Your Top Ten Bankruptcy Questions Answered

Section 11 U.S.C. Section 341 mandates that the United States Trustee “shall convene and preside at a meeting of creditors”. Despite the name of the meeting, there are very few creditors, if any, who bother to show up at this meeting! The meeting of creditors for persons residing in the Will County area is at City Hall in downtown Joliet.

At this meeting, debtors who have filed a Will County consumer bankruptcy (Chapter 7 or Chapter 13) can expect a number of things to occur. First, their appointed trustee will administer an oath for truthfulness that they will be required to take. Second, they will be questioned regarding a variety things, common questions include: Have you filed a bankruptcy before? Did you review and sign the bankruptcy petition prepared by your attorney? How long have you lived in Illinois? What are the values of your vehicles and/or real estate?

Every bankruptcy case is different and every trustee is different. Couple this with the fact that no two bankruptcy cases are exactly alike, and you have the potential for many different types of questions. Depending on the circumstances, there may be questions that seem odd or confusing. Do your best and answer these questions as truthfully as possible and, if necessary, consult with your attorney.

In the rare case that a creditor does show up at your meeting of creditors, they will usually be given an opportunity to speak and ask you questions. The trustee will usually try to keep the questions on a guided path so that they only address issues pertaining to the bankruptcy filing.

We will prepare you for this meeting beforehand. Do not worry, they normally go smoothly with no issues. Please call us at 815.729.9220 for further questions.

Completing a Chapter 7 bankruptcy is faster than a Chapter 13 bankruptcy. The discharge of your debts normally happens four to six months after filing for a Chapter 7. You begin the process by filing a detailed petition listing all of your property, debts, and other financial information with the bankruptcy court. A short time later you go to a meeting with the bankruptcy trustee (usually the only appearance you must make). Unless there are problems or one of your creditors objects, the discharge will be granted a few months later. In many cases Will County bankruptcy filers receive a discharge within 3 months, but not always. Within a few days of filing your Will County bankruptcy we can get creditors to stop harassing you. Please call us at 815.729.9220 for further questions or to get started.

If you are considering declaring bankruptcy in Will County, IL or one of the surrounding counties you are probably wondering what you get to keep. Many people get the image of bankruptcy and think of the person or family left with nothing. Not true.

The fact is, you can declare bankruptcy and remain in possession of some or all of your possessions.

In bankruptcy ‘talk’, the stuff that you are able to keep after declaring Chapter 7 or Chapter 13 bankruptcy are called exemptions.

If you are wondering, “What do you get to keep after your Will County Bankruptcy?”, here are the answers to 5 frequently-asked-questions (FAQs):

What is a bankruptcy exemption?
Of course, when a person goes through bankruptcy, many assets above a certain value must be sold to pay off creditors. However, several types of items – usually with maximum value thresholds that vary on a per-item-type basis – can be kept by the family who has been through bankruptcy proceedings.

Will my house be safe?
Yes, you are able to save your house in almost all cases. However, if you want to remain in your home, you will need to keep up your payments just as before.

What about my car?
Similarly, a car is almost always on the exemption list, provided that it worth less than a certain amount. For example, you cannot keep your $200,000 Range Rover after filing for a Chapter 7 bankruptcy. Similar to with wanting to keep a house, in order to keep your car you will need to continue to make your car payments.

Can I keep the stuff in my home?
Almost all or all of the items in your home should be safe from being confiscated. Family heirlooms and the like, as well as low-value items, should all be safe.

How about the money in my retirement accounts?
In addition, monies in a retirement account and educational savings accounts should likely be considered exempt in your state.

Please call Hamilton & Antonsen, Ltd. at 815.729.9220 or further information or to schedule a free bankruptcy consultation.

Failing to disclose assets in a bankruptcy case is a serious problem and can be bankruptcy fraud. As a Will County, IL bankruptcy attorney, I am always asked questions concerning what assets have to be included in one’s bankruptcy and the ability to take different actions in order to retain property that would have to otherwise be turned over to creditors.

Inevitably, each day someone will ask if he or she can transfer a piece of real estate or a vehicle to a family member or friend in an attempt to keep the property it if he or she decides to file bankruptcy. The question is a valid one and is worth asking especially since most people have not been through the bankruptcy process. The simple answer, however, is no you cannot and should not attempt to do so. Any transfer of property to a family member or other “insider” can lead to a variety of problems including the possibility that the Trustee of the bankruptcy court brings an action to recover the property from whom ever it was transferred to. If a transfer has been made to an “insider” within a year (and sometimes longer) you run the risk of creating serious problems in your bankruptcy. If you transfer property and do not disclose the transfer you have now possibly opened yourself to a wide range of civil and criminal penalties. One point needs to be emphasized. Bankruptcy is governed in large part by federal law and the United States Trustees Office is affiliated with the United State Department of Justice. You can see why it is not a good idea to play games in this regard just as you would not do so with the IRS. All income, assets, debts, liabilities, etc have to be disclosed. Full disclosure is the rule in bankruptcy.

That being said, there is a difference between bankruptcy fraud and bankruptcy planning. Consulting with a Joliet bankruptcy attorney will allow you to go over all your property and discuss what laws are applicable. A competent Joliet bankruptcy attorney should be able to give you some guidance as to what property can be retained and what may not. An attorney will also be able to advise you if you have made transfers to family members or other “insiders” prior to filing for bankruptcy. If you are concerned about being able to keep an asset or whether or not a transfer is lawful you need to ask. You may be seeking to take of course of action that is not lawful or will not prove successful but the same goal may be able to be achieved successfully using the bankruptcy laws. The most important thing a possible client can do is disclose everything.

Once everything is known a course of action can be devised. Many people cannot file a bankruptcy the day the come into our office because most of our lives are not lived as if we are planning to go bankrupt. In many cases failing to disclose property is not only illegal it is unnecessary. There exists a wide range of governing statutes and case law that can be applied in many cases to ensure that a debtor obtains the most favorable resolution to these issues as possible. A Joliet bankruptcy attorney should go over all of your assets and advise you on how best to achieve a resolution that is both lawful and beneficial to you. If you do not disclose the asset, transfer, or source of income the debtor is is taking a major risk and it may have been an issue that could have been resolved during the bankruptcy planning process. Many issues that appear to be problems to the clients can and often are resolved prior to filing the bankruptcy or within the bankruptcy case. Discussions with a Joliet bankruptcy attorney are confidential even at the initial consultation so you should rely on that protection and go over every aspect of your financial situation. The attorney is your advocate and works for you. Do yourself a favor and have a free and open conversation with the attorney and you will often receive better results and protection of your interests.

Please call Hamilton & Antonsen, Ltd at 815.729.9220 to set up a free meeting to get your bankruptcy started today.

How long may bankruptcy information be included in my credit report after bankruptcy?

Both the Bankruptcy Code and the Fair Credit Reporting Act (which regulates what a consumer reporting agency may include in your credit report) are Federal law, so the same rules apply to all states.

A consumer credit report may include information on a Chapter 7 and Chapter 13 bankruptcy for 10 years from the commencement of the case. We have been advised that at least one major consumer credit reporting agency removes information about Chapter 13 after only 7 years although it is not legally required to do so.

Most other credit information may be reported for 7 years, except for civil suits, civil judgments, and arrest records can be reported for at least seven years, but may be reported longer if the governing statute of limitations is longer. For example, in Arizona, a court judgment is effective for 5 years. However, it may be renewed at the end of that time for another 5 year period, and again after that period. As a result, a renewed civil judgment could be reported for as long as it is effective.

The restrictions on reporting any credit information do not apply to reports for:

• credit transactions involving, or which may reasonably be expected to involve, a principal amount of $150,000 or more;
• the underwriting of life insurance involving, or which may reasonably be expected to involve, a face amount of $150,000 or more; or
• the employment of any individual at an annual salary which equals, or which may reasonably be expected to equal $75,000 or more.

The governing law, 15 U.S.C. § 1681c (renumbered as § 605), can be viewed at the Federal Trade Commission’s site, Fair Credit Reporting Act.

Can you still get a Federal guaranteed student educational loan after you have filed bankruptcy?

Unlike most credit, the granting of government guaranteed educational loans is not based upon credit history or income. They are instead extended if you meet the statutory and administrative criteria. Although default on an existing educational loan may affect your ability to get a subsequent loan, the filing of a bankruptcy in itself should not. As a matter of fact, under § 525 of the Bankruptcy code the government is restricted from discriminating against those who have filed bankruptcy. For more information on educational loans, you can check with The Financial Aid Information Page, or the financial aid office at your local college.

How long after filing bankruptcy will it be until I will be able to get a loan to buy a house? Will the interest be “sky high?” What are some of the other credit effects of filing bankruptcy?

The short answer to your questions is that you may be able to finance the purchase of a home two years after you have gotten your discharge in bankruptcy, but you qualify as early as one year after filing Chapter 13, or one year after discharge in Chapter 7. Since a large proportion of home loans depend on FHA or VA loan guarantees, your ability to qualify for those guarantees may determine when you are able to obtain a home loan.

FHA will insure mortgages to individuals who have filed Chapter 7 liquidation bankruptcy two years after the discharge if “the borrower has re-established good credit (or has chosen not to incur new credit obligations), and has demonstrated an ability to manage financial affairs.” To obtain a loan within one year after the discharge, the borrower must show that “the bankruptcy was caused by extenuating circumstances beyond his or her control and has since exhibited an ability to manage financial affairs and the borrower’s current situation is such that the events leading to the bankruptcy are not likely to recur.” FHA regulations also specify that a borrower still in a Chapter 13 debt adjustment who has satisfactorily completed one year of plan payments and gets court approval of the transaction. [U.S. Department of Housing & Urban Development, Office of Housing, Handbook No.: 4155.1 REV-4 CHG-1, September 28, 1995. Chapter 2-3, E]

VA has similar regulations. The VA handbook for lenders includes provisions that “If the bankruptcy was discharged more than 2 years ago, it may be disregarded.” If the discharge was between 1 and 2 years, the guarantee may still be granted if the applicant or spouse has obtained consumer items on credit subsequent to the bankruptcy and has satisfactorily made the payments over a continued period and the bankruptcy was caused by circumstances beyond the control of the applicant or spouse such as unemployment, prolonged strikes, medical bills not covered by insurance, etc.

VA regulations allow granting of the loan guarantee to a person in a Chapter 13 when the plan payments are finished satisfactorily, or after 12 months payments and the Trustee or the Bankruptcy Judge approves of the new credit. [Veterans Benefits Administration VA Pamphlet 26-7, Change 34, November 13, 1997]

If you obtain home loan financing with a loan guarantee, the loan rate should be based on the guarantee status of the loan. As a result, I would not expect that the rate would be affected by the bankruptcy.

Other effects of bankruptcy on credit are difficult to assess. Credit is extended by individual lenders, and is not generally regulated by law. Lenders do not generally make their criteria public. We do know that there are two factors which are important to creditors in extending credit.

In most situations we find that Will County Illinois residents can afford a bankruptcy lawyer, they just don’t know it.

If things are difficult and your life would improve without the burden of debt, phone calls, lawsuits and bill collectors then a bankruptcy might be right for you.

For those people, paying the costs for a typical chapter 7 bankruptcy case makes complete sense. People who can benefit from a bankruptcy in Will County find a way to pay to get it done. Some Joliet and Will County residents make payment plans with their lawyer to get a case filed and moving forward. When they know they will qualify for Chapter 7, they often stop making certain debt payments (like credit cards) to help raise the money. This is a popular way to raise money for Joliet and Will residents, and works just fine in most cases.

But there are situations when a wage garnishment is about to begin, and this won’t work. Those circumstances are difficult, but even in those cases solutions can sometimes be found. It tends to be quite rare that people wait until the last minute to explore their options. So, in most cases, being on a payment plan for two to three months before filing works perfect. You are able to have a Joliet or Will County bankruptcy lawyer to bounce your questions off of, and to help with the pre-filing stress (usually phone calls from debt collectors) and have the guidance to set up your case the right way.

 There are other ways to pay as well, like asking a family member or friend, to help, or by taking out money from a retirement fund. Call us at 815.729.9220 or email us and we will evaluate your situation and find a solution that is right for you.

Day 1 Bankruptcy Filed
Commencement of Case

A voluntary Will County, Illinois bankruptcy case is commenced by filing a Petition with the Bankruptcy Court. A husband and wife may file one petition together and commence a joint case. A schedule of assets and liabilities, a schedule of current income and expenditures, a schedule of executory contracts and unexpired leases, and a statement of financial affairs must be filed with the Illinois Bankruptcy Court.

About 1 Week after Bankruptcy Filed
Court Mails a Notice of Bankruptcy Filing

Approximately 1 week after the bankruptcy is filed, the court mails a Notice of Commencement of Case to the debtor and to the creditors included in the list of creditors. The notice contains the date and time of your court hearing (called “meeting of creditors”), deadlines for objections to discharge and the name of the Northern Illinois District bankruptcy trustee appointed to oversee your case.

30 Days after Illinois Bankruptcy Filed
Chapter 7: Statement of Intention regarding secured debt must be filed

Within 30 days after a Chapter 7 has been filed (or before the § 341 meeting if that is earlier), the debtor must file a Statement of Intention regarding his or her secured debts, e.g. home mortgages, auto loans, etc.. That statement indicates whether the debtor intends to: (1) reaffirm the debt and continue making payments, (2) redeem the property by immediately paying the value of the property, or (3) surrender the property.

Before Meeting of Creditors
Provide copies of tax returns

Not later than 7 days before the date first set for the first meeting of creditors, the debtor shall provide a copy of his or her most recent federal and state income tax return to the Illinois bankruptcy trustee and to any creditors that have requested it

About 4-6 Weeks after Bankruptcy Filed
341 Meeting (Creditor’s Meeting)

A Meeting of Creditors (also known as “Section 341 Hearing”) is usually held approximately four to six weeks after Bankruptcy is filed. The date and time of this meeting is stated in the Notice of Commencement of Case mailed by the court. Each debtor is required to attend this meeting and testify under oath, but most creditors do not come to the meeting.

30 Days after Meeting of Creditors
Deadline to file objection to claim of exemption

The debtor’s property must be claimed as exempt under the law in order to protect it from creditors. If the Trustee or a creditor disputes the debtor’s exemptions, they must file an objection within 30 days after the 341 meeting. Note: If the case has been properly prepared this type of objection should rarely occur.

Chapter 7: Debtor must perform under the Statement of Intention

In Chapter 7, the debtor must perform under the Statement of Intention, and (1) reaffirm the secured debt and continue to make the payments remaining for the balance of the debt, (2) redeem the property by immediately paying the value of the property, or (3) surrendering the property. [Note: Another section of the bankruptcy code appears to specify a time of 45 days after the meeting for the same action. See 11 U.S.C. § 521(a)(2)(B); and 11 U.S.C. § 521(a)(6) ]

60 Days after Meeting of Creditors
Deadline for Creditors to Object to Discharge of a Debt

Creditors have 60 days after the meeting of creditors to file a complaint objecting to the discharge of debts which were obtained by false pretenses, a false representation, or actual fraud; debt from fraud or defalcation while acting in a fiduciary capacity, embezzlement or larceny; and debt for willful and malicious injury. This deadline applies to objections to discharge of: Consumer debts owed to a single creditor of more than $500 for luxury goods or services obtained within 90 days before a Chapter 7 bankruptcy.

Deadline for Creditors to Object to Discharge of all Debts

Creditors have 60 days after the first date set for 341 meeting to file a complaint objecting to the discharge of all debts because of misconduct including transfer, destruction or concealment of property; concealment, destruction, falsification or failure to keep financial records; making false statements; withholding information; failing to explain losses; failure to respond to material questions; having received a discharge in a prior case filed within the last 6 years.

More than 60 Days after Meeting of Creditors
Discharge Order entered

Court rules require that the discharge be entered “forthwith” after the expiration of the time for objecting to discharge or moving to dismiss the case. The time for those objections expires 60 days after the first date set for creditor’s meeting. The discharge is not absolute or final. The Trustee can ask that the discharge be set aside if the debtor does not turn over non-exempt property, if the debtor fails to perform other duties, or if there were other matters pending which would result in the denial of the discharge.

Final Decree

Your case is not actually closed until the court issues a Final Decree. The “Discharge Order” and the “Final Decree” don’t necessarily come at the same time, although they often do if a case is a “no-asset” case. A no-asset case is a case where all of the debtor’s property is exempt.

However, if there is some property that is not exempt, then the bankruptcy case will remain open as long as it takes for the Trustee to liquidate the non-exempt property, distribute the funds to creditors, and file a final report. When the Final Decree is issued the case is closed.

As a practical matter once the discharge is entered a few months after filing the debtor is able to move forward with his or her life. Even if the trustee has additional duties to complete before he files a final report, this does not usually affect the debtor.

Please call Hamilton & Antonsen, Ltd. at 815.729.9220 for more information or to file an Illinois Chapter 7 bankruptcy case.