March 2012 Archives

Chicago Bankruptcy Question: Who is the Chapter 13 bankruptcy trustee?

Chicago Bankruptcy Question of the Day: Who is the Chapter 13 bankruptcy trustee?  In every Chapter 13 bankruptcy in the Chicago area, a Chapter 13 trustee is assigned to the case as soon as it is filed.  The trustee has a variety of roles to play throughout the Chapter 13 process and is an integral part of every Chapter 13 bankruptcy.

Avoid Jail Time; Don't Commit Bankruptcy Fraud

The majority of criminal practices in bankruptcy cases involve the concealment of assets by debtors.  A debtor may conceal assets on his or her bankruptcy petition by:  a) failing to disclose assets;  b) falsifying information; c) intentionally providing incomplete information.  To avoid liquidation by a trustee, a debtor may fail to disclose an asset, understate the value of an asset or transfer an asset to a friend or relative without disclosing the transaction.

Chicago Bankruptcy Question: Do I have to include all of my income in my Chapter 7?

Chicago Bankruptcy Question of the Day: Do I have to include all of my income in my Chapter 7 bankruptcy filing?  As is often the answer to questions such as these, the short answer is yes, all income must be properly scheduled and disclosed.  When you file for Chapter 7 bankruptcy protection, you are basically telling the bankruptcy court that you currently do not have sufficient income to repay your creditors any reasonable amount in the immediate future.  To prove this to the bankruptcy court, you must schedule any and all income, both within your budget and on the Statement of Current Monthly Income (means test), which are two very different standards.

Data show decrease in foreclosures over the past year

The housing markets in Chicago and those across America are far from out of the woods when it comes to the after-effects of the sub-mortgage industry collapse. Although fewer homes are currently in foreclosure now than at this time one year ago, the number has only lessened a small amount. Today 1.4 million homes are in foreclosure, a drop of only 100,000 over the course of a year.

Chicago Bankruptcy Question: What is an objection to confirmation in a Chapter 13?

Chicago Bankruptcy Question of the Day: What is an objection to confirmation in a Chapter 13?  When you file for Chapter 13 bankruptcy protection, you must file a series of schedules detailing your financial position (your bankruptcy petition), a schedule of your recent financial history (your Statement of Financial Affairs), a plan of reorganization and a Statement of Current Monthly Income (means test).  All of your creditors are given notice of your filing and an opportunity to review these documents.  Additionally, you must attend a Section 341 Meeting of Creditors with your trustee, at which your schedules and plan are reviewed in detail by the trustee.  After your meeting of creditors, a confirmation hearing is set wherein your case must be approved by the bankruptcy judge before it is finalized.

Chicago Bankruptcy Question: Do I have to list all of my creditors when I file for Chapter 7?

Chicago Bankruptcy Question of the Day: Do I have to list all of my creditors when I file for Chapter 7?  Short answer; yes, every single one of them.  When you file for Chapter 7 bankruptcy protection, one of the duties of the debtor is to submit to the court a series of schedules that list each of the creditors to whom monies are owed. There are separate schedules for secured creditors, priority creditors, general unsecured creditors and executory contracts & leases.

Chicago Bankruptcy Question: What is a confirmation hearing in Chapter 13?

Chicago Bankruptcy Question of the Day: What is a confirmation hearing in a Chapter 13 bankruptcy?  When you file for Chapter 13 bankruptcy protection, your plan of reorganization requires the approval of the bankruptcy judge assigned to your case.  This process is known as the confirmation process and it starts with a hearing.

Illinois Senator Advocates for Discharge of Student Loans in Bankruptcy

As the cost of higher education continues to rise, more and more students are burdened with large amounts of student loans after graduating. Currently, it is much more difficult to discharge student loans in bankruptcy than many other types of debt. However, Illinois Senator Dick Durbin (D) is hoping to change that.

Chicago Bankruptcy Question: Do I have to list all of my assets when I file for Chapter 7?

Chicago Bankruptcy Question of the Day: Do I have to list all of my assets when I file for Chapter 7 bankruptcy?  The short answer to that question is an emphatic yes.  Every asset you own or are financing, every receivable due to you and every contingent asset you may receive, such as proceeds from a lawsuit, must be listed and disclosed in your Chapter 7 bankruptcy petition. 

Chicago Bankruptcy Question: What is a Chapter 13 Meeting of Creditors?

Chicago Bankruptcy Question of the Day: What is a Chapter 13 Meeting of Creditors?  One of the requirements of completing a Chapter 13 bankruptcy is attendance at a meeting of creditors as required by Section 341 of the U.S. Bankruptcy Code.  In the Chicago area, the location of the meeting of creditors is determined by the county in which you live.  A list of the locations for Chicago area Section 341 Meetings of Creditors can be found on the U.S. Department of Justice's website under the U.S. Trustee program (we are in Region 11 in the Chicago area).

Chicago Bankruptcy Question: What is a Chapter 7 Meeting of Creditors?

Chicago Bankruptcy Question of the Day: What is a Chapter 7 Meeting of Creditors?  One of the requirements to completing your Chapter 7 bankruptcy is attendance at a Meeting of Creditors required by Section 341 of the U.S. Bankruptcy Code.  In the Chicago area, the location of the Chapter 7 Meeting of Creditors is determined by which county you live in.  A full list of the meeting locations can be found on the U.S. Department of Justice website under the U.S. Trustee program link (Chicago is covered by Region 11).  

Chicago Bankruptcy Question: What is a Chapter 13 Plan?

Bankruptcy Question of the Day: What is a Chapter 13 plan?  Very basically, a Chapter 13 plan is the document that is filed with the bankruptcy court explaining how much money will be paid into the Trustee and how those funds will be distributed to your creditors by the Trustee.  In the Chicago area, the court has approved and posted a model plan to be used in all Chapter 13 cases filed.  This model plan can be found on the website for the Northern District of Illinois Bankruptcy Court under the local forms link.

Chicago Bankruptcy Question: Who is the Chapter 7 Trustee?

Chicago Bankruptcy Question of the Day: Who is the Chapter 7 Trustee?  The Chapter 7 Trustee is a disinterested party who is appointed by the U.S. Trustee's office to review the bankruptcy filing and interview the debtor in bankruptcy in order to determine if there are any assets available to be liquidated, ensure that the petition filed is complete and accurate and to ensure there are no questionable issues that may prevent the debtor in bankruptcy from receiving their discharge.

Chicago Bankruptcy Question: What is a Chapter 15 bankruptcy?

Chicago Bankruptcy Question of the Day: What is a Chapter 15 bankruptcy?  Chapter 15 bankruptcy is properly titled "Ancillary and Other Cross-Border Cases" and was created when the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 went into effect in October 2005.  This bankruptcy chapter is designed to address the increasing international nature of business and provide a mechanism for dealing with insolvency issues that cross international borders.

Increasing medical debt places pressure on household finances

There are many reasons why a person seeks the debt relief found in personal bankruptcy protection. Chicago area residents are well aware that heath care costs are rising and that insurance companies are increasingly handing off larger portions of medical bills for the insured to pay. But whether you have insurance or not, high medical debt is a problem facing many people today.

Chicago Bankruptcy Question: What is a Chapter 12 bankruptcy?

Chicago Bankruptcy Question of the Day: What is a Chapter 12 bankruptcy?  A Chapter 12 bankruptcy is properly titled an "Adjustment of Debts of a Family Farmer or Fisherman with Regular Income" and is commonly referred to as a "farmer's reorganization".  Chapter 12 bankruptcy is very similar to Chapter 13 bankruptcy for wage-earners, but limited to those who qualify as a family farmer or fisherman and with a variety of rules & code sections specifically designed for these professions.

Chicago Bankruptcy Question: What is a Chapter 9 bankruptcy?

Chicago Bankruptcy Question of the Day: What is a Chapter 9 bankruptcy? Chapter 9 bankruptcy is properly titled an "Adjustments of Debts of a Municipality" and is commonly referred to a s a "municipal reorganization".    Similar to a Chapter 11 reorganization for businesses, a Chapter 9 bankruptcy allows for a municipality, such as a city or town, or an independant governmental entity, such as a port authority, to reorganize their debts under the protection of the federal courts.

Chicago Bankruptcy Question: What is a Chapter 11 bankruptcy?

Chicago Bankruptcy Question of the Day: What is a Chapter 11 bankruptcy?  Chapter 11 bankruptcy is properly titled a "Reorganization" and is usually used by businesses to reorganize their debts in order to keep the business operating.  Some recent Chapter 11 cases that you may be familiar with are General Motors, Kodack and American Airlines, but there are far more Chapter 11 bankruptcy filings by smaller businesses that do not make the headlines.

Chicago Bankruptcy Question: What is a Chapter 13 bankruptcy?

Chicago Bankruptcy Question of the Day: What is a Chapter 13 bankruptcy?  A Chapter 13 bankruptcy is properly titled an "Adjustment of Debts of an Individual with Regular Income".  It is more commonly known as a "wage-earner's bankruptcy", a "consolidation" or a "reorganization".  The simple definition of a Chapter 13 bankruptcy is that it is a structured repayment plan under the protection and supervision of the federal courts.

Chicago Bankruptcy Question: What is a Chapter 7 bankruptcy?

Chicago Bankruptcy Question of the Day: What is a Chapter 7 bankruptcy?  Chapter 7 bankruptcy is what most people think of when they consider bankruptcy.  Properly titled "Liquidation", but commonly called "complete bankruptcy" or "straight bankruptcy", Chapter 7 is a process wherein the federal court reviews a person's financial situation, determines eligibility for a discharge, liquidates any non-exempt assets, and then issues a discharge, relieving that person of their legal liability to repay their most of their debts.

Chicago Bankruptcy Question: What is the "means test"?

Chicago Bankruptcy Question of the Day: What is the "means test"?  The means test, as laid out in the required Form 22: Statement of Current Monthly Income, is a standardized method of determining the ability of a person(s) to file for Chapter 7 bankruptcy and can be a determining factor in the duration and repayment amount of a person(s) in a Chapter 13 bankruptcy.  The means test does not apply to businesses, individuals with primarly non-consumer debt or members of the active duty military, along with other specific exceptions.

New CEO takes reins at Hostess as it moves through bankruptcy

The Hostess brand is well-known in Chicago and across the country. At one time or another we have all eaten a slice of the company's bread or one of its many snacks. But times have not been so sweet for the baker recently. After filing for bankruptcy only a few years ago, it again sought the protection of Chapter 11 early this year.

Chicago Bankruptcy Question: What is the Statement of Financial Affairs?

Chicago Bankruptcy Question of the Day:  What is the Statement of Financial Affairs?  The Statement of Financial Affairs is the second significant set of documents filed with any bankruptcy petition.  The purpose of the Statement of Financial Affairs is to disclose to the court, trustee, creditors and any other interested parties your recent financial history as it pertains to your bankruptcy filing.  More often than not, it shows the path that brought you into the bankruptcy filing.

Bankrutpcy Discharge in Chicago

Whether filing for Chapter 7 or Chapter 13 bankruptcy, the goal of every filer is to receive a bankruptcy discharge.  The discharge is the court order which frees the person filing for bankruptcy protection from the the legal liability and responsibility for their debts.  One of the more difficult parts about filing for bankruptcy protection is determining which debts can be discharged, which debts are non-dischargeable and which debts fall into a grey area and are questionably dischargeable.

Chicago Bankruptcy Question: What are the Bankruptcy Schedules?

Chicago Bankruptcy Question of the Day: What are the bankruptcy schedules?  The bankruptcy schedules are the first major part of any bankruptcy filing.  They are generally a series of schedules that include your assets, exemptions, liabilities and budget.  The primary purpose of the bankruptcy schedules are to give a clear and concise snapshot of your financial picture to the court, trustee, creditors and other interested parties using standardized forms approved by the bankruptcy courts. 

Chicago Bankruptcy Question: Do I have options other than bankruptcy if I am behind on my mortgage?

Chicago Bankruptcy Question of the Day:  Do I have options other than bankruptcy if I am behind on my mortgage?  This is America; of course you have options other than bankruptcy if you are behind on your mortgage.  You must, however, be very careful when exploring these options.  There are a lot of unethical people out there who promise the world, take your money and give you little to no benefit.  The mortgage company has very good attorneys on their side; make sure that you have a very good consumer rights attorney on yours.

Chicago Bankruptcy Question: Do I have options other than bankruptcy for unsecured debt?

Chicago Bankruptcy Question of the Day:  Do I have options other than bankruptcy for unsecured debt?  You always have options, even if you are in significant debt.  You can go it alone and try and pay your way out of debt, you can attempt a debt consolidation or you can attempt a debt settlement program.  You must, however, be very careful as to who you work with.  There are many, many companies out there promising the world that do not deliver and put you in a worse position than where you started.  Lisa Madigan, the Illinois Attorney General, has been fantastic about going after these companies and protecting consumers.  She has an excellent website with a lot of information, so be sure to visit it before committing to any form of assistance.

Chicago Bankruptcy Question: What can happen if I hire the wrong bankruptcy lawyer?

Chicago Bankruptcy Question of the Day:  What can happen if I hire the wrong bankruptcy lawyer?  The short answer to this question is nothing good.  Filing for bankruptcy in the Chicago area can be complex and choosing the right bankruptcy lawyer can be difficult, but choosing the wrong bankruptcy lawyer can lead to huge problems.  This is why experience and focus on bankruptcy in Chicago should be one the biggest factors in deciding which bankruptcy attorney to hire to represent you.

Chicago Bankruptcy Question: What qualities should I look for in a Chicago bankruptcy lawyer?

Chicago Bankruptcy Question of the Day:  What qualities should I look for in a Chicago bankrupcty lawyer?  One of the most difficult challenges presented to someone seeking to hire a bankruptcy lawyer in Chicago is trying to figure out who to trust.  Like a good used car salesman, many attorneys can sell themselves very well, but are not all that good at practicing law.  There are some qualities that you should look for when making a decision as to which bankruptcy attorney to hire.  The attorney should be:

Relief for Underwater Homeowners Coming?

Across the country, 12.5 million homeowners owe more on their mortgage that their property is worth.  At least 4 million homeowners have lost their homes due to foreclosure since 2007.  In an effort to assist responsible homeowners and to boost the housing market, President Obama in his State of the Union Address announced a proposal to improve the housing market by offering a refinancing program to underwater homeowners who do not have conventional agency mortgages.

Chicago Bankruptcy Question: What should happen when I consult with a bankruptcy lawyer?

Chicago Bankruptcy Question of the Day: What should happen when I consult with a bankruptcy lawyer?  You have done your research, reviewed several Chicago bankruptcy lawyers, spoken with several Chicago bankruptcy attorneys and have found an attorney that you want to consult with.  Now you are not sure what to expect from that consultation.  In our opinion, the consultation should go along these lines:

Chicago Bankruptcy Basics: Household Income

As was discussed in the previous Chicago Bankruptcy Basics post, budget can play a big role in determining if bankruptcy is the right option to pursue.  The last Chicago Bankruptcy Basics post discussed the expense side of the equation and how all expenses in the household must be considered when evaluating the available bankruptcy alternatives.  Now we will turn to the household income side of the budget.

Chicago residents: be aware of illegal debt collection practices

Consumer bankruptcy gives people overburdened with debt a chance at a fresh start. But some collection agencies do not see it that way. Stories abound of debt collectors harassing people who do not owe that collector any money or who have completed bankruptcy and have had their former debts discharged. Those seeking debt relief should know that some debt collectors' methods are against the law.

Chicago Bankruptcy Question: What should I ask when I contact a bankruptcy lawyer?

Chicago Bankruptcy Question of the Day: What should I ask when I contact a bankruptcy lawyer?  Your initial contact with a bankruptcy attorney in Chicago, whether by phone or email, should be vital part of determining whether or not you even want to consult with this lawyer, much less hire them.  Your initial contact should go somewhat along these lines:

Chicago Bankruptcy Question: Where can I research Chicago bankruptcy lawyers?

Chicago Bankruptcy Questions of the Day: Where can I research Chicago bankruptcy lawyers?  So you are looking for a bankruptcy lawyer in Chicago and want to do a little research before scheduling an appointment with them.  Good for you.  Too many people simply call the first lawyer that they are contacted by of the first that they see online, when that attorney may not be their best option.  Hopefully you already read yesterdays blog, "How do I find a good bankruptcy lawyer in Chicago?" and have an idea as to what you are looking for.  There are several excellent online resources for researching bankruptcy attorneys in Chicago, including the following:

Chicago Bankruptcy Question: How do I find a good bankruptcy lawyer in Chicago?

Chicago Bankruptcy Question of the Day: How do I find a good bankruptcy lawyer in Chicago?  Finding a good bankruptcy attorney in Chicago can be a difficult and nerve racking process.  You have a lot of options to choose from and it seems that every lawyer promises to be the best for you.  The first step in hiring a bankruptcy lawyer in Chicago is narrowing the field to which attorneys you may want to work with.

Chicago Bankruptcy Question: Why do people file for bankruptcy?

Todays Chicago Bankruptcy Question of the Day:  Why do people file for bankruptcy?  Congress is apparently under the impression that most people file for bankruptcy because they are irresponsible, uneducated or simply trying to beat the system.  This must be why they continue to make bankruptcy a more difficult, time consuming and expensive process.  Or maybe it's because the it's the banks, credit card companies and finance companies that write those big campaign contribution checks, not the people struggling with debt.  This reasoning is patently false and has been proved as false repeatedly.  There are very simple and clear reasons why most people file for bankruptcy protection:

Chicago Bankruptcy Question: How do I know it is time to file?

Today's Chicago Bankruptcy Question of the Day:  How do I know it it time to file?  Deciding whether or not it is time to file for bankruptcy is an important decision that should not be taken lightly.  Most people in serious debt honestly believe that they will be able to fight their way out of it, given enough time and some positive change in their circumstances.  Most people in serious debt cannot do so.  There are, however, clear warning signs that should trigger you to at least meet with a Chicago bankruptcy attorney and review your options:

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