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Showing posts from December, 2020

Top Changes That Could Come to Consumer Bankruptcy in 2021

The consumer bankruptcy process could look quite different in 2021 if proposed reforms pass in the new year. You might already know that U.S. Senator Elizabeth Warren (D-Mass.) has introduced the Consumer Bankruptcy Reform Act of 2020 (CBRA) with House Judiciary Chairman Jerrold Nadler (D-N.Y.). We have discussed some of the proposed changes that would come with the bankruptcy reform package, and its relation to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), which made it more difficult for many consumers to be eligible for Chapter 7 bankruptcy. As we near the early weeks and months of 2021, we want to highlight some of the top changes that could come for personal bankruptcy if the proposed legislation passes. 1. Credit Counseling Will Not be Required The BAPCPA required any consumer seeking a bankruptcy discharge to go through credit counseling and to provide the court with a certificate of completion before any debts could be discharged. The newly

Filing Consumer Bankruptcy for Personal Guarantees

If you own a small business for which you provided a personal guarantee on a loan, or if you provided a personal guarantee for a family member’s business or other type of loan, you could end up in a very complicated situation if the business ultimately needs to file for bankruptcy , or if the other party (for which you gave the personal guarantee) ends up filing for bankruptcy. The issue of personal guarantees and consumer bankruptcy is currently attracting more notice given the terms of some of the SBA loans related to COVID-19 relief. We want to provide you with more information about loans with personal guarantees, and to say more about how consumer bankruptcy may be the only option to discharge a loan with a personal guarantee despite a business bankruptcy. SBA Loans That Required Personal Guarantees Anyone who owns a business already might be familiar with the types of business loans that can require personal guarantees, including specific kinds of SBA loans awarded during the CO

What are Bankruptcy Loopholes?

If you are considering personal bankruptcy , you might have come across talk of bankruptcy loopholes and you may be wondering what those could be. According to the Oxford English Dictionary, a loophole is “an ambiguity or inadequacy in the law or a set of rules.” More colloquially speaking, a loophole is a term that is sometimes used in the law to refer to a way of avoiding or evading a particular law or the specific language in a statute. Bankruptcy loopholes, as such, are ways that some people have been able to prove eligibility for Chapter 7 bankruptcy even though they should not actually have been able to pass the means test, for example. There are other kinds of bankruptcy loopholes for both consumers and business owners, but we want to focus on the ways in which bankruptcy loopholes unfairly benefit some consumers while leaving others without the ability to file for Chapter 7 bankruptcy. As you may know, Senator Elizabeth Warren’s recently proposed bankruptcy reform legislatio

Changes to Chapter 7 Bankruptcy Means Test

If you are considering the possibility of filing for Chapter 7 bankruptcy , you may know that you need to meet certain requirements in order to show your eligibility for this type of bankruptcy. Back in 2005, changes to U.S. bankruptcy law made it more difficult for consumers to be eligible for Chapter 7 bankruptcy, which is a type of liquidation bankruptcy. Those changes to the law were designed to prevent abusive bankruptcy filings in situations where the debtor actually has the means to repay some of the debt that they are seeking to discharge. In practice, however, those changes to the law have made the bankruptcy process more difficult and complicated for many debtors in Oak Park and across Illinois. The U.S. Department of Justice recently issued changes to median household incomes, which will result in changes concerning which debtors will need to take the “means test” in order to qualify for Chapter 7 bankruptcy in the U.S. We want to tell you more about these changes and to en

Possibility for New Bankruptcy Law Reform

As you may know, 2005 was the last year of major bankruptcy law reform with the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), which effectively made it more difficult for many individuals and families to file for Chapter 7 bankruptcy in Illinois and across the country. Over the last 15 years, the U.S. has grappled with a wide variety of large-scale financial issues that have impacted consumers, from the real estate crash of 2008 and the resulting recession and foreclosure crisis to the COVID-19 pandemic that has resulted in the losses of millions of jobs across the country. Recognizing the ways in which the current bankruptcy system simply does not work for many struggling consumers, members of Congress are pushing for new bankruptcy reform. We want to tell you more about recently proposed federal legislation that seeks to make changes to the current consumer bankruptcy system in this country. Senator Elizabeth Warren Proposes Bankruptcy Reform According

Is There More Than One Type of Consumer Bankruptcy?

If you are struggling with debt in Oak Park and you are weighing your options, you might be considering personal bankruptcy . Yet if you do not have any experience with the consumer bankruptcy process, and you do not have any friends or family members who have filed for bankruptcy, it can be difficult to understand how the process works. In particular, you might be wondering, “Is there more than one type of consumer bankruptcy ?” If you have done a quick internet search for bankruptcy, you have probably discovered that there are many different chapters under which a bankruptcy case can be filed, and it can be extremely confusing to navigate the U.S. Bankruptcy Code . You may notice that some types of bankruptcy can be used for individuals and businesses alike, while others are limited to individuals and others still are limited only to businesses. All of that is a lot of information to parse. Generally speaking, there are two major types of consumer bankruptcy, but sometimes consume