Thursday, December 20, 2007

Tax refunds and bankruptcy

I have received several emails from clients filing for Chapter 7 that are concerned about their tax refunds, and whether the chapter 7 bankruptcy trustee will want to take it or not.

While the tax refund is an asset, you should schedule the estimated amount in the case.
Your lawyer will then exempt what they can to protect as much as possible.
In Illinois, you have a $4000 wildcard per debtor to use towards cash, bank accounts, personal household goods and tax refunds. Your Illinois bankruptcy attorney can also exempt the portion attributed to Earned Income Credit.

You will need to file your taxes as soon as possible to work with your lawyer so they can best advise you when is the best time to file your case as well.

Blockbuster fees

I received an interesting email from Blockbuster yesterday.
They are increasing fees from $17.99 to $19.99.
This comes on the heals of the plan modification they put thru just several months ago....eliminating the free in-store game rental coupon each month as well as capping the in-store exchanges at 5.
I understand that companies need to make a profit, but this is ridiculous.
I emailed them back both times, but got a canned letter about profits, and providing quality service and the 'value' that I am receiving.
I have read online that some fees jumped to $34.99 per month ($10 increase)
This all comes after Blockbuster touted it's services and benefits over Netflix in their 2007 marketing campaign (voice over by Alec Baldwin).

How does this relate to Bankruptcy? Well, this shows that you should watch your monthly budget, and seek out cheaper/less expensive alternatives when possible to help your pocketbook. While $2 doesn't seem like much each month, if each and everything you pay for was $2 more, then you would definitely be feeling this crunch.

So, get out there, comparison shop..not only for prices, but for services offered and the lovely "Customer Service" that is out there.

See you all in the Netflix camp...because that is where I am headed. Thanks!

Tuesday, July 24, 2007

Rapid Fire Q&A

Here are a sampling of questions I have been getting regarding bankruptcy an bankruptcy process. If you would like further bankruptcy information, please contact my law office.

If a Judgment was won against you for a security bond and you file bankruptcy with no real property or income, can that judgment be included in the bankruptcy?
I am not totally familiar with a 'security bond.'
Most non-dischargeable debts are government related, or based on fraud. Otherwise, most regular judgments from credit cards or medical bills are discharged upon filing. If you let me know what a security bond is, perhaps I can get you more info, Belinda. Thanks

Judgments before bankruptcy
I filed for Chapter 7 bankruptcy on 3/04/2004 and it was discharged on 6/16/2004. Previous to my discharge one of my credit card companies was granted a judgment against me on 1/29/2004. The judgment is included in my bankruptcy under "Statement of Financial Affairs" but the debt was discharged on Schedule F Unsecured claims versus on the Schedule D Creditors Holding Secured Claims. My question is two-fold can I get this debt taken off public record based on it being discharged and should my attorney have filed this differently?
It really wouldn't matter if it was on schedule D or F, as long as it was listed. I assume you are looking at your credit report. The fact that you got the judgment will remain as a factual event, however, they should zero it out or otherwise mark that it was under bankruptcy. The creditor can never collect on this. The fact that you had the judgment may remain on your credit for up to 7 years, similar to foreclosure, and bankruptcy will show for up to 10 years on your credit report.

Divorce and Chapter 13
My wife and I filed a chapter 13 about 4 months ago. We have been marital problems for years and despite marriage counseling have decided a divorce is the best option for all involved parties, including my 5 yr old daughter, to avoid any more emotional damage by staying together in an unhappy home. We were not eligible for Ch. 7 because of income, but now divorce will change this quite a bit. We did file jointly on the Chapter 13. What options do I have to still keep the house as my form of Child support and still have enough money to live on myself? My Ch. 13 was a 100% repay plan. Can I reduce the percentage amounts? Or can I convert to a 7 in order to discharge the debt so that paying my wife child support will be and option. Currently I have a wage deduction weekly to pay the plan as it now stands.
You should speak to both your divorce attorney and bankruptcy lawyer. It is possible to convert the case, or even to split the cases into 2 separate cases if one party wants to convert to chapter 7. You would have to have enough combined monthly expenses to eat up the disposable income on a conversion. There are other budget test and asset protection issues as well, so sit down with your lawyer to map out the best plan of attack.

Can I file bankrupt on a student loan ?
Can I file bankrupt on a student loan that I received in 2001 with the help of a co-signer?
Hi Shana,
Unfortunately, student loans, more precisely 'debt for educational purposes' are generally non-dischargeable, unless you can prove that it is an undue hardship to repay it. To do that, you would have to satisfy the 'Brunner' case test: 1. you paid it when you could in the past, you have no present ability to repay it, and you have no future ability to repay.

Therefore, 99% of the time, student loans are non-dischargeable in chapter 7 bankruptcy because of this tough standard to beat them.

We filed bankruptcy in sept 2003 after my spouse lost his job. We have struggled till now trying to keep our house. It was sold public auction in May . Are we responsible for the remaining balance and if so can we claim again? If we have to pay back 100,000 we will not even be able to rent the house we are in .

Your answer depends on whether you reaffirmed the mortgage in a chapter 7. It would also depend on if your jurisdiction allows lenders to collect on their deficiency balances.

If you did not reaffirm the debt in the chapter 7, technically it is discharged in that case if you listed it in the petition.

You would only qualify for Chapter 13 if your prior chapter 7 was less than 8 years ago.. Chapter 13 is a debt repayment plan

chapter 13
I am in a chapter 13. I am about to be discharged but I have not turned over my last 3 years tax returns or refunds. I have been informed by the Trustee that if I do not turn over the tax refunds my case will be dismissed. What does it mean when they dismiss your bankruptcy?

It means that your creditors can collect from you. If you, let's say, paid in 10% to your unsecured creditors, they can come after you for the other 90%.
You should submit the items to the trustee to get the benefits of your bankruptcy filing.

What if I do not have the money? Is there something I can do?

You need to discuss the issue with your lawyer. In Illinois, debtors do not usually have to pay their tax refunds to the trustee. Therefore, discuss with your lawyer what repayment options you may have. Perhaps they can extend the case to compensate for that money.

Garnishment/Freeze placed on account a year and half after bankruptcy discharged
I live in the state of Georgia. I filed chapter 7 in October of 05 My bankruptcy was discharged in January 2006. On July 10, 2007 an attorneys office placed a freeze/garnishment on my checking accounts. I confirmed with the credit card company that this was covered in my bankruptcy. The original debt with the credit card company was a little over one thousand dollars. This attorney placed a garnishment of over THIRTY THOUSAND dollars on my checking account and placed a lien on my home. How they came up with that amount, your guess is as good as mine. This freeze on my checking account has left me with no way of paying my bills (even though I have the money, just can't touch it) and has left me unable to go to the grocery store to feed my family of 6. My bank also notified me that because of the freeze on the account any checks that I have written will be returned as non sufficient funds. Which will cause me a lot of money. My bank charges 33 dollars for each NSF charge. Plus what ever each store decides to charge me for the "bad" check. What are my rights and what can I do to this clear case of contempt of court? Can I sue them for damages? Can I sue them for the cost of having a lawyer reopen my bankruptcy case? Any information would be greatly appreciated.
Thank You,

You probably do not have to reopen the bankruptcy case. Assuming that you listed this debt in the case, it sounds like you may have a potential state court action for a violation of the bankruptcy discharge. You should contact your bankruptcy attorney for the process...he or she may be able to contact the attorney to get them to lift the hold without having to bring a lawsuit.

Question about selling a store before/after the bankruptcy
I am tring to file a bankruptcy(Ch 13 I think because I am trying to keep some assets I need). I have a primary work, and there is a store(mini mart running slow) under my name run by my parents. If I file ch 13, and if My parents sell the store, will those assets go to trusteeds 100%? we started the business with around 50K, and we are trying to sell it higher(hopefully). So say If we sell it as 80K, will those 30 difference go to trusteeds 100%?
2. I have filed the tax with my wife joinly, will she bee effected when I file a ch 13 ? I didn't join anything with her other than the tax filing.

Please help!!!

Hi Song,

All of your assets, that are in your name need to be disclosed in a bankruptcy case. Any transfers or sales need to be approved by the court and trustee. In most cases, any unexempt proceeds (ask your bankruptcy lawyer for specifics) would normally be paid to the trustee towards your chapter 13 plan.

You would file taxes like you normally do, there is no special bankruptcy exemptions that you would have to worry about.

Foreclosure and Bankruptcy

We have a 1st, 2nd, and 3rd mortgage and can no longer afford the house. Our income is too high for chapter 7 and we most likely would file chapter 13. If we surrender the house during BK, is this considered a foreclosure? Finally if the bank sells the house and it does not sell for the total amount owed, will the remaining unpaid balance be rolled into our payment plan or will it be discharged by the judge?

Usually, the bank will foreclose, but the chapter 13 bankruptcy will trump it, discharging any further liability on the claim if you set up your plan correctly. Therefore, you should speak to an experienced chapter 13 bankruptcy attorney to help assist you.

Selling a home in bankruptcy
My mother and I own a home I am primary on the mortgage. I just sold the home and purchased a new one in my name. My mother filed bankruptcy back in Jan 2007. I have a closing date on the home I own w/ Mom and the buyers closing atty called and said we have to get permission from the court to sell the home. My Mom has contacted her atty's office but cannot get past the paralegal who says this could take 8 to 10 weeks to get to court. Is there a faster way to get permission to sell the home. My mother will not receive any money from the sell and she is paying the court monthly on her bankruptcy. The closing is scheduled in 3 weeks. HELP!
Hi Dana,

Mom would need to bring a motion in bankruptcy court to obtain permission to sell the home. The notice period is 20 days, so realistically should take about a month to be heard in court. You will need to contact your real estate attorney and advise them that they may need to extend the closing date. Hope that helps.

Thanks for reading the Q&A for bankruptcy. Keep in mind, state law applies, and I am only licensed in Illinois, so my answers are based on Illinois case law. You should always seek out a local bankruptcy attorney to answer your case specific questions. Thanks

Thursday, July 12, 2007

Women On the Go Online Feature Guest

Hi all.

I just wanted to let you know that I have been invited to be a featured guest speaker on financial matters on the website Women On The Go Online. I will be speaking on bankruptcy, finance, and other money matters.

Women on the Go Online is hosted by Nikki Woods, AM Morning personalilty on WGCI radio in Chicago.

The monthly podcast can be found on the homepage, and my first topic, 'How to Avoid Bankruptcy' ran in June 2007.

I discuss several tips and tricks on how to improve your daily, monthly, and yearly financial status...simple steps to put some extra cash in your pocket!

Check it out.

Wednesday, June 20, 2007

How to extend the life of your car

Below is a link to an article I found about how to get the most life out of your car.
Many of my clients find themselves in bankruptcy with a huge car payment (or 2)

This extra money could go a long way to get one out of debt, so if you can keep your car running for a few more years and avoid the temptation of getting a new car every 3 or 4 years, you can be on your way to financial freedom!

How to live past 150,000 (miles, that is)
From Aaron Gold,
Your Guide to Cars.
Aaron Gold Guide to Cars

Thursday, June 07, 2007

"Your guide to the law" from the Chicago Bar Association

Here is a posting that I came across for a free legal guide.

Note, that it is always wise to talk to a lawyer to get exact advice based on your unique position.

I offer free bankruptcy consultations, so pick up the phone and call Leeders & Associates, Ltd. today at 312-427-7400

June 06
Chicago Bar Assn. Offers Free Legal Handbook for Chicagoans
from the Chicago Bar Assn.

CHICAGO, ILL. (June 6, 2007)— The newly revised and reprinted paperback "Your Guide to the Law: A Basic Legal Handbook for Chicagoans," published by The Young Lawyers Section (YLS) of The Chicago Bar Association (CBA), is available at no cost from the CBA Bookstore at 312-554-2130 or online at

Intended for use by non-lawyers, the 119-page book covers common questions about typical legal issues faced by consumers. Chapters include such topics as: bankruptcy, homebuying, divorce, jury duty, landlord/tenant issues, traffic, and criminal charges. A useful list of legal resources for Chicagoans is also included.

Written and edited by members of the YLS, the book's introduction explains its purpose is “increasing Chicagoans’ knowledge of the legal rules that affect us all.” Authors say they hope the handbook will be used by teachers, parents, students or citizens who have questions about the legal system.

Monday, May 07, 2007

Student Loans - Mostly Nondischargable

as printed in the Sun Times:

Students and loans: 'Til death do us part

May 6, 2007

BY DAVE NEWBART Staff Reporter

They liken it to a financial death sentence.

They can't get a car loan, a home mortgage or any other type of loan. They've lost jobs and even spouses over it.

They are so humiliated they don't want any of their friends or family to know.

And for most, there is no way out.

They are former students trapped under the weight of student loans. The same vehicle that allowed them to get a college education has left many graduates buried in debt with no reasonable way to climb out.

Some students who never graduate are stuck paying off loans without the earning power of a degree -- an estimated additional $1 million in lifetime earnings.

And some students who finish can't afford the monthly payments. Others lose jobs and can't catch back up. Then they get turned down by employers who increasingly check credit records before hiring.

Some say they would make small monthly payments to show good faith -- only to see their balances continue to grow and to receive harassing phone calls from collectors.

To be sure, most borrowers pay on time; default rates are at an all-time low.

But for those who run into trouble, changes in federal laws -- including many in the last decade -- have made student loans among the hardest debts to discharge. They've also made the loans among the most lucrative for private lenders, who face little risk -- because the government backs the loans -- but reap the benefits when balances balloon.

Some borrowers say they accept reasonable interest, but they believe the fees and penalties -- which over time can double or triple the loan balances -- are unfair.

Interest rate over 18%
Many of the students awash in debt say that they were blinded by the promise a college degree holds and unprepared to take on high levels of debt at such a young age.

Connie Martin's son signed up for cooking school in Chicago in 2002 at age 25. To pay for it, he borrowed $73,000, mostly in private loans from Sallie Mae, the largest student lender, at 18?250-134?/' percent interest.

"He didn't know what the interest rate was. ... He just wanted to go to school," said Martin, of Sycamore.

His first payment was $1,100 a month, his entire monthly salary at a downtown eatery where he went to work after graduation.

"I don't understand how they can lend a kid that kind of money with no credit history, who never owned anything, with no co-signers," said his mother, who only learned of the situation after the bills started to pile up.

Sallie Mae officials said they no longer offer such high-interest loans, and have offered students a chance to refinance at a lower rate if certain conditions are met. "We recognize it's high," spokeswoman Martha Holler said.

Martin's son declined to comment. His balance has since grown to $98,000.

'It's like indentured servitude'
Greg Treece, of Downstate Mattoon, now wishes he never enrolled in Washington University's Occupational Therapy program. "Choosing an expensive private school and borrowing the money to go there is the single greatest mistake I have ever made," he said.

Treece took out $84,000 in loans. Six months after he got out of the St. Louis school, his monthly payment was more than half his take-home pay for his first job in Chicago. He later lost his job. With compounding interest, his loan quickly skyrocketed. At times he seriously wished he could go to jail in exchange for wiping out the debt.

With a new job, he's managed to pay $60,000, but his balance remains at $111,000 because of fees, penalties and interest. "It's like indentured servitude," he said.

For those who default, lenders can truly play hardball, often employing no-scruples private collection firms that call borrowers as often as 10 times a day.

Shirley, an Ivy League-educated lawyer, lost her job in Chicago in the late 1980s. She pleaded for reduced payments from a collector working for the Illinois Student Assistance Commission -- but was denied.

"I said you are driving me to bankruptcy," she recalled. "They wouldn't budge."

In bankruptcy court ISAC claimed she owed $78,000, which included $13,000 for collection costs, 20 percent of the total debt. Nearly all of the debt was eventually erased, according to court records.

Because that was before the recent law changes, she should have been clear.

Loan chief admits 'mistakes'
But several years later, the collectors began calling again -- first from ISAC and then from the U.S. Education Department. They claimed the bill was now over $100,000.

"It was as though they were above the law," she said. She eventually went to court again and proved she no longer owed the money, but her husband left her in the process. She asked that her real name not be used out of fear of retaliation.

ISAC and the Education Department say they have several programs that allow students to delay payments in hard times or make lower ones based on income. Officials say they try to help borrowers in default get back into good standing, a process known as rehabilitation. Last year, ISAC rehabbed $30 million in defaulted loans, up from $4.4 million in 2002.

Agency director Andy Davis says the agency has to strike a balance between helping borrowers repay and making sure taxpayers aren't left in the lurch.

But he acknowledges his workers "make mistakes" and said he is looking to make changes in some of the outsourcing of collections.

Then there are those with hard luck, who make bad decisions or just simply can't get a break.

Richard and Sheila Friese both have degrees from Southern Illinois University, financed in part on student loans. They were also both discharged from the Navy after suffering injuries while serving stateside. Richard is learning disabled.

They have never been able to find high-paying jobs; now they both use wheelchairs to get around and suffer from ailments including arthritis, constant abdominal pain and chronic fatigue. They're currently fighting with the Veterans Administration over benefits; they also are wrangling with the Social Security Administration.

Collector: 'We will never go away'
They currently have no income to pay off their combined $141,000 loan balance. ISAC has seized $3,200 in tax refunds from Sheila, 37. Richard, 49, avoids the phone after constantly being called by collectors for Sallie Mae -- one of whom he claims called him a "low-life, S.O.B." Holler said Sallie Mae's collectors are trained in fair debt collection practices. "That should not happen," she said.

If this were virtually any other debt, experts say, the couple would be able to discharge some or all of it through bankruptcy. But the Frieses, of Mundelein, are stuck. "Our life has hit a brick wall," Richard said.

Davis said it might make sense for the federal government to "write off'' debt if borrowers -- particularly vets -- have no hope of paying.

Pam, 58, of Dolton, graduated from Downstate SIU-Edwardsville in 1984, but spent time on welfare. She eventually defaulted on her loan after a dispute over the amount of the balance and monthly payments. Her $12,500 in loans has grown to $28,000. Experts say borrowers should continue to make payments during a dispute so the loan doesn't get out of control.

She has gone underground, blocking collectors' calls and running her own business so her wages can't be garnisheed. But when collectors do get through, they have a harsh message. "When they call they say, 'We will never go away until you are dead.'"


Percent of students with loans
1993: less than 50 percent
2004: 66 percent

Average debt for graduating seniors
1993: $9,250
2004: $19,200

Number of graduating seniors with debt over $40,000
1993: 7,000
2004: 78,000

SOURCE: Project on Student Debt

Wednesday, April 25, 2007

Arlington Heights, Illinois Law Office

Greetings. I just wanted to announce that we are now open for business in Arlington Heights, IL. We have a part time weekend office at

Arlington Heights Rd. Ste. 113 Arlington Heights, IL 60005
Map and driving directions

We have struck a deal with Platinum Financial Mortgage Corporation They will be happy to help place you in a mortgage for the home of your dreams.

Our firm handles real estate transactions - from home buyers to commercial property deals.

We have also teamed with a real estate broker company, Lucky Realty Group of Chicago Illinois who has brokers and agents to help you find that home of your dreams or can help you maximize your sales price during this slow real estate market in Chicago.

Feel free to contact us for any of these deals.

Thursday, April 19, 2007

Save Money on Gas

I am here to provide useful tips and tricks to help my clients, and those who can take certain steps to help avoid bankruptcy.

Top 10 Fuel Saving Tips
From Aaron Gold,
Your Guide to Cars.(as posted on

Whether you drive a two-seat hybrid or a three-ton SUV, chances are you can squeeze a bit more distance out of each gallon of fuel. These ten fuel saving tips have served me well over the years, and they can help you improve your car's fuel economy and take some of the sting out of high fuel prices. Most of these tips will give you a very slight increase in miles per gallon (MPG) -- but use several together and the gas mileage improvements will really add up.

1) Check your air filter
A clean air filter is the key to good fuel economy. A dirty air filter restricts the flow of air into the engine, which harms performance and economy. Air filters are easy to check and change; remove the filter and hold it up to the sun. If you can't see light coming through it, you need a new one. Consider a K&N or similar "permanent" filter which is cleaned rather than changed; they are much less restrictive than throw-away paper filters, plus they're better for the environment.

2) Check your tire pressure
Next to the air fitler, under-inflated tires are one of the most commonly ignored causes of crummy MPG. Buy a reliable tire gauge, check your tires when they are cold (driving the car warms up the tires and the air inside them, increasing the pressure), and keep them properly inflated. Use the inflation pressures shown in the owner's manual or on the data plate in the driver's door jamb.

3) Slow down
As speed increases, fuel economy decreases exponentially. If you(sic) one of the "ten-over on the freeway" set, try driving the speed limit for a few days. You'll save a lot of fuel and your journey won't take much longer. Just be sure you keep to the right, so you won't impede the less-enlightened.

4) Hang with the trucks
Ever notice how, in bad traffic jams, cars seem to constantly speed up and slow down, while trucks tend to roll along at the same leisurely pace? A constant speed keeps shifting to a minimum -- important to those who have to wrangle with those ten-speed truck transmissions -- but it also aids economy, as it takes much more fuel to get a vehicle moving than it does to keep it moving. Rolling with the big rigs saves fuel (and aggravation).

5) Accelerate with care
Jack-rabbit starts are an obvious fuel-waster - but that doesn't mean you should crawl away from every light. If you drive an automatic, accelerate moderately so the transmission can shift up into the higher gears. Stick-shifters should shift early to keep the revs down, but don't lug the engine -- downshift if you need to accelerate. Keep an eye well down the road for potential slowdowns. If you accelerate to speed then have to brake right away, that's wasted fuel.

6) Get back to nature
Consider shutting off the air conditioner, opening the windows and enjoying the breeze. It may be a tad warmer, but at lower speeds you'll save fuel. That said, at higher speeds the A/C may be more efficient than the wind resistance from open windows and sunroof. If I'm going someplace where arriving sweaty and smelly could be a problem, I bring an extra shirt and leave early so I'll have time for a quick change.

7) Back off the bling
New wheels and tires may look cool, and they can certainly improve handling. But if they are wider than the stock tires, chances are they'll create more rolling resistance and decrease fuel economy. If you upgrade your wheels and tires, keep the old ones. I have fancy sport rims and aggressive tires on my own car, but I keep the stock wheels with a good narrower-tread performance tire in the garage. For long road trips, the stock wheels give a smoother ride and better economy.

8) Clean out your car
The more weight your car has to haul, the more gas it needs to do the work. If you're the type who takes a leisurely attitude towards car cleanliness -- and I definitely fall into that group -- periodically go through your car and see what can be tossed out or brought into the house. It doesn't take much to acquire an extra 40 or 50 lbs. of stuff.

9) Out with the new, in with the old
Many people keep their old cars around even after they buy a new one. A spare car, especially if it's an econobox, can be good insurance against temporary spikes in gas prices due to world events. The costs of keeping the car may or may not be less then the fuel saved, but it does allow for more predictability in your budget. My old beater doesn't look like much, but it goes 10 miles further on a gallon of gas than our regular car. For that, I can afford to look bad!

10) Don't drive
Not a popular thing to say on a car site, I know, but the fact is that if you can avoid driving, you'll save gas. Take the train, carpool, and consolidate your shopping trips. Walking or biking is good for your wallet and your health. And before you get in your car, always ask yourself: "Is this trip really necessary?"

Thursday, April 05, 2007

PMSI does not transfer When Original Security Interest Is Terminated and collateral is used for New Financingt by a new debtor

"A Purchase Money Security Interest Is Not Refinanced When the Original Security Interest Is Terminated and New Financing Is Used By a New Debtor to Acquire the Same Collateral"

The case of Lewiston State Bank v. Greenline Equipment, LLC, 147 P.3d 951, 61 UCC Rep. Serv. 2d 195 (Ut. App. 2006), holds that a purchase money security interest (pmsi) does not survive its termination when the same collateral is used by a different debtor to obtain new financing.

What happened: a secondary loan company (bank B) paid off the loan with the first bank (Bank A) that held the PMSI lien on farming equipment. This in effect satisfied the original loan, releasing the PMSI security interest. Debtors subsequently pledged the collateral to a 3rd company (Bank C), who's lien was perfected. Therefore, the court concluded that Bank C has a priority claim over bank B, since bank B never perfected their new security interest.

What's the short of it? A bank that wants to take over an existing PMSI should satisfy the existing debt and obtain an assignment of the existing lender's security interest for it to survive subsequent liens that may be recorded under the UCC thereafter.

Thursday, March 29, 2007

Save some money!

As a bankruptcy attorney in Chicago, I see many different people come through my office. It amazes me on the amount of money people spend on a day to day basis. Routinely people put down that they spend $500 a month on food, then make a point of putting down $300 'dining out' in addition!! My God! If people learn how to cook, they would save $300-500 a month. While I know that people like to go out with family and friends, but when did dining out turn from a 'special treat' to a 'necessity' ?

Same thing goes with gas and transportation expenses. It seems like some of my clients must drive around the neighborhood every day just to keep the car warm! If people realize what they are really spending on a day to day basis, I bet they would start making some changes to their lifestyles!

Thanks for listening.
Terrance Leeders
Chicago Bankruptcy Attorney

Tuesday, March 27, 2007

Must I list all of my debts in bankruptcy?

Recently, I received an email asking about filing a chapter 7 bankruptcy The writer asks:

"Do I choose which debts I want to include in my bankruptcy or does the trustee do this? I have a bank loan for my truck which I pay on time and I want to keep my truck and keep making payments. Do I have to include this loan in my paperwork for a bankruptcy? What happens if I don't include it?"

Answer: All debts must be listed in the bankruptcy petition. You can select to 'reaffirm' certain debts. Most chapter 7 consumers reaffirm financed items -cars, houses, jewelry, furniture and electronics. You can usually keep the asset by agreeing to keep paying for it. Now, your budget has to show that you can afford the payments, otherwise the judge could request that you prove how you can afford the payments if your budget shows you cannot.

Similarly, you must list all debts in a bankruptcy case, technically even small personal debts, such as the $10 you owe your Aunt Sue should be listed too! Otherwise, it would be bankruptcy fraud if you intentionally omit a creditor from a bankruptcy petition.

Amendments: if you find out that you inadvertently left a debt out of your bankruptcy filing, perhaps an old medical bill from 4 years ago, don't fret. You can always amend to include that bill in your case. If you do not, it will not be discharged under the bankruptcy code under BAPCPA. The court charges a nominal fee to amend to add another debt if you case is still open.

Wednesday, March 21, 2007

Can a spouse file an individual bankruptcy?

I received an email today from a prospective client asking if a spouse could file bankruptcy without her spouse. Excellent question.

Although both spouses are not required to file bankruptcy jointly, the Bankruptcy Code does require both spouses income to be included in the means test analysis for CMI - current monthly income. However, most people 'pass' the means test analysis and can file for Chapter 7 bankruptcy protection. See previous posts for the median income level in Illinois. As for any joint debts between spouses, or family medical debts, the non-filing spouse may still be responsible.

This prospective client also owned real estate joint with her spouse.
As for the home, it would depend on the value of the home, and the balance owed on the mortgage. Each party can exempt $15,000 of equity in Illinois, so unless it has a large amount of equity, then it shouldn't be effected in a Chapter 7.

Now, if their combined income is too high for chapter 7 or if their home has too much equity, a chapter 13 bankruptcy can help, where she could pay back her bills, sometimes as low as 10 cents on the dollar for unsecured debts, depending on her budget.

Since each case is unique, I encourage consumers to seek an attorney to get a free consultation where the lawyer can examine the case in more detail and provide more specific answers.

Tuesday, March 20, 2007

Substantial Abuse, Bankruptcy Planning & Chapter 7 bankruptcy

What does one have to do, or in this case from Wisconsin, NOT DO, to create substantial abuse ?

RECENT CASES: Feb. 6. 2007

Chapter 7 Debtor who fails to aggressively seek out work before the case is subject to dismissal based on the totality of the circumstances. 'Substantial abuse' is now just 'abuse.'

The court noted: " ... this Court concludes that a debtor who lacks the ability to pay because she has not engaged in a broad employment search, does not wish to work outside her chosen field, does not wish to work within her chosen field outside of southeastern Wisconsin, and takes this position at the expense of her creditors, abuses the provisions of Chapter 7 ..."

The court held, "The court concludes that it must look at the debtor's ability to pay her creditors at the time of the hearing on the motion to dismiss." " . . . it must delve further and find out why the debtor does not have the ability to pay. Finally, the Court concludes that if the debtor's inability to pay creditors is self-imposed, it may consider this fact ... in terms of the totality of the circumstances ..."

In re Richie, 353 B.R. 569 (Bankruptcy.E.D.Wis. 2006)

Therefore, as practitioners, this case is disturbing, as it takes out the element of bankruptcy case planning. What should a bankruptcy attorney advise their client? If a debtor's attorney advises the debtor to stop working, so that the debtor's income would allow them to pass the means test, it sounds like that would open the attorney up to malpractice, as it could get the chapter 7 case dismissed. Very interesting. Therefore, everything you advise a debtor must be very well thought out and planned, knowing that there are these type of pitfalls for the unwary practitioner!

Monday, March 19, 2007

Surrender Vehicle in Chapter 13 - Creditor allowed an unsecured deficiency balance

Northern District of Illinois - Eastern Division Chicago Bankruptcy Judge Squires recently ruled in the chapter 13 case of Linda J. Blanco, 06B 13223, where debtor tried to surrender a vehicle in full satisfaction of the claim owed. Judge Squires

The Court held that "the Debtor may not surrender the collateral in full satisfaction of the debt to the Creditor. The Creditor is entitled to seek its available state law remedies, including its right to an unsecured deficiency claim after liquidation of its collateral."

Judge Squires follows the minority argument in other jurisdictions, but it is also supported by fellow Chicago Bankruptcy Judge Schmetterer. This argument states that that when the collateral is surrendered, "the bankruptcy estate no longer has an interest in the collateral for purposes of § 506." Wherefore, the “hanging paragraph” does not preclude the creditor from claiming an allowed unsecured deficiency claim under § 502.

Judge Squires continued:
"Judge Schmetterer in the Morales case followed Judge Shefferly’s logic in Particka, and he aptly explained the interplay between § 506(a) and § 1325(a)(5)(C):

if a debtor surrenders the vehicle, the interests of parties in the collateral and the impact of § 506 changes. Section 506(a) applies only to “an allowed claim of a creditor secured by a lien on property in which the estate has an interest. . . .” 11 U.S.C. § 506(a). If a confirmed Chapter 13 plan provides for surrender of a vehicle under § 1325(a)(5)(C), the estate no longer has an interest in the vehicle. . . . When . . . . the debtor surrenders the vehicle and the estate no longer has an interest in the property that secures a claim, there is no reason to use the valuation process provided in § 506 to determine the amount of the allowed secured claim. Rather, once the vehicle is surrendered to the creditor pursuant to § 1325(a)(5)(C), the value of the creditor’s secured claim is determined under state law, Illinois U.C.C., 810 ILCS 5/9-610-624. "

Wednesday, March 07, 2007

Giveaway of the Day

Although this is a bankruptcy forum, my clients and visitors can all use a 'freebie' now and then. We'll, I have been using this site for a while now...and they offer some cool things! Check it out!

Giveaway of the Day

Monday, February 19, 2007

New legal blog link

Click the tag below to see some of the top blog sites for law related issues.

Law Blogs - Blog Top Sites

Saturday, February 17, 2007

Chapter 13

Chapter 13 Stop mortgage foreclosure
Keywords: chapter 13, bankruptcy, foreclosure, consolidation, chapter 7, mortgage, mortgage default, credit cards, medical bills, interest rate, ARM, adjustable rate mortgage
Stop Foreclosure
Yes, you can save your home!

Using the chapter 13 can strategically help you cure your mortgage default, protect your equity and eliminate your other debts to help you right the ship.

Several years ago, we saw a boom in mortgage lenders offering low adjustable rate mortgages (ARMS) 100% to 110% mortgage loans, and no money down mortgages.

Today, we have seen these ARMS increase from 5% to 8%, 9% or more depending on the lender. Homeowners are being bombarded with a mortgage payment that is almost double than it had been previously before the interest rates have started to rise.

What is a homeowner to do? With the soft real estate market, homes have not appreciated in value, or not enough to allow homeowners to refinance and use some of their equity to help with the higher rates.

Chapter 13 is an option. In a nutshell, consumers can file chapter 13 which will let them catch up on their mortgage payment, interest free. It can also consolidate their other financed items and often save money on the interest rates. Currently, debtors can pay cars, furniture and jewelry back at prime rate of interest or prime +2, or +3. shows a current prime rate of interest at 8.25%.

Consumers can also consolidate their credit card debt, medical bills and other consumer debts and pay them back, with little or now interest, and often can pay them as low as 10 cents on each dollar owed!By doing this, consumers can cure any mortgage arrears, pay off their secured debt for vehicles and for big ticket financed items, while eliminating their consumer debt. A Chapter 13 bankruptcy can run from 3 to 5 years. This depends on your monthly household disposable income. There are several recent changes to the Bankruptcy Code that can affect this repayment plan. These changes were part of the BAPCPA reform. Therefore, it is crucial to discuss with an experienced bankruptcy lawyer about the various law requirements and qualifications based on your unique situation.

For instance, let’s say Johnny Consumer owns a home worth $100,000 in Chicago, Illinois. Let’s say he has a $70,000 mortgage with the bank, but has fallen $6,000 behind and the mortgage company has started a foreclosure. Johnny was recently out of work do to an injury on the job. He has just went back to work, and sees no way to catch up $6000 any time soon. He has $10,000 in medical bills. He owes $3000 on his car. For our example, let’s say that Johnny makes $3000 per month and takes home about $2100. His mortgage is $700 a month, his car note is $300 and he has $67 left at the end of the month to use to try to catch up with the medical bills and the mortgage arrears.

At first glance, there is no way he can manage this on his own. Under a chapter 13, Johnny can make a monthly payment of $367 to the court. This will allow him to catch up on the mortgage, pay off his car note, and eliminate the medical bills he has. This will only take 3 years. It will protect all of the equity he has in his home and stop the foreclosure!

Therefore, if you are looking to stop foreclosure, and have steady income, Chapter 13 could be a great tool to use. You can always refinance or sell your home while under Chapter 13 if you wish to pay off the bankruptcy and move on with your life. The Chapter 13 stops the foreclosure immediately. Often, your only other option would be to refinance, or enter into a repayment agreement with your mortgage company. All too often, they want a double payment each month until you can catch up. If you had that kind of disposable income, you probably wouldn’t be in this situation in the first place.

Contact an experienced Chapter 13 bankruptcy attorney today to discuss these options. You
don’t need a home to file either. Often consumers just wish to get a better deal on their old car note, consolidate their credit card debt to eliminate the high interest rates…or wish to consolidate their old student loans and parking tickets. There is a way to pay back old IRS debt as well as pennies on the dollar.

Pick up the phone and call me at 312-427-7400 and I’ll be happy to give you a free consultation by phone or schedule an appointment at one of our convenient
office locations
We also have a free online legal evaluation to try as well.

The time to act is now if you want to save your home from foreclosure.

Thursday, February 08, 2007

Feb 1 - Updated census bureau median income in Illinois

For Illinois Bankruptcy filings: Census Bureau Median Family Income By Family Size

(Cases Filed On and After February 1, 2007)

The following are the for ease of use in completing Bankruptcy Forms B22A and B22C.

1 EARNER: $42,995
2 PEOPLE: $54,599
3 PEOPLE: $64,184
4 PEOPLE: $74,705*

* Each additional person in the household gets $6300 additional allocation.

information provided by the US Trustee, Department of Justice.

Now, even if you are above the median income, you may still qualify for chapter 7. Contact your bankruptcy lawyer for more info, or if you are seeking legal advice, shoot me an email or phone call and I'll be happy to review your specific situation.
Terry Leeders
Law offices of Leeders & Associates, Ltd.

Bankruptcy - Real Estate - Divorce - DUI - Immigration - Personal Injury - Small Business

Friday, February 02, 2007

Foreclosure and bankruptcy

My clients often call and ask me how long does a foreclosure take?
How much time do I have in my house?
Or how much time do I have to file Chapter 13 to stop the foreclosure?

Excellent questions. The generic answer is anywhere from 6-9 months from the time the foreclosure started. The party being foreclosed upon will get notices and timelines of events as they occur to get specific dates. The foreclosure attorney's office can also provide the dates to you...if they will even take your call!

Therefore, I have posted the Illinois Statute that sets out the time frame. Remember, each state differs. Please contact me if you need help to stop foreclosure, time is of the essence, and the foreclosure will not stop until a bankruptcy is on file.

info below as found on

State Statutes

Illinois Mortgage Foreclosure Law (IMFL), 735 ILCS 5/15–1507,1508; 1602

Foreclosure Process

The entire process in Illinois takes, on average, from the filing of the complaint to the eviction by the sheriff, nine months. Foreclosure defense in court is seldom successful in defeating the foreclosure action but may prolong the foreclosure by as much as 24 months. If the property is not residential or is abandoned, the process can be substantially shortened. The following is an outline of a typical foreclosure case:

  • Default
  • Filing of Foreclosure
  • Personal Service of Summons
  • Foreclosure Judgment and Order of Sale
  • Reinstatement Period Expires (90 days after personal service)
  • Redemption Period Expires (7 months after personal service or 3 months after judgment, whichever is later)
  • Foreclosure Sale
  • Foreclosure Sale Confirmed
  • Right to Possession Expires (30 days after foreclosure sale confirmed)
  • Eviction by Sheriff of Named Parties
  • Recording of Foreclosure Deed

Thursday, February 01, 2007

Bankruptcy Chapter 13 Law update

Projected Disposable Income is the Same as Disposable Income
(Form B22C Controls)
In re Farrar-Johnson, WL 2662709 (Bankr. N. D. Ill. 9/15/06.)

Under Chapter 13 where a debtor is above the median income, section 1325(b)(3) makes clear that Schedule J has no role in calculating disposable income when determining what the monthly plan payment will be. Line 58 multiplied by 60 will give you the amount needed to be paid to the unsecured creditors when calculating the plan.

Another, possibly bigger blow to debtors is found in the decision In re Wiggs, 2006 WL 2246432 (Bankr. N. D. Ill. 8/04/06).
If a debtor who does not make a vehicle note or lease payment cannot take the ownership/lease deduction on Lines 28-29 of Form B22C.
Finding §707(b)(2)(A)(ii)(I) “clear and unambiguous,” the court stated that the word “applicable” "modifies the amounts specified to limit the expenses to only those that apply” (Citing In re McGuire, 342 B. R. 608 (Bankr. W. D. Mo. 2006)). The court also reasoned that the court should look to the statute rather than the IRS guidelines.

Obviously, you should speak to an attorney to help you with these issues.
Contact me at

Tuesday, January 30, 2007

Divorce, bankruptcy and real estate

Real Estate.

These 3 areas of law are often intertwined.
Yes, it's true, my office handles all three practice areas.
But for each client, these issues all come together. Divorce clients, who have racked up the debt before splitting apart often file bankruptcy to relieve the pressure & stress that the debts cause on top of their already stressful lives. Bankruptcy eliminates the unsecured debt for each party, thereby helping each party to truely get the fresh start after divorce. Although it could seem to be an easy way out, it helps reduce or eliminate the need for alimony (often called maintenence) when one party is burdened with debt, and a drastic change in lifestyle post divorce.

Real estate is also often sold to have the proceeds split between the parties. This occurs when there is a stalemate between the parties on who keeps the marital home. Another popular drafting technique allows for the property to be refinanced at a certain time after the divorce, to allow for the parties to adjust to the change, for the property to increase in value, and for the retaining party to become financially stable and time to seek out the best refinancing available.

Contact us today to help you sort thru all of your real estate issues. We also nave a new company we would like to introduce, called Lucky Realty Group. Lucky is a group of real estate brokers and agents who have the legal experience and background to understand these unique situations and can help you reach your goals you wish. Visit our newly developed website for details at

As our loyal readers know, we have several bankruptcy resouces for you. Leeders & Associates, Ltd. and the Chicago Bankruptcy Network.

Blog Flux Directory

Launching Spanish Bankruptcy website

We have been up to some exciting things lately. We have launched our Spanish version of Chicago Bankruptcy Network, or "Red de la bancarrota de Chicago" en Espanol! The site is located at

You can always speak to one of our helpful associates at 312-427-0644

Se habla espanol.