N is for a no asset report in bankruptcy

This is the holy grail in bankruptcy, what every chapter seven debtor wants.

A no asset report by the standing bankruptcy trustee means there are no assets to administer in the bankruptcy case for the benefit of creditors. It's either because your exemptions are great enough to protect all of your belongings, or that there is no significant value that the trustee would receive if they tried to liquidate the unexempt asset. (The trustee does not want to sell your used VHS cassette tapes at a flea market to make $11)

The no asset report is filed shortly after the 341 meeting of creditors. If everything is proceeding as planned, the chapter 7 discharge should come about 2 months later.

M is for Marriage in bankruptcy

If you are married, you are not required to file a joint bankruptcy.   In many cases you should though.

a.  If you live in a community property state it is usually wise to file a joint case.  Debts incurred by either spouse during a marriage are each spouses responsibility in most instances.   Therefore, if only one spouse files on marital debt, the other spouse gets socked with the responsibility for repayment, which defeats the purpose of filing a bankruptcy case.

b. Many debts are cosigned and joint between spouses, so a joint filing discharges them for both filers.

c. If the parties are separated and contemplating divorce, it is often helpful to discharge all debts for both spouses, making the break cleaner, and the divorce simpler, rather than having to resort to splitting the debt, and then splitting income to help pay for the debt during the marital settlement agreement.   This is most helpful for a home that is under water, with neither party really wishing to keep the home.
I'm not advocating that parties file bankruptcy just because they are divorcing, but money problems is often a major factor in the decision to file divorce.

We handle both bankruptcy and divorce. Contact our lawyers today!

L is for Leeders

Ah, a bit of self promoting here!.  My name is Terry Leeders, a consumer bankruptcy attorney who practices law in Chicago and the surrounding suburbs.

I've been in practice since 1998, and have focused on bankruptcy law from the start.   I grew up in and around Chicago, and live here with my wife and newborn son.   I went to Thomas M. Cooley Law School and the University of Illinois Champaign-Urbana for undergraduate studies.  I honed my skills at a bankruptcy firm right out of law school, one of those who advertises on TV specializing in high volume practice.   I was able to learn a lot, and I learned I could offer much more to those by opening up my own firm in 2004.  

We have offices in the Chicago Loop, the south side, at 105th &. Western Ave, Schaumburg, Warrenville, and Waukegan.   My fine bankruptcy staff of Sean, Mark and Krista make up our Chicago bankruptcy team.   We have and always will offer free consultations, either by phone or in person.  

We strive to provide quality bankruptcy services for a reasonable fee.  Keeping the firm small allows for one on one attention for our clients. Cases are filed electronically, and our office has started a green initiative to help keep costs low and to help the environment.

We can be reached by phone 312-427-7400, by website -www.leederslaw.com or by email - info@leederslaw.com

So if you are in the Chicago area, and are considering a bankruptcy case, Chapter 7 or chapter 13, contact us for a free consultation to review your situation.   We'll give you sound legal advice on how to get back on track. Our Chicago bankruptcy law firm of attorneys is here to help consumers who are looking for a fresh start, and experienced lawyers to guide them to it.

Thanks
Terry

K is for Keep

You can keep a lot of personal belongings when you file bankruptcy, provided that you have an exemption available to protect them.  In Chicago, Illinois, an individual debtor can keep up to $4000 of cash and personal belongings.  Good news! Your stuff probably isn't worth that much. It's old, it's used, the kids have tore them up...etc.  Think garage sale value.

K is also for Keeping Debt.  A debtor can reaffirm a secured debt if they can demonstrate the ability to afford the monthly payments and by signing a reaffirmation agreements. Most commonly, this is done for cars and homes.

Interesting story.  I had a Chicago Chapter 7 trustee tell a debtor of mine to walk away from his home.   Debtor looked shocked at how serious the trustee was.  Then I looked at the numbers.  The home was recently valued at $71,000 from a recent appraisal in this current market.  The debtor owed about $140,000, but was current on the loan.  When asked why he would want to pay double what something was worth, the only thing he could say was "but it is my home."    This is a great dilemma I see.  Debtors come in, pleading to keep their homes, but want to get rid of all their other debt.  Truth be told, paying twice what something is worth could be the reason they are filing bankruptcy in the first place.   True, the economy and poor real estate market decimated values in Chicago, in Illinois and around the country. 


The trustee is right, no matter how attached he was to his home. It sucks, but it is true.  The bankrupt debtor should walk away and get a complete fresh start.  I

J is for Just Answer

Hey all.  If you didn't know, I participate on the Q&A website called Just Answer.com.  They also have a sister site called Pearl.com where I answer questions. too.

If you have a specific legal question about bankruptcy, or consumer protection, you can ask me here:



They have many different question areas too, doctors, lawyers, with all types of backgrounds.  Tech support, auto maintenance etc. If you have a question, I'm sure they can find you an answer!  Give it a try!

I is for Income

Income.  So many topics to cover.  Schedule I is where income is listed in a bankruptcy petition.

The Means Test Form 22a and Form 22C (chapter 7 or chapter 13 respectively) computes disposable monthly income too.  This is a 6 month average of all household income leading up to the case, along with allowable deductions for taxes, insurances, and set amounts based on where the debtor lives.

All income must be disclosed in a bankruptcy case.   This includes child support, pensions, social security income (counts for schedule I, but not for the means test) and even household contribution towards shared expenses by a family member or roommate must all be disclosed in a bankruptcy case.

To qualify for chapter 7, a debtor should not have much income left at the end of the month after all monthly expenses. If there is significant income left, the rule of thumb is if there is enough left over to pay 10% of the debts back over the next 5 years, then a chapter 13 is the better option to file your bankruptcy case under.

H is for Homestead exemption

When a debtor files for chapter 7 or chapter 13 bankruptcy, they are allowed certain protections under the bankruptcy code. Among the protections, are exemptions to exempt certain assets from becoming property of the bankruptcy estate.

Illinois has opted out of the federal exemptions, providing a list of asset protections granted by state law.

The Illinois homestead exemption law provides the bankrupt debtor protection of up to $15,000 of the equity in their residence in Illinois.

Specifically:
§ 735 ILCS 5/12-901. Amount
Sec. 12-901. Amount. Every individual is entitled to an estate of homestead to the extent in value of $ 15,000 of his or her interest in a farm or lot of land and buildings thereon, a condominium, or personal property, owned or rightly possessed by lease or otherwise and occupied by him or her as a residence, or in a cooperative that owns property that the individual uses as a residence. That homestead and all right in and title to that homestead is exempt from attachment, judgment, levy, or judgment sale for the payment of his or her debts or other purposes and from the laws of conveyance, descent, and legacy, except as provided in this Code or in Section 20-6 of the Probate Act of 1975 [755 ILCS 5/20-6]. This Section is not applicable between joint tenants or tenants in common but it is applicable as to any creditors of those persons. If 2 or more individuals own property that is exempt as a homestead, the value of the exemption of each individual may not exceed his or her proportionate share of $ 30,000 based upon percentage of ownership.


There ya go, if you live in your property, you get $15000 exemption for your home in Illinois, $30000 to protect the equity if you own it jointly with your spouse and you are both filing bankruptcy.

In Chicago, as well as other areas, values of homes have plummeted, and there is hardly any equity in most of my bankruptcy case filings to even worry about the exemption not covering enough.

The exemption protects any equity beyond the balance on the mortgage and also, we factor in brokers fees and commissions to sell the home too.

Give us a call to discuss equity in your Illinois home, and we'll examine the exemption and any equity for you, free of charge! You can't beat that!!

G is for Garnishment

Many people file bankruptcy because a creditor has a garnishment.
A garnishment is a court order to deduct a portion of a debtor's wages to pay a creditor who sued the debtor and obtained a judgment.

Garnishments are stopped though the instant a bankruptcy case is filed, regardless if it is Chapter 7 or Chapter 13.  In my Chicago bankruptcy law office, we send a fax notice to the creditor's attorney as to the payroll department or HR supervisor.

Contrast this with a wage assignment.  A wage assignment is where you authorize the creditor to deduct a payment from your wages if you don't make voluntary payments.  The most common are from payday loans.  These can be stopped instantly, before bankruptcy, under the Fair Debt Collection and Practices act and the Wage Assignment Act under the Federal Trade Commission rules.

Contact your attorney, or call us if you need one as soon as possible to help with any of these types of matters. We are here to help!  312-427-7400
Thanks
Terry

Update to B is for Baseball and F is for Fraud...

As a followup to B is for Baseball Bankruptcy and F is for Fraud, Lenny Dykstra, a former baseball star has entered a plea agreement with the feds who accused him of defrauding creditors by declaring bankruptcy and then looting his $18 million mansion. He allegedly liquidated assets of his bankruptcy estate. This is bankruptcy fraud, as opposed to fraudulent debts.    Basically, the bankruptcy code says you must disclose all possible assets, debts and financial affairs when you file, subject to fines and prison should you not do it.

See the full article here. 

http://www.reuters.com/article/2012/06/26/dykstra-plea-idUSL2E8HQKEW20120626

'47 Brand Chicago Cubs Mvp Baseball Cap - Men (Google Affiliate Ad)

F is for Fraud

Ok, a nice simple one here folks.  Fraudulent debts are non-dischargeable under bankruptcy.  Creditors would have the right to file an adversary objection to discharge. The bankruptcy code section they would file their adversary under is 11 USC 523   The common objections seen are for actual fraud, but also conversion, embezzlement, theft, or intentional torts such as intentional personal injury, or personal injury from driving under the influence of drugs or alcohol.


Under chapter 13, these debts can be paid back 100% though, if the debtor can afford it. If paid less than 100%, the debts could survive the case, but a portion could be paid down.