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Are you eligible for Chapter 7 bankruptcy?

While you may have considered filing for Chapter 7 bankruptcy as a way to wipe out some of your extensive debt, not all people are eligible for this form of debt relief. We know that in order to qualify for this chapter of bankruptcy, Illinois debtors must meet certain criteria.

According to U.S. Courts, you may be able to file for Chapter 7 bankruptcy if you meet the following conditions:

You have not filed for bankruptcy within 180 days and had that bankruptcy thrown out because you did not show up to a court hearing or for any other reason.
You have completed an approved credit counseling course within 180 days of filing for bankruptcy.
You are not filing as a corporation or partnership.

In addition to these requirements, you must pass the state means test, which ensures that you make less money than the state median income level. If you make more money than the state median, your case may be shifted to a Chapter 13 bankruptcy. In some cases, the judge or trustee may make special arrangements if unique circumstances are involved.

Once you are considered eligible to file for Chapter 7, it is important that you submit your application and supporting documents while paying close attention to the deadlines. If for some reason you don’t qualify for Chapter 7, you do have other debt relief options, including Chapter 13 bankruptcy.

Mistakes in the insurance directory can cause massive debt

Bankruptcy, Chicago

It is supposed to be a book of information designed to help those who need medical care find the right professional. Not only does it have a list of medical providers and their contact information, but the list is supposed to include those who are covered within your insurance.

The whole point is to eliminate the headache of finding a doctor covered by your plan, right? Well, maybe not.

Unfortunately, these directories are not always kept up to date. This can result in a patient seeking care from a physician who is not within his or her plan. Care outside of coverage can result in bills – big bills.

The issue has become so prevalent MedCityNews ran a publication delving into the problem. The piece notes that federal rules are in place to help better ensure these directories are up to date. A failure to update these directories can result in penalties or removal of the listing from the directory or portal. Even with these rules, directories are failing to stay current.

How big of an impact can a directory mistake have?

Anyone that has sought medical care can attest to the high cost. From a quick stop to check for a sinus infection or strep, to an emergency visit after an accident, a simple visit can cost hundreds and a serious injury can jump into tens of thousands in the blink of an eye. If the provider was outside of the patient’s network, that patient may be expected to cover the full cost of care.

Fortunately, those who find themselves struggling with medical debt have options. One such option is relief through bankruptcy.

How can bankruptcy help with medical debt?

If approved, a petition for relief through bankruptcy can result in the discharge of medical debt. Essentially, this means that you are no longer responsible for the debt.

Determining if bankruptcy is the right option to find relief from your debt is a difficult decision. As a result, it is wise for those considering bankruptcy or struggling with debt to contact an experienced attorney. Your lawyer can review your situation and discuss the best option to help meet your needs.

Emergency care and medical debt: Is it dischargeable in bankruptcy?

Bankruptcy, Chapter 13, Chapter 7, Chicago, Personal

Medical bills can be astronomical. This is true whether the care involves out-patient care or more serious, emergency situations. This reality was recently discussed in a piece by the Associated Press.

The story involves a man that required urgent care. The only way to get the treatment he needed was to receive transportation through the use of an air ambulance transport service.

Is the cost of ambulance transportation covered? Unfortunately, even if a patient has medical insurance, not all the medical costs needed for care may be covered. As a result, the answer to this question depends on the language of your insurance policy and the details of the situation.

In some circumstances, a ride in an ambulance may not qualify for coverage. This can leave the patient left to cover the cost. If that emergency transport involved air travel, such as in an air ambulance like a helicopter, the cost left to the patient could translate to a bill of almost $30,000.

In the story noted above, the man’s insurance policy did not cover the cost of transportation for a number of reasons. As a result, he was left with a bill of approximately $27,000.

What can I do if I can’t manage my medical debt? Those who are struggling with medical debt have options. One option is to seek relief through bankruptcy.

In many cases, medical debt qualifies for discharge through bankruptcy. This means the debt would essentially be forgiven. There are different types of relief available through bankruptcy, but the most common for individuals struggling with this form of debt are Chapter 7 and Chapter 13.

These two forms of bankruptcy offer different benefits and should be discussed with an attorney. Legal counsel can review the details of your situation and help you choose the best option for a fresh financial start.

Can student loan debt be discharged in bankruptcy?

Bankruptcy, Chicago

U.S. bankruptcy law has a number of interesting and complex rules that determine exactly which debts can be fully discharged, and which are exempt from discharge. These also help to identify the shades of gray that come in when there are items that may only be discharged under certain circumstances. These myths help to fuel a large number of misconceptions about bankruptcy, such as the common perception that student loan debt cannot be discharged.

How many people even try?

U.S. News and World Report published an online series from the Student Loan Rangers that dug into the details to see exactly how many people tried to get their student loans discharged and how effective they were. Here are some of their findings:

Only 0.1 percent of all people who filed bankruptcy in the study they cited included their student loans.

Of those who included student loans in bankruptcy proceedings, 40 percent saw some or all their debt discharged.

The way that judges determine whether student loans are dischargeable is by applying the Brunner test.

What is the Brunner test?

Federal bankruptcy law only allows for student loan debts to be discharged if they pose an “undue hardship,” but that phrase does not actually wind up being defined in the law. This leads to some of the confusion about whether a person can include student loans in bankruptcy filings. The Brunner test asks the court to consider three questions as it makes the determination.

Are the payments so high that the person cannot sustain a reasonable standard of living on your income?

Is the situation unlikely to improve any time in the foreseeable future?

Does the person have evidence that a good faith effort was made to repay the loans?

For those who believe they pass the Brunner test, the next step is to consult with a bankruptcy lawyer for further advice. A lawyer also needs to file the adversary proceeding to get a hearing about the discharge.

Starting the process

An attorney is an essential step in the process for those who believe they qualify because the right attorney will be able to tell whether or not a subject has a reasonable case for discharge under the Brunner test. Leaving student loans out of a bankruptcy can have repercussions for years to come, so investigating all the options is important. A person should not wait to get advice about bankruptcy proceedings when I investigating all the options can be done relatively easily.

Common business bankruptcy mistakes to avoid

Bankruptcy, Chicago

Chicago is known for many things, and a thriving corporate climate is certainly one of them. The city is home to major international corporations as well as many local companies. According to World Business Chicago, several factors indicate that businesses in Chicago are continuing to grow, but there are still many others that face financial struggles and debt. If you are considering bankruptcy as an option for your business, you should be sure to avoid these common mistakes.

Don’t make preferences in your payments

If you are considering bankruptcy, you may still be trying to make payments on debt and pay back loans that you have received. In bankruptcy, however, loans from people such as friends, family and business associates are liable to be considered gifts and a repayment may be considered a preference payment. Making payments like these is typically tricky, though, and could be considered fraudulent.

Don’t blow money on luxuries

When faced with impending bankruptcy, some people make the mistake of spending company money on luxurious goods. Whether it is as small as a piece of jewelry or as big as a new car, purchases such as these are very unwise to make when you are preparing to file. The debt is likely going to be considered fraudulent, and if so, it will not be discharged in court.

Don’t make unnecessary payments

Bankruptcy typically allows debtors to discharge some or all of their unsecured debt, but secured debts remain intact more often than not. If you plan to file and are still struggling to make payments on all of your bills, it is best to address those that cannot be discharged and wait to make payments on unsecured debts. This should only be done if you are positive such debts will be discharged, though.

These are some of the many mistakes you should avoid in bankruptcy. You can learn more about your options for filing by reaching out to a bankruptcy lawyer.

Ways to minimize student loan debt

Bankruptcy, Chicago

You are finally looking forward to the future and working for the things you have always wanted. You are out of high school, enrolled in your dream university and are ready to move into your dorm. Suddenly, you are facing a big question: How are you going to pay for all this?

Excessive student loan debt is a major reason that Americans end up in financial trouble. If your salary does not match your student loan payments, you could be looking at an unsure future despite all your hard work. While bankruptcy rarely discharges student loans, there are other ways to negotiate rates and payments and save money in the long run.

Apply for financial aid and scholarships -FAFSA deadline is June 30

The federal government offers grants and loans to help you get through college, but you will never benefit if you do not apply. Some students miss applying because they do not think they are eligible for a grant and are pleasantly surprised when the application comes back. Grants are money you do not have to pay back that you may receive for school.

Most colleges offer thousands of scholarships big and small. There are times where scholarships remain unused because there are no applicants. Check with your university’s scholarship or financial aid office for a list of scholarships. Do not be afraid to apply for all that are applicable to you. Every small amount helps and is one less dollar you must borrow.

Only borrow what you need

When you get a letter from the government with the option of borrowing thousands of dollars for school, it is tempting to take it all. Do not forget that you must pay this money back eventually, even if you defer interest while you are in college. It may seem like graduation is forever away, but it comes faster than you realize in terms of paying off your student loans.

Talk to a professional

Many Americans end up with overwhelming debt. Although student loans and bankruptcy come with limited options, meeting with an attorney when you are in over your head may provide you with more options. For example, bankruptcy may help you reduce overall monthly debt payments, or eliminate some debt entirely, that can make student loan payments more affordable.

Dealing with the emotional aspects of bankruptcy

Bankruptcy, Chicago

A lot of the talk around bankruptcy focuses on finances. That makes sense, as bankruptcy is often about matters such as drowning in medical debt and credit card bills. However, while the legal process provides the fresh start you need financially, it may not help you much with the feelings that are threatening to overwhelm you.

The truth is that even though many Americans are only one big medical emergency away from being in your shoes, it is still common to suffer feelings of embarrassment or weakness when the time comes to file the paperwork. The emotional component of bankruptcy may go beyond these surface anxieties, too. For example, you may have lost property that meant a great deal to you, or you may face heavy disapproval from family members.

Acknowledge your feelings

Identifying the emotions you are going through is an important part of the healing process. It is okay to mourn your losses. It may also help to recognize which elements were outside of your control and free yourself from blame. This is not the same as denying accountability for mistakes, but even guilt over past actions can be turned around and viewed as a life lesson that applies to the clean slate you are claiming. If you see filing for bankruptcy for the brave move it is, you may gain a sense of confidence as you face life with new strategies under your belt.

Address negativity

Once you have accepted your situation, you may still have to face others who are not willing to be kind. Planning ahead may help. If you are afraid that family members will criticize you, write down possible responses so they do not catch you flat-footed. For example, one option could be to name notable people who have had to file. When planning these responses, you may also want to craft replies that discourage nosiness and protect your privacy.

Seek help

A financial therapist may be able to help you recover some of your self-esteem. You may also find that a good bankruptcy attorney is a source of moral support, in addition to the legal advice and assistance you receive. Now that you have the chance to start anew in life, hopefully, many good nights of sleep are just around the corner.

Tips for buying a house after you emerge from bankruptcy

Bankruptcy, Chicago

The good news first: Plenty of people have been able to buy a house after their bankruptcies were settled. Now for the bad news: Well, there actually is not any. You do have to exercise some patience and diligence, but these are good characteristics to have anyway.

Learn more about successfully getting a house after a bankruptcy discharge.

Wait at least two years for the best rates

Realtors.com recommends you wait at least two years before buying a new property so your rates will be more affordable. This time frame also gives you the opportunity to prove yourself in other ways, such as credit trustworthiness.

Rebuild your credit

On the topic of credit trustworthiness, a secured card is a great way to begin rebuilding your credit. Installment loans such as a car loan are a good help, too. Word of warning: Qualifying for a car loan can be difficult if you try to do so right after bankruptcy. What helps is putting down a sizeable down payment and paying off the loan far faster than you technically have to (paying off a five-year car loan in only a year, for example). This way, the impact of higher interest rates should not seriously affect you.

Save for the down payment

Speaking of down payments, you should try to save up for your home’s down payment as well. Lenders are more likely to approve your application (and for lower interest rates) if you are able to put down at least 10 percent; even better is 20 percent.

All that said, it is important to buy a house for the right reasons. If you do not think you will stay in the home for at least 15 years, renting may be in your best interest until you can rebuild your finances even more. Consider erring on the side of caution, and pay no more than 25 percent of your monthly income on mortgage bills and house expenses. Also, build an emergency fund before you buy your house.

The benefits of Chapter 7 and Chapter 13 bankruptcy

Chapter 13, Chapter 7, Chicago

As you consider bankruptcy, you may be unsure which type to file for. There are two types for personal bankruptcy: Chapter 7 and Chapter 13. Each takes a different approach to eliminating debt.

Knowing the benefits of each may be a contributing factor in your decision. However, the best way to know which is right for you is by consulting a bankruptcy attorney because there are requirements you must meet for each type.

Chapter 7

Chapter 7 wipes out most of your obligations to repay unsecured debt and is best if you do not have many or high-value assets.

You eliminate most debts: Chapter 7 does not require you to pay anything to most creditors. Exclusions include child support and recent taxes.
You can take advantage of state exemptions: Although you can only retain some types of property, other assets may have protection under Illinois exemption laws.
You finish the process sooner: Your case is usually over within a few months, whereas with Chapter 13, you have a commitment to a repayment plan for three to five years.

It is important to note that your income may be too high to qualify for this type.

Chapter 13

Chapter 13 entails a plan to repay a portion of unsecured debts.

You get to keep your property: Unlike Chapter 7, you can keep more of your assets because you are still paying for them.
You learn better money management: Following a plan and sticking to a strict budget will help you prevent going bankrupt again.
You can rebuild your credit faster: Chapter 13 stays on record for a minimum of seven years, but you can qualify for secured credit cards within months and for loans in under two years. Making on-time payments will help raise your credit rating.

No matter which you file for, bankruptcy also puts an immediate end to creditor harassment, repossessions and wage garnishment. Bankruptcy may be frightening or stressful, but it gives you a fresh financial start, and the negative consequences will not last forever.

3 signs you are too deep in credit card debt

Bankruptcy, Chicago

Credit cards are great tools for improving your credit score if you use them responsibly. However, if you are not careful, you might end up with an unmanageable amount of debt. But how do you know if you are in too deep? You might know you have some debt, but it can be difficult to know exactly when you have gone over the edge.

You might think ignorance is bliss, but you should confront your credit card problems directly. Below are some of the most urgent warning signs of a credit card debt disaster.

1. You skip one payment to cover another

While you might need to prioritize credit card bills sometimes, you should always avoid skipping any payments. If you are constantly unable to afford your credit card bills, you are in trouble. As you keep skipping payments, your credit score will become more damaged.

2. You use credit cards to cover necessities

Your income should cover basic living expenses such as clothing, food and gas. If you find yourself needing to use credit to handle these purchases, you are probably in financial trouble. Consistently being unable to live within your means results in a growing credit card debt that may become too much to manage.

3. You can only afford minimum payments

According to personal finance journalist Rebecca Lake, it is easy to fool yourself into believing your credit card debt is not too bad if you are able to cover the minimum amount each month. The truth is this is a warning sign of disaster. Only paying the minimum will cost you significantly on interest charges and will consistently leave you on the brink of consumer debt.

If you see these warning signs in your life, you have options. You might be lucky and be able to reverse the trend, or you might be too far gone and need to discharge your debt through bankruptcy. But no matter how much debt you have, you can start over and rebuild your financial future with the right help.

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312-853-0200

312-853-0200

Are you eligible for Chapter 7 bankruptcy?

Mistakes in the insurance directory can cause massive debt

Emergency care and medical debt: Is it dischargeable in bankruptcy?

Can student loan debt be discharged in bankruptcy?

Common business bankruptcy mistakes to avoid

Ways to minimize student loan debt

Dealing with the emotional aspects of bankruptcy

Tips for buying a house after you emerge from bankruptcy

The benefits of Chapter 7 and Chapter 13 bankruptcy

3 signs you are too deep in credit card debt

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