with an experienced bankruptcy and debt settlement attorney such as Jason Wischmeyer to make sure you are making a wise financial and legal choice.
On a side note, our office does not immediately slot you into a bankruptcy. We evaluate your situation to advise you of the best outcome with the least overall cost which is very different from many bankruptcy law offices as they are focused on, and all they know, is how to file bankruptcies and they may not look at your actual situation and try to help you avoid bankruptcy because it is not in their financial best interest. We will advise you properly and help you with whatever process is best for you.
Owe More Than Your House Is Worth and Waiting on the Bank to Threaten Foreclosue --- What Can I Do?
12/3/12
The United States is going through one of the worst recessions since the Great Depression. Bankruptcy filings have increased, unemployment is high and home values have decreased exponentially since 2007 highs. Many home owners are finding they have a lot of debt, a house that is not worth what they owe, no ability to refinance and no ability to sell a home because they owe more than it is worth.
It may seem like a home owner is left with no option except to quit paying their mortgage, allow a foreclosure and file bankruptcy. However, if the home owner has the ability to avoid bankruptcy if the house could go away there should be options besides bankruptcy and at Wischmeyer Law Office we help homeowners with such solutions.
First, bankruptcy is an option that allows the homeowner to keep the home. If a home owner wants to keep the home then a Chapter 13 bankruptcy can allow the homeowner to file bankruptcy, catch up on their missed payments and possibly even reduce the amount that the homeowner owes on the home. This is called a “cram down” and can have significant benefits helping a homeowner keep the home at the value that exists in today’s world.
The home owner may also be able to give the home to the bank, avoiding foreclosure, and the extra costs that often get tacked on to the mortgage because of the bank’s attorney fees, collection costs and the ongoing interest the mortgage allows the bank to collect. This process is called a Deed-In-Lieu and although bank’s put up significant barriers to avoid a deed in lieu it is possible. Sometimes the bank will ask for the homeowner to make small payments toward the difference in the home’s value and the balance of the mortgage, but an experienced attorney often can negotiate the amount of the deficiency and the payment amount and term to give the homeowner the financial relief they are seeking.
A third option is a short sale. With a short sale the homeowner obtains permission from the bank to sell the home to a third party for less than the balance owed on the home. This is not a quick process, but an experienced short sale attorney such as Jason Wischmeyer can help expedite the process by having the short sale prepared and the discussions with the bank so that when an offer is made on the home the bank has the information needed to evaluate the proposed sale and get an answer back to the homeowner on allowing the sale. At Wischmeyer Law Office we work with all sorts of Realtors and even have a Realtor on staff to help list your property and get a short sale approved.
Having financial difficulties with an underwater mortgage should not leave a homeowner with only the option of allowing a foreclosure on the bank’s terms. An experienced attorney can help facilitate some other deal with the bank, delay any foreclosure and give a homeowner the ability to feel in control of the process. Often times, if the homeowner wants the attorney and relator can help save the home.
Call us at Wischmeyer Law Office to speak with an attorney AND a Realtor about options for your home and what it is that you, as a homeowner, want to do with your help. Let us give you a solution that either saves your home or puts you back in control instead of the bank and its attorneys.

Jason P. Wischmeyer, P.O. Box 419, Shelbyville, IN 46176
Phone: phone_num Fax: phone_num Email: e_mail