Rebuild your credit: Watch out for high interest credit cards

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People who have declared bankruptcy in Illinois may be encouraged to open a new secured credit card with the idea of paying off the balance every month. Since bankruptcy can have a negative effect on your credit report for up to 10 years, rebuilding your credit is an essential part of reestablishing your financial stability.

Despite the positive effect a credit card can have on peoples’ credit score when they pay off any existing monthly balances, researchers warn about the dangers of having a subprime credit card. These credit cards are marketed to people who have low credit scores and give them a chance to reestablish their credit. In order to offset the risk that is taken by offering credit cards to people who have just declared bankruptcy, however, many of these credit card companies have high-interest rates and charge exorbitant fees.

Some believe that these credit card agencies extend offers that are written in a way that makes it difficult for people to understand. Some debtors may not know what they are entering into when they sign up for an unsecured credit card, and many may end up paying hundreds of dollars in maintenance and processing fees.

Secured credit cards, on the other hand, usually extend the same credit-building potential but without the added fees and high-interest rates. In some cases, these cards require people to come up with an initial deposit.

If you have filed for bankruptcy and are looking for a way to reestablish your financial presence and boost your credit score, a bankruptcy attorney may be helpful when it comes to exploring your options.

What is the meeting of creditors in a Chapter 7 bankruptcy?

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Whether you have already started the process of filing for bankruptcy or you are simply gathering more information about the process, it is important that you know about the meeting of creditors. This mandatory meeting is essential for all who file for Chapter 7 bankruptcy in Illinois or anywhere else across the nation. Since declaring Chapter 7 bankruptcy may ultimately end in full discharge of your medical expenses, credit card debt and other unsecured loans, the creditors involved in the case are given an opportunity to state their case and ask questions before the court-appointed trustee.

When filing an application for bankruptcy, you are required to provide a comprehensive list of creditors who you owe money to. According to the U.S. Courts, all creditors are invited to attend the meeting and ask the debtor questions regarding the bankruptcy case. As the debtor, attendance at the meeting is mandatory. In addition to creditor questions, the trustee will ensure that you understand the impact that filing for bankruptcy will have your financial health. Not only does this include your credit report, but also a reaffirmation of debt, liquidation of property and what types of debt are not eligible for discharge.

The trustee presiding over the case may wish to obtain further documentation regarding property and/or assets in your case. It is crucial that you provide this documentation to the trustee as soon as possible to avoid delays in the case.

The information should be used for educational purposes only and should not be taken as legal advice.

What is a debtor in possession in a Chapter 11 bankruptcy?

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Whether you run a corporation in Illinois, are the sole proprietor of a business or are involved in a partnership, you may run into tough financial situations where you are forced to consider bankruptcy as a way to clear your debt. Chapter 11 bankruptcy is designed to help these types of businesses reorganize debt in such a way that it can be repaid in a timely manner, and the company can continue on with its business endeavors. When filing Chapter 11 bankruptcy, you may actually become a debtor in possession, which requires you to take over many of the responsibilities associated with the case.

According to U.S. Courts, the debtor who files for Chapter 11 bankruptcy may be asked to perform certain duties as a debtor in possession. These are things that a court-appointed trustee would usually handle, and include the following:

  •          Examining claims and objecting to them as necessary.
  •          Listing and evaluating property associated with the case.
  •          Submitting any reports and/or documentation that is required for the case.

The debtor in possession is also able to hire certain professionals to help with the case, such as accountants, auctioneers, attorneys and appraisers. Rather than perform these duties themselves, the trustee who is appointed to the case must monitor the actions of the debtor in possession to ensure he or she is doing everything properly.

As a debtor in possession, it is crucial that you understand everything that your position entails. Not only can this simplify the bankruptcy process, but it may help to maximize your business’s ability to survive following the bankruptcy.

This information should be used for educational purposes and should not be taken as legal advice.

Understanding homeowners’ rights during the foreclosure process

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There are a number of homeowners across the state of Illinois who may struggle to keep up on their mortgage payments. As a result, people may face foreclosure or lose their home when the lender decides to reclaim the property. Although homeowners who face foreclosure may be delinquent in making their house payments, they do have certain rights when it comes to the foreclosure process.

According to the Homeowner’s Rights Act, lenders are required to provide homeowners with sufficient notice of foreclosure, as well as a complete listing of their rights and legal options. Upon the homeowner’s request, lenders must provide a financial statement, including the amount of money the homeowner owes on his or her home. This allows homeowners to explore their legal options, such as putting their home up for sale or refinancing their loan, which they are able to do throughout the redemption period. People should understand that they are able to contact the mortgage company in order to talk about different alternatives to foreclosure, and to find out what they can do to avoid losing their home.

Homeowners should keep in mind that they are able to remain in their residence until an Illinois court rules that the lender is able to reclaim the property. Within 90 days after they receive a summons for foreclosure, they are able to send in their delinquent payments to bring the mortgage current. In some cases, the lender may sell the home in foreclosure for more than is owed on the loan. If this should happen, the homeowner can petition the court for the difference between what the home sold for and what was owed on the property.

What consumers should do when hit with time-barred debt

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Even when people believe that their finances may be in order, they may be contacted by a creditor trying to collect an old debt. Since debt has a statute of limitations, creditors are unable to collect unpaid debt once a certain time period has passed. These ‘expired’ expenses are known as time-barred debt. Regardless of whether the person is actually still responsible for the debt, however, aggressive creditors may continue harassing debtors through phone calls, mail and even bad marks on their credit report.

Although it may seem overwhelming, there are a few things people should keep in mind when faced with this type of situation. First, people should refrain from making an installment payment in order to appease the creditor. The statute of limitations on the debt can restart when a payment is made unless the debtor makes the full payment in one lump sum.

Furthermore, the time-barred debt may not be valid. The creditor could be contacting the person by mistake on a debt that has already been paid. It is crucial that people research the debt, and dispute it if it has been made in error.

Once the debtor receives notice regarding the unpaid charge, he or she has 30 days to appeal the debt. During this time, people can research the charge and explore their options as to how to proceed. Depending on the situation, people could file for bankruptcy, work with a credit counselor or speak with an attorney in order to find the best route.

Prison debt may be discharged under certain conditions

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In a Chapter 7 bankruptcy, people are able to discharge much of their debt and start fresh with a clean financial slate. There are some expenses, such as school debt and child support, that can not be wiped free from the list of owed debts. Other expenses that are not eligible for discharge include penalties and fines that are given by a criminal court of law. In some cases, however, certain situations in Illinois may be difficult to discern whether the debt is criminal in nature. One case showed how even though a debt is connected to a prison does not always mean that it is exempt from bankruptcy.

One man in Minnesota was able to write off the cost of his room and boarding for his stay in prison. When the man filed for Chapter 7 bankruptcy, he listed his prison expenses under non-priority unsecured debt. The U.S. Bankruptcy Appellate Panel for the court determined that the debt could indeed be written off under liquidation bankruptcy as it met the requirements under the state code. The court ruled that in order to be exempt from discharge, the debt must be given to punish a person or be penal in nature. Prison room and boarding, on the other hand, did not fall under this category, as it was simply the prison’s attempt to get back some of the money used to house the prisoner.

When people are facing large amounts of debt and cannot make ends meet, they may want to consider bankruptcy. Depending on their particular financial situation, people have different options when it comes to eliminating portions of their debt. People may want to speak with a bankruptcy attorney, who may be of help.

Garnishing wages in a Chapter 13 bankruptcy

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If you are behind in making payments on your mortgage, vehicle loans, credit cards, medical expenses or other types of loans, you may have received phone calls, texts and/or emails from creditors. In an attempt to reclaim owed funds or replace missing payments, creditors may take action by garnishing your paycheck. While it may be impossible to retrieve the funds that have already been lost through wage garnishment in Illinois, filing for Chapter 13 bankruptcy may help to protect you from losing more money. At Ledford, Wu and Borges, LLC., we know that having your wages garnished can be overwhelming. You have options when it comes to unfreezing your bank account, having your wages garnished or filing for bankruptcy.

When a creditor garnishes a debtor’s wages, federal and state laws place a limit on how much money a creditor can take out of each paycheck. While federal law prohibits creditors from taking more than 25 percent of the debtor’s income, Illinois state law reduces that limit to 15 percent. The garnishments are taken out of the debtor’s paycheck after all other deductions have been made.

Once you file for Chapter 13, the creditors that are listed on your application will be notified of your case. At that point, those creditors are no longer able to contact you or garnish your wages. If you notice that a payment has been taken out of your paycheck after you have filed with the court, you should contact your attorney as soon as possible. Our office will speak with your company about stopping the garnished wages and may contact the creditor as well.

To find out more information about filing for bankruptcy and garnished wages, visit our Chapter 13 bankruptcy page.

How does Chapter 11 bankruptcy work?

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Whether you have filed for Chapter 11 bankruptcy on your own merit or your creditors have submitted a petition for bankruptcy on your behalf, you may be wondering what the process entails. If you are going to file for bankruptcy in Illinois, you will need to submit several documents. This includes a list of all your assets and liabilities, your current income, a statement of financial affairs and any contracts and leases you may have. You must also take a credit counseling course before the bankruptcy will be considered.

As soon as your paperwork is filed, you will assume the title of debtor in possession, which allows you to maintain control of your business, assets and property during the bankruptcy process, according to the U.S. Courts. It also requires you to act as a trustee over your case, in reorganizing your debt so that you can repay your creditors. In most cases you will remain debtor in possession until the plan for repaying your debt has been approved or until your case for Chapter 11 bankruptcy is switched to a Chapter 7 or Chapter 13 bankruptcy. Although it is not common, your case may be turned over to a court-appointed trustee under certain circumstances. This may happen when the debtor in possession is found to be engaged in incompetence, fraud, gross mismanagement or dishonesty.

Chapter 11 bankruptcy can help you reorganize your business debt so that you can repay your creditors and possibly keep your business and property. There are many options for people who are overwhelmed with their finances and need help repaying their debt.

This should be taken as general information and not as legal advice.

What you should know about reaffirming debt

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Filing for Chapter 7 bankruptcy can be a complicated and emotional process, especially when you are faced with decisions that may seem overwhelming. Although people who file for this type of bankruptcy are able to wipe out much of their debt, they run the risk of having some of their property and/or possessions reclaimed by a trustee who is appointed to the case.  There are ways, however, of keeping some of your property, such as your home or vehicles, through loan reaffirmation in Illinois.

Depending on the circumstances surrounding your case, you may be able to work with the creditor in order to extend the terms of your loan, even while you’re going through the bankruptcy process, according to U.S. Courts. When you reaffirm a debt, you agree to work with the creditor and continue making payments on your loan in order to keep your property. For example, if you wish to keep your vehicle during a bankruptcy, you may reaffirm the loan with the financial institution and make arrangements to keep paying, despite your impending bankruptcy. In some cases, the creditor may lower your monthly payments or decrease your interest rate as a way to help you.

It is important to keep in mind that when you reaffirm a loan, the debt will not be discharged and you are still fully responsible for paying off the terms of the loan. In order to be approved for debt affirmation, you must submit a comprehensive statement of your income and expenses showing that you have enough money to make the reaffirmed loan payments each month.

This information is intended to educate and should not be taken as legal advice.

 

Managing the high cost of bankruptcy

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Bankruptcy is designed to help people, who have been overwhelmed by debt, manage their financial burdens. In some cases, debtors can emerge from bankruptcy with a clean financial slate. Some people, however, may be unable to afford the cost of bankruptcy itself. The truth is, filing for bankruptcy can be pricy, and the cost may deter people from starting bankruptcy proceedings. In addition to the fees and costs of filing the bankruptcy paperwork with the court, there are often attorney’s fees involved. In some cases, these fees can amount to thousands of dollars. This leaves many people wondering how they can come up with this money when they have no money to pay their debts in the first place.

Debtors have several options when it comes to accumulating the money needed to file for bankruptcy. Depending on which chapter of bankruptcy you are planning to file, you may want to stop making payments on your credit cards. Since you are attempting to discharge the debt, you can take the money that you would use for the monthly payments and put it toward obtaining an attorney. Keep in mind that once you file for bankruptcy, an automatic stay will keep creditors from harassing you with constant calls and correspondence.

There are some attorneys that may help you by working out a payment plan. This allows you to pay your attorneys’ fees and bankruptcy filing costs in affordable monthly amounts over time. Although you are able to file for bankruptcy on your own, without the legal assistance of an attorney, it may be better to go through the process with a professional in your corner. The bankruptcy process can be confusing, and having an experienced lawyer there to answer your questions and walk you through the process may prove to be vital.

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Located in Chicago, the law firm of Billbusters, Borges and Wu LLC. represents clients throughout Illinois, including, but not limited to the cities of :Alsip, Arlington, Heights, Bellwood, Berkeley, Berwyn, Blue Island, Bridgeview, Broadview, Brookfield, Burbank, Calumet City, Chicago, Chicago Heights,  Chicago Ridge, Cicero, Country Club Hills, Des Plaines, Dolton, Elk Grove Village, Elmwood Park, Evanston, Evergreen Park, Flossmoor, Forest Park, Franklin Park,  Glencoe,  Glenview, Glenwood, Golf, Hanover Park, Harvey, Harwood Heights, Hazel Crest, Hickory Hills, Hillside, Hines, Hoffman Estates, Hometown, Homewood, Justice, Kenilworth, La Grange, La Grange Park, Lansing, Lemont, Lincolnwood, Lyons, Markham, Matteson, Maywood, Melrose  Park, Midlothian, Morton Grove, Mount Prospect, Niles, Northbrook, Oak Forest, Oak  Lawn, Oak Park, Olympia Fields, Orland Park, Palatine, Palos Heights, Palos Hills, Palos  Park, Park Forest, Park Ridge,  Posen, Prospect Heights, Richton Park, River Forest, River Grove, Riverdale, Riverside, Robbins, Rolling Meadows, Schaumburg, Schiller Park, Skokie, South Holland, Steger, Stone Park, Streamwood, Summit Argo, Techny, Thornton, Tinley Park, Westchester, Western Springs, Wheeling, Willow  Springs, Wilmette, Winnetka, Worth and All of Cook County IL.

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