Chicago Bankruptcy

Posts Tagged ‘ Chicago Bankruptcy Lawyer ’

Handling Tax Debt In An Indiana Bankruptcy

Posted on: January 17, 2018 by in Bankruptcy, debt
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Full or part-time freelancers currently constitute over a third of the U.S. workforce. Keeping up with income taxes is sometimes a problem for these individuals, especially given the changing nature of the law and the uncertain responsibilities of quarterly tax payments. Many times, people fall a little behind for various reasons, the problem snowballs, and a serious delinquency results.

Consumer bankruptcy is an excellent way to deal with such income tax debt because it has both short-term and long-term solutions to tax problems in Illinois.

The Importance of the Automatic Stay in Chicago

Section 362 of the Bankruptcy Code prohibits most moneylenders or debt collectors from taking adverse action against most bankruptcy debtors for as long as their cases are pending. In the case of a Chapter 13, that could be up to five years or even longer. Although the IRS is no ordinary debt collector and it has sweeping powers under federal law, the automatic stay prohibits any taxing authority from taking adverse action against most debtors. Such action includes:

  • Wage garnishment,
  • Bank levy, and
  • Forced property sales.

If a consumer has filed bankruptcy within the last several years, the automatic stay may not fully take effect, or may not take effect at all.

Discharging Past-Due Income Taxes in Illinois Bankruptcies

Income tax debt is like credit cards and medical bills in that all these kinds of debt are unsecured. In each case, the debtor only made a promise to pay the account. Generally, unsecured debt is dischargeable in both a Chapter 7 and a Chapter 13, but special rules apply to some forms of government debt. For example, child support arrearage is nondischargeable in almost any case, and student loans are only dischargeable if the debtor establishes a hardship.

When it comes to tax debt in Chicago, a bankruptcy discharges said debt only if all of the following apply:

  • Income Tax: Property taxes, payroll taxes, and any other kind of taxes are not dischargeable. The taxing authority usually has the final say on what constitutes “income tax” and what constitutes something else.
  • Three Years: The income tax debt must be at least three years old. Tax day is not always April 15, and the IRS has been known to contest discharge in Indiana because the petition was filed just a few days too early.
  • Two Years: The returns must have been on file for at least the last two years. They must be taxpayer-filed returns. Substitute returns, which the IRS or another taxing authority files on the taxpayer’s behalf, don’t count.
  • 240 Days: The taxing authority must not have assessed the account in the 240 days preceding the petition’s filing. In plain English, that usually means that the taxpayer has not received a letter with the balance on it within the past eight months.

Bankruptcy only gets rid of the debt and not the collateral consequences of that debt. So, if the taxing authority has filed a lien, that lien will remain in place even if the debt is discharged.

Reach Out to Experienced Attorneys

Bankruptcy can erase some past-due tax debt. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. We routinely handle cases in both Illinois and Indiana.

Keeping Your House, Cars, And Cash In An Illinois Consumer Debt Relief Action

Posted on: January 2, 2018 by in Bankruptcy, debt
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No one can turn back the hands on the clock to that point in time where people had no debt. But bankruptcy does the next best thing. These voluntary petitions discharge most unsecured debts, such as credit cards and medical bills, and create a protected repayment period of up to five years which allows debtors to make catch-up payments on secured debts, like home mortgage and auto loans.

Furthermore, while the bankruptcy is in effect, the Bankruptcy Code’s automatic stay prevents moneylenders from taking any adverse action against debtors, such as collections efforts, wage garnishment, repossession, or foreclosure.

The Bankruptcy Code’s purpose is to give debtors fresh starts. That cannot happen if they lose their core assets, which is why there are some effective strategies available to retain them.

Exempting Home Equity in Chicago

Both Illinois and Indiana have very large home equity exemptions, so if the debtor has less than a threshold amount ($30,000 for an Illinois married couple), the trustee, who is the person who oversees the bankruptcy for the judge, cannot seize the house and sell it to pay creditors.

If the debtors have lived in the house for a long time, they may have more than $30,000 in home equity. In these cases, accurate valuation is key.

Assume the homeowners have a $200,000 home with $50,000 in equity. If Schedule A lists the home at that value, the trustee may file a motion for turnover, demanding that the homeowners pay $20,000 or lose their house. But the Bankruptcy Code requires debtors to list the as-is cash value of an asset. For houses, a good place to start is the Quick Sale Value per the Internal Revenue Service, which is 80 percent of the fair market value. So, in this scenario, the home’s QSV is $160,000. After deducting the $150,000 unpaid principal balance on the loan, the owners only have $10,000 in equity, which is well below the exemption maximum.

Keeping Vehicles in an Indiana Bankruptcy

Roughly the same thing applies to personal vehicles. Typically, new cars have a very high value and almost no equity, while old cars have a considerable amount of equity but almost no value. But cars often have a very high turnaround cost.

Assume that the subject vehicle is a used car with a $1,500 value and $1,500 in equity. The trustee would probably not seize and sell the vehicle in this situation, because by the time the trustee pays towing fees, storage fees, hires a mechanic to make any necessary repairs, and so on, the creditors would only see a few dollars. In other words, the bankruptcy trustee is not a used car salesman, and therefore the trustee does not bother with assets that have little value.

Keeping the Cash in Your Indianapolis Bank Account

Cash is hard to protect, because there is no turnaround cost. The trustee can simply take it. In these situations, a legal doctrine called mootness sometimes come into play.

Assume that two people each claim to own a house, but before the case goes to court, the house burns down. Since the house is gone, there is nothing for the judge to decide and the case is moot. Arguably, the same thing applies to cash. If the trustee files a motion for turnover that demands $5,000 in cash and that cash is gone by the time the judge hears the case, the matter may be moot.

Go With Experienced Attorneys

There are a number of ways for debtors to keep nearly all their assets in bankruptcy. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. Convenient payment plans are available.

Resource:

irs.gov/irm/part5/irm_05-008-005r

Bankruptcy Case Filings Reach 10-Year Low

Posted on: December 11, 2017 by in Bankruptcy
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Fewer people filed bankruptcy in the year ending in September 2017 than in any other year since 2007, but many observers think there may be bad financial news on the horizon.

Low interest rates may be the main reason that bankruptcy filings for fiscal 2016 decreased 1.8 percent. With these low rates, many distressed debtors have been able to borrow their way back to solvency and hang tight until the financial storm passed. But if, as expected, interest rates increase dramatically, such a strategy will no longer be possible. Furthermore, the 1.8 percent change is the lowest decline since filing rates began dropping in 2011. Northwestern bankruptcy law Professor Bruce Markell said that the levelling-off and higher interest rates “will result in many more filings—both consumer and business.”

The number of Chapter 12 filings, although still very small, increased significantly, as a near-record number of family farmers took advantage of this loophole bankruptcy.

Bankruptcy Causes

Issues due to unavoidable and unforeseen business downturns, although poor management decisions sometimes exacerbate these problems, are responsible for most business bankruptcies. Similarly, most people file personal bankruptcies due to circumstances that are beyond their control, such as:

  • – Medical Bills: Hopes that subsidized health insurance would end “medical bankruptcies” have largely been dashed. In fact, a third of insured Americans said they took money out of college or retirement savings account to satisfy medical expenses at least once in the past twelve months.
  • – Divorce: The sudden loss of income combined with a sudden spike in expenses, because of legal fees and other divorce-related costs, drives many people into bankruptcy. The situation is even more acute for divorced women, because they rebuild wealth much more slowly than divorced men.
  • – Job Loss: Most people have little or no savings, so even a month or two without income causes massive economic hardship.

These financial storms show no mercy. Sometimes, two or more occur at once. Furthermore, when it comes to financial distress, lightning does sometimes strike twice in the same place.

Some people feel ashamed because they file bankruptcy, but because the causes are uncontrollable, there is no reason to be embarrassed. The only reason to feel otherwise is if people let their pride get in the way of a necessary bankruptcy, and their loved ones suffer because of their delay.

Technical Requirements

The Bankruptcy Abuse Prevention and Consumer Protection Act’s sponsor, Iowa Senator Chuck Grassley, specifically excluded Chapter 12 bankruptcies from the law’s provisions. Essentially, this 2005 measure was designed to make bankruptcy more difficult to file, through provisions such as:

  • – Credit Counselling: Before filing and before discharge, debtors must attend either a debt counselling class or a budgeting class.
  • – Means Test: To be eligible for Chapter 7, the debtor’s income must be below the average income for that geographic area.

These hurdles are usually not difficult to overcome. Furthermore, BAPCPA made almost no substantive changes to the Bankruptcy Code, so for the most part, the same rules as before apply to asset protection and debt discharge.

Count On Experienced Attorneys

Bankruptcy is not your fault. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. Convenient payment plans are available.

Resource:

bna.com/bankruptcy-filings-hit-n73014471103/

3 Dischargeable Debts In Bankruptcy

Posted on: December 4, 2017 by in Bankruptcy, debt
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In the words of several Supreme Court Justices, the Bankruptcy Code is designed to give the “honest but unfortunate debtor” a fresh start. This label applies to almost all the voluntary bankruptcy petitioners in Illinois and Indiana. Since it would be impossible to get this fresh start with unpaid accounts still hanging over the debtor’s head, most all unsecured debts are dischargeable. “Unsecured debts” are those that include only a promise to pay and are not secured by property, such as a house or car.

That being said, there are some restrictions and limitations on discharge, or forgiveness of debt.

Medical Bills

The leading cause of consumer bankruptcy filings is also the classic example of unsecured and dischargeable debts. Because they are usually involuntary (no one asks to get seriously ill), many moneylenders are also a little more understanding about medical bill-related bankruptcies, especially if the debtor has a reasonably good credit history otherwise.

Bankruptcy ends the obligation to repay the debt but not the medical debt itself. That’s normally a good thing, because many medical creditors are willing to accept a partial payment post bankruptcy and notate the debt as “paid,” because they know that a partial payment is much more than they are likely to get otherwise. Such a note helps improve the debtor’s credit score and also demonstrates additional financial diligence to other potential creditors.

Credit Cards

Rising interest rates are just one reason that credit card debt now eclipses $16,000 per household. Now that the Great Recession is in the rearview mirror for most people, they have more confidence and are spending more. Unfortunately, many of us spend money that we do not have, and that sometimes leads to bankruptcy filings.

The automatic stay often comes into play with regard to credit card debt, because these moneylenders are normally quick to file suit over delinquent accounts. Under Section 362, all these lawsuits must stop at the moment the debtor files a voluntary petition, at least in most cases. Furthermore, since the discharge order eliminates the obligation to repay the credit card, the lawsuit cannot be revived.

Taxes

Past due state and federal income taxes are both dischargeable in bankruptcy, provided that the following conditions are met:

  • – The tax must be at least three years old,
  • – The returns must have either been filed on time or at least been on file for a minimum of two years, and
  • – The debt has not been assessed in the last 240 days (in plain English, that usually means the taxpayer has not received a collections notice in the last nine months).

Bankruptcy only discharges past-due tax debt and not any tax debt associated with fraud or willful evasion. Furthermore, if the taxing authority has filed a lien, that lien remains in place, because the bankruptcy judge only has the power to extinguish the legal obligation to repay the debt.

Some unsecured debts are not dischargeable for policy reasons, such as family support obligations (FSOs). However, the automatic stay still applies, so bankruptcy will stop FSO-related lawsuits and wage garnishment.

Reach Out to Experienced Attorneys

Most people emerge from Chapter 7 or Chapter 13 bankruptcy with no unsecured debt. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. Convenient payment plans are available.

Resources:

usatoday.com/story/money/personalfinance/2017/05/05/this-is-the-no-1-reason-americans-file-for-bankruptcy/101148136/

time.com/money/4607838/household-credit-card-debt/

Some Key Pre-Bankruptcy Steps

Posted on: November 6, 2017 by in Bankruptcy
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Many financial events, such as investments, largely depend on timing to determine success or failure. Bankruptcy is much the same. If a Chapter 7 or Chapter 13 is filed too early, it can feel like using a flamethrower to kill a housefly. If on the other hand the voluntary petition is filed too late, considerable damage may have already been done, and such damage is sometimes difficult to correct.

As a rule of thumb, if the debtor owes more than about $10,000 in credit card or other unsecured debt, a Chapter 7 petition is probably a good idea, because that amount is more money than most people can comfortably afford to repay. If secured debt is the issue, and the debtor is more than 60 days delinquent, a Chapter 13 petition is probably a good idea, because adverse action — perhaps including pre-foreclosure — is probably just around the corner.

Initial Assessment

Before taking any concrete steps to prepare, it’s usually important to take just a few moments for self-reflection. In a nutshell, if the debtor is in financial distress due to his or her own choices, the debtor will probably file bankruptcy again sooner or later unless these issues are addressed.

Typically, this process does not take very long. That’s because most people file bankruptcy because of a sudden adverse event, such as a job loss, medical emergency, or divorce. Over two-thirds of Americans have less than $1,000 in savings, so most people simply do not have the resources to cope with such situations.

That being said, some people file bankruptcy because they misallocate the resources that they have. The government most likely had these kinds of preventable bankruptcies in mind when Congress passed the 2005 Bankruptcy Reform Act which required, among other things, pre-debt counseling.

Debt Counseling

All debtors must complete counseling courses before they file their voluntary petitions. In most cases, these classes are simply a formality, but in some cases, such sessions can be very enlightening and empowering.

In most cases, these classes can be completed online in about a half hour for only a few dollars. Before you enroll in a class, be sure that it’s approved by the court where your petition is to be filed, because the list changes frequently.

Qualification

At some point, probably during an initial or followup consultation with a bankruptcy attorney, the debtor must decide what form of bankruptcy to pursue. Sometimes, the means test affects this decision.

To qualify for Chapter 7, the debtor’s household income must be beneath the average income amount for that geographic area. As of May 1, 2017, the amount for a family of four in Indiana is usually $77,566 per year. The number changes every few months, and it also varies according to the debtor’s specific expenses as well as geographic area (it is more expensive to live in Chicago than in Marion).

Contact Experienced Attorneys

Successful bankruptcies begin with good foundations. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. After-hours appointments are available.

Resource:

gobankingrates.com/saving-money/data-americans-savings/

Exempting Houses And Cars In Illinois Bankruptcies

Posted on: October 2, 2017 by in Bankruptcy, chapter 13, chapter 7
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Whether the voluntary petition is filed under Chapter 7 or Chapter 13, most all common consumer assets are exempt in Illinois, meaning that debtors rarely, if ever, must forcibly surrender their property to the bankruptcy trustee (person who oversees the case for the judge).

Bankruptcy protects assets to help fulfill the law’s mission of a fresh financial start for “honest yet unfortunate” debtors. If Illinois filers lost their houses, cars, and other important assets, they would go back behind the starting line, an outcome that’s clearly not contemplated by the Bankruptcy Code.

All that being said, if the asset is secured by a mortgage or other loan, the debtor must keep making payments as originally agreed, at least in most cases.

House

Up to $15,000 in equity for a single filer ($30,000) for joint filers) is exempt under 750 ILCS 65-22.

Per the Bankruptcy Code, the debtor must declare the house’s as-is cash value, which may be substantially lower than the fair market value, because cash-paying home investors usually pay a maximum 60 cents on the dollar.

Although the value difference makes no difference in the amount of equity, as that figure remains the same regardless of the home’s value, the distinction makes a tremendous difference in terms of the loan-to-value ratio. Assume a single filer has a $200,000 home with $20,000 in equity and a $180,000 loan balance. Given those facts, the trustee could theoretically force the debtor to sell the house for the $5,000 in unexempt equity, although the judge would have to approve such a plan.

But the as-is cash value of that house may be as low as $100,000, meaning that the debtor is upside-down on the residence and there will be no sale.

There are some other loan-to-value issues related to exempt homesteads as well, including:

  • – Lien Strip: If the property’s value is too low to secure a second mortgage or other junior lien, the bankruptcy court may declare it to be unsecured, thus freeing the debtor from the obligations to make payments on that debt.
  • – Cram Down: In some cases, the outstanding loan balance can be reduced to match the property’s fair market or as-is value.

These options, and specifically a cram down, may be available for other assets as well, such as motor vehicle loans.

Cars

$2,400 in equity for a single filer ($4,800) for joint filers is exempt under 735 ILCS 5/12-1001(c). Typically, newer cars have almost no equity because the outstanding loan balance is so high, and older vehicles have almost no equity because they have almost no value.Once again, the debtor must declare the as-is cash value, which can be readily obtained from a site like kbb.com.

In addition to the cram down mentioned above, redemption may be an option as well, especially in longer lasting Chapter 13 cases. If the debtor pays the full fair market value of the collateral, the moneylender may be unable to collect the remaining balance on the loan, no matter how high it is.

Count On Experienced Attorneys

Nearly all bankruptcy debtors get to keep their houses, cars, and other key assets. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. Convenient payment plans are available.

Resource:

ilga.gov/legislation/ilcs/ilcs3.asp?ActID=2102&ChapterID=59

A.D.K. Arms Files Bankruptcy

Posted on: September 19, 2017 by in Bankruptcy
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Aggressive debt collection tactics may have forced the firearms manufacturer into bankruptcy. Do ordinary people file bankruptcy for the same reason?

A.D.K. and its affiliate company, Advanced Precision Manufacturing, Inc., sought Chapter 11 bankruptcy protection almost simultaneously, apparently because Midwest Community Bank was attempting to collect on a $3.9 million loan and the company either could not, or would not, satisfy that obligation. Indeed, A.D.K. also filed a civil suit against the bank, alleging unfair debt collection practices.

Many companies use Chapter 11 to reorganize under the protection of a federal court.

Bankruptcy and Debt Collection

Over the past several years, many large banks have acquired many smaller banks, and these institutions may have little or no connection to the communities that they serve. As a result, some banks are even more aggressive than they were before when it comes to collecting debts, and they do not hesitate to take adverse action like repossession, foreclosure, lawsuits, and harassment.

Moreover, in June 2017’s Henson v. Santander, a unanimous Court relaxed the rules even further, so moneylenders, and specifically debt buyers, may push the envelope even more in the coming months and years. Typically, moneylenders launch adverse action after two or three missed payments, and once the debt collection machine kicks into high gear, it is almost impossible to slow it down simply by making payments.

Fortunately, bankruptcy’s automatic stay offers a solution. In most cases, moneylenders cannot take any adverse action against debtors, even if that action is already pending, while the case is open, unless the bankruptcy judge grants special permission. Even if a foreclosure sale is scheduled for the afternoon, the automatic stay will usually stop it if the voluntary petition is filed in the morning.

Why People File Bankruptcy

Just like business downturn usually triggers the inability to pay business debts, financial storms that the debtor cannot possibly control usually lead to the inability to pay personal debts and therefore a Chapter 7 or Chapter 13 petition. Some of these events include:

  • – Medical Bills: Even if the debtor has good health insurance, the deductibles and copays associated with a serious illness are usually thousands of dollars, and neither hospitals nor banks are very patient when it comes to payment.
  • – Unemployment: Almost 70 percent of American families have less than $1,000 in savings, so even a temporary layoff usually has devastating consequences.
  • – Divorce: The unexpected legal fees, coupled with support payments and/or the expense involved in maintaining two households, triggers many bankruptcy filings.

Even if families can weather one of these storms, these events often come in pairs or in quick succession, and that is enough to swamp most any boat.

They say lightning never strikes twice in the same place, but there is no guarantee when it comes to financial storms. So, people can usually file bankruptcy again, after a short waiting period expires.

Go With Tenacious Attorneys

Most of the people who file bankruptcy are victims of adverse financial circumstances that they cannot control. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. Convenient payment plans are available.

Resources:

thefirearmblog.com/blog/2017/07/30/d-k-arms-files-chapter-11-bankruptcy/

supremecourt.gov/opinions/16pdf/16-349_c07d.pdf

Bankruptcy And Consumer Credit Reports

Posted on: September 11, 2017 by in Bankruptcy
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TransUnion and Equifax Information Services violated the Fair Credit Reporting Act by posting erroneous information on a post-bankruptcy credit report, according to court documents filed in an Illinois federal court.

Mary Ahlers, of East St. Louis, says that the credit reporting companies recorded some debts as delinquent, as opposed to discharged, even after she received a debt forgiveness order that applied to the listed accounts. She blames the companies for not performing a diligent investigation, and then for not deleting or modifying the account data in light of the available information about the accounts. Her lawsuit demands compensation for unspecified out-of-pocket expenses and emotional distress.

Her lawsuit also seeks a court order that forces the companies to amend her credit reports.

How Does Bankruptcy Affect Credit Scores?

The answer to this question surprises many people, because in many cases, a bankruptcy looks better than long-term debt delinquency or adverse actions, like foreclosure or repossession. These negative reports are signals to many moneylenders that the debtor simply gave up and made no effort whatsoever to rectify the situation, and typically, that is probably a fair assessment.

However, if a consumer files bankruptcy, some moneylenders may conclude that something is better than nothing, and at least the debtor made some effort to cure the money problems. This is the same reason that a Chapter 13 (seven years) falls off most credit reports faster than a Chapter 7 (ten years).

As for the information on the credit report, it is often incumbent on the consumer to ensure that the data is accurate and that all discharged debts are listed as such, because as discussed in a previous post, the Supreme Court recently sided with a debt buyer against a consumer. So, it is fair to speculate that courts will show little interest in enforcing the FCRA and other consumer-friendly laws.

Managing Post-Bankruptcy Credit

Remaining current on any remaining secured debts, such as auto loans or home mortgages, is one of the best and fastest way to rebuild credit.

A new credit card may be a good idea as well, as long as it has a low credit line. If possible, obtain a secured card that does not contain a “secured” note on your credit report. Opinions vary as to whether it is best to pay off the entire balance each month to show diligent payment  or carry over a few dollars and allow the bank to make money.

A proactive attitude may be the best way to rebuild credit. Be upfront with future potential moneylenders about your past credit problems, and while they do not need or want to know details, they do need to hear a brief explanation for your filing, such as medical bills or whatever.

Debtors who keep true to these principles, and others that their attorneys suggest, are in the fast lane to credit restoration, while debtors that overlook or ignore them often end up back in bankruptcy court.

Reach Out to Experienced Attorneys

Effective credit recovery is part of a bankruptcy strategy. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. Convenient payment plans are available.

Resource:

madisonrecord.com/stories/511146223-woman-alleges-inaccurate-credit-reporting-following-bankruptcy

Bankruptcy Filings Dip Slightly

Posted on: September 6, 2017 by in Bankruptcy, chapter 13, chapter 7
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According to the latest government statistics, distressed debtors have less money, owe less money, and are filing fewer voluntary bankruptcy petitions than they were a year ago.

Nationally, consumer filings dropped 6 percent in the latest filing tally. The average debtor had a $2,668 monthly income to pay $2,590 in monthly expenses. In 2015, both these figures were about 7 percent higher.

In Indiana, bankruptcy filings fell by 9 percent.

Types of Consumer Bankruptcy

Chapter 7 bankruptcy is normally a good option for families who owe more than $10,000 in unsecured debt, because that is realistically more money than most people can afford to repay. The list of dischargeable obligations includes:

  • Medical Bills: Even with health insurance, medical bills often overwhelm a family, which is why these expenses are one of the leading causes of bankruptcy.
  • Credit Cards: Like payday loans, credit cards are secured only by a future promise to pay, which is why credit card debt is one of the most frequently-discharged obligations.
  • Back Taxes: Income taxes are dischargeable if the taxpayer did not commit fraud or tax evasion, the tax is at least three years old, the returns have been on file at least two years, and the debt has not been assessed in the last 240 days.
  • Small Business Administration Loans: Most businesses fail within their first few years, and if your business is no longer in operation but the SBA loan is still outstanding, bankruptcy should be a consideration.

Bankruptcy eliminates the debt but not the collateral consequences of debt. So for example, if a taxing authority has filed liens on outstanding taxes, those liens remain even if the underlying debt is discharged.

Procedurally, after the debtor takes a debt counselling class, an attorney files a petition and schedules. About six weeks later, the debtor meets with the trustee (person who oversees the bankruptcy on behalf of the judge) to review the paperwork, and about six months after that, the judge typically signs the discharge order.

Chapter 7 debtors must pass the means test, which means their income must be lower than the average income for that geographic area.

In Chapter 13 cases, the debtor’s income usually needs to be slightly above average, since the debtor must make monthly debt consolidation payments. The debtor has up to five years to pay any arrearage on home mortgages, auto loans, and other secured debts.

The trustee also has a different role in Chapter 13 cases, because instead of simply reviewing paperwork, the trustee evaluates the debtor’s monthly income and expenses. The debtor ten remits any excess income as the debt consolidation payment.

Chapter 13 is a good option for people who are more than a month or two behind on secured debts.

Benefits of Bankruptcy

The automatic stay is one of the most significant benefits of bankruptcy. In most cases, moneylenders cannot take any adverse action against debtors as long as the case is pending. That includes lawsuits, repossessions, foreclosures, and collection phone calls.

Chapter 7 debtors receive a fresh financial start in only a few months, and Chapter 13 debtors have up to five years to pay off any arrearage. Furthermore, Chapter 13 debtors may also be eligible for cramdowns, which means that their secured loans are reduced to the current fair market value of the secured property.

Rely On Experienced Attorneys

Chapter 7 and Chapter 13 are the two main types of consumer bankruptcy. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. We routinely handle matters in both Illinois and Indiana.

Resource:

ibj.com/articles/64552-indiana-bankruptcy-filings-take-downward-turn

Casino Remains On Track To Exit Bankruptcy

Posted on: August 30, 2017 by in Bankruptcy, chapter 13
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In much the same way that consumers deal with debts in a Chapter 13 bankruptcy, Caesars Entertainment Corporation hopes that Chapter 11 will give it a fresh start.

The company announced that about 90 percent of shareholders approved a merger between Caesars Entertainment Corporation, the bankrupt entity, and Caesars Acquisition Company. The merger is part of the company’s reorganization plan, which the shareholders must approve before the company can emerge from bankruptcy. In the coming months, regulators from both Nevada and Missouri will further scrutinize the plan, which is part of an action pending in an Illinois federal court.

Caesars CEO Mark Frissora said the merger “is an important milestone” in the case.

Renegotiating Debt

In many Chapter 13s, home mortgage debt is the largest single liability. Largely depending on the jurisdiction and the facts of the case, debtors may have some options in terms of renegotiating this and other secured debt.

One option may be a cramdown. Assume the homeowner recently purchased a $200,000 home and still owes $200,000 on the note. Further assume that the house’s tax appraised value is now $180,000. If that is the case, the actual fair market value may be even lower than that. Under these facts, the homeowner may be able to renegotiate the $200,000 unpaid principal balance down to $180,000, or the fair market value of the property. In this scenario, the additional $20,000 is forgiven.

A lien strip may be a possibility as well. Assume the homeowner took out a second mortgage for $20,000. If there is not enough equity in the property to secure both debts, the junior lien arguably becomes unsecured and therefore subject to discharge.

Finally, there may be a legitimate dispute as to the amount owed, perhaps because the loan was predatory or the homeowner may be eligible for a loan modification. In these cases, the judge usually refers the dispute to mediation, where the lender has a duty to negotiate in good faith. In other words, the moneylender must come down on its demand and try very hard to meet the homeowner somewhere in the middle.

Paying Off Debt

The principle advantage of a Chapter 13 is not the possibility for debt renegotiation, but the certainty of debt repayment. Debtors have up the five years to catch up on any delinquencies on any secured debt, including home mortgages and auto loans. During this period, the automatic stay remains in effect, in most cases, so moneylenders cannot take adverse action against the debtors, including repossession or foreclosure.

The repayment schedule is income-based, so debtors pay what they can afford as opposed to what the moneylender demands. Again in most cases, the moneylender cannot successfully oppose the repayment plan as long as the arrearage is satisfied within the protected repayment period.

Go With Experienced Attorneys

Chapter 13 debtors may have several debt reduction and debt repayment options. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. We routinely handle cases in Illinois and Indiana.

Resource:

reviewjournal.com/business/casinos-gaming/caesars-shareholders-take-new-steps-to-emerge-from-bankruptcy/