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Chapter 7 bankruptcy

Chapter 7 bankruptcy is a form of bankruptcy where your debts are canceled, but some of your assets are sold to pay off part of your debt.

Daniel J. Winter | Oct 16, 2019

Chapter 7 vs. Chapter 13 Bankruptcy- Which is Best for You?

Chapter 7 Bankruptcy - Eliminates Debts- Do you Qualify? Chapter 7 Bankruptcy is sometimes referred to as "Straight Bankruptcy". This is what most people need. You file a Petition to eliminate all of your debts. You have to list every debt you owe to every company or person. You also have to tell the court everything you own, including houses, cars, vacant land, bank account balances, and other valuable things you own. The reason you have to disclose everything you own, is because, you are allowed to keep your belongings, as long as it is not over the amount you are allowed to protect. The amount you are allowed to protect is called, exempt property. That varies by state. For example, in Illinois, you are allowed to protect $15000.00 equity in your house, $2400.00 worth of a car, and $4000.00 worth of everything else. These are the common exemptions. There are others, and you need to consult with an experienced bankruptcy lawyer to discuss how they apply to your situation. If you own more than you are allowed to protect, you might need to file Chapter 13 Bankruptcy to protect your things. Chapter 7 Bankruptcy, in turn, eliminates debts such as credit card, medical, some taxes and utility bills. It does not eliminate certain taxes, child support, or student loan debt. How do you qualify for Chapter 7 Bankruptcy? You have to pass the "Means Test". This test says that if you make under a certain amount of money for your size family, you can file Chapter 7. If you make more than the state median, then we have to go further, and you get certain allowances, and after the full test, you might or might not qualify. If you own too much property or make too much money, you will then have to consider Chapter 13 Bankruptcy to reorganize your debts over 3 to 5 years. Chapter 13 Bankruptcy- Reorganizes Debts and Saves Houses and Cars Chapter 13 Bankruptcy is a court-supervised reorganization of your debts. Most people who file Chapter 13 Bankruptcy are behind in house or car payments and want to save the house or car. Two things determine how much your payment in the Chapter 13 Plan will be. First, is the "Means Test". After taking your last 6 months average from your pay stubs, then deducting your expenses such as taxes and insurance and car payments, the number that is left tells the court how much you have to pay on your unsecured (credit card and medical) debt. This is a very complicated process, much like doing a tax return. The second way your payment is determined is based on how much stuff you own that is beyond what you can protect. You have to pay at least as much as the amount of property you can't protect. So if you have $10,000.00 worth of unprotected equity in your house, you have to pay at least $10,000.00 to your creditors over 3 to 5 years. The attorney develops a Chapter 13 Plan, and it tells your creditors how much they will be paid, in what order, and when. No bill collecdtors Which is best for YOU? Chapter 7 or Chapter 13? When you meet with an experienced Bankruptcy Attorney, he or she will review your whole financial situation. What you own, who you owe, and what your goals are. Then we can start to determine whether Chapter 7, Debt Elimination, or Chapter 13, Debt Reorganization, is best for you. In many cases, we have to do the "Means Test" to determine which type of bankruptcy you qualify for. The most important thing to remember is that at the end of your meeting with an attorney, you should know a bit about each type of bankruptcy, how each would affect you, and whether you'll qualify or not. Generally, if you own too much stuff or make too much money, you can't file Chapter 7 and get full debt relief. Rather, you'll probably have to file Chapter 13 and pay back at least part of your bills back. The Devil is in the Details, so it's important that you understand everything before you decide with your attorney which type of Bankruptcy Relief is best for you.

Michael F. Terry | Sep 10, 2019

Top Ten Bankruptcy Myths

Congress has eliminated bankruptcy for the "little guy." Despite what you may have heard in the press, bankruptcy is still alive and well and available to the little guy. Yes, in October 2005, new bankruptcy reform laws went into effect that may make it more difficult for some individuals to qualify for Chapter 7 relief. However, consumers in serious financial trouble should still be able to qualify for protection under the Bankruptcy Code. The sky has not fallen on bankruptcy! Bankruptcy will ruin my credit record This is absolutely false. What ruins your credit record is your inability to pay your debts on time. After your bankruptcy case, many of your debts will be discharged, and you will be given a fresh start. If you can keep on top of any new debts you incur after you emerge from bankruptcy, your credit record should actually improve. Filing bankruptcy makes me a bad person Absolutely not! Congress passed the bankruptcy laws to help individuals and businesses with severe financial problems get a fresh financial start and become productive members of society again. Do you think it makes you a better person to avoid your creditors, ignore your bills, and drive yourself further into a debt hole that you'll never get out of, or to take on new credit responsibly, and pay your bills on time? Millions of businesses and individuals file for bankruptcy each year and become productive members of society-you can too. I won't be able to get credit after my bankruptcy Think about it. If you owned a credit card company, who would you rather give a credit card to: someone who has a massive debt load and is behind on all their bills, or someone whose bills have been wiped out? Probably the latter, right? That's why you should be able to get credit after bankruptcy. Since many of your debts will be wiped out after bankruptcy, and, in the case of a Chapter 7, you won't be able to file another one for another eight years, many creditors will see you as a good credit risk after your bankruptcy. I can't afford to hire an attorney for my bankruptcy We offer payment plans: you can make a down payment and pay the balance in installments. A debt counseling service can help me eliminate my debts without the stigma of bankruptcy on my r This myth is a very dangerous one. Debt counselors cannot get rid of your debts, nor can they stop your creditors from harassing you. All debt counselors do is help you negotiate new terms on your existing debt with your creditors-your creditors do not have to agree to any restructuring, and they can still come after you for any unpaid balances. By contrast, the moment you file your bankruptcy case, many of your creditors are prohibited by law from taking any legal actions against you, and once your bankruptcy is complete, many of your debts are gone forever. Furthermore, credit counselors do not necessarily have your best interests in mind-they are often owned by the very creditors that are making your life miserable to begin with. Don't let their non-profit claims fool you-when you use a debt counselor, someone is making a lot of profit off you, and in most cases you’ll still be hopelessly in debt. Bankruptcy cannot get rid of debts like student loans and taxes This myth ignores the fact that in some instances you can include student loans and taxes in a Chapter 13 repayment plan and pay them off over time. In many cases, this will save you money. Also, in rare instances, these debts may be dischargeable. You will need to talk to an experienced bankruptcy attorney if you have these types of debts. I can handle my bankruptcy myself Although you are permitted to handle your own bankruptcy if you wish, do you really want to? Bankruptcy involves a complex interplay of state and federal laws, and there are many traps for the unwary. Your bankruptcy will be one of the most important events of your financial life; if it is not done properly, it could have dramatic consequences for the rest of your life. You wouldn't perform your own surgery, why would you perform your own bankruptcy? I won't be able to buy a house or a car, or rent an apartment, after bankruptcy Again, not true. As we note above in myth number 4, you should be able to get credit after bankruptcy. Although it may take you a little time to start purchasing things, you should be a good credit risk once you emerge from bankruptcy, and you shouldn't have too much trouble making these types of purchases. You can also get help in making these types of purchases, such as getting someone to be a co-signer for you. I don't want to go through a difficult and time consuming court case Forget about jury trials, cross examination, and all of the other courtroom drama you see on TV. In most bankruptcy cases, you'll never appear before a judge, and in most Chapter 7 cases, your case will be complete and your debts discharged in about four months. BONUS TIP: Any lawyer can handle a bankruptcy Although any licensed lawyer can represent you in a bankruptcy case, would you hire a criminal lawyer for a real estate closing, or a patent attorney for a divorce? Don't you want to have the comfort of knowing that your case is being handled by an experienced professional? You'll likely only file for bankruptcy once in your life, so you should hire an experienced bankruptcy lawyer for this very important job.

Avi Adler | Jul 15, 2019

Don’t Hire a Bankruptcy Lawyer Until They Answer These 9 Questions

1. Is bankruptcy the best option for me? You want a lawyer who genuinely helps advises clients based on their unique circumstances instead of just trying to make a sale. A good bankruptcy lawyer will only take on clients for whom bankruptcy makes the most sense while advising others to get help in ways that make the most sense for them. Generally, at the point in time that someone is looking into bankruptcy options, it usually means that that filing for either Chapter 7 or chapter 13 is indeed the best option for them. However, you should still try to find a lawyer who shows experience and understanding of the various alternatives, just in case. 2. What is Your Experience as a Bankruptcy Attorney? Many law firms specialize in other fields of practice and only file bankruptcies on the side. Generally, it’s a good idea to find an attorney dedicated to helping people with their debt. Having someone who really cares and files bankruptcies on a daily basis will be your best advocate for your bankruptcy success. Additionally, some cases can be more complicated than others. If you have a complex Chapter 13 case, or if your case involves student loans, you want to be sure your lawyer has the expertise for these types of cases. 3. Should I be Filing for Chapter 7 or Chapter 13? Remember to ask your lawyer which type of bankruptcy is best for you. Chapter 7 may be better for you if your income is below a certain level. This requires you to surrender much of your property, and you’ll be released from your debt, with some exceptions, such as back taxes or student loans. Chapter 13 allows you to keep your property by agreeing to a payment plan to pay off your debts over a 3-5 year period. 4. Who will be handling my case? It's really important to make sure you trust your lawyer and want them to take care of your case. We recommend meeting with the lawyer in-person before hiring them. Also, make sure an experienced lawyer will handle your case to increase the likelihood of successfully filing for bankruptcy. Some firms will only have you meet with an experienced lawyer, while an inexperienced lawyer will actually work on your case, lowering your odds for getting your case discharged. 5. What are the total costs for filing for bankruptcy? What is included? Be sure your lawyer gives you the total cost up-front, from their fees to court fees, to avoid any hidden fees later on. For example, in Chapter 7 cases, the fee is $335, and for Chapter 13 cases, the fee is $310. There are also several courses you may need to take which may cost additional money. Additionally, make sure to find out what is included in the attorney’s fees. You can also ask about payment arrangements the lawyer may be open to setting up if needed. There should always be a written fee agreement given to you, showing all the items being charged. You never want to find out down the line about some hidden fee that wasn’t brought up beforehand. 6. Will you keep me updated throughout the case? Find out from your lawyer how long the bankruptcy process will take and at what points they will contact you to keep you updated. Additionally, make sure you understand the attorney’s preferred methods of communication, whether by email or phone call. You should also ask who will field your questions or concerns if the lawyer isn’t available right away. Some attorneys communicate with clients primarily by email, while others prefer to use the phone. Some will be accessible after hours. Be sure to choose a lawyer who communicates using your preferred contact method. 7. Are there any Problems With My Bankruptcy Case? It is crucial to find a lawyer who will be upfront with you about the potential risks involved in filing for bankruptcy, such as the possibility of losing some of your property and how it may affect your credit rating. Your lawyer's response to this question will help you accurately assess their expertise and honesty. 8. How Long Will the Bankruptcy Process Take? Ask the attorney to tell you about how long you can expect each step in the bankruptcy process to take. Does your lawyer start working on the case immediately, or is there a backlog? How long your case will take depends on several factors. You can expect your Chapter 7 case to take about four months from start to finish. Chapter 13 bankruptcies tend to take longer until they are completely finished, especially if you decide upon a 5-year payment plan. 9. What Happens After My Bankruptcy? Ask your attorney if they offer personalized support with planning your finances after the bankruptcy has gone through. Some bankruptcy law firms provide useful help with improving your credit record and other financial issues.

Kenneth Edward Walton II | Jun 18, 2019

Consumer Guide to Bankruptcy, Debt Collection, Garnishment, Repossession and Foreclosure

Alternatives to bankruptcy . . . It is often said that bankruptcy should be a “last resort” for financially troubled consumers. This advice is oversimplified. In some cases, legal rights can be lost by delay. It is especially important to get early advice about bankruptcy if you are hoping to use the bankruptcy process to help save a home or a car, or to stop or prevent garnishment. While bankruptcy can prevent a foreclosure or repossession, bankruptcy usually cannot help once the sale process has been completed and your property interest in the collateral has been terminated. Under Florida law, this occurs upon the issuance of the Certificate of Sale, which typically is by 11 AM on the day of the sale. Florida is a deed, mortgage and promissory note state and forecloses by judicial foreclosure. It is important to understand the specifics of your own state in regards to real estate financing, land ownership and foreclosure procedures. We have also used bankruptcy as a defense to foreclosure sales in Colorado and Illinois. There are extreme differences between each of the three states. If you have questions about about bankruptcy to defend against foreclosure in a different state, feel free to contact us. You may live in a state that we are willing to join the Federal Bar and Bankruptcy Bar, and if not, we will provide you contact info for one of consumer defense colleagues in your state. In some situations, however, it may make sense to explore alternatives to bankruptcy. Such alternatives may include an out-of-court settlement with creditors, mortgage modifications or negotiating a reduction of payments to creditors. If facing garnishment in Florida, call us right away. Florida might have more garnishment defenses than any state in the country. It certainly has more than Illinois or Colorado, where bankruptcy is more likely to be the best option to stop garnishment. Collection harassment . . . Consumers with debt problems often consider bankruptcy primarily to stop harassing telephone calls and letters from creditors. Once we are retained, we tell our clients to tell all clients that they have retained our services. Then by law, the creditors must stop calling our clients. They are allowed to call us regarding the debt. If they do, it is typically only to tell us where to serve them with the notice of bankruptcy. The Fair Debt Collection Practices Act (FDCPA) and the Florida Consumer Collection Practices Act (FCCPA) provide invaluable rights to consumers to prevent illegal and harassing debt collection activity. If you are being harassed by debt collectors, record their calls and save their voice messages. When a debt collector or creditor starts their communication with a statement such as "This call may be recorded for quality assurance.", it gives you the right for them to record the call, and you are consenting to the recording by staying on the line. However, it also give you the right to record the call without telling them you are recording the call. We advise our clients, for their own protection, to absolutely record anyone that announces they may be recording the call. In our experience, companies that say that they may record the call, can always find the recordings that prove that they are in the right. However, if the recording of a call would would benefit the you as the consumer, when you ask for a copy of it, you should expect to hear "we don't record every call" or "we routinely purge recordings to conserve space on the server" Side note on recording harassing debt collectors, and others . . . There are apps that can be installed on your cell phone to record calls. Some will beep during the call and others will not. Clients have brought us recordings made by putting the call on speaker phone, and using their phone, tablet, laptop, video camera or $20 digital recorder from Amazon or Walmart. All that said, I strongly advise to not share the recording with anyone but a experienced consumer protection lawyers. Confidential settlements often fetch a higher price for consumers than do settlements where the information has already gone viral. Not to mention, you may find friends and co-workers to be less willing to talk to you on the phone out of fear that you might record them and publish the conversation. Also remember this, in the 21st century, it is smart to assume that someone is recording what you are doing or saying or both. If you have any questions on the legalities of recording conversations, we are fond of the subject and welcome your emails. And as mentioned earlier, discussing recording phone calls is a subject best only discussed with consumer protection lawyers like us, versus risking losing the trust of your friends and family. Florida is an all party consent state when it comes to recording conversations. It it illegal to record a live or phone conversation unless all persons involved are notified prior to recording that you are initiating recording. If the other people say that they do not consent to you recording, you are not required to stop recording. You have a right to record your conversation as long as you make it unmistakably clear that you are recording (although typically not in courthouses unless you have permission from the judge). The other people have the right to continue to speak or stop speaking until you stop recording. If they continue to speak after they stop, that is on them, provided that you didn't pretend to stop. Also, a lot of people ask about recording Home Owner Association (HOA) Meetings, Condo Association Meetings or town hall type meeting in their communities. For HOA and Condo meetings, the answer is generally yes, but their are exceptions to when you cannot. In town hall type meeting in your community, let's put it this way, whatever you whisper is likely to be recorded by a few people. Illinois and Colorado are single-party consent states, which means that anyone who is participating in a particular conversation can record the conversation without asking permission or informing the other participants that they are recording the conversation. However, just because it is legal, it does not make it moral or intelligent to do. If you record someone without their permission, you best keep it secret from everyone except your attorney. Disclosure of the recording, especially reckless disclosure of the recording, could manifest into a wide range of consequences, including but not limited to bodily harm or being charged criminally for alleged extortion or blackmail. Also, be extra smart where you store your recordings. If you use your cell phone, you should definitely secure your phone with a strong password, and encrypt the SD card and the local phone storage, in case you lose your phone. What bankruptcy can and cannot do . . . Bankruptcy may make it possible for you to: ● Eliminate the legal obligation to pay most or all debts. This provision is called a “discharge,” which is designed to give the debtor a fresh financial start. ● Stop foreclosure on a home and allow you an opportunity to cure a default. ● Prevent repossession of an automobile or other personal property. ● Stop wage garnishment, debt collection harassment and other similar collection activities. ● Prevent termination of utility service or restore service if it has already been terminated. ● Lower monthly payments on some debts, including some secured debts such as mortgages or car loans. Bankruptcy, however, cannot cure every financial problem. In bankruptcy, it usually is not possible to: ● Modify certain rights of secured creditors. Although you can force secured creditors to take payments over time in the bankruptcy process to cure a default, some secured creditors are afforded protection from other modifications of the loan terms. ● Discharge certain types of debts singled out by the Bankruptcy Code for special treatment, such as child support, alimony, most student loans, court restitution orders, criminal fines and most taxes. ● Protect all co-signers on their debts. When a relative or friend has co-signed a loan and the debtor discharges the loan in bankruptcy, the co-signor may still have an obligation to repay all or part of the loan. ● Discharge debts that are incurred after bankruptcy has been filed. Types of bankruptcy . . . There are six basic types of bankruptcy cases provided under the Bankruptcy Code. The cases are traditionally given the names of the chapters that describe them. Determining which type of bankruptcy to file is based upon analysis of numerous factors, including income, assets, debt, type of debt and the consumer’s goal in filing bankruptcy, among other factors. Most consumers, however, will file bankruptcy under either Chapter 7 or Chapter 13. Because our practice deals with a lot of real estate investors and real estate financiers, we do deal with consumers whose debt exceeded the thresholds for Chapter 13 and must file Chapter 11, which is predominately for mid to large corporations. (Chapter 13 bankruptcy thresholds are no more than about $394,725 in unsecured debt, or no more than about $1,184,200 in secured debts). Chapter 12 is like a Chapter 13, but for farmers. Chapter 9 is for Municipalities. Chapter 15 is for filing foreign debtors. Discharging student loans and other debt due to mental health issues . . . As a country, our intelligence is just beginning to sharpen and we are better learning how to provide reasonable accommodations to people with physical health challenges. Additionally, we are beginning to evolve and provide enlightened support for the mental health needs for our country. As such, the bankruptcy code and bankruptcy courts provide framework for discharge of student loans, where repayment of the debt would provide and "undue hardship" for the consumer. Undue hardship traditionally was granted to persons who suffered from a debilitating illness or physical trauma. However, certain persons with bipolar and mental health challenges, have also demonstrated "undue hardship" and granted discharge of student loans in bankruptcy courts across the country. If you would like more information, shoot us an email and give us a call. Every conversation had with us, even before you hire us, is legal protected by attorney-client privilege. We have worked with many people with mental health challenges become debt free, and also help rebuild their lives and their credit. Fresh start is the starting line, not the finish line . . . Bankruptcy is more than getting rid of debt. It is an asset protection, credit restoring and a family wealth generation vehicle as well. That is why every year that you hear all of the stories of famous celebrities, Fortune 500 companies and of course presidents, hiring bankruptcy attorneys. Within 3 years of filing bankruptcy you can have your credit score above 700, yes above 700, especially the sooner that you file instead of letting more negative history build up on your credit report. It is important to do a full credit report analysis, followed by an assets and liabilities analysis because in many cases we give clients a list of things to do first on their own, and to then come back to us. This includes writing letters to challenge items on their credit reports, waiting for a few months after taking out a loan on a 401k, or advising to trade in their current car for a new car before filing. Things like this can help you qualify for Chapter 7 instead of 13; help you increase your credit score before you file; and/or negate that impact that the filing bankruptcy has on your credit score. Thank you for reading . . . and for more information . . . For specific information on each of the Chapters, see our other legal guides. Or just pick up the phone and give us call or shoot us an email. Every client that for whom we filed their bankruptcy petition, has been glad that they filed. However, at least 50% of them could have protected more of their family's money by coming to days, weeks, months and years sooner. Often, as you will see from a few our AVVO client reviews, we tell clients not to hire us. Also, every bankruptcy court that I have seen has terrific information for debtors. We actually send the info from the courts to our clients, so call us and we will be glad to save you sometime looking. Also, if you go to the website for the Chapter 13 trustee for your area, they have lots of good information too. What about the library? Sadly, as the son of a former school teacher, I was mandated to check out books from the library, and today have library cards in Denver, Miami and Chicago. Unfortunately, I would not recommend a single book on bankruptcy or debt relief that I have seen at any library. Don't waste your time. Stick with the bankruptcy courts and the Chapter 13 trustees, and of course consumer protection lawyers like us. If you want information on DIY credit repair and credit restoration, I have seen lots of good books on that. However, be aware that credit repair and credit restoration by consumer protection lawyers will be better. This is because we are assume the worst of the the credit bureaus and write the letters both seeking deletions by following all of the statutory provisions, but also write thinking about how to win the lawsuit we might have to slap on the credit bureau to get our clients the justice they deserve.

Robert J Adams Jr. | Mar 13, 2019

It is possible to discharge all or some Chicago Parking tickets in Chapter 7? Yes! (Sorta)

All tickets are older than 3 years If all tickets are older than 3 years as of the date of filing Chapter 7 the debt to the city will be waived upon receiving a Chapter 7 discharge. WHAT ABOUT WHEN THERE ARE TICKETS YOUNGER THAN 3 YEARS? The original amounts. The increased penalties will be gone. The resulting balance has to be repaid over a period of time. Ticket fines double when not paid. A $60 ticket becomes $120; a $100 ticket becomes $200. Under this program the repayment goes back to the original amount. Tickets younger than 3 years at the original amount will have to be repaid over a period of 6 months to 5 years. Completing the program and you receive a discharge in Chapter 7 the city will waive all the fines and costs. Also, you must pay any ticket you get during the installment payment term. What About Cars Towed Or Booted By The City? To enroll in the program and get the car back: you must pay 25% of the tickets younger than 3 years but only at the face amount. Example: $5,000 in tickets; $3,000 less than 3 years; going back to the original amount: $1,500: Immediate payment of about $375. Car impounded for other reasons (like driving on a suspended license)? Same as the above plus $1,000 or $1,375. Steps To Take Email [email protected] List your name and address; your license number; All known license plate numbers; (past and present) If the vehicle has been booted or impounded state why: parking tickets or perhaps driving on a suspended license The city will then send its proposal to you. Bring the proposal to the lawyer of your choice. SHOULD I FILE CHAPTER 7 OR CHAPTER 13 The choice is yours. Can you live up to the payments in the proposal? A little later you will see the downside of the plan if you don't complete it. CHAPTER 13 INSTEAD OF CHAPTER 7 Chapter 13 may be the better solution with Chicago tickets that are younger than 3 years old. That is why you have to determine how much you owe for tickets younger than 3 years old. If you only have unsecured debts such as parking tickets most of our clients pay about $100 per month. When completely the Chapter 13 plan the tickets as well as all other listed debts are gone forever. What About Converting An Existing Chapter 13? The date to determine what is older than 3 years runs from the date of filing Chapter 13 and not the date of converting the Chapter 13 to Chapter 7. So, may not work. The Good, The Bad, And The Ugly If all your tickets are older than 3 years the city will waive the tickets upon getting a Chapter 7 discharge. Repayment plan for the tickets: the city will waive all tickets when you complete the program. During the term of the repayment program you must pay any new tickets. If you get a repayment plan and you fall behind: what then? The city will allow you on 2 occasions to catch up. But, not a 3rd time. If you do not complete the repayment plan you will owe all the tickets: even the ones older than 3 years and penalties will come back. Don’t file Chapter 7 unless you are 100% sure then you can complete the program. Filing Chapter 13 may well be a safer bet for you.