Blog

BLOG - May 8, 2009

What to expect when you go to "Court"? I am amazed each and every time how nervous people are to come to their bankruptcy "court" date, or what we call the Section 341 hearing. (named after the section of the bankruptcy code) I tell my clients it is formal, even though it is not in a Courtroom, but that there is nothing to be afraid of, so long as they have answered everything truthfully. Yet, one after one is nervous as all h____ until it is over! And then they all say the same thing, that they cannot believe how easy that was! You see with Bankruptcy, it is all in the preparation. When you retain our law firm to prepare your Chapter 7 or Chapter 13 bankruptcy documents, we take it very very seriously. We know that if the documents are prepared carefully and done right, then all will go smooth and there will be no surprises when we go to Court. In our jurisdiction, in the Northern District of Illinois, you don't go to Court but rather to an office, where you will be examined under oath by a court appointed Trustee or Trustee's representative. Your testimony is being recorded and everything you say could be used against you just as in a Courtroom. The important thing is that if your lawyer prepares the documents correctly, and goes over the details with you, the lawyer can predict with almost 100% certainty how your bankruptcy case will play out. The worst thing you can do when filing bankruptcy is to keep information from your lawyer and not be totally candid when filing a Chapter 7 or Chapter 13.

BLOG - June 11, 2009

I am a consumer bankruptcy lawyer....practicing here in Chicago for over 28 years. My how time flies. And it never ceases to amaze me how many of my clients get into trouble helping other people. Most times it is a mother helping her children or grandchildren.....letting them use the credit cards.....or cosigning for a car loan. Trouble is bad things can happen to even the most well intentioned. People promise to pay that car loan, or credit card but lose their job or get laid off. My rule, never never cosign, unless you plan on paying the debt yourself! Today I met a wonderful grandmother, helping her two daughters and their two kids each. Letting them live at her home, without contributing to household expenses. My advice? Put her foot down, and make them start paying the first of next month. $500 for room and board. If my grandmother client was receiving $1,000 per month she wouldn't need the bankruptcy attorney and she could afford to pay her bills. Think of what all those showers are costing and the electric bill for all those kids watching TV all day! I hope she takes my advice and gets those two daughters, who are working, start paying! Where are they going to live for $500 a month, including room, board and a built in baby sitter? Absolutely Nowhere! But Mom has to insist or they are going to continue to take advantage of her. It is only human nature!

BLOG - July 15, 2009

Student Loans and Bankruptcy-----IMPOSSIBLE, to wipe out, or just about....you might if you are permanently disabled.....Recently a court refused to allow the discharge of $300,000 plus in student loans for a young lawyer earning under $50,000 stating that it was NOT an undue hardship on this young lawyer to pay back these loans...and that he was intentionally not earning more money to avoid paying back these loans! Talk about out of touch judges! It didn't help the young man that he had never made any payments on the student loans.....

The burden is on the debtor to prove that it would be an undue hardship on himself and his family to be forced to pay the student loans, and if you are young and can work, I don't think any Judge at least in the Northern District of Illinois will grant you a discharge of those nasty student loans. Warn everyone you know....be careful about how much you borrow!

BLOG - August 15, 2009

FUTURE CREDIT - One of the most frequent questions I receive is how will Bankruptcy affect my future credit? It is true that credit records are very important and getting more important every day. Many employers have started requesting credit reports, and certainly credit is necessary to purchase a house or in most cases a car. That is why I usually don't recommend filing bankruptcy if you have good credit. If you can avoid "ruining" your credit, you certainly should! Bankruptcy will bring down the infamous FICO credit score by at least 100 points immediately.....but sometimes it can raise the FICO score by the same amount. Usually, within a year or so after the bankruptcy is over, and the Discharge is received, an individual's credit score is better than it was than before he or she filed bankruptcy. Most people who seek out the protection of the federal bankruptcy laws are already late on their bills, which affects their credit scores. Just paying your mortgage late once can bring down that FICO score 100 points! But will you be able to obtain credit again after the bankruptcy? Certainly it helps if you pay the car and the mortgage payment on time after the bankruptcy. And don't bounce any checks at your bank! FHA's policy right now is to lend people money for mortgages two years after receipt of a discharge with 3.5% down payments. It is likely you will be able to purchase an automobile too, right after receiving your discharge, but you must be careful. Everyone must be careful when purchasing a car, new or used. Those salesman are expert at selling and often make us pay too much for the car, at too high an interest rate. Make them compete for your business and do your research! There is so much information available on the Web about how to purchase a car...I recommend the Consumer Union website. Many of my clients are also able to obtain a VISA and MASTERCARD after bankruptcy. These are most likely subprime lenders and you must be very careful. They charge fees just to let you have the honor of charging; they have low limits. Now is the time to read the fine print and if you do not understand, you might want to ask your bankruptcy lawyer to explain to you. Another option is the secured credit card. You open a savings account and use that as collateral to secure the credit card. My choice however, my recommendation is to stop using credit.....and to get in the habit of a debit card rather than going back to the dangers of credit cards.

BLOG - August 20, 2009

Bankruptcy Fraud - One of the main reasons Congress changed the bankruptcy laws so dramatically in 2005 was to curtail bankruptcy fraud. Congress was concerned that there were too many people filing too many bankruptcies who didn't deserve to, i.e. they could afford to pay their debts, at least something. Congress also felt that there was too little policing of debtor's assets and information contained in the paperwork submitted by debtors. Now the Debtor's attorney is expected to investigate his or her own clients to determine if they are indeed telling the truth about what they own. The debtor's bankruptcy lawyer is charged with verifying the debtor's income and assets, and if the information is not correct, is subject to sanctions. The net result has made bankruptcy much more expensive to accomplish because the bankruptcy attorney must spend more time reviewing the debtor's information, investigating, and then strategizing how to accomplish what his client wants....relief from his creditors. On average fees have doubled since the law changed in 2005. My advice? Make sure you tell your lawyer the whole complete truth about everything you own. You don't want to risk being charged with bankruptcy fraud, a crime punishable by up to five years in jail. Better you come clean in the privacy of your lawyers office and give your lawyer an opportunity to help you save your assets and get you the relief from your creditors you are seeking. It can be done! Lawfully and honestly!

BLOG - October 16, 2009

Should you file for bankruptcy? Well, only you can decide that question. Perhaps with the help of an attorney or other counselor, you can help make your decision. What factors should you think about? Here are some ideas to get you thinking.........How much debt are you in? Can you realistically pay it off over a reasonable amount of time? What type of debt is it? What is your current income? Future prospects? Are you using credit cards to pay off other credit cards? Are you going to payday loans to make it through till next payday? Are you living paycheck to paycheck? Are you able to save anything? How is your current credit history? Bankruptcy will be a negative on your credit record, is it worth affecting your credit record to get rid of that much debt? That is relative.....What are your other options? What are your priorities? Are you current on the house payment? The car payment? The first step is to stop using all credit cards immediately. You might want to contact a credit counseling agency website, for tips on budgeting. I recommend www.moneymanagement.org.

Stop borrowing money. And take an honest assessment of your financial situation. It isn't a question of what you want but more what you need. Are you robbing Peter to pay Paul? Using the equity line of credit to pay for living expenses or credit card payments? Can you survive without borrowing? Do you have health insurance? That is more important than paying off a credit card it seems to me. If you have children, do you have sufficient life insurance to protect them should something happen to you or your spouse?

The important thing to realize is that there are many resources for people. Online and over the telephone. You are not facing these financial problems alone. It is not worth getting sick over. It is only money. It does not mean you are a failure. Bad things do happen to good people. You are more than your present financial circumstances. This too shall pass. And remember, there is life after bankruptcy.

BLOG - May 19, 2011

Nowadays, it seems that everyone I meet is "upside down" on their home. What does that mean? It means that they owe way more than their home is worth. And the really sad thing is that it may take years for values to catch up. For example, when Japan went through its financial crisis in the 1990's, it took over 10 years for things to start getting better. It looks to me that we may be in for the same type of stagnation, i.e. a long period of time in which values of real estate do not increase at all. What can be done about it? Well, everyone with a home needs to think hard and carefully about their individual situation. There are a number of options, and considerations. The amount you owe versus the market value of the home. The relative cost of owning versus renting. The cost of maintenance of the home. Tax considerations. The cost of moving. The trouble of moving. How long you intend to live in the home, or the area in which you live. Your age, income. The need to reduce housing costs. Your other debts, investments. Your ability to save. How will your credit be effected if you do choose to walk away? Those are some of the considerations. How about your options? Should you stay or should you go? You can stop paying on the mortgage and let them foreclose. You may be able to live there several months rent free and save up for your move. If you have a second mortgage, you might want to talk to a bankruptcy lawyer to see if you can get rid of that second lien using the federal bankruptcy laws, and stay. A bankruptcy lawyer is equipped to help you with many of these issues.

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