Increasing Home Value Knocks Debtor Out Of Chapter 7 Eligibility

If a debtor does not know the true value of his home, he may find himself in an asset case under chapter 7 bankruptcy. This was almost the case for a recent client who was seeking a fresh start under Chapter 7 bankruptcy law. The debtor purchased his home slightly over three years ago for $92,000. When he came into my office and completed an in-take questionnaire, he valued the home at $94,000. If I were to accept his figure, he would've found himself in an asset case with approximately $18,000 of unexempt real estate. This would've been an unnecessary tragedy for both the debtor and the law firm. After all, my goal is to help debtors get out of debt while maintaining ownership of their real + Read More

Bankruptcy Exemption For Personal Bodily Injury Applies In Illinois

Sometimes a debtor’s rights in bankruptcy get affected by an overly aggressive Trustee.  The Trustee gets a fee and a percentage of any assets administered.  The debtor is seeking to keep any and all of his assets free and clear from the long arm of the Trustee.  This blog today deals with the personal injury exemption and whether or not the Trustee can make claims to the debtor’s proceeds or potential proceeds from said injury. In general, the personal injury exemption of the bankruptcy code is a powerful tool.  The Debtor is entitled to an exemption of $15,000 under Illinois law which is applied in a bankruptcy case.  In addition, the spouse can use the exemption if her claim, such as + Read More

Reaffirming On Your Auto Loan Through Chapter 7

The Reaffirmation Agreement Over 90% of the Chapter 7 debtors that I assist with auto loans choose to keep that auto while filing a Chapter 7 bankruptcy. This is done through the signing of a reaffirmation agreement which is prepared and provided by the auto lender. The agreement is rather lengthy and filled with unnecessary information and verbiage which is required by the courts. However, the net result of the reaffirmation agreement is simple. The debtor is agreeing to be bound by the terms of the auto loan going forward. The filing of the chapter 7 bankruptcy case eliminates the outstanding debt to an auto lender. By signing the reaffirmation agreement, the debtor is putting him or her + Read More

Attorney Fee Concept Often Difficult For Clients To Grasp

As these economic times get tougher and tougher for debtors, I am confronted on a weekly and sometimes daily basis regarding their plight. In the most recent case, a debtor was having a difficult time making his rent payment and was concerned about being evicted. He then remembered that he had hired an attorney four months earlier to help him get out of debt. Well it turns out that the debtor has never complied with the pre-filing requirements, has never returned the prepared petition, and has sat idly by, hoping and praying that just by hiring a bankruptcy attorney the debt would be eliminated. Of course this is not how the bankruptcy system works. Funds On Account The debtor mistakenly + Read More

When You Can No Longer Afford Your Chapter 13 Plan Payment

Plan Payment Problems A common problem that happens in a chapter 13 bankruptcy case is the inability to continue to make plan payments. This inability to make the plan payment can happen for a variety of reasons. The most common reasons are job loss, illness, injury, divorce, and other catastrophic events. Just recently, a couple came to me with a dilemma regarding their chapter 13. The problem was that one spouse's income was completely eliminated from the equation. This event caused their inability to not only make the chapter 13 plan payment, but to make ongoing rental payments as well. After a 30 minute consultation with all of the different parameters placed on the table, I proffered + Read More

Proof Of Income Is Critical To Filing Bankruptcy

Income Whether you are eligible to file under a particular chapter of the bankruptcy code is dependent upon a number of factors. One of the most critical factors is whether or not you qualify based on income. Income is calculated based upon all sources for one part of the bankruptcy petition, yet not necessarily included in the means test. Because income is such a critical factor in qualifying for either chapter 7 or Chapter 13, prospective clients must be able to provide proof of such income. This proof can be in the way of a paycheck stub, Social Security benefits statement, unemployment benefits statement, a bank account showing deposits of other sources of income or any other proof + Read More

Car Impounded? You Still Have Good Options

  Booted, Repossessed, Impounded Other than death, divorce and job loss, there is nothing worse than heading out to your car only to find out that it has been either booted, repossessed or impounded. If you find yourself in such a situation, you still have options to retrieve your car. The remedy is chapter 13 bankruptcy which allows for you to recover your car and repay whomever you owe on that vehicle over a period of 3 to 5 years. This is typically done at a lower monthly rate than what you may currently be under contract to pay. Parking Ticket Debt Let's examine the situation where the car is impounded. If you owe the City of Chicago more than two outstanding parking tickets, + Read More

The Credit Report Does Not Tell All

Credit Report Determines Credit Worthiness In the last week, I have noticed more than one client relying way too heavily on information appearing on a credit report. These clients were under the impression that if something falls off the credit report, that they no longer owe any money to that particular creditor. What these clients are failing to understand is that the credit report is not a full listing of the amount of debt owed. The credit report rather, is a document utilized by lenders to determine credit worthiness. To whom a debtor owes money and in what amount is important to lenders in determining whether or not a person should receive a loan and if so, at what interest rate. The + Read More

You May Be Closer To Having Your Car Booted Then You Think

If you live in the City of Chicago, you have no doubt seen the boot installed all over your neighborhood. This is especially true around tax time when the city knows that the residents typically have access to some sort of tax refund from which to pay off city debts. In years past, to be eligible for the boot, a registered owner of the vehicle had to have a fairly significant amount of either tickets and/or debt owed to the city. However, things are much different today. Boot Eligibility Vehicles can become boot eligible into basic ways: 1) If the vehicle accrues three or more unpaid parking, red light, and/or automated speed enforcement tickets in final determination status. 2) If + Read More

There Is Only One Absolute Requirement Prior To Filing Bankruptcy

Code Requirements The bankruptcy code enumerates several items that need to be provided in terms of bankruptcy filing. These include, but are not limited to, credit counseling, production of tax returns, production of pay advices and other items that may be requested by the panel trustee or Chapter 13 trustee. If your bankruptcy attorney is requiring that all of the items be provided prior to filing, then you are receiving some misinformation about what is actually required to file for bankruptcy. One Absolute Requirement The only absolute requirement which must be satisfied before a bankruptcy case can be filed under either Chapter 7 or Chapter 13 of the bankruptcy code is the completion + Read More