April 2012 Archives

Chicago Bankruptcy Question: Will filing a Chapter 13 stop a wage garnishment?

Chicago Bankruptcy Question of the Day: Will filing a Chapter 13 stop a wage garnishment?  In almost all cases, the answer to this question is yes.  Immediately upon filing for Chapter 13 bankruptcy protection in the Chicago area, two very important things happen. 

Chicago Bankruptcy Question: How are condominium association dues treated in a Chapter 7?

Chicago Bankruptcy Question of the Day: How are condominium association dues (or homeowner's association dues) treated in a Chapter 7 bankruptcy?  Most of the time, when you purchase a condominium or a townhouse, and often when you purchase a single family home in planned community, there is an association affiliated with the complex/community to which a consensual lien is granted on the property.  The association is comprised of the unit/home owners and each owner must make a payment to the association, usually monthly, in order to pay for the maintenance of common areas, property insurance on the building, etc.  The size and frequency of this payment varies as significantly as the types and values of the properties do.  How these association dues are treated in a Chapter 7 bankruptcy filing is relatively clear cut.

Chicago Bankruptcy Question: What is the normal timeline for a Chapter 13?

Chicago Bankruptcy Question of the Day: What is the normal timeline for a Chapter 13 bankruptcy in the Chicago area?  Local bankruptcy rules, trustee procedures, judge procedures and the Chapter 13 process' are different in every jurisdiction.  This is one of the reasons that when you seek out an attorney to represent you in Chapter 13, you hire one who focusses their practice exclusively on the Chicago area.

Chicago Bankruptcy Question: How is income tax debt treated in Chapter 7?

Chicago Bankruptcy Question of the Day: How is income tax debt treated in Chapter 7?  As with most questions involving creditors in bankruptcy, the answer is "it depends".  When you file for Chapter 7 bankruptcy protection in Chicago, you are required to schedule and notice must be given to all of your creditors.  This includes the Internal Revenue Service, Illinois Department of Revenue and any other taxing authority to whom you may owe income taxes to.

Chicago Bankruptcy Question: What is a "cram down" in a Chapter 13?

Chicago Bankruptcy Question of the Day: What is a "cram down" in a Chapter 13 bankruptcy?  When you file for Chapter 13 bankruptcy protection in Chicago, you are required to disclose and schedule all of your assets and all of your debts.  Included are your secured creditors, which are those creditors whose debt is secured by some property owned by the filer.  All of your debts must be treated within your Chapter 13 plan of reorganization.  One of the ways that some secured debts may be able to be treated within your Chapter 13 plan is for them to be "crammed down".

Chicago Bankruptcy Basics: Vehicles in Chapter 7

This week's Chicago Bankruptcy Basics topic is vehicles in Chapter 7 bankruptcy.  It is not really relevant what type of vehicle we are talking about, be it an automobile, motorcycle, snowmobile, fishing boat or helicopter, as the basic bankruptcy theories surrounding vehicles is the same throughout Chapter 7.

Chicago Bankruptcy Question: How are mortgage treated in Chapter 7?

Chicago Bankruptcy Question of the Day: How are mortgages treated in a Chapter 7 bankruptcy?  When you file for Chapter 7 bankruptcy protection in Chicago, you are required to disclose all of your debts and notice must be given to all of your creditors.  This includes any and all primary mortgages, second mortgages and home equity lines of credit.  How that debt is treated in Chapter 7 depends on your individual intention with regard to the property and your financial position at the time of filing.

Reform of Chapter 11 of Bankruptcy Code could benefit businesses

The aim of filing for Chapter 11 bankruptcy is to give financially distressed businesses in Chicago and around the country a chance to reorganize and continue operations under a fresh start. Although Chapter 11 still provides significant benefits to businesses, some bankruptcy experts have argued that the Bankruptcy Code is no longer neatly tailored to achieve that goal. They assert that the business realities expressed in the Code, now nearly 35 years old, do not align with those of today.

Chicago Bankruptcy Question: What documents will I need in order to file for Chapter 13?

Chicago Bankruptcy Question of the Day: What documents will I need in order to file for Chapter 13 bankruptcy protection in Chicago?  Since the bankruptcy laws changed in October 2005, the amount of documentation that is required in order to effectively prepare and file a Chapter 13 bankruptcy case in Chicago has increased dramatically.  We will break this down into two areas; documents needed to effectively prepare your case and documents needed to tender to the trustee upon the filing of your case and at your section 341 Meeting of Creditors.

Chicago bankruptcy judge rules that receipt of discharge is necessary to strip off a wholly unsecured second mortgage from a residence.

As homeowners struggle to keep up with their financial obligations in the current economy, many have turned to Chapter 13 Bankruptcy.  Chapter 13 cases, like all bankruptcy cases, are handled by the federal court system.  The Northern District of Illinois includes all of Cook County and it's collar counties, including Will, DuPage, Lake, Kane, LaSalle, Grundy and Kendall.  Each bankruptcy district may interpret sections of the Bankruptcy Code differently, which means that what a person can do with a bankruptcy in their district may differ from what can be done in another district.

Chicago Bankruptcy Question: What happens if I win the lottery after I file for Chapter 7?

Chicago Bankruptcy Question of the Day: What happens if I win the lottery after I file for Chapter 7?  The answer to this question, as is so often the case, depends on the the timing.

Chicago Bankruptcy Question: If my house was already sold, will Chapter 13 help me get it back?

Chicago Bankruptcy Question of the Day: If my house was already sold in a foreclosure, will filing for Chapter 13 bankruptcy help me get it back?  The short answer to this question is no it will not. 

Chicago Bankruptcy Question: What is an unsecured creditor and how are they treated in Chapter 7?

Chicago Bankruptcy Question of the Day: What is an unsecured creditor and how are they treated in Chapter 7?  When you file for Chapter 7 bankruptcy protection in Chicago you are required to disclose and schedule all of your creditors.  The creditors are broken down into categories, which include secured creditors, priority creditors and unsecured creditors.  The first two were addressed in prior Chicago bankruptcy question of the day blog entries, so now we will address unsecured creditors.

Chicago Bankruptcy Question: What happens to authorized users in a Chapter 13 bankruptcy?

Chicago Bankruptcy Question of the Day: What happens to authorized users in a Chapter 13 bankruptcy?  An authorized user is a person who is expressly permitted to use a credit card or line of credit, but who is not actually personally liable on the debt.  This is very common for younger people who are authorized users on a credit card in their parents' name and spouses who are authorized users on their respective spouse's credit card.  How these are treated within a Chapter 13 depends on which party is filing for bankruptcy protection.

Chicago Bankruptcy Question: What is a priority creditor and how are they treated in a Chapter 7?

Chicago Bankruptcy Question of the Day: What is a priority creditor and how are they treated in a Chapter 7 bankruptcy?  When you file for Chapter 7 bankruptcy protection you are required to disclose and schedule all of your creditors.  Some specific creditors are afforded special treatment under section 507 of the U.S. Bankruptcy Code.  These are termed "priority creditors" and have their own schedule within your Chapter 7 bankruptcy petition.

College students taking on more credit card debt

There are many reasons a person may need to consider whether to file for bankruptcy, including having significant credit card debt. Many people in the Chicago area are burdened by high credit card bills, leading them to seek debt relief. A recent study of the credit card habits of college students may reveal some of the contours of the problem.

Chicago Bankruptcy Basics: Personal Property

Today's Bankruptcy Basics topic involves the treatment of personal property when filing for bankruptcy protection in Chicago.  This post will not cover the treatment of vehicles, retirement funds, pending lawsuits or income tax refunds, as these specific items are worthy of their own entries, which will follow in the near future.  In bankruptcy, the concept of personal property basically includes everything that you own that is not real estate.  Money in the bank, furniture, clothing, life insurance policies, and all of your "stuff" is included in the general category of personal property. 

Chicago Bankruptcy Question: How are cosigned debts treated in a Chapter 13?

Chicago Bankruptcy Question of the Day: How are cosigned debts treated in a Chapter 13 bankruptcy?  In the context of a Chapter 13 bankruptcy, a cosigned debt is one where both the person filing for bankruptcy protection is liable (the debtor) along with another party, usually one who is not filing for bankruptcy protection (the codebtor).  Some debts, such as most medical bills incurred while parties are married, are joint debts by law, regardless as to who signed what.  The treatment of these debts vary, depending on the nature of the debt and the nature of the relationship between the responsible parties.

Conventional Mortgage Foreclosures Increase in Chicago

People may suspect that a balloon or adjustable rate mortgages represent a majority of Chicago foreclosure filings. In reality, although mortgages with ARMs and adjustable rates used to represent about half of Chicago foreclosure filings, that percentage is falling.

How to deal with ChexSystems and TeleCheck.

Have you ever gone to the bank to open an account only to be told that they cannot help you because your name is listed in ChexSystems or TeleCheck?  If you answered yes, then you probably already know that you will likely be denied an account on this basis.

Chicago Bankruptcy Question: What happens to leases in Chapter 7?

Chicago Bankruptcy Question of the Day: What happens to leases in a Chapter 7 bankruptcy?  The answer to this question truly turns on the nature of the lease and the intentions of the person filing for Chapter 7 bankruptcy protection. 

Chicago Bankruptcy Question: How are past due utility bills treated in Chapter 13?

Chicago Bankruptcy Question of the Day: How are past due utility bills treated in Chapter 13?  The treatment of past due utility bills in a Chapter 13 bankruptcy filing is relatively straight-forward, but there are a few wrinkles.  There are three major issues that need to be addressed when dealing with utility bills: 1) Is the debt actually a utility bill, 2) Is the debt secured or unsecured, and 3) Has there been any action on the part of the debtor that could be problematic.

Chicago Bankruptcy Question: What is a secured creditor in a Chapter 7 and how are they treated?

Chicago Bankruptcy Question of the Day: What is a secured creditor in a Chapter 7 and how are they treated?  A secured creditor is a creditor to whom a debt is owed and some form of collateral was either pledged against that debt or the creditor was able to obtain a lien against some collateral.  The most common forms of secured creditors are mortgages and home equity lines of credit, financed  motor vehicles and financed furniture.  Other types of secured creditors include judgment lien creditors, where the creditor obtained a court judgment against the person and had the lien attached to the person's property, non-purchase money creditors, where a person pledged property that they already owned against a debt, and tax liens, where tax debts are attached to the person's property by operation of law.

Chicago Bankruptcy Question: Can Chapter 13 stop an income tax levy?

Chicago Bankruptcy Question of the Day: Can Chapter 13 stop an income tax levy?  When you file for Chapter 13 bankruptcy protection, the automatic stay of bankruptcy effectively stops any and all collection actions, including those of the Internal Revenue Service and Illinois Department of Revenue.  This includes income tax levies.  In order to be truly effective, the debt owed to the IRS and IDOR must be properly treated in your Chapter 13 plan of reorganization.

Chicago Bankruptcy Question: Will I lose my income tax refund if I file for Chapter 7?

Chicago Bankruptcy Question of the Day: Will I lose my income tax refund if I file for Chapter 7?  The answer to this question, as it is so often, is "it depends".  There are several factors that have to be taken into account regarding income tax refunds when you file for Chapter 7 bankruptcy protection in Chicago. 

Chicago Bankruptcy Question: Will Chapter 13 get my car back after it's been repossessed?

Chicago Bankruptcy Question of the Day: Will Chapter 13 get my car back after it's been repossessed?  Filing for Chapter 13 bankruptcy protection will usually allow for the recovery of a vehicle that has been repossessed, so long as the case is filed within a timely manner, notice is proper, the vehicle is insured, there have been no prior significant issues regarding the vehicle payments and the plan is prepared properly to adequately protect the vehicle finance company.

Chicago Bankruptcy Basics: Real Property in a Chapter 13 bankruptcy.

Chicago Bankruptcy Basics: Real Property in a Chapter 13 bankruptcy.  In bankruptcy, the term real property refers to any "chunk of dirt" that the filer has any legal interest in.  In most Chapter 13 cases, this is limited to the residence of the filer, but it often includes one or more investment properties, time shares, cemetary plots and jointly held pieces of real estate.  How these pieces of real property are treated within a Chapter 13 bankruptcy depend greatly on the type of property it is, the value, the amount owned and how much debt, if any, is owed on the property.

Chicago Bankruptcy Question: Can I file for Chapter 7 if I am current with all my bills?

Chicago Bankruptcy Question of the Day: Can I file for Chapter 7 if I am current with all my bills?  If you are otherwise eligible to file for Chapter 7 bankruptcy protection, then it is not relevant whether or not you are up to date or behind with your bills.  There are three common scenarios where this occurs.

Warren Sapp seeks fresh start through Chapter 7 bankruptcy

Chicago residents and football fans will surely remember Warren Sapp, who played for many years in the NFL and is currently working as a television analyst on the NFL Network. Like a number of athletes, Sapp has encountered financial difficulty, and reports indicate that he has filed for Chapter 7 bankruptcy.

Chicago Bankruptcy Question: Can Chapter 13 bankruptcy stop a repossession?

Chicago Bankruptcy Question of the Day: Can Chapter 13 bankruptcy stop a repossession?  Keeping a vehicle from being repossessed when you are behind on payments is one of the major reasons that people file for Chapter 13 bankruptcy, so yes, it can.  In Illinois, if you are more than thirty days behind in your car payments, the finance company has the right to repossess your vehicle.  Usually they do not move this quickly and will not attempt to recover the vehicle until you are more than sixty days behind in the payments, but not always, so if you are behind on your car payments you must be careful and act quickly.

Chicago Bankruptcy Question: Does my spouse have to file for Chapter 7 with me?

Chicago Bankruptcy Question of the Day: Does my spouse have to file for Chapter 7 with me?  The short answer to the question is no, one spouse is not required to file for Chapter 7 bankruptcy protection if the other elects to.  In extremely rare circumstances, both spouses can be forced into an involuntary Chapter 7 bankruptcy, but these cases are so uncommon it is barely worth mentioning.  It may, depending on the facts, make sense for your spouse to do so, however, so it is something that should be discussed between you.

Chicago Bankruptcy Question: How does Chapter 13 stop a foreclosure?

Chicago Bankruptcy Question of the Day: How does Chapter 13 stop a foreclosure?  Preventing or stopping a foreclosure is one of the primary reasons that people file for Chapter 13 bankruptcy in the Chicago area.  A mortgage company is permitted to start a foreclosure process as soon someone falls more than thirty days behind on their mortgage.  Usually, however, they will not start the foreclosure process until that person is at least three months behind.

Chicago Bankruptcy Question: What is the timeline for Chapter 7?

Chicago Bankruptcy Question of the Day: What is the timeline for a Chapter 7?  The Chapter 7 bankruptcy process in Chicago does follow a reasonably strict schedule as dictated by the Federal Rules of Bankruptcy Procedure, the local bankruptcy rules and the U.S. Bankruptcy Code. 

Chicago Bankruptcy Question: How do I make my Chapter 13 payments?

Chicago Bankruptcy Question of the Day: How do I make my Chapter 13 payments?  When you file for Chapter 13 bankruptcy protection in Chicago, a repayment plan is filed with the court that usually requires monthly payments be made to your Chapter 13 trustee.  Your first payment will be due thirty days after the filing of your case and the payments generally last between three to five years, depending on the specifics of your case. Currently, there are two ways in which you can make these Trustee payments.

Chicago Bankruptcy Question: What is a Statement of Intention?

Chicago Bankruptcy Question of the Day: What is a Statement of Intention in a Chapter 7 bankruptcy?  When you file for Chapter 7 bankruptcy protection in Chicago, one of the documents that you must file is a Statement of Intention.  This is a statement that tells the bankruptcy court, Chapter 7 trustee and the secured creditors in your case what your intent is with regards to the secured debts that you have.

Chicago Bankruptcy Basics: Real Property in a Chapter 7 bankruptcy.

Chicago Bankruptcy Basics: Topic: Real Property in a Chapter 7 bankruptcy.  Owning real property, in it's most simple definition, is holding a legal interest in a piece of real estate.  For most people filing for Chapter 7 bankruptcy in Chicago, this is limited to their home.  It does include, however, an investment property, vacant lot, time-share, cemetary plot, etc.  As we say, owning any chunk of dirt anywhere in the world qualifies as owning real property.

Chicago Bankruptcy Question: How much does a Chapter 13 bankruptcy cost?

Chicago Bankruptcy Question of the Day: How much does a Chapter 13 bankruptcy cost?  The basic answer to this question is very simple.  In the Northern District of Illinois, Eastern Division (which covers the greater Chicago area), the bankruptcy court has approved and strongly recommends usage of a fixed fee agreement for Chapter 13 bankruptcy cases.  The legal fee approved by the Court Approved Retention Agreement (CARA) is $3,500 and it is a flat fee covering legal work from start to finish of your Chapter 13 bankruptcy in Chicago. 

Chicago Bankruptcy Question: What are exemptions in a Chapter 7?

Chicago Bankruptcy Question of the Day: What are exemptions in a Chapter 7 bankruptcy?  Exemptions in a Chapter 7 bankruptcy context are laws that protect equity in property that Congress or the state of Illinois has deemed necessary for people to keep in order to effectively reorganize their financial situation through bankruptcy.  There are a set of exemptions written into the U.S. Bankruptcy Code.  Illinois, however, has elected not to use the federal exemptions and instead use exemptions based on Illinois statutes. 

Court fines bank for collection activity after bankruptcy filing

For those facing significant debt around the Chicago area, constant telephone calls from creditors can become a daily routine. There are limits, however, to what creditors can say and when they can call. In addition, when a person files for bankruptcy, a creditor can be further limited in the actions it can take against a debtor. Yet some creditors stubbornly persist, in clear violation of the law.

Chicago Bankruptcy Question: Where are Section 341 Meetings held in Chicago Chapter 13s?

Chicago Bankruptcy Question of the Day: Where are Section 341 Meetings of Creditors held in Chicago Chapter 13 bankruptcy cases?  When you file for Chapter 13 bankruptcy in the Chicago area, a Chapter 13 trustee will be assigned to your case.  Which trustee is assigned depends on which county you file in.  If you are in Cook County, your trustee will be either Tom Vaughn or Marilyn Marshall.  If you are in one of the outlying counties in the Chicago area, your trustee will be Glenn Stearns.

Chicago Bankruptcy Question: What are allowable expenses in a Chapter 7?

Chicago Bankruptcy Question of the Day: What are considered allowable expenses in a Chapter 7 bankruptcy?  This is often a very problematic question in Chapter 7 bankruptcy cases.  Section 521 of the U.S. Bankruptcy Code requires all debtors in bankruptcy to file a schedule of current income and current expenditures; that is all the guidance the Bankruptcy Code gives us.  The courts, in a variety of holdings, have refined this to a "reasonable and necessary for an effective reorganization" standard and review this on a case by case basis when it is questioned or challenged.

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