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Lawrenceburg Indiana Bankruptcy and Estate Planning Blog

How financial struggle erodes mental decision-making processes

It’s not hard to understand the relationship between financial struggle and poor decision making. But consider the possibility that due to the economic conflict, your rational decision-making abilities are hindered going forward. The psychological burden of money problems often makes planning and organizing your life highly challenging to accomplish. As a result, an unhealthy cycle of depression and inability to solve money problems usually develops.

It’s similar to the physical feeling of being unable to breathe. Your decision-making lung capacity is restricted by the big money worries you carry with you. Scientific research has recently backed up the dynamic between struggling financially and impeded mental processing.

Secured and unsecured credit

If you are one of the many people in Indiana who cringes every time you look at your bank balance or go to the mailbox and see a pile of bills waiting for you, you may well be wondering how you can get out from under a seemingly endless supply of debt. In evaluating your options for this and for creating a brighter financial future for yourself, it is important that you understand the differences in the two primary forms of debt - secured and unsecured.

As explained by NerdWallet, with unsecured debt there is no risk that you will lose a precious asset because the debt is not associated with any particular item. In a Chapter 7 bankruptcy, these type of debts are generally discharged and no further action is needed. Examples of unsecured debt include most credit cards, medical bills and even student loans.

What is a holographic will?

Although it sounds like a science-fiction term, a holographic will is simply a handwritten will, written entirely by the person who signs it. You may have heard that holographic wills are not legal in Indiana, but that’s not entirely true.

According to NWI Times, the Hoosier State does not decide the validity of a will based on whether it is written by hand, but by what it contains. Although many other states will recognize a handwritten will that is signed and witnessed properly, Indiana typically requires a little more before it validates a will and admits it to probate proceedings. Being handwritten does not mean it is automatically invalid, however. Courts decide validity on a case-by-case basis.

Taxes and generation-skipping trusts

Providing financially for one's children after death has long been a common desire of people in Indiana. The legacy that can be created through an inheritance can be both sentimental and financially beneficial for generations to come. In addition to leaving something for your children, you may be particularly interested in ensuring that your grandchildren receive something from your inheritance. Such a desire is part of why the generation-skipping trust has been developed.

As the Motley Fool explains, the generation-skipping trust may be just the ticket to provide financial assets for your children's children but there are certain things you will want to know and evaluate as you consider this type of trust. One of these is the taxation model associated with a GST. When not carefully created, a GST may leave your assets vulnerable to a high level of taxation.

Discharging taxes via bankruptcy

With the deadline to file 2017 taxes recently passed, many Indiana residents may have chosen to file for extensions because they were unable to pay the amount of money they owed in federal income tax. This is not an uncommon thing. However, for some people the inability to pay income tax is linked to broader financial difficulties. In these situations, bankruptcy may provide much-needed relief.

It is important, however, for taxpayers to understand that not all money owed for income tax may be discharged via a bankruptcy according to the Internal Revenue Service. If a person is expecting a tax refund for a current year but owes money for a prior tax year, the current refund may be applied to the past debt. It may be possible for the taxpayer to receive a refund while thye are completing a bankruptcy.

What is intestate succession?

Writing a will might currently be the furthest thing from your mind. You might have confidence that your family in Lawrenceburg is closely knit enough to disperse your assets without there being any contention. Why, then, risk hurting someone's feelings by creating a will? The main reason is because of what will potentially happen if you die intestate. 

Dying intestate simply means that you died without a will. Authority over how your estate is distributed, however, does not automatically go to your family. Rather, the state determines how assets are dispersed through a process known as "intestate succession." Your surviving spouse is the most immediate beneficiary of this law. Per Section 29-1-2-1 of Indiana's Probate Code, he or she is entitled to the following portion of your intestate estate: 

  • 50 percent if you are survived by any other issue (direct descendants)
  • 75 percent if you have no surviving issue, but your parents are still alive
  • 100 percent if you have no surviving issue or parents

If you struggle financially, you may be a prime scam target

Common sense would support the idea that hackers, scammers and thieves target wealthy people. After all, rich targets would allow them to rake in the most loot, right?

Unfortunately, it may be the other way around. Debt relief and refinancing scams are a major problem for a many middle and low-income Americans.

Benefits to filing for bankruptcy

If you are one of the many people in Indiana who cringe when it is time to go to the mailbox for fear that you will receive yet another bill, you are not alone. You may also likely avoid answering your phone or even checking your email in the event that a debt collector is once again contacting you. Even if you know you that you legitimately owe on a particular debt, when you do not have the money to pay it, you may experience severe stress.

For many, the thought of bankruptcy may be equally stressful. However, NerdWallet explains that it may be time for you to take a fresh look at bankruptcy and understand how it very well may be the most beneficial option for you. Certainly, bankruptcy can eliminate some of your debt but there are other benefits to be had as well. Ultimately, filing for bankruptcy may give you the best access to new credit with which to re-establish your financial life. This is in part due to the fact that your debt-to-income ratio will be much better after you file for bankruptcy.

Balancing bankruptcy and divorce together

Financial woes are known to be a common contributor to marital woes for many couple in Indiana and around the country. If you are finding yourself in this situation and trying to decide if you need to file bankruptcy before filing for divorce or the other way around, you should know there are a few different things that may influence what is right for you. 

As explained by My Horizon Today, there is no one answer to this dilemma for all couples. One of the things you will want to assess is how well you and your spouse might be able to communicate and work together if you file a joint bankruptcy before you get divorced. Certainly filing for Chapter 7 bankruptcy will require you two to communicate but if that is not possible, you might want to reconsider.

How to rebuild your credit after filing for bankruptcy

For many Indiana residents, carrying some form of debt is simply a part of life. Mortgages, car payments, credit card bills and student loans make up some of the more common cornerstones of the monthly budget. What happens, however, when that debt spirals into an unmanageable figure? For some, filing for bankruptcy—either Chapter 7 or 13—is a viable pathway to debt relief, but such an action does come at a cost.

Successfully filing for bankruptcy means a pretty severe drop in your credit score, and it requires some work to rebuild it, but that shouldn’t necessarily dissuade those struggling with debt from considering it as an option. With the right responsible behaviors, it is possible to get your credit score back into the neighborhood of where it should be, thereby positioning yourself for a much brighter financial future.

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