Showing posts from 2019

Can I File for Bankruptcy if I am Self-Employed?

Filing for personal bankruptcy is complicated under any circumstances, but the process can be more complex when you are self-employed. When a person is self-employed, it can be difficult to know what kind of documentation she or he might need in order to pass the “means test” for Chapter 7 bankruptcy, or to prove that the debtor has sufficient and regular income to file for Chapter 13 bankruptcy. These complications can become more significant when a self-employed person is also a small business owner. We want to discuss consumer bankruptcy for self-employed individuals, and to provide additional information about personal bankruptcy when you are self-employed and a small business owner.

Proof of Income for Chapter 7 or Chapter 13 Bankruptcy
In order to qualify for Chapter 7 bankruptcy under the U.S. Bankruptcy Code as an individual (as opposed to a business), you need to be able to show that you can pass the “means test.” In effect, passing the means test is evidence that a liquidation…

Are Consumers in Generation Z Changing Debt Management Trends?

Consumer debt affects adults of all ages, from young adults to the elderly. When it comes to tracking personal bankruptcy filings, many older adults past the age of retirement are filing for bankruptcy, yet younger adults also file for consumer bankruptcy with some frequency. There may be a significant difference in the way that very young adults who are part of Generation Z manage their debts in comparison with adults of other generations, according to a recent article in Ladders. That article cites a Lending Point study that reports “Gen Z may be just getting into their credit-using years, but they are already showing significant differences in their credit profiles from the Millennials and GenXers that preceded them.”

In short, the article intimates that Generation Z adults may be on a trend to have less difficulty managing consumer debt, and thus ultimately could be less likely to file for bankruptcy than consumers in other generations.

Generation Z Consumers Have Higher Credit Scor…

Can the Court Dismiss My Bankruptcy Case Without Discharging My Debt?

When someone in Oak Park decides to file for consumer bankruptcy, that debtor usually will make the decision to seek bankruptcy protection under the assumption that she or he will get a discharge of all eligible debts once the bankruptcy case is complete. However, there are many reasons that the bankruptcy court can dismiss a case. In some instance, a dismissal in bankruptcy occurs because of an honest mistake. At the same time, a dismissal in bankruptcy can also happen when the debtor intentionally engages in fraudulent behavior.

If you are considering bankruptcy, you may be wondering: Can the court dismiss my bankruptcy case without discharging my debt? To ensure that you remain eligible to have your debt discharged, it is extremely important to work with an experienced Oak Park bankruptcy attorney on your case. In the meantime, we will provide you with some examples of common reasons that a Chapter 7 bankruptcy or Chapter 13 bankruptcy case can be dismissed without a discharge.

1. Yo…

Consumer Debt Reaches New High

If you are currently managing a substantial amount of debt, chances are good that you are not alone. According to a recent report from Consumer Affairs, consumer debt has reached a new high of about $14 trillion. That information comes from the Center for Microeconomic Data, which is part of the Federal Reserve Bank of New York. The consumer debt included in that figure includes debt from a variety of sources, including “mortgages, credit cards, student loans, personal loans, auto loans, and all other forms of consumer debt.” While some consumers may be able to manage debt, others are struggling with it.

We want to discuss the rise in consumer debt and to consider options for dealing with debt.

Consumer Debt Amounts Steadily Rising
The $14 trillion amount of consumer debt is part of a rising trend. According to the article, “the total has been rising for 21 straight quarters and has now surpassed the previous high reached in the third quarter of 2008, just as the financial crisis hit.” I…

Is it Best to Prevent Elderly Bankruptcy?

In recent years, more older adults and the elderly have been seeking bankruptcy protection. In some cases, filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy can allow a person to get a fresh start financially. Chapter 13 bankruptcy can be especially beneficial to consumers who are facing foreclosure and want to find a way to stay in their homes and get back on track with mortgage payments. But is bankruptcy really the best option for seniors? According to a recent article in Investment News, bankruptcy may not be the best way for older adults to deal with debt. While younger people can rebuild savings and credit profiles, that work is more difficult for someone at the age of retirement. The older a person is, the more difficult those tasks become. Accordingly, for an adult aged 70 and up, getting back on track financially can be more difficult than it may seem.

Yet whether bankruptcy is the right decision for you always depends upon your particular circumstances. If you have que…

Can I Seek Emotional Distress Damages in a Bankruptcy Case?

The question of whether a debtor can seek and obtain emotional distress damages in a consumer bankruptcy case might seem like an odd one given that most debtors are concerned primarily with getting debt under control and achieving a discharge. However, it is important to keep in mind that there are legal protections in place to protect debtors when creditors do not abide by federal bankruptcy law. Following other court, the Seventh Circuit Court of Appeals (which includes Illinois) has ruled that, in some cases, a debtor may be eligible to receive emotional distress damages when a creditor willfully violates the terms of the automatic stay in a personal bankruptcy case.

Why Would Emotional Distress Damages Come Into Play in a Bankruptcy Case?
Under Section 362 of the U.S. Bankruptcy Code, the automatic stay applies as soon as a debtor files for bankruptcy. The automatic stay prevents creditors from continuing with any attempts to collect on the debts owed by the debtor, from making phon…

How to Deal With Debt in Retirement

More older adults, including those who have retired, are filing for consumer bankruptcy. For some people, filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy is the best decision to deal with debt. Yet bankruptcy presents particular difficulties for seniors given that there is not as much time to bounce back financially. Indeed, filing for bankruptcy after retirement can result in the debtor needing to return to work in order to get back on his or her feet. A recent article in Kiplinger discusses tips for older adults dealing with debt in retirement. We want to provide you with more information about managing debt after you retire, and to give you more information about what you might expect after a bankruptcy during your retirement.

Tips for Managing Particular Types of Debt
As the article emphasizes, “declining income and medical expenses are the leading causes of older Americans’ financial stress.” About two-thirds of retirees who file for bankruptcy do so as a result of medical…

Chapter 13 Bankruptcy and the Holiday Season

The holiday season often is expensive and stressful even under the best financial circumstances. Many families spend thousands of dollars every holiday season on gifts for other family members, friends, and co-workers, not to mention vacations involving extensive travel and hotel costs. Yet, if the holiday season is a financial stressor even for people who are feeling relatively stable financially, it is often extremely difficult for families struggling with debt. For those who have already filed for bankruptcy, the holiday season can be particularly challenging. Is it possible to enjoy the holiday season if you recently filed for Chapter 13 bankruptcy or are planning to file for bankruptcy in the near future? An article in The Balance addresses this question, and we want to discuss it with you as we move into the holiday season.

Managing Holiday Spending After Filing for Chapter 13 Bankruptcy
If you recently filed for Chapter 13 bankruptcy and are in the early stages of your repayment …

Can I Discharge HOA Dues in Bankruptcy?

If you are thinking about filing for consumer bankruptcy and are currently a homeowner, you may also be someone who pays fees to a homeowners association. When it comes to homeowners association (HOA) fees, it is important to understand how this type of debt gets handled in a bankruptcy case. It will be essential to understand the distinctions between Chapter 7 bankruptcy and Chapter 13 bankruptcy for the purposes of HOA fees. To be clear, there are particular considerations for HOA fees that are different from other types of debt. We will explain more below.

Understanding HOA Dues and HOA Debt
As an article in The Balance explains, HOA fees consist of money that is paid to the homeowners association when you own a home in a particular neighborhood or building. In effect, HOA fees are better thought of as “dues” that “help you share costs with others in your community.” The homeowners association typically is “a group of homeowners in the same neighborhood or building who share costs, s…

How Will an Inheritance Affect My Bankruptcy Case?

When you make the decision to file for consumer bankruptcy, it can be confusing to understand what property is exempt and how your current assets will be handled in your bankruptcy case. There are also important distinctions between Chapter 7 bankruptcy and Chapter 13 bankruptcy, since the former is a “liquidation” bankruptcy in which all non-exempt assets are liquidated in order to repay creditors. One issue that can be especially unclear is how inheritances are handled in a bankruptcy case. For example, if you inherit property either before you file for bankruptcy or after you file your bankruptcy petition, will you be able to keep that property?

The answer to this question can vary depending upon a number of different factors. We want to address some of those key factors for you below.

Is the Inheritance Exempt?
One of the first considerations is whether an inheritance would be exempt property under Illinois law. In Oak Park, debtors who are filing for bankruptcy are required to use …

Mortgage Tax Debt and Bankruptcy

Many consumers in the Oak Park area who struggle with various types of consumer debt also struggle to make monthly mortgage payments. For some of those consumers, filing for personal bankruptcy can be an option for managing what feels like insurmountable debt. However, consumer bankruptcy may not be the best option for people who are dealing with non-dischargeable debt. While there are various types of non-dischargeable debt that cannot be erased through a bankruptcy filing, we want to say more about tax debt—and mortgage tax debt—specifically when it comes to filing for bankruptcy.

According to a recent article in Bloomberg, numerous consumers make the decision to file for bankruptcy as a result of an inability to pay the taxes on mortgage debt that is forgiven after a foreclosure or a short sale. As the article explains, consumers previously could exclude forgiven debt from taxable income, but that may be more complicated now.

How Forgiven Mortgage Debt can Affect Your Taxable Income

What are the Functions of a Bankruptcy Trustee?

Filing for consumer bankruptcy is an extremely complicated process. Whether you are simply considering bankruptcy as one of your options or have begun to look more carefully into actually filing soon, it is important to learn more about the bankruptcy trustee. In researching Chapter 7 bankruptcy or Chapter 13 bankruptcy, you have likely come across information about the bankruptcy trustee and that person’s role in the process. However, it can be confusing to understand precisely what the trustee does, and what the debtor’s relationship to the trustee will be. The U.S. Department of Justice gives answers to frequently asked questions about the bankruptcy trustee, and we want to provide you with some of that information.

Who or What is a Bankruptcy Trustee?
First, there is an office of the U.S. Trustee, which is within the U.S. Department of Justice. One of the primary roles of this office is to appoint bankruptcy trustees in Chapter 7 and Chapter 13 bankruptcy cases, as well as to handle…

What is Credit Counseling for Personal Bankruptcy?

If you are considering personal bankruptcy, you will likely be required to go through credit counseling. In fact, you will probably be required to go to credit counseling twice at different stages of the bankruptcy process. Whether you are filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy, you should learn more about credit counseling so that you know what to expect. An article in NerdWallet discusses various aspects of the bankruptcy credit counseling process, and we want to share them with you here. If you have additional questions or need assistance filing for bankruptcy, you should get in touch with an Oak Park bankruptcy attorney.

Learning More About Credit Counseling
Credit counseling is a process in which a debtor learns about whether she or he actually needs to file for bankruptcy protection, and to learn more about the benefits and limitations of consumer bankruptcy. During credit counseling, debtors also learn about bankruptcy alternatives that may be available for mana…

Understanding How the BAPCPA Continues to Shape Consumer Bankruptcy Filings

In 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) became law, making it more difficult for consumers to file for Chapter 7 bankruptcy. As a recent article in GQ points out, the BAPCPA took effect only a short time before the recession and foreclosure crisis in 2008, preventing many struggling consumers from being eligible for Chapter 7 bankruptcy. As the article contends, now is an important time to revisit the BAPCPA because two of the Democratic presidential candidates played important roles regarding bankruptcy reform in the late 1990s and early 2000s, and they were on different sides of the issue.

More precisely, both Joe Biden and Elizabeth Warren were involved in developing and opposing changes to U.S. bankruptcy law. While Biden supported the BAPCPA as a senator from Delaware, Warren opposed it. Given that consumer protection issues could play a role in the Democratic presidential primary and that the BAPCPA may arise in national conversations, it is …

Can I Keep My Car if I File for Consumer Bankruptcy?

If you are struggling with debt and are thinking about filing for consumer bankruptcy, you probably have many questions about how liquidation bankruptcy and reorganization bankruptcy work. In particular, consumers often want to know if they will be able to keep a particular piece of property if they file for Chapter 7 bankruptcy since this is a liquidation bankruptcy. In other words, many consumers hear that, with a liquidation bankruptcy, all property will get liquidated in order to repay creditors. When a debtor files for bankruptcy in Illinois, that person is allowed to keep certain property even with a liquidation bankruptcy. These are known as “exemptions.” There are both federal and state exemptions, but anyone who files for bankruptcy in Illinois must use the Illinois exemptions.

When it comes to exemptions and what type of property you can keep, we know that many debtors want to know, “Can I keep my car if I file for bankruptcy?” The answer to this question depends on several d…

New Report Addresses Trends in Consumer Bankruptcy

Personal bankruptcy trends in Oak Park and throughout the U.S. can sometimes provide us with a bigger picture concerning consumer debt and economic stability. A new report from the Consumer Financial Protection Bureau (CFPB) addresses recent trends in consumer bankruptcy filings and the ways in which those trends have changed in the last two decades. As such, the report considers how consumer bankruptcy filings trends shifted with the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) in 2005, and the foreclosure crisis and subsequent recession that began more than 10 years ago.

What does the CFPB have to say about bankruptcy trends in the 2000s? We will say more about the report and its potential implications for consumers in the present who are considering bankruptcy.

Key Aims of the CFPB Report
Given that the new CFPB report stretches over a period of nearly 20 years, there are some key aims that the authors intended to address. Those key aims, or question…

Revisiting the Issue of Medical Bankruptcies

Given the way in which questions about medical debt and universal healthcare have become prominent in news cycles concerning presidential nominee debates, the issue of medical bankruptcy is on a lot of minds. According to a recent article in the Los Angeles Times, Bernie Sanders has repeatedly asserted that “medical bills drive 500,000 Americans into bankruptcy every year.” That article emphasizes that The Washington Post has done fact-checking on that number, suggesting that it is higher than the actual number of medical bankruptcies in a particular year. However, as the Los Angeles Times article underscores, the figure of 500,000 Americans seeking bankruptcy protection due to medical debt is based on a peer-reviewed study published in the American Journal of Public Health.

With news stories highlighting the issue of medical debt and bankruptcy, it is a good time to revisit the issue and to consider the ways in which debt from hospital bills, surgeries, and other health care often lea…

What is the Difference Between Secured and Unsecured Debt in Bankruptcy?

When you are planning to file for consumer bankruptcy, you may have heard that there is a difference between how secured and unsecured debt will be handled. If you are thinking about Chapter 7 bankruptcy, it is unlikely that you have many (if any) assets that the bankruptcy trustee will be able to liquidate in order to repay creditors. At the same time, it is important to understand how secured and unsecured debts are likely to be treated in your bankruptcy case. If you have questions or concerns, an Oak Park bankruptcy lawyer can help.

What is Secured Debt in a Bankruptcy Case?
Secured debt is not only a term that is used in personal bankruptcy cases, but also in relation to certain types of debt outside the context of bankruptcy. A secured debt is a particular type of debt that has been secured by property, or for which the creditor has a lien. According to the Cornell Legal Information Institute (LII), a secured debt is defined as “a creditor’s claim that is secured by a lien of some…

Should I File for Bankruptcy Over Student Loans?

If you currently are struggling to repay student loan debt, you may know that you are not alone. With student loan debt totaling approximately $1.5 trillion dollars and 45 million borrowers in the U.S., many people who are having difficulty managing student loan debt want to know if they should file for consumer bankruptcy. Indeed, as an article in Forbes underscores, student loan debt currently is “the second highest consumer debt category—behind only mortgage debt—and higher than both credit cards and auto loans.” At the same time, however, many consumers who are grappling with student loan debt have heard that discharging student loans in bankruptcy can be difficult or even impossible.

A recent report from U.S. News & World Report considers student loans and bankruptcy, and discusses situations in which debtors should consider filing for personal bankruptcy in order to discharge student loans.

It is a Myth That Student Loans Cannot be Discharged in Bankruptcy
The recent report hig…

Recent Changes to U.S. Bankruptcy Law

In August, Congress passed several laws designed to amend current bankruptcy law in the U.S. in order to make it easier for certain people to file for bankruptcy. As an article in The Guardian explains, the legal changes will make it easier for certain individuals and small business owners alike to seek bankruptcy protection. If you are considering filing for Chapter 7 bankruptcy and currently receive veterans’ disability payments, you should learn more about recent changes to U.S. bankruptcy law. In addition to providing help for disabled veterans who want to seek bankruptcy protection, recent changes to the law also may be able to help some consumers who are also small business owners.

We want to tell you more about these changes to the law and to discuss some ways in which they may be able to provide relief for consumers in Oak Park, Illinois.

How the HAVEN Act Will Make it Easier for Disabled Veterans to File for Bankruptcy
The first of the recent changes to the law is the Honoring A…

Five Things to Know About Chapter 7 Bankruptcy for Consumers

Are you considering filing for Chapter 7 bankruptcy? While a liquidation bankruptcy may seem relatively straightforward upon initial consideration, it is important to remember that consumer bankruptcy is extremely complex. Even when you have relatively few assets, Chapter 7 bankruptcy requires individuals to provide detailed information in a wide variety of documents. As such, you should always work with a dedicated Oak Park bankruptcy attorney on your Chapter 7 filing. In the meantime, however, we want to provide you with some basic facts about Chapter 7 bankruptcy. The following are five things you should know before you consider filing.

Individuals Must Pass the “Means Test” in Order to Qualify
The “means test” is a way of determining whether a debtor has enough income or assets such that it does not make sense for that person to file for Chapter 7 bankruptcy. In general, a consumer takes the means test by deducting monthly expenses from his or her current monthly income to determine…

Should I File for Bankruptcy Before Divorce?

When a couple is considering filing for bankruptcy, it is often a real possibility that those spouses also are considering divorce. As an article in Business Insider explains, financial difficulties, including consumer debt, often are listed as a primary cause for divorce. Yet when you are considering both personal bankruptcy and divorce, it can be difficult to know whether you should file for bankruptcy before you file for divorce, or vice versa. If you are thinking about bankruptcy and divorce, you should get in touch with an Oak Park bankruptcy lawyer as soon as possible who can help you to determine a course of action that is best suited to your individual circumstances. In the meantime, however, we want to provide you with some information that can help you to get a sense of whether filing for bankruptcy before divorce may be in your best interests.

Which Type of Bankruptcy are You Considering?
If you are planning to file for Chapter 13 bankruptcy, which is a type of reorganization…

What Documents do I Need to File for Bankruptcy?

When you are considering consumer bankruptcy, it is important to know that the processes for both Chapter 7 bankruptcy and Chapter 13 bankruptcy are complicated. As such, you should always work with an experienced Oak Park bankruptcy attorney throughout your case. At the same time, it is also a good idea to understand the process of filing for bankruptcy before you actually do it, as well as the documents you will need in order to be eligible for a discharge of your debts or to have the court approve your Chapter 13 repayment plan. The following is a checklist of all of the documents you will need to have in order to properly disclose income and assets, as well as to provide the bankruptcy court with the information it needs to move forward with your case.

Tax Returns
You will need to have copies of your tax returns in order to complete your Chapter 7 or Chapter 13 bankruptcy petition. If you are filing for Chapter 7 bankruptcy, you will need the last two years of tax returns. If you ar…