Is Chapter 13 Right For My Chicago Family?
Although many home mortgage lenders are patient for a few months, they can technically begin foreclosure proceedings after just one missed payment. Basically the same thing applies to other secured debts, such as vehicle loans.
In financial matters as well as other life situations, it is usually a very bad idea to rely on the kindness of strangers. Just ask Blanche DuBois how that worked out. A much better approach is to take control of your financial problems with something like a federally-guaranteed debt repayment plan.
In Chapter 13, everyone wins. Lenders get the money they are owed and debtors keep the property they’ve worked hard to purchase.
Filing the Petition in Chicago
The pre-foreclosure process is extremely stressful. Many times, the bank promises relief only to pull out the rug at the last minute. Once debtors file their voluntary petitions, the automatic stay stops this process. In addition to foreclosure, the automatic stay also halts other creditor adverse actions, such as harassing phone calls, lawsuits, and wage garnishment. The stay applies whether or not the debt is dischargeable.
In a few cases, the trustee (person who oversees the bankruptcy for the judge) may be able to seize assets and sell them to pay creditors. But this power only applies to nonexempt assets. The list of exempt assets in Illinois usually includes:
- – Retirement account,
- – House,
- – Vehicle, and
- – Personal property.
The debtor must continue making payments on any secured debt. Otherwise, the creditor can repossess the collateral.
The Repayment Plan
Usually, the petition includes schedules and a proposed repayment plan. In a Chapter 7, it’s usually important that the debtor have little or no disposable income. That is usually the only way to pass the means test. But the opposite is usually true in Chapter 13 cases. Debtors must have sufficient monthly income to fund the debt consolidation payment.
Typically, this payment includes all the past-due amounts for all secured debts. Debtors have up to five years to bring these obligations current.
As long as the debtor makes these payments on time, the automatic stay usually remains in effect. So, moneylenders must accept these income-based repayments. They can only bypass the automatic stay and take adverse action if the bankruptcy judge grants special permission.
Some Advanced Issues in a Chicago Chapter 13
Many debts involve a legitimate dispute as to the amount owed. For example, many home mortgage loans may involve some form of predatory lending or mortgage fraud. Or, in student loan cases, the parties may disagree about the extent of the debtor’s hardship.
Matters like these usually go to mediation. In this forum, the moneylender has a duty to negotiate in good faith. In other words, the bank must be willing to give ground in order to make a deal. Furthermore, debtors do not go into these negotiations alone. Their attorneys represent them.
Other advanced options include lien removal and redemption. If the debtor is upside-down on the note, which is quite common in many cases, these options could save the debtor thousands of dollars.
Contact Experienced Lawyers
Chapter 13 is an excellent option for families with past-due secured debts. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. We routinely handle cases in Cook County and nearby jurisdictions.
Resource:
natlbankruptcy.com/how-long-does-foreclosure-take/
