Bankruptcy Relief: A Little Pain For A Lot Of Gain

Bankruptcy Is More Difficult It's a lot harder to file for bankruptcy now than it was prior to 2005. That was the year the federal government passed sweeping changes and reforms to the then existing bankruptcy laws. Since then, there are pre-requisites to filing as well as financial documentation that must be submitted contemporaneously with a bankruptcy filing. These requirements make the process more difficult on a debtor seeking relief. However, with the guidance and support of a knowledgeable bankruptcy lawyer or bankruptcy law firm, the degree of difficulty can be lessened. The Initial Consultation Every bankruptcy case still starts with an initial consultation with a lawyer. This + Read More

When Filing Chapter 13 Bankruptcy, Make A Good-Faith Effort To Succeed

I have noticed a rush of Chapter 13 filings lately that never make it past the starting gate. The client gets the relief of the automatic stay, but not for very long. It seems that lately there is a lack of sincerity with regard to Chapter 13 filings. This trend is counterproductive to realizing the benefits of Chapter 13. This trend is mostly seen but not exclusively seen with non-payroll control debtors. Benefits of Filing One of the many benefits of filing Chapter 13 is to recover a vehicle which has been either repossessed or impounded by either a finance company or by the city of Chicago. By filing Chapter 13, the debtor has a temporary lease on life so to speak. The debtor's driver’s + Read More

Bankruptcy Case Study For D. L.

This is the bankruptcy case study for D.L. who resides in Prospect Heights, Illinois. She is here to get some advice and help regarding bankruptcy. She has a lot of creditors and she realizes that she must take some action to improve her situation. With that in mind, she has appeared at the office to learn more about bankruptcy and how she could be helped. Let's look at the particular facts of her case. Assets In terms of major assets, she does not own a home. Instead, she is currently renting an apartment. She does have two vehicles. The first vehicle is paid outright, which is a 1990 Honda which has very little value. The other vehicle is a 2011 Toyota Camry, financed by BMO Harris, and + Read More

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

Bankruptcy Case Study For May, 2016

Overview This is the bankruptcy case study for Mr. and Mrs. C., who reside in Addison, Illinois. Although the case will be filed in DuPage County, the majority of the assets reside in another county. Let’s begin with the fact that the couple rents their current home in Addison. Their former home was foreclosed upon and went to a short sale back in April, 2015. There is a large deficiency judgment in the amount of approximately $200,000 from that sale. Their current rental will expire in April, 2017 as they are on a yearly lease. In terms of other personal property, the couple has three vehicles which are all paid in full. They own a 1999 Lexus with 170,000 miles on it. They own a 2006 + 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