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Tom Scott & Associates, P.C.
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Hoosier Hard-Luck Tales: Unusual Circumstances and Unexpected Medical Bills

Here are some examples of good hard-working Hoosiers who experienced bad luck, which caused them to file for bankruptcy:

A 20-something Hoosier was working his tail off trying to become an owner/operator of his own semi truck and refrigerated trailer. While delivering beer around a city he “topped the truck,” which means he hit a bridge. The unfortunate incident happened when he was driving a new route in a city he had not been in before. He drove under a bridge that was immediately followed by another bridge. He checked the clearance sign for the first bridge and saw that it was not a problem, but right after that was the second lower bridge he was not aware of, so he did not have time to react.

Because the driver destroyed half a load of beer, he could not find business for his truck after the incident and his insurance payments skyrocketed. He could not afford to drive his own truck any more. The company that was financing the loan for the truck had a lien, so he sold it for what he could, but still had to make up a significant deficiency on the loan by having family members use their savings. He lost his house and the high-end sports car he had just purchased. He now works as an airport shuttle driver, taking people to and from the terminal, which is ironic in the sense that if you kill beers, you can't drive beers anymore, but you can still drive people. He will be out of his normal work for three years, so enough time will have elapsed without any claims that he can apply for insurance, but he will have start his business all over again at that point.

The sad part of the story is he had worked his tail off to acquire his home and car. He was trying to grow his own business, but the risk he took was trying to expand into different territories, which caused the business to plummet. Unfortunately, this story is not unusual in that industry, because a lot of truck drivers file for bankruptcy. Many owner/operators are unfamiliar with running a business and they do not know about all of the taxes and fees they have to pay.

Another truck driver hard-luck story involves a client who was giving his wife his pay check every week to take care of the household and his business requirements. She always told him everything was covered and he had no reason to suspect otherwise. He never had a problem until he was pulled over by the Department of Transportation. He gave the DOT officer his cab card, license and registration, as usual. After the officer checked the truck driver's credentials, he handcuffed the driver and told him the cab card was forged and his truck had not been registered with the DOT for the last seven years.

While in custody, the driver was told that to registered his truck with the DOT for all of the years he missed, plus the penalties for being overdue, it would cost him around $40,000. When he called his wife from jail, she claimed she had registered the truck and it was all a mistake. When he was released a short while later, the driver returned home to find his house cleared of everything, including his wife. who had disappeared into thin air. He finally found out that for many years his wife - to whom he had been married for 20 years - had apparently not been paying the mortgage on the house, the household bills, or the registration on the truck. Instead, she had pocketed all of that money.

The unusual and hard to believe circumstances involves the real estate the driver believed was in his name. He assumed his wife had been paying all of the bills over the years and that his name was on the deed for their house and lot. However, when we typed in his name into the county database, it did not pop up, which indicated he did own any real estate. We then acquired a copy of the deed and determined that in 2007 she stopped paying the mortgage. In 2010, there was a mortgage foreclosure. In 2012, the bank bought back the house at a Sheriff's sale. In 2013, the wife just vanished into the wild blue yonder. The couple had been living in the house for years without paying a penny on it, while the wife was stashing all of the cash – his hard-earned money.

The truck driver's livelihood was at stake, so he had little choice but to file bankruptcy. We worked closely with agents at the Indiana Department of Transportation to forge a deal in which the driver would pay the current registration fees immediately – over $12,000 – and then pay back the overdue fees for the previous years over a five-year period. Given the unusual circumstances of the driver's case, the DOT approved the plan.

Unfortunately, the unusual circumstances described above are not really that unusual. It is hard to believe how many bad luck stories we hear that are almost unfathomable but true. The many people that experience all of that bad luck are not bad people. They are just unlucky, like people who get hit by lightening in an open field are unlucky. Sometimes bad things do happen to good people.

A not-so-unusual circumstance that forces many people to file bankruptcy is the arrival of unexpected and overwhelming medical bills. We have worked with hundreds of clients who have suffered under the weight of medical bills, because they mistakenly thought they had sufficient insurance coverage, or their employer did not pay the premiums on the group policy, or some other circumstance occurred that was impossible to foresee.

We had a client whose doctor told him he worked with his policy group, when in reality the physician was not approved by the insurance company. The client received a huge bill from the doctor, who is now suing to collect.

In other cases, hospitals choose doctors who are out-of-network, so patients have no choice but to foot huge bills not covered by their insurance policy, because before being admitted to a hospital, patients have to sign waivers that make them responsible for payment, without a guarantee that assigned doctors are in-network. Patients are responsible for determining if doctors are in-network before they are approved to treat them. Obviously, when you are a patient in a hospital, that is difficult or impossible to do. Unfortunately, we have seen the type of scenario all too often in which overwhelming bills from out-of-network doctors force people into bankruptcy.

The bottom line is that who you are is not determined by your financial status. If you have encountered some bad luck that has caused financial hardship, you will remain the same good person you have always been, even if you need to file for bankruptcy.

For more information, visit www.TomScottLaw.com or call (317) 255-9915.
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Apply for Home Affordable Modification Program (HAMP) While Your House is Still Affordable 

Every person we know of who has gone through the Home Affordable Modification Program (HAMP) has found it very frustrating, because there are hundreds of pages of forms to fill out and you have to write the loan number on every page. The mortgage companies require bank statements, tax returns, a hardship letter, and the RMA (Request for Modification). Eventually, they will lose the application and say, “We never heard from you... do it again.”

By the time homeowners get through the application process, they are possibly a year and a half behind on their mortgage. When they contact us at that point, we have $35,000 to $40,000 in arrears to secure.

Sometimes people think that they are modifying their mortgage through the HAMP, but the mortgage foreclosure process is still going on behind their backs. There is nothing that says filing the HAMP will stop any pending foreclosure agreement. By the time these individuals come to us, they are so far behind on their house that bankruptcy is no longer such a viable option, because now they have $35,000 of arrears to cure on top of their normal mortgage payments.

While reorganization will allow anyone to save their home, you have to have the money for it, which would be the monthly mortgage payment PLUS an additional amount to cure the arrears - within the the 60 months allotted. If we're talking about $15,000 of arrears on a house, the additional amount would be $250 a month for the 60 months, so it becomes considerably more expensive going forward. The longer you wait to file a bankruptcy on your house, the less likely it is that you can keep your house.

We recently had a family come into the office that was already over $100,000 in arrears on their mortgage. They wanted to save their home, but their mortgage company said they they were too late by a couple of years. “Thanks for playing the game, and you owe us $123,000.” If the family wanted to keep the house, they would have to start making their regular house payments, plus an additional $2,000 a month for 60 months to cover the amount in arrears, which they obviously couldn't afford.

Had this family come to see us when they were only five or six months behind, or at least talked to us on the phone, we could have either helped them with the Home Affordable Modifications, to make sure their application was where it needed to be. If that was not possible, we could have at least stopped the arrears from climbing by filing a Chapter 13, even temporarily, while they were working on the HAMP, so the arrears didn't get out of hand. Homeowners need to file for HAMP while their home is still affordable.

This example is about a good Hoosier, a businessman from Carmel with a wife and two children, who owned his business for years. The market took a turn and he started to fall behind in his mortgage payments. The moment he fell behind, he was considered in default by the mortgage company, which wouldn't accept any more money from him and instead started to add to the arrears.

If you are feeling similar financial pressure as this family in Carmel, but don't want to end up in arrears like them, you should consider contacting us or another bankruptcy attorney. We would certainly, at least, help you fill out the paperwork for a loan modification. If you fall into default, it then becomes the bank's choice on whether or not you keep your house. This normally happens in 90 days.

If you are still within the 90 days, and have missed one or two of your mortgage payments, which can feel like the point-of-no-return, you can beat the bank to the punch by conferring with a good bankruptcy attorney. Even if the mortgage company does call it a default, homeowners can meet with us to see if there's a way out. A lot would depend on their current financial situation, but we have helped people with the HAMP process.

In the case of the family from Carmel, the wife had a job that requires a professional license/certification, which she could have lost for owing back taxes. A few types of certifications that could be affected by a home in default include:

- Medical doctor's license
- Pharmacy or dental technician license
- Attorney's license
- CDL license
- Driver's license
- Hair Stylist's license
- Cosmetology license

The loss of these licenses is determined by the Dept. of Revenue. The counter-intuitive part of this is that the DOR is trying to collect revenue, but are stopping people from being able to earn the money needed to settle their debts.

For more information, visit www.TomScottLaw.com or call (317) 786-6113.
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