Hi everyone.

As a bankruptcy attorney, I see so many cases for people who file, who make good money, but bad decisions.  It goes against my business model, but as a counselor,  I’m going to share with you ways to Avoid bankruptcy!

1.  Make a budget and stick to it. 
Try this for one week.   Write down everything you spend.  Everything from that morning coffee on the go, to the magazine subscription, to the cable bill, Netflix, Redbox, and trips to the movies.  Don’t forget your meals, groceries, eating out, the bar tab etc.   You would be surprised on how much you just blow through on insignificant items.    Now, make a list of expenses in order of priority.   Shelter, food, clothing (necessity only) monthly credit card bills, student loans, medical bills, and so on down the line with the discretionary items at the bottom.   Now, look at what you take home as income.    Now, redo your list and trim out the items that you don’t HAVE to have.   Pack a lunch, Bring a mug of coffee from home, eat out once a week, or better, once a month.  You can see where you can save money.  Now, the hard part, STICK TO YOUR BUDGET!  Share your reasons with family and friends and they can accommodate your plans to get out of debt.  Movie night in with a group, for instance, is a great way to save money, dine in, and spend time with family and friends all in one!  For people that have trouble budgeting, there is a system called the envelope system.   Put all your money into envelopes for each expense, and you can spend each envelope until it’s gone.   IF you need more, you can borrow, but you’ll have to make adjustments to your other budget categories!  Don’t forget to budget in savings as well, never too early to get on that track.

2. Don’t buy luxury items such as a brand new car. 
You’ve heard the phrase “house poor” Don’t buy over your head.  Buy/rent the right size house or apartment for your needs.   (Utility and maintenance costs will reduce too with size).  Choose the right, affordable neighborhood.   Don’t buy a new car!  We all know the value drops the second you go off the lot.  Do your research and buy a reliable car.  Pay cash if at all possible, since these are rapidly depreciating assets.  Buy a reliable beater to free up cash. (Have the car checked by a mechanic).  You can always move up in car later when you are out of debt.   If you must finance, never lease a car either. The cost is just too much, and you get nothing at the end of the lease.
Don’t get all the bells and whistles.   For instance, do you need that in-dash navigation?  90% of the time you drive, you know where you are going anyways!

3. Pay your highest interest rate debts first.
This will help you pay off the most debt for the lowest price.   Even if you have a smaller account, if it has a lower interest, you’ll pay less in the long run if you attack the highest interest first.  Some people want to clear one account first, and some people need that motivation, This is fine, but to pay the least back, attack the highest interest rate first.

4. Maximize your income.  
This may seem obvious, but it is often overlooked.   You can always ask for a raise, but be humble about it. Show the employer that you care about the company, and want to move forward, and ask how you can increase your income while doing so.   Sincerity goes a long way.   You can also look for a part time job.  It’s short term.  Bust your butt and reap the rewards.  Keep the big picture in mind.     Deliver pizzas, stuff envelopes, be a waiter or waitress.

5.  Cut up your credit cards!
It’s Obvious.  This should be the first step.  Stop going further into debt.   Cut up the cards.  Negotiate better interest rates.    Look to refinance your home when the interest rates are low.  Talk to your bank and have them close your accounts too once they are paid off.  Use your debit card or envelope system to pay your bills. This way you can use all available income to pay down the debt to be debt free as soon as possible.


Bankruptcy is an easy way to get out of debt, but it usually doesn’t fix the problem.   Fix the problem and you may not even need to file.     Feel free to contact me if you do need to file, if there is truly no way out.   Best of luck to you!
Terry

The post 5 simple ways to Avoid Bankruptcy appeared first on Chicago Bankruptcy Lawyer.

Subject: What does reach back mean?

Question: I was doing fine financially until I went to commission sales. I kept thinking I was going to make a lot more money than I did. In June 07 I took a cash transfer from my bank credit card to my checking (they offered to me) of 15,000.00. A week later I transferred 14,000.00 to my daughter for lap band surgery. That credit card is now up to 22K and part of about 40K I am in debt and thinking about filing Chapter 7 on. Do I need to wait one or two years before filing so they wont go after her. I did not know I was going to be in such a financial pit and don’t want my bad decisions to effect her.

Answer: Transfers/payments/gifts to insiders must be disclosed for a year in your bankruptcy paperwork.

Subject: repo
Question: Is there a law that clears you from being sued after a certain amount of years. I co-signed 8 years ago for someone on a car and now the bank is just trying to sue me for the difference.

Answer: Bankruptcy will discharge your responsibility for the debt.

Subject: chapter 7
Question: Hello. Thank you for your time. I filed a chapter 7 in October of 2005, discharged in February of 2006. I have a residence and a rental home (has already gone to sheriff’s sale) which both were listed assets on the bankruptcy filing. Both mortgages had ARM’s which adjusted after the discharge, and the loans were never reaffirmed. Although I kept the payments current until July/August 2007, the values dropped, I could not rewrite the mortgages and have decided to “walk-away.” Is my understanding correct that, since these assets were discharged in my bankruptcy and not reaffirmed, I cannot be held responsible for any deficiencies? Thank you

Answer: True. If you did not reaffirm, you are not responsible for the mortgage balance and can walk away from the home.

Subject: Getting out of Bankruptcy
Question: I need to know how can refinance my home loan and get out of bankruptcy.

Answer: I assume you are in chapter 13 bankruptcy. You will need to seek out a lender and get a proposed refinance contract. Then get that to your attorney to draft a motion to permit you to refinance. You should also order a payoff statement from the trustee. Once the motion is granted, (court will look to see if it is reasonable and necessary, comparing costs before and after etc.) then you can close on the loan and turn the proceeds over to the trustee to distribute to your creditors. You should allow about 30 days for the motion to be heard and granted.

Subject: Filing taxes post bankruptcy discharge
Question: I have completed a Chapter 7 bankruptcy during 2007. I am unsure how, or if, I am required to report that to the IRS. I owe no back taxes, and taxes were not apart of my bankruptcy. All of the debt that was discharged was consumer credit debt. I maintained my home, car and personal belongings.

Answer: As far as I know, there are no special deductions or exemptions to list when filing your taxes in regards to your bankruptcy. You should mention it to your tax preparer just in case, since I am not a tax expert, and the tax code is as big as the bankruptcy code!

Subject: Can debt be discharged?
Question: I am a primary card holder on a credit card. My wife was put on as a authorized user only. She rang up 10,000 in debt on this card. She admits its all her debt. She plans on filing Bankruptcy alone{I am not filing}. Can this debt be discharged?

Answer: This would still be your debt, since you ‘authorized’ her to use your account. So, they could still collect on this, despite her bankruptcy.

Subject: Chapter 7
Question: I live in Vancouver Wa but work in Oregon. I file for chapter 7 bankruptcy in Nov 2007 but the trustee is waiting to close /discharge the debt until I file taxes so he can garnish them. My question is can he garnish my child tax credit and/or my earned incom credit?

Answer: Each jurisdiction may be different, but in Illinois, we use one of the Illinois exemptions to protect Earned Income Credit. Talk to your attorney about the available exemptions for your refund.

The post More Bankruptcy Q&A appeared first on Chicago Bankruptcy Lawyer.

Judgment
Q:
If a Judgment was won against you for a security bond and you file bankruptcy with no real property or income, can that judgment be included in the bankruptcy?
A:
I am not totally familiar with a ‘security bond.’
Most non-dischargeable debts are government related, or based on fraud. Otherwise, most regular judgments from credit cards or medical bills are discharged upon filing. If you let me know what a security bond is, perhaps I can get you more info, Belinda. Thanks

Judgments before bankruptcy
Q:
I filed for Chapter 7 bankruptcy on 3/04/2004 and it was discharged on 6/16/2004. Previous to my discharge one of my credit card companies was granted a judgment against me on 1/29/2004. The judgment is included in my bankruptcy under “Statement of Financial Affairs” but the debt was discharged on Schedule F Unsecured claims versus on the Schedule D Creditors Holding Secured Claims. My question is two-fold can I get this debt taken off public record based on it being discharged and should my attorney have filed this differently?
A:
It really wouldn’t matter if it was on schedule D or F, as long as it was listed. I assume you are looking at your credit report. The fact that you got the judgment will remain as a factual event, however, they should zero it out or otherwise mark that it was under bankruptcy. The creditor can never collect on this. The fact that you had the judgment may remain on your credit for up to 7 years, similar to foreclosure, and bankruptcy will show for up to 10 years on your credit report.

Divorce and Chapter 13
Q:
My wife and I filed a chapter 13 about 4 months ago. We have been marital problems for years and despite marriage counseling have decided a divorce is the best option for all involved parties, including my 5 yr old daughter, to avoid any more emotional damage by staying together in an unhappy home. We were not eligible for Ch. 7 because of income, but now divorce will change this quite a bit. We did file jointly on the Chapter 13. What options do I have to still keep the house as my form of Child support and still have enough money to live on myself? My Ch. 13 was a 100% repay plan. Can I reduce the percentage amounts? Or can I convert to a 7 in order to discharge the debt so that paying my wife child support will be and option. Currently I have a wage deduction weekly to pay the plan as it now stands.
A:
You should speak to both your divorce attorney and bankruptcy lawyer. It is possible to convert the case, or even to split the cases into 2 separate cases if one party wants to convert to chapter 7. You would have to have enough combined monthly expenses to eat up the disposable income on a conversion. There are other budget test and asset protection issues as well, so sit down with your lawyer to map out the best plan of attack.

Can I file bankrupt on a student loan ?
Q:
Can I file bankrupt on a student loan that I received in 2001 with the help of a co-signer?
A:
Hi Shana,
Unfortunately, student loans, more precisely ‘debt for educational purposes’ are generally non-dischargeable, unless you can prove that it is an undue hardship to repay it. To do that, you would have to satisfy the ‘Brunner’ case test: 1. you paid it when you could in the past, you have no present ability to repay it, and you have no future ability to repay.

Therefore, 99% of the time, student loans are non-dischargeable in chapter 7 bankruptcy because of this tough standard to beat them.

bankruptcy
Q:
We filed bankruptcy in sept 2003 after my spouse lost his job. We have struggled till now trying to keep our house. It was sold public auction in May . Are we responsible for the remaining balance and if so can we claim again? If we have to pay back 100,000 we will not even be able to rent the house we are in .

A:
Your answer depends on whether you reaffirmed the mortgage in a chapter 7. It would also depend on if your jurisdiction allows lenders to collect on their deficiency balances.

If you did not reaffirm the debt in the chapter 7, technically it is discharged in that case if you listed it in the petition.

You would only qualify for Chapter 13 if your prior chapter 7 was less than 8 years ago.. Chapter 13 is a debt repayment plan

chapter 13
Q:
I am in a chapter 13. I am about to be discharged but I have not turned over my last 3 years tax returns or refunds. I have been informed by the Trustee that if I do not turn over the tax refunds my case will be dismissed. What does it mean when they dismiss your bankruptcy?

A:
It means that your creditors can collect from you. If you, let’s say, paid in 10% to your unsecured creditors, they can come after you for the other 90%.
You should submit the items to the trustee to get the benefits of your bankruptcy filing.

Follow-up:
What if I do not have the money? Is there something I can do?

A:
You need to discuss the issue with your lawyer. In Illinois, debtors do not usually have to pay their tax refunds to the trustee. Therefore, discuss with your lawyer what repayment options you may have. Perhaps they can extend the case to compensate for that money.

Garnishment/Freeze placed on account a year and half after bankruptcy discharged
Q:
I live in the state of Georgia. I filed chapter 7 in October of 05 My bankruptcy was discharged in January 2006. On July 10, 2007 an attorneys office placed a freeze/garnishment on my checking accounts. I confirmed with the credit card company that this was covered in my bankruptcy. The original debt with the credit card company was a little over one thousand dollars. This attorney placed a garnishment of over THIRTY THOUSAND dollars on my checking account and placed a lien on my home. How they came up with that amount, your guess is as good as mine. This freeze on my checking account has left me with no way of paying my bills (even though I have the money, just can’t touch it) and has left me unable to go to the grocery store to feed my family of 6. My bank also notified me that because of the freeze on the account any checks that I have written will be returned as non sufficient funds. Which will cause me a lot of money. My bank charges 33 dollars for each NSF charge. Plus what ever each store decides to charge me for the “bad” check. What are my rights and what can I do to this clear case of contempt of court? Can I sue them for damages? Can I sue them for the cost of having a lawyer reopen my bankruptcy case? Any information would be greatly appreciated.
Thank You,
Michelle

A:
You probably do not have to reopen the bankruptcy case. Assuming that you listed this debt in the case, it sounds like you may have a potential state court action for a violation of the bankruptcy discharge. You should contact your bankruptcy attorney for the process…he or she may be able to contact the attorney to get them to lift the hold without having to bring a lawsuit.

Question about selling a store before/after the bankruptcy
Q:
Hi.
I am trying to file a bankruptcy(Ch 13 I think because I am trying to keep some assets I need). I have a primary work, and there is a store(mini mart running slow) under my name run by my parents. If I file ch 13, and if My parents sell the store, will those assets go to trustee 100%? we started the business with around 50K, and we are trying to sell it higher(hopefully). So say If we sell it as 80K, will those 30 difference go to trustees 100%?
2. I have filed the tax with my wife jointly, will she bee effected when I file a ch 13 ? I didn’t join anything with her other than the tax filing.

Please help!!!

A:
Hi Song,

All of your assets, that are in your name need to be disclosed in a bankruptcy case. Any transfers or sales need to be approved by the court and trustee. In most cases, any unexempt proceeds (ask your bankruptcy lawyer for specifics) would normally be paid to the trustee towards your chapter 13 plan.

You would file taxes like you normally do, there is no special bankruptcy exemptions that you would have to worry about.

Foreclosure and Bankruptcy
Q:
We have a 1st, 2nd, and 3rd mortgage and can no longer afford the house. Our income is too high for chapter 7 and we most likely would file chapter 13. If we surrender the house during BK, is this considered a foreclosure? Finally if the bank sells the house and it does not sell for the total amount owed, will the remaining unpaid balance be rolled into our payment plan or will it be discharged by the judge?

A:
Usually, the bank will foreclose, but the chapter 13 bankruptcy will trump it, discharging any further liability on the claim if you set up your plan correctly. Therefore, you should speak to an experienced chapter 13 bankruptcy attorney to help assist you.

Selling a home in bankruptcy
Q:
My mother and I own a home I am primary on the mortgage. I just sold the home and purchased a new one in my name. My mother filed bankruptcy back in Jan 2007. I have a closing date on the home I own w/ Mom and the buyers closing atty called and said we have to get permission from the court to sell the home. My Mom has contacted her atty’s office but cannot get past the paralegal who says this could take 8 to 10 weeks to get to court. Is there a faster way to get permission to sell the home. My mother will not receive any money from the sell and she is paying the court monthly on her bankruptcy. The closing is scheduled in 3 weeks. HELP!
A:
Hi Dana,

Mom would need to bring a motion in bankruptcy court to obtain permission to sell the home. The notice period is 20 days, so realistically should take about a month to be heard in court. You will need to contact your real estate attorney and advise them that they may need to extend the closing date. Hope that helps.
Thanks.

Thanks for reading the Q&A for bankruptcy. Keep in mind, state law applies, and I am only licensed in Illinois, so my answers are based on Illinois case law. You should always seek out a local bankruptcy attorney to answer your case specific questions. Thanks

The post Rapid Fire Q&A appeared first on Chicago Bankruptcy Lawyer.

Top 10 Fuel Saving Tips
From Aaron Gold,
Your Guide to Cars.(as posted on About.com)
http://cars.about.com/od/helpforcarbuyers/tp/ag_top_fuelsave.htm

Whether you drive a two-seat hybrid or a three-ton SUV, chances are you can squeeze a bit more distance out of each gallon of fuel. These ten fuel saving tips have served me well over the years, and they can help you improve your car’s fuel economy and take some of the sting out of high fuel prices. Most of these tips will give you a very slight increase in miles per gallon (MPG) — but use several together and the gas mileage improvements will really add up.

1) Check your air filter
A clean air filter is the key to good fuel economy. A dirty air filter restricts the flow of air into the engine, which harms performance and economy. Air filters are easy to check and change; remove the filter and hold it up to the sun. If you can’t see light coming through it, you need a new one. Consider a K&N or similar “permanent” filter which is cleaned rather than changed; they are much less restrictive than throw-away paper filters, plus they’re better for the environment.

2) Check your tire pressure
Next to the air fitler, under-inflated tires are one of the most commonly ignored causes of crummy MPG. Buy a reliable tire gauge, check your tires when they are cold (driving the car warms up the tires and the air inside them, increasing the pressure), and keep them properly inflated. Use the inflation pressures shown in the owner’s manual or on the data plate in the driver’s door jamb.

3) Slow down
As speed increases, fuel economy decreases exponentially. If you(sic) one of the “ten-over on the freeway” set, try driving the speed limit for a few days. You’ll save a lot of fuel and your journey won’t take much longer. Just be sure you keep to the right, so you won’t impede the less-enlightened.

4) Hang with the trucks
Ever notice how, in bad traffic jams, cars seem to constantly speed up and slow down, while trucks tend to roll along at the same leisurely pace? A constant speed keeps shifting to a minimum — important to those who have to wrangle with those ten-speed truck transmissions — but it also aids economy, as it takes much more fuel to get a vehicle moving than it does to keep it moving. Rolling with the big rigs saves fuel (and aggravation).

5) Accelerate with care
Jack-rabbit starts are an obvious fuel-waster – but that doesn’t mean you should crawl away from every light. If you drive an automatic, accelerate moderately so the transmission can shift up into the higher gears. Stick-shifters should shift early to keep the revs down, but don’t lug the engine — downshift if you need to accelerate. Keep an eye well down the road for potential slowdowns. If you accelerate to speed then have to brake right away, that’s wasted fuel.

6) Get back to nature
Consider shutting off the air conditioner, opening the windows and enjoying the breeze. It may be a tad warmer, but at lower speeds you’ll save fuel. That said, at higher speeds the A/C may be more efficient than the wind resistance from open windows and sunroof. If I’m going someplace where arriving sweaty and smelly could be a problem, I bring an extra shirt and leave early so I’ll have time for a quick change.

7) Back off the bling
New wheels and tires may look cool, and they can certainly improve handling. But if they are wider than the stock tires, chances are they’ll create more rolling resistance and decrease fuel economy. If you upgrade your wheels and tires, keep the old ones. I have fancy sport rims and aggressive tires on my own car, but I keep the stock wheels with a good narrower-tread performance tire in the garage. For long road trips, the stock wheels give a smoother ride and better economy.

8) Clean out your car
The more weight your car has to haul, the more gas it needs to do the work. If you’re the type who takes a leisurely attitude towards car cleanliness — and I definitely fall into that group — periodically go through your car and see what can be tossed out or brought into the house. It doesn’t take much to acquire an extra 40 or 50 lbs. of stuff.

9) Out with the new, in with the old
Many people keep their old cars around even after they buy a new one. A spare car, especially if it’s an econobox, can be good insurance against temporary spikes in gas prices due to world events. The costs of keeping the car may or may not be less then the fuel saved, but it does allow for more predictability in your budget. My old beater doesn’t look like much, but it goes 10 miles further on a gallon of gas than our regular car. For that, I can afford to look bad!

10) Don’t drive
Not a popular thing to say on a car site, I know, but the fact is that if you can avoid driving, you’ll save gas. Take the train, carpool, and consolidate your shopping trips. Walking or biking is good for your wallet and your health. And before you get in your car, always ask yourself: “Is this trip really necessary?”

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