Friday, May 18, 2018

Do I Need a Lawyer for My Chapter 7 Bankruptcy?

If you are considering Chapter 7 bankruptcy, you might be wondering whether you need to hire a bankruptcy lawyer to help with your case. You might be thinking that consumer bankruptcy is relatively straightforward in that you provide information to the bankruptcy court and receive a discharge of your debts. However, the U.S. Bankruptcy Code is extremely complex, and making even a minor mistake could put your entire bankruptcy case at risk. There are numerous steps to a Chapter 7 bankruptcy proceeding, and these steps require the debtor to show that he or she can pass the “means test,” as well as to fill out and submit precise information about assets and exemptions. In addition to the complicated process of filing for Chapter 7 bankruptcy, it could turn out that this is not the best bankruptcy chapter for your specific situation.
An Oak Park bankruptcy lawyer can ensure that you are eligible for Chapter 7 bankruptcy, that it is the best course of action for you, and that your bankruptcy filing goes as smoothly as possible. We will explain in more detail.
A Lawyer can Help with the Complex Requirements of a Bankruptcy Filing
Every Chapter 7 bankruptcy case has multiple steps, including the following:

  • Debtor will need to go through mandatory credit counseling;
  • Debtor must file bankruptcy petition and all required documents, which include schedules of the debtor’s assets and financial information to prove that the debtor can pass the “means test,” as well as documents on which the debtor claims exemptions;
  • Bankruptcy trustee will be appointed to the case, and the debtor will be required to submit additional documentation to the trustee, including the most recent tax return; and
  • The “meeting of the creditors” occurs, at which time the debtor will need to answer questions about his or her financial situation and the documents submitted.
All of those steps occur before the court even determines that the debtor is eligible for Chapter 7 bankruptcy. As such, it is essential that you have an experienced attorney on your side throughout these steps.
Is Chapter 7 the Right Bankruptcy Option for Your Situation?
Another important reason to work with a lawyer on your Chapter 7 bankruptcy case is that it could turn out that Chapter 7 bankruptcy is not really the right decision for you. In some cases, it might be that you are ineligible to file for liquidation bankruptcy because you cannot pass the “means test.” In other scenarios, you could simply benefit more from filing for Chapter 13 bankruptcy, especially if you are seeking to stop a foreclosure.
A bankruptcy lawyer can assess your situation and can talk through your options with you for seeking debt relief.
Discuss Your Situation with an Oak Park Bankruptcy Attorney
The general process of a Chapter 7 bankruptcy filing might sound relatively straightforward, but U.S. bankruptcy law is extremely complicated. As we discussed above, making even a minor mistake in your bankruptcy petition or in any of the documents you are required to file can delay your bankruptcy discharge or could even result in your inability to have your debts discharged. An experienced bankruptcy attorney in Oak Park can assist with your case. Contact the Emerson Law Firm for more information.
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Wednesday, May 16, 2018

What is a Meeting of Creditors?

When you file for consumer bankruptcy in Oak Park, Illinois or anywhere else in the country, you will probably hear the phrase “meeting of creditors” used to describe one of the necessary steps in your Chapter 7 bankruptcy filing. In fact, whether an individual or a business files for Chapter 7 bankruptcy, the “meeting of creditors” will take place. What does this term mean, and what is involved in a meeting of creditors?
Defining the Meeting of Creditors Under the U.S. Bankruptcy Code
Under the U.S. Bankruptcy Code, the meeting of creditors falls under § 341, and thus it is often referred to as the “341 meeting of creditors” or the “341 hearing.” The statute specifically states that, “within a reasonable time after the order for relief in a case . . . the United States trustee shall convene and preside at a meeting of creditors.” In other words, once a consumer has filed for Chapter 7 bankruptcy and has submitted all required documentation (such as financial schedules and information about assets and exemptions), the bankruptcy trustee will convene a meeting of creditors. Chapter 13 bankruptcy cases also involve a meeting of creditors.
The meeting is in some ways what it sounds like - a meeting in which you, the bankruptcy trustee, and your creditors convene in one place. The court does not appear at the meeting of creditors, and the statute specifically prohibits the court from presiding at or attending the meeting of creditors.
What You Should Expect at the Meeting of Creditors
What happens at the 341 meeting of creditors? In general, the point of the meeting is that your creditors are able to ask you questions, under oath, about the materials you have provided in your bankruptcy petition. It is basically a way to ensure that all of your financial information and the information you have provided about your assets is complete and is truthful.
You should have your bankruptcy lawyer with you at the 341 meeting of creditors. While a lawyer is not required by the statute, as you can imagine, it is extremely helpful to have your bankruptcy attorney with you when you are responding to questions from creditors.
Although all creditors are invited to the meeting, it is unlikely that they will all appear. The meeting is not likely to last very long—probably only about 10 minutes. You will know when and where your meeting will be held because the court will send you a notice that states the time, date, and place of the 341 meeting of creditors. This notice will also include information such as your bankruptcy case number and the bankruptcy trustee’s information. The trustee will be the person who examines you under oath at the meeting of creditors.
How to Prepare for the Meeting of Creditors in Your Bankruptcy Case
What do you need to do to prepare for the meeting of creditors? Your bankruptcy attorney can help you to prepare. In general, however, you will need to be prepared to answer questions about the documents you have submitted, such as how you valued certain property and whether there is any other property you own that was not listed in the documents. In addition, you will need to bring a number of different documents with you to the 341 hearing, such as:
  • Photo identification;
  • Documents you submitted with your bankruptcy petition; and
  • Evidence of income and other assets.
The bankruptcy trustee can require that you bring additional materials with you.
Contact an Oak Park Bankruptcy Lawyer
If you have questions about your bankruptcy petition and the meeting of creditors, an Oak Park bankruptcy lawyer can help. Contact the Emerson Law Firm to speak with a consumer advocate today.
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Saturday, May 12, 2018

Illinois Court Certifies Class Action Against Debt Collection Company


Have you been contacted by Midland Funding LLC about debts you do not owe or debts for which the statute of limitations has passed? Debt collection companies like Midland Funding LLC are required to abide by the Fair Debt Collection Practices Act (FDCPA), and they cannot use unfair or fraudulent methods to collect debts. The FDCPA also protects consumers against harassment from debt collectors. When a debt collection company is alleged to have wronged a wide variety of consumers, can those consumers take part in a class action lawsuit?
That question arose in a recent case against Midland Funding LLC, Midland Credit Management, Inc., and Encore Capital Group, Inc. Illinois consumers got a win in this case, which involved aggrieved consumers seeking class action certification, according to a recent article in Reuters. The case, Wheeler v. Midland Funding, LLC, was decided in late April by U.S. District Court Judge Virginia Kendall in the Northern District of Illinois. If you have been treated unfairly by a debt collection company, what do you need to know about this case?
Limitations for Collecting on Expired Debt
The case began back in 2015 when the plaintiff, Kevin Wheeler, noticed that Midland Credit Management, Inc. (MCM) pulled his credit report. The plaintiff called MCM to find out why his credit had been pulled. MCM indicated that it was trying to collect a credit card debt, and MCM offered to settle the debt with the plaintiff for 40% of the total debt. The plaintiff did not agree to the settlement. Later on that year, the plaintiff noticed that his credit report had been pulled again. He contacted MCM again, and the company gave him an account number to pull information about his debt. Nowhere in that account did MCM indicate that the statute of limitations had run on collecting the plaintiff’s debt.
The Illinois statute of limitations for collecting the plaintiff’s credit card debt—which dated from 2009—had in fact run. The plaintiff argued that MCM’s failure to inform him that the statute of limitations had run constituted a violation of the FDCPA. The plaintiff recognized that other consumers may have been in a similar situation, and he sought to certify and represent a class through a class action lawsuit. A class action claim would allow many more plaintiffs to join the case if they had been harmed in a similar manner.
Certifying a Class Action
According to the case, MCM and the other defendants argued that the plaintiff could not file a class action for the following reasons:
  • Plaintiff did not have standing because he had not suffered actual harm;
  • Plaintiff failed to establish the commonality and predominance elements of Rule 23;
  • Plaintiff’s claims did not meet the typicality and adequacy elements under Rule 23; and
  • Class claims would not be superior to a potential individual claim.
The court ultimately determined that the above arguments were invalid and that the plaintiff could certify the following class:
  • All individuals with Illinois addresses;
  • Who accessed the MCM website;
  • Were offered a settlement or discount on a credit card debt for which the last payment was made more than five years prior to MCM accessing the debt information; and
  • Where accessing was on or after a date one year prior to the filing of the claim.
Learn More from an Oak Park Consumer Protection Lawyer
When a class action is certified, the plaintiff can move forward with a class action and other members of the class can join. If you believe you meet the requirements of the class because you were contacted by MCM about a debt for which the statute of limitations had passed, you should discuss your case with an Oak Park consumer protection lawyer. Contact the Emerson Law Firm today for more information.
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Friday, May 4, 2018

Nondischargeable Debt and the Fraud Exception

U.S. Supreme Court Hears Bankruptcy Case Concerning Fraud Exception
The U.S. Supreme Court recently heard arguments in bankruptcy-related case that has been ongoing for quite some time. Back in January 2018, the U.S. Supreme Court agreed to hear the case, Lamar, Archer & Cofrin, LLP v. Appling. In brief, the case deals with an individual debtor who made false promises about repaying a portion of his debt. The debtor ultimately filed for Chapter 7 bankruptcy and attempted to discharge the debt. The creditor argued that the debt fell under the U.S. Bankruptcy Code’s fraud exception, and as such the debt was a nondischargeable debt in the Chapter 7 bankruptcy proceeding. The debtor disagreed, and the issue is now up to the U.S. Supreme Court.
The U.S. Supreme Court’s decision could impact certain debtors in Oak Park who file for consumer bankruptcy. We will tell you more about the recent case and its possible implications.
Getting the Facts of the Case: Lamar, Archer & Cofrin, LLP v. Appling
In order to consider whether the fraud exception may apply to this case, it is important to understand the facts. Back in 2004, the debtor (Appling) retained a law firm (Lamar), and he ended up owing more than $60,000 in attorneys’ fees and court costs after a lengthy period of litigation. The debtor met with the law firm and insisted that he would be able to pay off his debt because he was expecting to receive a $100,000 tax refund that he planned to use to pay the law firm. While the debtor did apply for a tax refund, it was only for $60,000—instead of $100,000 as he had indicated—and he used none of the refund to pay the law firm.
The law firm again met with the debtor after he had received his tax refund, and the debtor lied and told the law firm that he had not yet received his tax refund. As such, he wanted the law firm to continue representing him, and it agreed on the assumption that the debtor would make payment once he received his tax refund. Eventually, the law firm stopped representing the debtor and sent a final invoice for approximately $61,000. About a year later—during which time the debtor still had not made payment—the law firm learned that the debtor had in fact received a tax refund much earlier and had paid none of the attorneys’ fees or court costs as he had promised. The law firm filed a lawsuit against the debtor for the unpaid attorneys’ fees and court costs.
A lower court ordered the debtor to pay $104,000 to the law firm. The debtor then filed for Chapter 7 bankruptcy and listed the debt to the law firm among the debts he planned to discharge. In bankruptcy court, the law firm argued that the debt was nondischargeable because it fell into the category of one of the exceptions to discharge - the fraud exception.
What is the fraud exception? The statute says that a debt cannot be discharged “to the extent [it was] obtained by false pretenses, a false representation, or actual fraud.” The only exception to the exception is a situation in which the debtor’s seemingly fraudulent statement was “respecting the debtor’s . . . financial condition.”
The law firm argues that the debtor’s false statements concerning the tax refund and promised payment constituted fraud, placing the debt in the nondischargeable category. The debtor argues that his statements fall into the exception to the exception because his statements about the tax refund and paying the debt were “respecting the debtor’s financial condition.” A lower court that heard the case said that a statement “pertaining to a single asset,” meaning the tax refund, does not constitute “a statement of financial condition.” As such, it said the debt was nondischargeable due to the fraud exception. The debtor appealed, and the Eleventh Circuit found in favor of the debtor.
Now, the U.S. Supreme Court will have to decide whether a statement—or series of statements—concerning a tax refund and promise to pay a debt constitute “a statement of financial condition,” or whether the debt does in fact fall into the fraud exception making it nondischargeable.
Contact an Oak Park Bankruptcy Lawyer
To learn more about Chapter 7 bankruptcy, you should speak with an Oak Park bankruptcy attorney. Contact the Emerson Law Firm for more information.
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Friday, April 27, 2018

What is Priority Debt in Bankruptcy, and Why Does it Matter?

If you are thinking about filing for Chapter 7 bankruptcy, you might have heard the term “priority debt.” While the term might sound like it is referring to debts that are the priority of the consumer who is seeking bankruptcy protection, in fact, the opposite is true. When a consumer in Oak Park files for personal bankruptcy, some debts are considered priority debts under the U.S. Bankruptcy Code. In other words, federal law says that some debts need to be prioritized over others when creditors are being compensated from the bankruptcy estate. How will your bankruptcy case be affected by priority debt?
Understanding How Priority Debts are Related to Secured and Unsecured Debt
When an individual thinks about filing for bankruptcy, she or he likely has two different types of debt - secured debt and unsecured debt. Secured debt is the type of debt with collateral. In other words, the creditor has an interest in the property you have and can repossess that property if you fail to make payments. One of the most common types of secured debt is an automobile for which you still have a car loan and make payments. Secured debt is not the area in which the question of priority debt arises. Instead, priority debt concerns unsecured debt.
Unsecured debt refers to any debt you have that does not have property that serves as collateral. If you fail to make payments on unsecured debt, the creditor cannot come and repossess the property, for instance, that has been serving as collateral. The creditor can, however, file a claim against you and take you to court in most situations.

What is the relationship between unsecured debt and priority debt? In general, unsecured debt will either be classified as priority debt or nonpriority debt. What leads a particular type of debt to be classified as a priority debt?
Priority Debts in Your Chapter 7 Bankruptcy Case
Which debts are classified as priority debts? Simply put, priority debts are those that are classified as such by the U.S. Bankruptcy Code. The Bankruptcy Code gives priority to certain debts that the debtor owes to the government, or for which it is in the interest of the public good to ensure that the debt gets repaid. In most cases, these are debts that would not be dischargeable in a bankruptcy case (or could be difficult to discharge), including but not limited to the following:
  • Recent income tax debt;
  • Child support;
  • Spousal maintenance or alimony; and
  • Money you owe as a result of a personal injury claim involving impaired driving.
Priority debts, according to the U.S. Bankruptcy code, get paid first. As such, when your property is liquidated (aside from property that is exempt), the proceeds will be used to pay your priority debts before paying any other nonpriority debts such as credit card debt or medical debt. For many debtors who have priority debts, the fact that priority debts get paid first actually benefits them. If there is enough money to pay off the priority debts, then the nonpriority debts are eligible for discharge.
Learn More from an Oak Park Bankruptcy Lawyer
If you have questions about priority debt, an Oak Park bankruptcy attorney can help. Contact the Emerson Law Firm for more information.
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