CAN YOU USE YOUR CREDIT CARD RIGHT BEFORE FILING BANKRUPTCY?

The answer is dependent on when the credit cards were last used and for what purpose. Generally, any use of a credit card for luxury goods over $500 and debts owed to any one creditor incurred within 90 days of filing will not be discharged. Also, any cash advances made within 70 days before filing or debt incurred without any intention to repay will also not be discharged. Typically, if minimum payments are made to the creditor for the last six months prior to filing, a debtor should have no problem having such a debt discharged as long as no debt was incurred under false pretenses or fraud.

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CAN I TRANSFER ASSETS TO OTHER BEFORE FILING IN ORDER TO AVOID LOSING THEM IN A CHPATER 7 BANKRUPTCY?

In a bankruptcy case, trustees have a lot of power and discretion. They are working on behalf of the creditors in order to determine whether there are any assets of the debtor that can be seized and distributed. As a result, the trustee is not going to look favorably upon a debtor transferring property or assets in order to keep them out of the hands of the trustee. In my experience, any transfers done within one year prior to the filing of the petition can be reversed by the trustee or he/she can pursue those assets. This is referred to as the "lookback period." If the transfer was made more than four years ago, those assets will usually be outisde the scope of the bankruptcy proceeding. The gray area comes in between those two periods. If the trustee feels the transaction was performed primarily to keep the assets out of bankruptcy, he will likely pursue them if it was done within the last four years. If the transfer looks like a bona fide good-faith transaction, the trustee will probably have no problem with it provided it occurred over one year ago.

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DOES BANKRUPTCY STOP LAWSUITS OR COLLECTION ACTIONS?

When you file a bankruptcy petition with the court, an "automatic stay" is issued. An automatic stay places a stop or hold on all current lawsuits and current collection activities and continues throughout the case. This means that no creditors can call you, send letter, file or continue with a lawsuit, or contact you in any other way in order to attempt to collect on a debt. Doing so would violate federal statute and the offending creditor could face punitive penalties. If you are tired of creditors contacting you, call one of our bankruptcy lawyers today to see if filing bankruptcy is right for you and get those creditors off your back.

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HOW ARE SECURED DEBTS HANDLED IN A CHAPTER 7 BANKRUPTCY?

First of all, let's define what qualifies as a secured debt. A secured debt is a debt backed or secured by collateral, such as your vehicle loan or mortgage. In a Chapter 7 bankruptcy, you generally have three options on how to handle secured debts: surrender, redeem, and reaffirm. Surrendering a secured debt simply means that you will surrender the property that is securing the loan back to the creditor. For example, you would abandon your house and surrender it back to the lender if you were choosing this option pertaining to your mortgage. The creditor will generally not be able to pursue a debtor for the outstanding amount due under that debt. Redeeming the debt simply means paying off the amount owed on the secured property. So, if you owe $10,000 on your current vehicle loan, you can always tender $10,000 to the creditor of that property in order to redeem the debt. Finally, you can also reaffirm the debt. This requires you signing additional documentation with the creditor and you are essentially committing to the debt again. This means that the debt will not be discharged throughout the bankruptcy proceeding and you will still be liable for the amount owed to the creditor, but you will also maintain possession of the secured property. If you have any questions, contact our bankruptcy lawyers to learn more about your options in a Chapter 7 bankruptcy.

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WHAT DEBTS ARE DISCHARGED IN A CHAPTER 7 BANKRUPTCY?

We are asked many times by clients which debts will be discharged through a Chapter 7 bankruptcy. Typically, all unsecured debt such as credit cards, medical bills, and utilities will always be dischargable. With secured debts such as mortgages, car loans, and home equity lines of credit, it is a little complicated and will be discussed in a later post. However, federal statute lays out certain debts that are not dischargable under a Chapter 7 bankruptcy, such as student loans, alimony and child support, some taxes, and criminal restitution. Contact one of our bankruptcy lawyers today to learn more about your specific situation and what debts may be discharged.

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DO I NEED TO QUALIFY FOR A CHAPTER 7 OR 13 BANKRUPTCY?

Ever since the new regulations took effect in 2005, many people are worried that they no longer qualify for a Chapter 7 bankruptcy. However, over, 90% of the people who qualified for a Chapter 7 bankruptcy prior to 2005, would still qualify today. The major obstacle in a Chapter 7 bankruptcy is the means test. The means test was designed to ensure that only people under a certain income level could file for Chapter 7 bankruptcy. Generally, a single individual living alone must make under $47,000 a year in order to qualify, however that figure is constantly changing so consult a bankruptcy attorney today for an exact amount. If you have additional people living in your house such as a spouse or children, then the income level will rise with each additional person. If you are over the income amount, this does not necessarily mean you cannot file a Chapter 7 bankruptcy as there are still ways to qualify.
In order to qualify for a Chapter 13 bankruptcy, you muct have regular income and secured and unsecured debts under specific amounts. Without regular income, an individual would have no money to repay the creditor, thus defeating the purpose of a Chapter 13 bankruptcy. Contact our experienced bankruptcy attorneys today for a free consultation.

WHAT TYPE OF PROPERTY IS EXEMPT FROM A CHAPTER 7 BANKRUPTCY?

In Illinois, the state has a statutory list of property that is exempt from bankruptcy, meaning it cannot be touched or seized by the trustee. For example, up to $15,000 worth of equity in your house and $2,400 worth of equity in your car is exempt under Illinois law. Also, most retirement savings and unemployment compensation is exempt also. There are also many other categories of exemptions allowed by the state, in addition to everyone's $4,000 "wild-card" exemption. The "wild-card" exemption can be used for any assets or accounts the debtor holds, and those assets will be protected from the bankruptcy proceedings up to $4,000 worth of value. There are several different ways debtors can protect their assets from creditors, so contact one of our bankruptcy lawyers today in order to learn more.

WCZ
http://www.westmontattorneys.com