Frequently Asked Questions
If you find yourself unable to pay your bills, it’s likely you will have questions about filing for bankruptcy.
I am happy to provide you with information about some of the most commonly asked questions.
Should I start a debt management or credit counseling plan instead of filing for bankruptcy?
Many people turn to a debt management or credit counseling firm when they can’t afford to pay their bills. These agencies often charge expensive up-front fees and high monthly payments that are supposed to go to the creditors to repay the debt. Unfortunately, the debt management company sometimes keeps the money instead of paying off the debt. And it is only after they have accumulated thousands of dollars that they even start working for you. Throughout the years, I have counseled many people who have used these agencies and then were sued by a creditor they thought was being paid by the debt management company. So, after wasting thousands of dollars, they hired me to get them the relief they really needed. Be very careful. Do your homework before you hire a debt management or credit counseling firm. They do nothave the power to stop the phone calls and stop the lawsuits. Nor do they have the power to work out something with all of your creditors. And, keep in mind, that any debt that is forgiven can be taxed as income. You will receive a 1099 from any creditor that agrees to accept less than what is owed. But Bankruptcy protects you from this.
My wages are being garnished by a credit card company that sued me. Is it too late to file bankruptcy and stop the garnishment?
No, it is not too late to file a bankruptcy and stop a garnishment.
How can I re-establish my credit and get a house after bankruptcy?
We have filed bankruptcy for many people who later went on to buy a home. The important thing is to start making payments on time after you file bankruptcy. Future lenders want to see that you can pay your bills on time. That is how you will re-establish your credit. Perhaps you will begin with a debit card at your bank, or with your car loan.
If I still owe money on my car, can l keep it if I file for bankruptcy?
The threat of repossession is a scary matter and a concern for many of our clients. If this is the case for you, filing for a Chapter 13 bankruptcy may be a good option for you. Chapter 13 can protect you from repossession and excuse you from catching up on past due payments. The vehicle loan is paid through a Chapter 13 plan over up to five years and can often reduce your interest rate and monthly payments.
I owe income taxes. Can I wipe out taxes I owe to the government?
Sometimes you can wipe out older taxes and some tax penalties. Newer taxes that can’t be wiped out can be included in a Chapter 13 plan that stops the Internal Revenue Service and the State of Illinois Department of Revenue from garnishing your wages, provides for their repayment, and often stops interest and penalties from accruing on them. It depends on the type of tax you owe, the year you owe, and when you filed your return. I have over 34 years experience helping people find solutions to their tax problems.
I owe parking tickets and my car was just booted. Can bankruptcy help me?
Yes. Definitely. Chapter 7 does not wipe out parking tickets or red light violations. It will stop the City from doing anything more against you temporarily. But, to solve the problem you have to pay those tickets. You can work out a payment plan with the City of Chicago, or, if you have thousands of dollars of parking tickets, the best thing might be to file a Chapter 13 and force the City into a repayment plan. We can force them into a repayment plan often for pennies on the dollar, saving you thousands of dollars.
Do I need to spend all of my retirement funds and other savings before I can file bankruptcy?
No, you do not. Absolutely not. It is not a good idea to use your retirement funds to pay debts. I am totally against that. It is normal for people to not want to file bankruptcy. In an effort to avoid bankruptcy, they often will resort to selling stocks, withdrawing money or borrowing against retirement plans, borrowing money from friends or relatives, or getting a second or third job to pay bills. Usually they don’t even consider bankruptcy until most of their limited assets are used up. If this sounds like you, please call me for a free consultation before you use up all of your retirement money or other assets; we can usually protect those assets if you file for bankruptcy.
I filed bankruptcy a few years ago, and now I have more bills I can’t afford to pay. Can I file bankruptcy again?
Yes. Contrary to what most people hear, yes, you can file bankruptcy again. However, there are some complicated restrictions on filing another bankruptcy case, and we advise you to consult with an experienced bankruptcy attorney about your particular situation. For example, you cannot file a Chapter 7 after a Chapter 7 for eight years. But you can always file a Chapter 13 if you have a steady source of income.
I’m worried that I can’t afford to hire an attorney so I don’t even want to call one. How can I get help?
Many people think that they cannot afford to hire a bankruptcy attorney to help them. However, the risks and penalties that go along with filing bankruptcy papers incorrectly – without an attorney – can cost you much more than you can afford to lose. Over the years, I have taken over many cases for people who did not have an attorney. These cases were in serious trouble because the papers had been filed incorrectly. You don’t have to lose your home. You don’t have to lose your car, but these things are too important to risk. Hire an attorney to protect your interests. My fees are very competitive and I will do everything I can to make it affordable for you.
How much does it cost to file a bankruptcy case?
Fees to file a bankruptcy case depend on which type of bankruptcy is being filed and what debts, assets, and income you have, and do change from time to time. However, here is a general idea of how much the fees are. The first consultation is free, and we encourage you to meet with me and I will give you a specific assessment of your case and a clear description of your options and their costs. The court charges a filing fee of $310 for a Chapter 7 and $335 for a Chapter 13. The court increases this fee every few years. Court-required credit counseling certificate is $9.95 – $14.95 for the initial course taken online. It costs more to take the course over the telephone, $25-50. In addition, the Debtor education (or Financial Management) session and certificate fee is usually $7.95 to $9.95 if taken online, but more if done on the telephone.
For Chapter 13, our fees for our services are based upon a schedule set up by the bankruptcy court, with most of the fees are included in the monthly payment plan. Right now the Court allows all Chapter 13 lawyers to charge $4,000.00 per case. But lawyers differ on how much you must pay up front to start the case. In some cases I will start your case with nothing more than the court costs and the initial credit counseling paid. In other cases, such as for self-employed folks, or someone who is filing for a second time, I will ask for more money down to start.
For Chapter 7, my fees for our services are based upon the complexities of your individual case. A typical consumer case with no house, no taxes, no car loan would usually be about $1,200.00. More complicated cases are more expensive. However, I will try my best to make my services affordable to everyone who needs them.
How are the fees paid?
In Chapter 7 cases, you can retain our law firm with as little as $200.00 down. This is a non-refundable retainer or deposit. If you are working and have direct deposit of your paycheck we may be able to file your case with the court and stop all collection activities with a total of $500.00 down and the balance of your fees to be paid in payments over time. In some cases, we do insist on the entire fees and costs being paid in full prior to filing your case and getting you the protection of the U.S. Bankruptcy Court. For Chapter 13 cases, generally, in many cases, we can file your case and stop your creditors as soon as you give us the court costs plus pay the credit counseling fee, and obtain a certificate of completion of the pre-bankruptcy filing course.
What are these credit counseling sessions?
You must do two credit counseling sessions. The first one is done before we can even file your case with the Court. It does not take too much time, perhaps 45 minutes and you can do it over the internet, on the telephone or in person. You must complete this session and provide us with a certificate of completion before we can file your case. This is not a difficult thing, more a pain than anything. One of Congress’ new requirements under the new bankruptcy laws. Shortly after we file your case, you must do another credit counseling session, which they tell me is more useful than the first one. Failure to do this second session, will result in your case being closed without receiving the all important discharge of your debts! You must use a credit counseling agency that has been approved by the Office of the U.S. Trustee.
Do I have to lose any of my property?
Our job is to help you save your home and your car, not lose them! We will do all that we can to help you keep your home, your car and all of your other property. You do not need to lose anything when you file bankruptcy!
What about my future credit?
There is no doubt that filing any type of bankruptcy will affect your credit negatively. Filing bankruptcy can be reported on your credit reports for 10 years. This means that anyone looking at your credit will see that you filed bankruptcy. It does not mean that you will not get credit for 10years. But you must be very careful after a bankruptcy, and shop around very carefully to protect yourself and your family from the predatory lending practices that exist to take advantage of working people. You must use certain time-honored methods to find the best deals for credit: shopping around comparing prices and interest rates; doing your homework and knowing how much you should pay for the particular item you want to purchase. It is very important that you purchase wisely.
Can I keep my car and a credit card?
Yes, you can keep your car, so long as you keep paying for it, and keep it insured. Keeping a credit card is another matter. This is up to the creditor. Many times, a creditor will be pleased to let you keep the card, so long as you keep paying them. The best thing to do is to have us contact the creditor and make an arrangement for you in writing. We must tell the judge everyone you owe money to, even though you want to keep paying some of your debts. You are free to pay anyone you wish, but you must disclose all to the Court.
What if I have a co-signer?
You must let us know whether you want to protect your co-signer or not. With Chapter 13 we can force the creditor to accept payments that are lower than you must pay now and still protect your co-signers! There is no co-signer protection with Chapter 7.
Will I have to go to court?
In every case, there is at least one appearance that you must make at the office of the U.S. Trustee. The Trustee is appointed in each bankruptcy case to administer the case for the judge. This meeting does not take place in a courtroom, and an attorney from our office is with you at all times. The meeting is called a Section 341 meeting, and it is held at the office of the U.S. Trustee. We will take care of you during the meeting. You have already gone over all the details with an attorney from my office, and I have personally reviewed your file. There will be no surprises for us at the meeting.
Are any debts not covered by bankruptcy?
There are a few debts that cannot be wiped out. Child support, alimony, student loans, income taxes for recent years, parking tickets, fraudulently acquired credit, or judgments arising from accidents involving driving under the influence of alcohol or drugs. These debts must be paid back using Chapter 13.
How do I know if bankruptcy is right for me?
You should take advantage of our free consultation to go over your financial affairs in detail, without any obligation. Obtaining information will help you decide. Read, investigate. Learn all you can. The pressure put on you by your creditors will help you decide. Are you robbing Peter to pay Paul? Not sleeping at night? Are the creditors calling you at all hours, even at work? Are you using credit cards to pay other credit cards? These are the warning signals that your finances are getting out of control and you must pay attention. No one wants to file bankruptcy. Is there another solution, realistically? How long can you work two jobs? How long will it take you to get out of debt paying as you are now? Do you have health insurance? What are your priorities? We can refer you to a reputable credit counseling company if you would like to discuss your options with them before you decide. You must be aware that they often are prejudiced in favor of your paying credit card debts rather than mortgages and car notes, because they receive their funding from the credit card companies. Only you can set your priorities. Keep that in mind as you make your decision. In my experience, listening to your heart, will tell you the answer.