Bankrupty Filing Fee Increase

As of June 1, 2014 the filing fees for bankruptcy cases will go up in the Northern District of Illinois. For Chapter 7 cases, the fee will increase from $304 to $335. For Chapter 13 cases, from $281 to $310. For Chapter 11 cases, from $1,213 to $1,717. Please contact our office if you have questions about these fee changes.

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Spring Cleaning After Divorce

The long and cold Chicago winter has finally ended and spring is here. For many, this means a lot of thorough spring cleaning of their homes, garages, and gardens. Whether it’s cleaning every corner of your house, organizing your tools in the garage, throwing away unnecessary items, or deleting old files from your hard drive, it’s that season again. You spend extra time, effort and money cleaning your house and caring for your lawn. Why? Because there is great satisfaction gained from spring cleaning and it’s a nice fresh start to the summer season.

If you recently went through a divorce, your life probably seems very disorganized and muddy. Getting rid of the disorganization, clutter and muddiness that is stuck in your mind and heart is a way to take charge and reclaim your life. You can then be ready to embrace life, whatever comes your way. Get organized, tidy up and avoid any overflow of emotional junk. This way the focus is on you.
Divorce often leaves people with a head full of negative thoughts; bad self-beliefs and feelings of disappointment. The experience is exhausting, clogs your head and makes it very difficult to move forward. However, spring is a perfect time to take the duster and clean up the mess. Take some time alone to take care of yourself and start being positive.

Your past can ruin any shot of you moving forward. Get rid of anything around you or around your house that signifies bad memories from your divorce or past. Remodel a room in your house, treat yourself to some pieces of furniture or decorative accessories, put up new photos of your friends and family. There’s a great quote that highlights this: “To have a good future you have to learn from the past and focus on the present.”
Once your mind, heart and past are cleaned up, you will be ready to embrace your fresh new start in life. There is no time like the present.

Lien Stripping

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The previous article touched upon the process of removing a second mortgage from a home in a Chapter 13 case. This process is called “lien stripping” and works as follows. If a debtor has a second mortgage and the house is underwater (meaning that the value of the home is LESS than the amount of the first mortgage), the Chapter 13 plan allows that mortgage to be “stripped” from the home. That debt is then placed into a general unsecured pot and is paid cents on a dollar over the next three or five years. After the debtor successfully completes all the payments on the plan, the remaining balance on the second mortgage is discharged, along with the other unsecured debt, and the lien on the home is extinguished.

For example, the Smiths’ home is valued at $150,000 and the balance remaining on the first mortgage is $175,000. The Smiths’ also have a home equity line of credit with a balance of $40,000. Since the balance on the first mortgage is more than what the home is worth, the Smiths can propose a plan to strip the second mortgage. If successful, the second mortgage is turned into an unsecured debt and will be lumped together with other unsecured debt, such as credit cards. That whole unsecured debt will then be paid on a percentage basis. The percentage paid to the unsecured debts will depend on numerous factors but it basically boils down to how much “disposable income” the debtor has left each month after paying expenses, multiplied by 36 or 60 months. That percentage is determined on a case by case basis.

After successfully completing a Chapter 13 plan, the second mortgage lien will be removed from the Debtor’s home. Not everyone will qualify for “lien stripping”. That’s why it is very important to have your situation looked at by a competent attorney. Give attorney Artur Zadrozny a call at 312-375-1704 to set up an appointment.

Chapter 7 v Chapter 13

Once individuals decide they need bankruptcy relief, the next question usually is: what kind of bankruptcy is the best option for me? People know about Chapter 7 or Chapter 13 but they are not clear what the difference between the two options is. First of all, the names Chapter 7 and Chapter 13 are simply the chapters found in Title 11 of the United States Code. Title 11 contains all the laws related to bankruptcy law. Think of Chapter 7 as the process of liquidation and Chapter 13 as the process of reorganization.

Chapter 7 – Once filed, the trustee appointed by the bankruptcy court takes the Debtor’s non-exempt assets, sells them, and payoffs of the unsecured creditors. In majority of Chapter 7 cases, the Debtors do not have any assets of value, their major debt is unsecured debt: such as credit cards, medical bills, or court judgments. Within three to four months of the filing, any qualified Debtor receives a discharge and all his or her debt is wiped out.

What if I have a house? Can I still keep it if I file for Chapter 7? That depends whether you have equity in the house or not. If your house is underwater and is secured by mortgages, the trustee will generally not bother with selling the house because there won’t be any funds left over after the sale. If there is equity, the trustee will sell the property, payoff the creditors, and if there are any funds left over, they will be turned over to the Debtor.

What if the house is underwater and I am late with my mortgage payments? In this situation you will have to continue to make mortgage payments if you want to stay in your home. Otherwise, there is nothing to stop the bank from filing a foreclosure action against you. If a foreclosure action was already filed before filing of the Chapter 7 case, the filing will only temporarily stop the foreclosure.

Chapter 13 – This is a reorganization form of bankruptcy where you reorganize your debts by paying the unsecured creditors a percentage of what you owe. The Debtor proposes a repayment plan that lasts three or five years during which time the Debtor makes monthly payments to the bankruptcy trustee. The trustee in turn disburses those funds to the creditors. If the Debtor is behind mortgage payments, Chapter 13 allows the debtor to become currents on the mortgage payments by including the mortgage arrears in the plan. The Chapter 13 plan also allows for the removing of a second mortgage if certain conditions are met. This process of “lien stripping” will be discussed in greater detail in the next article.

This was just a short overview of the differences between a Chapter 7 and Chapter 13. Each bankruptcy case is unique, with its different set of circumstances. Call attorney Artur Zadrozny today at 312-375-1704 to discuss your situation to see if bankruptcy is the answer for you.

Dispelling the Bankruptcy Myth

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The word bankruptcy has a very negative connotation in our society, suggesting that the person filing for bankruptcy is financially irresponsible. Most people believe that overspending and money mismanagement is the reason why people are forced into bankruptcy. However, that is far from the truth: job loss, medical bills, natural disasters, and the state of the economy in general are the real reasons why people file for bankruptcy.

Imagine this scenario: Mr. and Mrs. Smith are a married couple with two children. Both work and make decent income. Their credit is healthy, have one mortgage and there is equity in their home. Recently, Mr. and Mrs. Smith decide to remodel their outdated kitchen and build a garage for their two vehicles. They take out a home equity line of credit and start working on their project. Since they have some money left over after the remodel, Mr. and Mrs. Smith plan on taking a long-overdue vacation with their kids. Unfortunately, tragedy hits. Mrs. Smith is diagnosed with breast cancer and has to stop working for several months. Mr. Smith’s company downsizes due to the weak economy and he is laid off. As a result, the Smith family’s health coverage ends. The Smiths continue to live off of their life savings but they quickly run out and start to use their credit cards to pay for basic necessities. Before long, the Smiths max out their credit cards and have a hard time making the minimum payment. The medical bills are piling up. The value of their house plummets. The financial stress is taking a toll on the whole family; Mr. Smith struggles to sleep and shows signs of depression. The Smith family needs help and this is where bankruptcy comes in.

Thousands of families and individuals file for bankruptcy every year because they need financial and emotional relief, just like the Smith family described above. They file not because of financial mismanagement, but because events beyond their control have caused them to end up in a financial hole.

What kind of relief does bankruptcy afford to individuals? Next week’s article will describe the difference between filing a petition for relief under Chapter 7 and Chapter 13 of the Bankruptcy Code.

For bankruptcy matters, please call attorney Artur Zadrozny at (312) 375-1704.

Tips for Selling Your Home in 2014

With low inventory, still low mortgage interest rates, and slowly rising prices, here’s what you need to do to get your home in selling shape for 2014:

• Get your home ready, “HGTV” ready.

Cleaning your home is a must. After that, you should consider hiring a stager (or a friend/agent who is good with home decorating) to give your home the television-worthy (“HGTV”) look so many buyers expect today. Assess what other sort of work needs to be done, such as fixing things that don’t work, touching up paint, or cleaning or replacing your carpets.
Decide if you need to update your landscaping, and paint, clean or tuck point your home’s exterior. And if you’re selling in January, clear out the holiday decorations as quickly as possible.

• Have at least three agents come and assess your property.

Often, sellers simply call the agent who sold them their home to list it. While you may wind up hiring that agent, you’ll be doing yourself a favor if you invite a couple of other agents so that you get different assessments of your home. Each agent will bring different ideas to the table about how much your house is worth and what kind of marketing plan will work. They will all have a variety of experiences to draw on.

• Understand what it will take to sell your home.

If you live in an area plagued with foreclosures and short sales, you may have to meet that price point in order to sell. You have to ask yourself if it is worth it. You will have to evaluate the price and timing in order to get the most for your property. If homes have recently sold for more, you might be pleasantly surprised. Again, you will need to get comparable home sales from your agent to make sure you price your home correctly.

• When pricing your home, be realistic.

Find out what types of properties are selling in your area and how many days they are sitting on the market. Accept the reality of your local market and make sure you price your home realistically.
Don’t blame your agent if you don’t get any offers within 24 hours of listing your home on the market. And remember that Sellers who set over-the-top prices could wait months or years for an offer and may wind up with a lower price than the price the agent originally recommended.

• Find a good attorney that will guide you through all of the legal steps and documents.

Having a trustworthy attorney that will explain things to you in plain English and be there with you at each important step–whether it’s negotiating during the inspections or performing a careful title examination–is extremely important. Choose an attorney that you feel comfortable with, one who will guide you and represent your best interests.

For more information on real estate matters, contact Attorney Kathy E. Bojczuk at (773) 580-1122.

Cutting Costs During Divorce

Divorce isn’t a topic most couples like to talk about, especially since it involves a wide range of feelings, but it’s important to be objective. If you and your spouse have tried everything, but just can’t seem to make your marriage work, going your separate ways may be the best option for both of you. Eventually, you’re both going to be happier, and although the effects on any children you may have are likely to be major, they’re ultimately going to be better off as well. Apart from the emotional strains of a divorce, there are also financial issues to consider. If divorce is on the horizon for you, read on to learn how to reduce the overall expenses of this difficult and tenuous period in your life.

1. Get a Good Lawyer

While your first impulse may be to go out and hire a top lawyer to get every penny you can from your spouse, that’s probably not the best route to take. The priciest lawyers can cost as much as $500 per billable hour. Instead, let your emotions cool off and find an affordable attorney who you feel comfortable with and one you trust. Your friend’s “killer” lawyer may not be a comfortable fit for you and your situation. Also be certain that your attorney works in family law.

2. Keep Negotiations Amicable

If your divorce is uncontested, billable hours are going to be greatly lower, saving you substantial money on attorney’s fees. If possible, meet with your spouse to discuss if there are any matters where you and your spouse can reach an agreement on (dividing personal property/furniture, or perhaps creating a parenting schedule). Update your lawyers on the results of those conversations, so they can provide more direction.

3. Disclosure All Income and Assets

This may not save you money initially, but can help you stay out of the judge’s way, who can impose serious fines and penalties if you try to hide income or assets. No reputable lawyer is ever going to suggest that you conceal information, and it’s simply not a good strategy to undertake. By being honest in your financial reporting to the court, you’re going to be much better off in the end.

4. Work Efficiently with Your Lawyer

Once you retain a lawyer, ask for a complete list of all documents and any other information you’re going to need for your initial consultation or the following meeting. This will not only save you money, but it will also keep your case moving forward, avoiding any unnecessary delays. Throughout the whole process, remember to always keep your lawyer in the loop, ask relevant questions, be prepared for all meetings, and—most importantly–use your time with him/her efficiently.

5. Check your Bills

Has there been some over-spending after you separated from your spouse? Is your spouse generating expenses which should not be your responsibility? Your bills are very telling about your and your spouse’s expenses and lifestyle. The bills will help you understand what you might need to cut back on if separation and divorce do not leave you with enough income to cover every expense. They will also show you your spouse’s expenditures, some of which might be difficult to justify as reasonable expenses going forward.

Closing

Once the agreement is reached, signed and entered as an official final court order, make sure you live up to it. Being late with child support or spousal support payments will also cost you more attorney fees when your ex takes you back to court. If you agree to make payments on the 1st or the 10th of each month, then do so. The sooner you and your ex can create a stable, amicable post-marriage relationship, the better off both of you, and your children, will be.