Oak Park Real Estate & Estate Planning Blog

When an individual debtor — as opposed to a business debtor — is considering the possibility of filing for bankruptcy , there are a number of terms that can be used to describe the type of bankruptcy case. For a person who is contemplating bankruptcy, understanding when terms overlap and when they are distinct can be confusing, and the use of various terms can appear to complicate the overall bankruptcy process. While the bankruptcy process and U.S. bankruptcy law are, indeed, complex, our Oak Park bankruptcy attorneys can provide you with clarification concerning consumer bankruptcy or personal bankruptcy in Illinois. Consider the following information, and do not hesitate to reach out to our firm if we can answer any questions about getting started on a consumer bankruptcy case. Personal Bankruptcy, Consumer Bankruptcy, and Individual Bankruptcy are Interchangeable Terms Consumers are often confused about the different uses of the terms “personal bankruptcy,” “consumer bankruptcy,” ...

Are you considering personal bankruptcy ? If so, you might have discussed your circumstances with close friends or family members, and you might have done some of your own research into the different types of consumer bankruptcy that are available. Yet, many people in the Chicago area who are struggling with debt encounter a lot of misinformation or incomplete information before they have spoken with an attorney. We know that filing for bankruptcy is a big decision, and we want to ensure you have the information and the answers you need. Here are answers to five top bankruptcy concerns our Oak Park bankruptcy lawyers often hear. 1. Bankruptcy Concern: I Will Lose All of My Property Many debtors reach out to bankruptcy lawyers with the initial concern that filing for bankruptcy will result in them losing all of their property or being required to turn over all of their property to the bankruptcy trustee. This is simply not how any type of consumer bankruptcy works. Under the Bankruptcy ...

In the New Year, you may be considering the possibility of filing for personal bankruptcy . As you may already know, the two most common types of personal bankruptcy are Chapter 7 bankruptcy cases and Chapter 13 bankruptcy cases. Both types of bankruptcy require the debtor to show eligibility, and the proof required to show a person’s eligibility for Chapter 7 will be much different from that required for a Chapter 13 case. In short, Chapter 7 requires the debtor to show that their income and assets are limited enough for liquidation bankruptcy to make sense. Differently, Chapter 13 bankruptcy requires the debtor to show that they have a regular income that is stable enough and of a high enough value for the debtor to reliably be able to make payments for three to five years in a reorganization bankruptcy. Both types of bankruptcy come with pros and cons. When it comes to the “pros,” what are the top benefits of bankruptcy in 2023? Our Oak Park bankruptcy attorneys have more informatio...

Any debtor who is considering the possibility of filing for consumer bankruptcy has likely looked into the different options that are available to an individual debtor. In most cases, an individual debtor in Illinois will file for Chapter 7 bankruptcy or Chapter 13 bankruptcy, depending upon the debtor’s particular circumstances. Debtors are not typically eligible for both types of bankruptcy, and as such, a debtor cannot choose between Chapter 7 and Chapter 13 bankruptcy. Rather, Chapter 7 bankruptcy is designed for individual debtors who can pass the “means test,” showing that they have insufficient income or resources to repay debts in any meaningful capacity. Chapter 13 bankruptcy, differently, is designed for wage earners who can prove that they have a regular income that will allow them to meet the terms of a three-to-five year bankruptcy plan. If Chapter 7 and Chapter 13 bankruptcies are the most common types of bankruptcies for individual debtors, why is there information abou...

If you owe a significant amount of debt and a portion of that debt includes federal student loans, you may be able to more easily have that debt discharged by filing for personal bankruptcy . According to a recent article in The Washington Post , a student financial aid point person for the U.S. Department of Education informed Congress “that the agency is working with the Justice Department to revise its bankruptcy policy for federal student loans.” This could mean that debtors who are struggling largely with student loan debt may soon be able to avoid the complicated process of seeking to have that debt discharged in bankruptcy even if there is not an overhaul of U.S. bankruptcy law. Changing the Approach to Student Loan Debt According to Richard Cordray, the current chief operating officer of the Office of Federal Student Aid, the current process for seeking a discharge of student loan debt in bankruptcy “doesn’t work well” and “needs to be reformed.” Speaking before a House educa...

Struggling with debt is incredibly difficult under any circumstances, but it has been particularly difficult for many individuals and families in Illinois during the coronavirus pandemic. You may be dealing with frequent calls from debt collectors, and you might be considering Chapter 7 bankruptcy or Chapter 13 bankruptcy as an option. At some point, you might learn that the creditor has charged-off your debt, and you might assume that you are no longer responsible for paying the debt. Whether or not you are considering personal bankruptcy , we want to make sure you understand what charged-off debt is and how it can affect you. What Does it Mean if My Debt Has Been Charged Off? If you learn that a particular debt has been charged off, you should know first and most importantly that this fact does not mean that you no longer owe the debt. In fact, many charged off debts are sold to debt collection companies and other debt buyers, and you will likely continue to receive calls about th...

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...

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...

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...

Consumers who are struggling with debt but do not want to file for bankruptcy may, in certain situations, end up facing an involuntary bankruptcy petition. While involuntary bankruptcy is much more common when businesses owe debts to creditors, there are situations in which creditors can file an involuntary bankruptcy petition against an individual debtor. In most situations, individual consumers do not need to be worried about facing an involuntary bankruptcy case. However, it is important to understand the kinds of scenarios in which the U.S. Bankruptcy Code allows a creditor (or a group of creditors) to file an involuntary bankruptcy petition against an individual debtor. Learning More About Involuntary Bankruptcy Before we discuss some of the situations in which creditors can and cannot file an involuntary bankruptcy petition against an individual debtor, we want to tell you more about involuntary bankruptcy. In general, there are voluntary and involuntary bankruptcy proceedi...

If you are considering whether consumer bankruptcy is the right path for you, we know that you probably have many different questions. When you have questions or concerns, it is important to know that the specific facts of your situation could affect certain answers to inquiries you have. As such, you should always speak directly with an Oak Park bankruptcy lawyer who can assess your case and provide you with tailored responses. In the meantime, the following are some frequently asked questions about consumer bankruptcy, along with replies that can be helpful to you as you consider whether bankruptcy is the right choice for you. Can I Choose Between Chapter 7 and Chapter 13 Bankruptcy? In most situations, the U.S. Bankruptcy Code does not permit a debtor to choose between Chapter 7 and Chapter 13 bankruptcy because each type of bankruptcy has different requirements. In order to qualify for Chapter 7 bankruptcy, you need to prove that your income and assets are low enough that ...

If you are an individual (and not a business) who is thinking about filing for Chapter 7 bankruptcy , you need to know up front that you will need to be able to pass the “means test” in order to be eligible for Chapter 7 bankruptcy in Oak Park. The means test was instituted as part of the bankruptcy reforms that occurred in 2005 to prevent individual consumers who have the ability to repay debts from obtaining a swift discharge. The drafters of the bankruptcy reform measure thought it would be abusive to allow a consumer who earns a regular paycheck to have assets liquidated. When you are considering Chapter 7 bankruptcy, which is a liquidation bankruptcy, you are probably wondering, “Can I pass the means test?” We want to give you more information about the means test, and to clarify what your options might be in the event that you cannot pass the means test to file for Chapter 7 bankruptcy. Determining Household Income In general, the first step toward passing the means test is to...

For most consumers in Oak Park, Illinois, one of the major benefits of filing for personal bankruptcy is that you can be eligible to have debts discharged—either quickly in a Chapter 7 bankruptcy case or the end of a reorganization plan in a Chapter 13 bankruptcy case. For many debtors in Illinois, the bankruptcy discharge allows for a fresh financial start and the ability to stop worrying about unmanageable debt. There are also other reasons to file for personal bankruptcy, especially if you are at risk of foreclosure. Filing for Chapter 13 bankruptcy can allow you to stop a foreclosure and to get back on track with monthly mortgage payments. Yet if you are currently considering filing for bankruptcy in order to have your debts discharged, you should know that certain types of debts are not eligible for discharge. The following should give you a sense of some of the major types of debts that are considered “non-dischargeable” under the U.S. Bankruptcy Code . Family Support Debt I...

Will the coronavirus pandemic result in more consumer bankruptcy filings in the coming months? Given that thousands of people who own small business, who work in the restaurant industry, and who earn a living through the gig economy are now out of work and without incomes, many if not most of those Americans may need to seek bankruptcy protection. According to a recent article in The Wall Street Journal , bankruptcy experts in the National Bankruptcy Conference (NBC) are urging the federal government to broaden bankruptcy protections for consumers and businesses alike during this unprecedented moment “to help ameliorate the financial damage stemming from the coronavirus.” More specifically, the article explains, bankruptcy law practitioners, scholars, and judges who make up the National Bankruptcy Conference advisory body argue that, “to blunt the economic fallout from the pandemic, special bankruptcy protections should be made available to more small businesses and bankruptcy court...

If you are considering consumer bankruptcy , then you may be wondering how a personal bankruptcy filing will impact the belongings you currently have. For example, will you be able to keep your house, or does all of the equity in your home need to be turned over to the bankruptcy trustee? Can you keep your motor vehicle? How do bankruptcy courts handle property that has sentimental value, such as family photos or jewelry that you consider to be a family heirloom? The amount and kind of property that you will be able to keep if you file for bankruptcy depends upon the type of bankruptcy you are filing for, and then it depends upon the kind of property you have and want to retain according to Illinois’s bankruptcy exemptions. Let us explain in more detail. If You File for Chapter 13 Bankruptcy If you are planning to file for Chapter 13 bankruptcy, you should know immediately that this is not a liquidation bankruptcy. To be clear, you will not need to liquidate your property up front i...

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 liqui...

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. ...

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 rep...

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 f...

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 q...