THE NEW BANKRUPTCY ACT.
The New Bankruptcy Act has made the Bankruptcy process far more complicated. More than ever you need an experienced Bankruptcy attorney to help you sort through your questions, decisions and procedures.
Recent studies have shown that approximately 85% of those who sought Chapter 7 Bankruptcy relief in the past would still qualify under the new law. The main purpose of the New Bankruptcy Act is to prevent those with income over the median from a Chapter 7 discharge. It is no surprise that most people who seek Chapter 7 Bankruptcy do not have large incomes.
THE NEW ILLINOIS LAW CHANGES.
As of January 1, 2006, Illinois DOUBLED the value of the assets that you can keep notwithstanding a Bankruptcy Petition. For example, a Husband and Wife can protect $30,000.00 in equity in a jointly owned home. The old exemption law allowed only $15,000.00. Each individual can now keep $2,400.00 in equity in one car, $4,000.00 worth of miscellaneous personal property and $1,500.00 in tools of your trade. Beware however, knowledge of Illinois exemption laws alone are not sufficient to fully understand what you can keep in a Bankruptcy case.
My office in Arlington Heights, Illinois, is convenient for those in the Northwest suburbs of Cook County, Southwest Lake County and Northeast Du Page County. Those individuals who live in Hoffman Estates, Hanover Park, Rolling Meadows, Wheeling, Des Plaines, Schaumburg, Streamwood, Elk Grove Village, Mt. Prospect, Prospect Heights, Buffalo Grove and parts of Egin will certainly find it more convenient to use my Arlington Heights office than traveling to downtown Chicago.
Unfortunately, Cook County residents still must go to downtown Chicago for at least one meeting of creditors. Du Page residents attend their creditors meeting at the Du Page County Courthouse. Lake County residents must go to Waukegan. In the end, most consumer bankruptcy cases can be concluded with only one meeting of creditors and no appearance in an actual bankruptcy courtroom.
CALL, I WILL TALK TO YOU.
Call, I will talk to you and answer your bankruptcy questions. No two peoples’ problems are identical. That is why it is so important to be able to call someone. An attorney must learn about assets, income and the history of your purchase and sale of assets. Please feel free to call. At least, get the discussion started.
Virtually every single bankruptcy client expresses their great embarrassment. Financial crisis comes about differently for each individual. Some are unemployed and some have been ill. For others, it might have been a divorce or a failed business venture. Many good people fall into bankruptcy helping others. But even if it is your own fault from overspending or gambling, bankruptcy can usually help you obtain a fresh start.
My job is to listen to your individual circumstances. You might be horribly embarrassed, but you will never know whether bankruptcy can provide a fresh start unless you ask.
Our great country does not have Debtors Prison. The founding fathers authorized the laws of bankruptcy when they drafted the constitution. I would never tell you that filing for bankruptcy is fun or nice, but exercising your rights is important to you.
Obtaining a fresh start through bankruptcy may be the single best way to put you in a position to pay your future bills on time.
DO'S AND DON’TS.
Transfers and Sales. Do not transfer or sell your assets before you talk to a bankruptcy attorney. You can be denied the entire bankruptcy for a fraudulent transfer.
Don’t withdraw from your IRA or 401(k) until you consult with a bankruptcy attorney. For example, I’ve seen people withdraw $10,000 from an IRA to payoff their car just before bankruptcy. Their IRA is then gone and the bankruptcy court takes the car away. Had this been done after the bankruptcy, all would have been well.
Keep Receipts. If you must “live off” an asset, keep your receipts. You can be denied the entire bankruptcy if you can’t prove what happened to a substantial asset.
Don’t Credit Card Kite. Many people live by using one credit card to pay another. Further use of credit cards when you are already in very substantial debt and have insufficient income to pay, can be fraudulent. The Credit card company that you borrow from at the tail end may claim fraud based upon the absence of any ability to actually pay.
YOUR CHOICES REALLY ARE DIFFICULT.
Does bankruptcy affect your reputation? I don’t know the answer. I have seen many very good people file bankruptcy: deacons of the church, teachers, financial advisors, and professional debt collectors. Hopefully, they took their fresh start to heart and became even better people.
Will bankruptcy destroy your credit? Of course; for a while. You are not filing bankruptcy to improve your credit score. Please don’t fool yourself into thinking that you can hide the discharge in bankruptcy, you can’t. But you can get credit after bankruptcy. There are secured credit cards and I have seen people buy homes two years after a bankruptcy discharge.
YOUR CREDIT REPORT.
Bankruptcy does not automatically “clear” your credit report of all past due entries. Once you have received a discharge, your creditors may not report the debt as “past due” or “still due and owing.” It may require some effort on your part to have the old bills designated as “discharged.” I read an excellent book entitled “Credit after Bankruptcy” by Steven Snyder. He has a web site named, LifeAfterBankruptcy.com . “Credit Repair” companies are the worst. They take your money and rarely provide any service that you couldn’t do yourself. Watch out!
CREDIT COUNSELING PROGRAMS VERSUS BANKRUPTCY.
There are some very good alternatives to bankruptcy. Reputable businesses will help “settle” your claims and pay your debts. But first, consult with a good bankruptcy attorney. Make an informed decision. Remember there are also some fraudulent “get out of debt” schemes. Please be careful.
SOME DEBTS DON’T GO AWAY.
There are many debts that do not go away in bankruptcy. Student loans, criminal fines and taxes from the failure to withhold, never go away in bankruptcy. Consult with an experienced bankruptcy attorney to find out about your situation. Don’t assume that the problem is hopeless. Maybe you need bankruptcy and an offer and compromise with the IRS.
ARE MY DEBTS LARGE ENOUGH TO FILE?
One man’s mountain is another man’s mole hill. A single mother without child support may decide one way. A married couple with two incomes may decide another. Sometimes decisions are made because you are getting close to retirement and must begin saving through a fresh start in bankruptcy. Consult with an experienced bankruptcy attorney about your situation.
STOP THE PAIN.
Collection agencies calls, interest rates going up, mandatory minimum payments going up, back due taxes, foreclosures and repossessions. The stress caused by any one of these can be “too much” to take. Bankruptcy is not always a panacea, but it may provide a break or a fresh start. Consult with an experienced attorney and get your life back.
Click Here to see what you need to bring to a bankruptcy appointment.
Click Here to read my paper on the Dischargeability Of Income Tax.