Facing Chapter Seven Bankruptcy is a daunting prospect for those who do not understand the process. Most people live in fear of bankruptcy and may be afraid to consider going to bankruptcy court. However, despite the presence of that dreaded “B” word, opportunity is the light at the end of the tunnel. Understanding Chapter Seven bankruptcy laws and how they can benefit you is a big step on the journey to financial recovery and future success. One of the biggest advantages to declaring Chapter Seven is that you can put an immediate stop to the creditor threats and harassment.
So what exactly is Chapter Seven Bankruptcy, and how can it help you?
Sometimes referred to as liquidation, this form of bankruptcy can be a way for individuals (and some businesses) to eliminate unsecured debt when they are in over their heads with monthly payments.
Discharges
A discharge can take care of money owed on credit cards, medical bills, personal unsecured loans and many other types of unsecured debt. According to the US Federal Court’s website, a discharge “...releases individual debtors from personal liability for most debts and prevents the creditors owed those debts from taking any collection actions against the debtor. Because a discharge is subject to many exceptions, debtors should consult competent legal counsel before filing to discuss the scope of the discharge.”
Automatic Stay
Additionally, an automatic stay will stop most collection actions against you or your property. As long as the stay is in effect, creditors may not initiate or continue lawsuits, wage garnishments, or those harassing telephone calls demanding payments.
Potential Loss of Property
However, potential debtors should understand that filing a petition under Chapter Seven may result in the loss of property. In the ensuing case, the bankruptcy trustee will gather and sell the debtor's nonexempt assets to pay creditors. Additionally, some of the debtor's property may be subject to liens and mortgages which pledge the property to other creditors. Moreover, the trustee will liquidate the debtor's remaining assets. The news is not all bad though, as bankruptcy court allows certain property to be exempt from liquidation.
What is Exempt From Chapter Seven Bankruptcy?
There is a category of debt classified as “non-dischargeable debts”, which include child support, student loans and most types of tax related debt. Additionally, whether certain property is exempt and may be kept by the debtor is often determined by state law. Consulting an attorney is important in order to determine the exemptions available in the state where the debtor lives.
Secured vs. Unsecured Debt
Bankruptcy court will not automatically discharge liens such as your mortgage. If you want to continue to own your home or car, you will need to continue making payments. It is possible, under Chapter Seven to give the “security” back and discharge the remaining debt along with the rest of your unsecured debt. You will need to negotiate a reaffirmation agreement with your lien holders where you continue to make payments in exchange for keeping your property. A reaffirmation is an agreement you make with a creditor that you will remain liable and will pay all or a portion of the money owed, even though the debt would otherwise be discharged in the bankruptcy.
The process may be daunting to think about, but it does not actually take very long to complete; typically, cases only lasts three to four months from the time your Chapter Seven attorney files a case in bankruptcy court on your behalf. After that you will have a fresh start and a plan to stay debt-free. Let Chang & Carlin, LLP help you determine what your options are and create a road map to help you get out of debt; request a Free Consultation today.
DISCLAIMER: All information on this website are provided for informational purposes only and are not intended to be construed as legal advice. Chang & Carlin shall not be liable for any errors or inaccuracies contained herein, or any actions taken in reliance thereon.
If you are closing a business due to bankruptcy, it is important to know your options. Eight out of every ten business owners will face serious financial problems at some point. Financial issues can occur for many reasons, whether it is the overall economy or a poorly conceived business strategy, there are really only 3 viable choices for a business when facing the financial crunch:
Find a way to secure more financing
Default on your loan
File for a business bankruptcy
Going bankrupt is the simplest way to escape those relentless creditors, but it creates a red flag for your future financial endeavors and hurts your credibility as a business owner. Unfortunately this can lead to both business and personal issues down the road.
If you are closing a business and going bankrupt, you can file under one of three chapters of bankruptcy - Chapter 7, Chapter 11, or Chapter 13. In some cases your business must shut down during bankruptcy, while in other cases your business may remain open. Bankruptcy may be a way to get out of an oppressive lease and provides an orderly way for closing a business. While it can create a black mark on your credit score, filing for bankruptcy does not stop you from trying again and starting a new business in the future.
The following are the different types of bankruptcy and how they could apply to you if you are closing a business:
Chapter 7
This chapter is available for those businesses that are closing permanently. Although valuable assets may be liquidated and used to pay off the debt, this chapter of bankruptcy releases the filers from any obligation to pay. Chapter 7 is available to any type of business.
Chapter 11
Since corporations do not qualify for a Chapter 13, Chapter 11 is available, allowing businesses to reorganize debts and gradually pay them off. Businesses can even remain open during the bankruptcy process while they pay off their debts, and have 6 years to do so. Chapter 11 is available to any business, including corporations.
Chapter 13
Sole proprietors can file for Chapter 13, although they must file as individuals with business debts for which they are personally liable. Upon filing, an automatic stay is initiated, which prohibits the creditors from making any attempt to collect their debt, including starting foreclosure and repossession. Corporations may not file for Chapter 13.
You may have to close your business down if you file for Chapter 7 personal bankruptcy. However, you may be able to keep your doors open if you own an LLC or corporation with the other Chapters, even if you’re liable for a significant portion of its debt.
Even though bankruptcy is federal law, and most states have similar procedures on handling bankruptcy, bankruptcy filing law differs from state to state.This is why it is a good idea to always consult with a bankruptcy attorney from the state where your case is taking place.
The lawyers at Chang & Carlin, LLP are sensitive to the difficult decision you may be facing and are here to help you through this tough financial and personal time in your life. If you are considering closing a business and going bankrupt, let us help you determine what your options are and create a road map to guide you through the process of getting the best results possible for you and your business.
DISCLAIMER: All information on this website are provided for informational purposes only and are not intended to be construed as legal advice. Chang & Carlin shall not be liable for any errors or inaccuracies contained herein, or any actions taken in reliance thereon.
What is Chapter 11 Bankruptcy and how does it compare to other forms of bankruptcy? To begin, Chapter 11 tends to be targeted to larger businesses, but individuals may also use this reorganization plan. Under Chapter 11, businesses and individuals may restructure their debt without liquidating their assets. So who typically uses Chapter 11?
Small businesses
Individuals
Partnerships
Corporations
Other business entities
This plan allows these parties to reorganize operations and continue running through the whole bankruptcy process. Individuals with high levels of debt may use this process, but it can be very complex and costly. Most individuals seeking bankruptcy without liquidation prefer to file under Chapter 13.
What is Chapter 11 for Individuals?
Chapter 11 is often the only option available to an individual debtor with income greater than that allowed by Chapter 7, and has secured debt greater than that allowed by Chapter 13.
For example, an individual may own a large section of real estate property, but does not have sufficient liquidity to pay debts as they occur.
Chapter 11 benefits individuals by allowing them to keep assets beyond the exemptions available under Chapter 7 and Chapter 13.
Chapter 11 cases for individuals are infrequent, so if you are an individual considering filing Chapter 11 the guidance of a bankruptcy attorney could be very beneficial.
To initiate a Chapter 11 Bankruptcy case, a voluntary petition is filed with the bankruptcy court. Once the initial filings have commenced, all assets, liabilities, and a statement of financial affairs also must be filed.
Automatic Stay: Once the Chapter 11 process has begun, creditors must cease all actions to collect money owed to them from you or your business immediately. This allows an individual or business to begin negotiations with creditors, granting you some time to work through financial difficulties.
Chapter 11 also grants the exclusive right to file a plan of reorganization for a period of 120 days and to solicit a plan of reorganization for a 180 day period.
To better understand what Chapter 11 bankruptcy is, knowing the basics of other common types of bankruptcy is also useful:
Chapter 7 Bankruptcy: Probably the most common form of bankruptcy used by individuals, although businesses also may file under Chapter 7.
A court-appointed trustee assesses and gathers the individual’s assets.
The assets are sold by the trustee for cash which pays off creditors.
Some assets may be exempt, and these will not be liquidated.
Chapter 7 filing cannot be repeated for six years.
Chapter 12 Bankruptcy: This voluntary bankruptcy is tailored specifically for farmers and fishermen who have a steady income.
The debtor establishes a plan to pay off all or part of their debts over a certain period of time.
Chapter 12 is a much less daunting and expensive procedure than Chapter 11.
Chapter 13 Bankruptcy: Works for individual debtors with a steady income and small businesses.
During “individual reorganization,” debts are paid over a 3 to 5 year period and the debtor may keep their property.
Once a plan is confirmed, creditors will be required to accept payments according to the terms of the plan or not get paid at all.
Hopefully this overview has been useful for those wondering, ‘What is Chapter 11 Bankruptcy?’.
Even though bankruptcy is federal law, and most states have similar procedures on handling bankruptcy, bankruptcy filing law in Illinois differs from laws in other states.That is why it is a good idea to always consult with an Illinois bankruptcy attorney.
The lawyers at Chang & Carlin, LLP are sensitive to the difficult time you may be facing and are here to help you through this tough financial and personal time in your life. If you are considering filing bankruptcy, let us help you determine what your options are and create a road map to help you get out of debt.
DISCLAIMER: All information on this website are provided for informational purposes only and are not intended to be construed as legal advice. Chang & Carlin shall not be liable for any errors or inaccuracies contained herein, or any actions taken in reliance thereon.
Americans today assume that going to college is the best way to educate themselves and prepare for a career. Unfortunately, for many the student loan debt associated with college can be crippling. The worst part is you cannot discharge student loan debt through any type of bankruptcy. It's here to stay.
According to an article in The Bottom Line on MSNBC.com, student loan debt in the United States totals more than $1 trillion. This number is higher than the unsecured credit card debt in the country.
Students, (and their parents) are graduating with more student loan debt then they can afford. In a challenging job market these graduates are faced with difficulty finding work and this has made it challenging to repay the loans.
There has been a significant increase in the number of people who are trying to get help with their student loan debt. Unfortunately at this time there is nothing that can be done with this type of loan debt by filing chapter 7 or chapter 13 bankruptcy in Chicago.
However, there is currently a push for Congress to pass a bill that would allow individuals filing for chapter 7 or chapter 13 bankruptcy to receive a discharge from their student loan debts as well.
There is a lot of support for this bill including many educational associations. However those who were in favor of the 2005 bankruptcy reforms are unlikely to support a change to the system.
There is bankruptcy help for people who open a business that fails. So, it only makes sense that investing in education for a future career should be protected if the graduate cannot find employment.
If you are struggling with student loan debt, look into options to defer those loans and buy yourself some extra time. Also, it is wise to talk to a Chicago bankruptcy lawyer about your situation, as they can advise on the best solution for you.
DISCLAIMER: All information on this website are provided for informational purposes only and are not intended to be construed as legal advice. Chang & Carlin shall not be liable for any errors or inaccuracies contained herein, or any actions taken in reliance thereon.
Chapter 7 Bankruptcy can happen to anyone. This was recently proven when Chicago Bears alum Bob Avellini filed for chapter 7; Avellini played for the Chicago Bears as a quarterback from 1975 until 1984.
It is unclear what caused the former Chicago Bears quarterback to seek help from bankruptcy court - according to an article in the Chicago Tribune Avellini had $2.2 million in debt and $1.3 million in assets. The article quoted Avellini's current employment to be a self-employed property manager.
You can speculate what pushed Avellini to file bankruptcy, but ultimately he could no longer pay his bills. The decision to file chapter 7 instead of chapter 13 bankruptcy means that the Chicago Bears alum will have his $1.3 million in assets liquidated and the money made from the sales will go to make payments towards his debt. If the bankruptcy filing is successful, Avellini will then be discharged of his remaining debt and given a fresh start.
Had the Chicago Bears alum decided to file for chapter 13 bankruptcy instead he would have had to show proof of income and then be set up on a trustee approved payment plan. Avellini would be expected to make agreed upon payments to creditors for 3-5 years. Once the payment plan was completed he would be discharged of the remaining debt.
When a high profile person like a former Chicago Bears quarterback files for bankruptcy it draws a lot of public attention. It is likely that during the case his bankruptcy lawyers will shed some light on what caused the bankruptcy filing.
DISCLAIMER: All information on this website are provided for informational purposes only and are not intended to be construed as legal advice. Chang & Carlin shall not be liable for any errors or inaccuracies contained herein, or any actions taken in reliance thereon.
In today's job market there is no doubt that many former students are having difficulty making their student loan payments. College is expensive and loan payments can be as much as a mortgage in some cases.
It is important that former students figure out how to make those student loan payments because if you file for bankruptcy in Chicago your student loans will not be included in the debts that are discharged. Debts owed for back taxes, alimony and child support are other forms of debt that cannot be discharged through chapter 7 or chapter 13 bankruptcy in Chicago Illinois.
This makes it more important than ever to evaluate your finances before student loans kick in. Far too many former students do not realize how much they have in loans or who they will owe money to. Some loans are private, others are from the government. These loans will all carry different interest rates.
The first step a recent college graduate should take is to look at their student loan debt and research their options for consolidating their loans. Loan consolidation will sometimes carry a higher interest rate because of the various lenders you could have used. However if you have never consolidated before, you may be eligible for a special low interest rate.
Most importantly, if you are unable to make payments and feel like chapter 7 Chicago is your only option, don't just stop making payments to your student loan creditor. Contact your lender and see if you can defer the loan payments to help you get back on your feet. There are a lot of resources available to those that take action when they feel they are getting into trouble financially.
Organizing your student loan payments and making on time payments is a great way to avoid chapter 7 bankruptcy and build your credit.
Loan consolidation makes it easier to make payments, helps make sure you won't miss a payment and can often save you money in the long run.
DISCLAIMER: All information on this website are provided for informational purposes only and are not intended to be construed as legal advice. Chang & Carlin shall not be liable for any errors or inaccuracies contained herein, or any actions taken in reliance thereon.
We all know the importance of putting aside some money to be used when you retire. Some people have jobs that offer very generous retirement systems or pensions. Others rely on personal 401k's and other retirement savings accounts as well as the knowledge that they will be able to collect Social Security.
Social Security has always been a system in place that you can count on. There was no risk of changes and the money you put into social security is safe.
This is why it surprised some Americans to hear that there has been some discussions about making some changes to the social security system. The Chicago Sun Times reported that the proposed changes would involve an increase to income tax as well as a decrease in benefits. The changes would not decrease the benefits that current retired people receive but it could change the amount their benefits are increased as time goes by.
The whole point of these cuts is to save money and reduce the nation's deficit. The changes listed above would save $200 billion.
For people who are counting on Social Security benefits to survive through their retirement should feel nervous about this. Potentially the changes will be minor however if Social Security is your only plan for retirement you might find yourself looking at a future filled with debt and possibly chapter 13 or chapter 7 bankruptcy in Chicago.
When you reach retirement age you want to be living comfortably, not worried about what type of bankruptcy to file for. Set extra money aside now for your retirement and put a plan in place to help you be financially prepared for retirement.
DISCLAIMER: All information on this website are provided for informational purposes only and are not intended to be construed as legal advice. Chang & Carlin shall not be liable for any errors or inaccuracies contained herein, or any actions taken in reliance thereon.
Credit Card debt is a big problem in America. The July issue of Woman's Day reported that the average household carries over $10k in credit card debt. Once you've gotten this deep in credit card debt it can begin to feel impossible to get out of it.
If credit card debt gets out of control it can very easily lead to chapter 7 in Chicago.
This is because a lot of Americans do not know how to start digging themselves out of debt and don't know that there are credit counseling and financial advisors available to them.
The first step in recovering from credit card debt is to start looking at the numbers. Look at your total debt and figure out how long it will take you to pay off if you only pay the minimum. The answer will be staggering enough to make you want to pay a lot more than the minimum. But for those who carry debt on multiple cards it can be hard to decide where to start paying down.
The best choice is to pay extra on your credit card with the highest interest rate. While you are paying that down just pay the minimum on your other cards. Once you pay one off move to the next highest interest rate card.
If you have good credit you may be able to get a low interest credit card. If that is possible you should consolidate all of your credit card debt onto that one card and start paying it down.
The July issue of Woman's Day suggests that if you are tempted to make a purchase using your credit card look at the price of the item and break it down with your hourly pay rate. How many hours would you have to work to pay for this item? And if you charge it you should figure you'll pay double for it before it's paid off when you factor in interest. This should make you think twice before making an unnecessary purchase.
Evaluating your credit card situation and putting together a plan is the best way to avoid chapter 7 Chicago.
DISCLAIMER: All information on this website are provided for informational purposes only and are not intended to be construed as legal advice. Chang & Carlin shall not be liable for any errors or inaccuracies contained herein, or any actions taken in reliance thereon.
When someone files chapter 7 bankruptcy in Chicago they will do so knowing that all of their assets will be liquidated. The cash from the liquidation will be used to make payments to creditors.
Many do not understand all the possible exemptions allowed with chapter 7 bankruptcy. Potential exemptions are:
Social security benefits
Pensions and retirement benefits
Cash from any insurance policies
Approximately $17,000 of equity in their home
Up to $1,000 worth of personal jewelry
Tools used for your job
A minimum of 75% of wages
Federal exemptions: survivor, disability, lighthouse worker's and miscellaneous benefits
A homestead exemption may allow you to keep some of the equity in your home.
Exemptions vary by state and you do not automatically get these exemptions. The proper exemption paperwork needs to be filled out by your trustee. Consult with your chapter 7 bankruptcy lawyer right away and determine which of your assets may qualify for exemption.
DISCLAIMER: All information on this website are provided for informational purposes only and are not intended to be construed as legal advice. Chang & Carlin shall not be liable for any errors or inaccuracies contained herein, or any actions taken in reliance thereon.
The first thing you need to know about car repossession laws is that if you want to save your car you need to act quickly. Ideally you should reach out to a bankruptcy lawyer in Illinois as soon as you are threatened with the possibility of repossession.
If you're car has been repossessed many lenders don't even give you two weeks before the repossession is final and a bankruptcy lawyer in Illinois is unable to help you.
Once you hire an Illinois bankruptcy lawyer they are going to want to review your financial situation with you. This will help them determine what the best solution will be for you. If you are unable to pay the outstanding balance of your car loan then your only hope to save your car would be chapter 13 bankruptcy. Chapter 13 is a form of bankruptcy where you are assigned a payment plan for a designated number of years. If you successfully stick to the payment plan you can then be discharged of all remaining debts and keep all of your assets.
In order to qualify for chapter 13 bankruptcy you need proof of steady income and you need to be able to show that you will be able to make the necessary payments.
A bankruptcy lawyer in Illinois may review your finances and tell you that you aren't in a financial position to continue making the car loan payments. If this is the case they will look at your other debts. If you are behind in a lot of your finances you may qualify for chapter 7 bankruptcy. With chapter 7 you give up all of your assets but you are wiped clean of all qualifying debt and you get a fresh start.
Once you are faced with repossession you need a qualified Illinois bankruptcy lawyer on your side. Their guidance will help you navigate through the current repossession laws.
DISCLAIMER: All information on this website are provided for informational purposes only and are not intended to be construed as legal advice. Chang & Carlin shall not be liable for any errors or inaccuracies contained herein, or any actions taken in reliance thereon.
