Wednesday, January 28, 2009

Rent - past due and future amounts due

Subject: chicago bankruptcy attorney, law suit, future rent

Question: Hi Terry, Thank you for this service. I'll try to make my questions short. I owned a business, went out of business, and could not pay my rent on commercial lease. I signed lease as sole proprietor and was sued by landlord. I have been found guilty of breaching lease and ordered to pay past 9 months rent plus lawyer fees. The lease is for five years. The amount of time I was in business plus the 9 months out of business has been just 2 years and 5 months. I have already lost over 75,000.00 with the business and have no means at this point to come up with additional money owed. Now for 2 questions. Can I file bankruptcy and be discharged of this debt after going to court? If I can file bankruptcy, can the landlord come back and sue me again for the remaining months owed or can the bankruptcy absolve me from all relations with the landlord?

Answer: This debt can be included in a personal bankruptcy, and would discharge any past or future amounts that would be due, eliminating it completely. The landlord can not come back and sue you for rent.

cosigner and vehicle payments in bankruptcy

There is often some confusion with cosigned vehicles and a bankruptcy filing.
One questioner asked me : "my ex if filing for bankruptcy and he is the co signer on my car and he wants to add that in to the bankruptcy. will they repo my car or how can i protect myself from getting my car taken if he adds it?????"

Answer: If you are current and maintain the payments and insurance, you should be fine and can keep the vehicle when a cosigner surrenders their interest in the vehicle.

In other cases, where you would be the debtor in the bankruptcy, and are cosigned on someone else's car, you can walk away from the debt, discharging it, leaving the payments to the cosigner.

Alternatively, if the vehicle is yours, and you file bankruptcy, you can continue to make payments on the vehicle and reaffirm the debt, thereby protecting your cosigner. Remember, a cosigner is always liable for the debt, regardless of who has the asset.

Tuesday, January 13, 2009

debt relief agencies

The first federal appeals court has struck down a provision of BAPCPA that limits what lawyers may say to their clients who are contemplating bankruptcy.

In the case of Milavetz v. U.S., the 8th U.S. Circuit Court of Appeals at St. Louis invalidated a section of the Bank­ruptcy Abuse Preven­tion and Con­sumer Protection Act (BAPCPA) which prohibited “debt relief agencies”from advising their clients to incur more debt in anticipation of filing bankruptcy. This provision also includes lawyers.

Judge Lavenski R. Smith called that section 526(a)(4) “unconstitutionally overbroad” thus violating the the First Amendment -free speech. This conflicts with the attorneys duties to provide full and proper advice to their respective clients. For a thorough analysis of this story, please read the article, "A Debt-Defying Act" in the ABA Journal.

Homestead exemption caselaw

7th Circuit Case
In re: Belcher, No. 07-2174 (12/31/08). Appeal, S.D. Ill. Rev'd.

Dist. Ct. erred in finding that bankrupt debtor was eligible for homestead exemption under 735 ILCS 5/12-901 even though said debtor was not named on title of marital home shared by spouse, who was titleholder to said home and who had also filed for bankruptcy. Under Ill. caselaw, debtor must have formalized property interest to claim homestead exemption. In Illinois, the homestead exemption in bankruptcy is $15,000 per owner of the home, so $30,000 for a joint filing case if both spouses own the home.

Tuesday, January 06, 2009

Better Business Bureau Tips

As a member of the Better Business Bureau, I occasionally get tips from them.
Today, I received a list of the top ten scams from 2008.

Among them, #3 was Mortgage foreclosure scams, and right behind at #4 was Illegitimate credit repair & debt negotiation services. These both have an impact on my clients, before and after they meet with me.

Here is a link to the full article by the BBB.

The better business bureau advises:

3. Mortgage foreclosure rescue scams
- Due to foreclosure information being publicly available, many scammers contact desperate home owners and promise to save their home. They will claim to know investors or a "loop-hole", or will claim to be able to bypass the involvement of attorneys or other agents, thereby leaving the consumer in a complex and vulnerable situation. Victims of foreclosure rescue scams are asked to pay upfront funds or provide sensitive personal information. On many occasions the scammer will rob unknowing consumers of their money and do nothing for them in return, while in other cases the consumer may unknowingly sign away their property deed entirely, on pretense that "they'll be able to buy it back later."

Once the scam artist has the consumer's property deed, they are in a position to raise the consumer's rent so high that the consumer will not be able to afford to make the payments, and may wind up being evicted from their own home. The BBB strongly advises anyone going through foreclosure to thoroughly research any businesses they are dealing with. It is a good idea to contact the Department of Consumer Services to get more information on whom to go to for help.

4. Illegitimate credit repair & debt negotiation services - Due to the troubling economic situation, many consumers seek out credit repair or debt settlement companies- here is what you need to know about them and how to determine their legitimacy.

These services can not ask for money in advance.
They can not automatically get legitimate negative reports off your credit report.
Be extremely cautious about a service that recommends you not pay creditors so it can negotiate. This could negatively affect your credit report.
A service should never guarantee they can cut your debt by a specific percentage.

1) It is against federal law -- the Credit Repair Organizations Act -- for any credit repair company to charge you in advance for their services. The only time they can ask for payment is after all of the services they were to do for you are completed; whether this takes 3 weeks or 10 months. 2) A credit repair company cannot tell you that they can get negative (but legitimate) items off of your credit report. The main aspect of credit repair organizations' work is writing to the credit reporting agencies to dispute the items on your report by asking for their validation. If the items on your report are real, such as liens, bankruptcies, etc, the credit reporting agencies will not have a problem validating them. Also, keep in mind that disputing items on your credit report is something you can do by yourself, for free- you can easily find the appropriate dispute letter templates on the internet. 3) Many debt settlement or negotiation companies request that you don't pay your creditors and wait until you are behind in payments so that they can contact your creditors and attempt to negotiate to have your debt reduced in exchange for making a payment on the spot. While some creditors may agree to this to get at least partial payment, your credit rating will suffer, your interest rates may go up, and you may have trouble obtaining future loans or financing. 4) Debt settlement or debt negotiation companies should not guarantee that by enrolling in their services, they can cut your debt by any specific percentage, such as "40-60%".