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BY ANDREA HOLECEK
holecek@nwitimes.com
219.933.3316 | Sunday, November 02, 2008 | (5 comment(s))
HAMMOND | Northwest Indiana's bankruptcy filings are growing in proportion to the escalating economic problems hitting the nation and the region.
In the first nine months of 2008, Northwest Indiana's Chapter 7 bankruptcy filings topped the total number filed for all of last year, federal court records show. The Chapter 13 bankruptcy filings grew as filers attempted to avoid foreclosure, said Paul Chael, court-appointed administrator for Chapter 13 cases in Lake and Porter County.
The Hammond Division of the U.S. Bankruptcy Court for the Northern Division of Indiana recorded 1,499 Chapter 13 filings for the first nine months of 2008 compared to just 1,285 in the same 2007 period. Those filed in the recent nine-month period are just 278 cases below the 12-month 2007 total.
And according to court records, there were 1,775 Chapter 7 filings in the Hammond division from January through September 2008, 34 cases more than the 1,741 cases filed for all of last year.
Chapter 13 "repayment" bankruptcy requires debtors to use discretionary income to pay off unsecured debts, usually during a five-year period, while Chapter 7 "liquidation" bankruptcy allows debtors to start over with a "clean slate."
Foreclosures are stayed from the time Chapter 13 is filed until it is dropped, completed or dismissed, Chael said.
"Chapter 13 gives filers an automatic stay that stops it (foreclosure) in its tracks," he said. "The stay lasts the whole time the case is pending unless they aren't making mortgage payments. Then the mortgage company can petition to get relief from the stay..."
Chael said 5,000 Chapter 13 cases are pending in the two counties, and about two-thirds of the filers have mortgages.
"The number of filers is increasing because of recent increase in the rate of foreclosures," he said. "About two-thirds to 80 percent are in default or missing mortgage payments."
Half of the 5,000 cases won't make it to discharge, Chael said, explaining discharge is when the entire bankruptcy period is completed.
"About 40 percent complete the process and successfully complete the case and get a discharge under Chapter 13," he said.
Linda Shedrow, a counselor at the Consumer Credit Counseling Service of Northwest Indiana, said for the past year there have been more people filing repayment bankruptcies to save their homes from the threat of foreclosure.
"A lot of people have no clue what to do," she said. "They just know they're behind on their house payments, and they're petrified. Sometimes it's because of adjustable rate mortgages, but a lot of times people have lost a job. And now there's not enough income to support their house payments."
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tracy wrote on Nov 2, 2008 10:33 PM:
Char wrote on Nov 2, 2008 6:53 PM:
bill p wrote on Nov 2, 2008 2:04 PM:
to randy wrote on Nov 2, 2008 1:26 PM:
#1. His name is not BUSH. It is MCCAIN. He is just as frustrated as you are.
#2. If you are so upset with the Bush plan, etc., then mail back your economic stimulus check since you apparently are ungrateful and ignorant of the fact that B. Hussein Obama is going to make it worse. HELLO?!?! "
Randy wrote on Nov 2, 2008 11:38 AM: