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Who Files Bankruptcy – The Answer Will Surprise You

July 13, 2016 by admin

Steven A. Leahy

Who Files Bankruptcy – The Answer Will Surprise You

By Steven A Leahy

With the Trump Bankruptcies in the news lately, you may be wondering “Who Files Bankruptcy?” The answer may surprise you. Bankruptcy is a Federal Law and is administered by the Federal Court System under the rules of the U.S. Bankruptcy Code. “The primary purposes of the federal bankruptcy laws are to give an honest debtor, either a person or a business, a ‘fresh start’ in life by relieving the debtor of most debts, and to repay creditors in an orderly manner to the extent that the debtor has property available for payment.”

In the first three months of 2016, 201.906 bankruptcy cases were filed nationwide – a vast majority (195,679) were consumer cases. There are 90 Bankruptcy Courts – each a unit of a U.S. District Court. The Northern District of Illinois is comprised of the Eastern and Western Divisions, and has 10 bankruptcy judges. 11, if you count the retired Judge that handles a limited case load. The Northern District of Illinois encompasses 18 counties – with court locations in Chicago, Joliet, Rockford, Lake County and Geneva.

The Northern District of Illinois leads the nation in bankruptcy filings with 47,535 case filings over the 12 month period ending March 2016. That is actually a decrease of 6.6% compared to the previous 12 month period. A recent study revealed the top reason people file for protection under the bankruptcy code is – Medical Bills! The second reason is – Job loss! Both of these reasons may have nothing to do with the person filing bankruptcy.

I help people resolve their IRS problems. As I have mentioned many times – there are only 6 things you can do if you owe the IRS money. One of those six things is bankruptcy. Many of my clients are reluctant to even consider bankruptcy as a remedy. They believe it isn’t morally available to them. They have always paid their debts, and filing bankruptcy would go against that value.

First, often a tax debt includes an unreasonable amount of penalties and interest. A debt that may not hold the same moral obligation as the underlying debt. Second, as I explain to my clients, bankruptcy does not protect you from your moral obligations. Bankruptcy only protects you from some legal obligations. My favorite example is Abraham Lincoln. That’s right Honest Abe sought protection under the bankruptcy laws. You see, he had creditors taking legal action against him after a failed partnership in a General Store.

The Bankruptcy Code protects a person from their creditors. Most creditors are prohibited from collecting on the debt. It does not, however, prevent that person from repaying their creditors if they elect to do so. Honest Abe is a good example of this concept. Once granted legal protection from his creditors, Abraham Lincoln felt he still had moral obligations to repay his creditors. He paid every creditor back. It took some time to accomplish this – but in the end, his creditors were paid.

If you were to seek legal protection from your creditors, like the IRS, you could still repay the debt, at your convenience, should you feel a moral obligation to do so. Maybe you feel a moral obligation to pay the underlying debt, but not the unreasonable penalties and interest. You could do that. The IRS would accept the money!

If you have IRS problems and need the help of a professional to resolve it – I encourage you to call my office. Opem Tax Resolutions and the Law Office of Steven A. Leahy, PC helps taxpayers resolve their IRS problems

Filed Under: Uncategorized Tagged With: “Owe Taxes”, “Tax Relief Chicago”, “Tax Relief”, Bankruptcy, Chicago Tax Help, Help With IRS, IRS Help, IRS Help Chicago, IRS Options Help, IRS Tax Debt, tax attorney chicago, Tax Help Chicago, Tax Solution

Foreclosure Defense – Saving Your Home With Chapter 13

December 29, 2014 by admin

Steven A. Leahy
Foreclosure Defense – Saving Your Home With Chapter 13

By Steven A Leahy

Foreclosure is the process necessary for a mortgage lender (i.e. mortgagee) to take possession of a property because the borrower (i.e. mortgagor, homeowner) defaults on a contractual obligation to the mortgage lender, usually a default in payments. In Illinois, Mortgage foreclosures are governed by the Illinois Mortgage Foreclosure Law (IMFL) 735 ILCS 5/15-1101 et seq. (2013). There are at least three alternatives for a homeowner to defend against a foreclosure, litigation strategies, loan modifications, and Chapter 13 bankruptcy. This article will discuss the third alternative, Chapter 13 bankruptcy.

Illinois is a judicial foreclosure state. That means the mortgage company must file a mortgage foreclosure complaint with the court in the county where the property is located, and go through litigation in order to receive permission from the court to conduct a public sale. Under the IMFL, the homeowner has a period of redemption, during which the plaintiff (mortgage company) cannot sell the property. Redemption is the period of time that the mortgage company must accept full payment from the homeowner, instead of proceeding to the foreclosure sale. The period of redemption runs seven (7) months from the date of service of the summons to all defendants, or three (3) months from the date of entry of a judgment of foreclosure, whichever is longest.

Recently, we reviewed how foreclosures work in general and the IMFL in particular. When a defendant is served with a Complaint to Foreclose Mortgage, the next steps are crucial. Most foreclosure cases are never defended in court. Instead, homeowners contact their mortgage company (or mortgage servicing company) in order to work out an agreement. Usually, the homeowner is seeking a loan modification. While loan modifications can be a good remedy, what most don’t understand is, obtaining a loan modification may take many months. Sometimes, so long that it limits the homeowner’s other options to save their home.

Because loan modifications may take a long time, homeowners may look past the best option to save their home – Chapter 13 bankruptcy. If a homeowner files for protection under Chapter 13 of the bankruptcy code before the judicial sale occurs, the home may be saved, if the circumstances are right.

For example, a family may find themselves several months behind on their mortgage payments, due to a temporary job lay-off. Once the lay-off is over, the debtor can return to paying their regular monthly mortgage payments. But, because they are behind in payments, the mortgage company will not accept regular monthly payments unless the family can bring their mortgage account current. Chapter 13 will allow that family to pay the arrears over 60 months and require the mortgage company to accept the regular monthly payments while they are in Chapter 13. In this way the family can avoid foreclosure of their home.

The key factor is the size of the past due payments, plus legal fees and late charges (arrears). The longer it has been since a mortgage payment was made, the greater the arrears, and the less likely a workable chapter 13 plan can be proposed. If the loan modification takes too long, by the time the homeowner is denied a loan modification a Chapter 13 plan may be unworkable. Let’s put some numbers in my example.

Let us assume the homeowner’s monthly mortgage payment is $1,700.00, and the family has $30,000.00 in credit card debt. If the homeowner is 5 months behind in their mortgage, the arrears may reach $12,000.00 ($8,500.00 in past due mortgage payments + $3,500.00 in legal fees and late charges). A Chapter 13 plan may work if the plan pays 100% of arrears to the mortgage company and 10% of unsecured claims ($30,000.00 in credit card debt). The plan’s monthly payment would be around $270.00 ($12,000.00 + $3,000.00 + Trustee fees / 60 months), plus the regular monthly mortgage payment of $1,700.00: for a total of $1,970.00 monthly.

Now, let’s assume the homeowner is 15 months behind in mortgage payments. The chapter 13 plan payment would be around $500.00 per month ($25,500.00 + $3,000.00 + Trustee’s fees / 60 months). Add the plan payment to their regular monthly payments, and the number jumps to $2,200.00 per month.

In this example, the original mortgage terms are in effect. However, just because a homeowner files for protection under chapter 13 bankruptcy, doesn’t mean the homeowner can’t also seek a loan modification. So, if saving your home is the most important goal, Chapter 13 may be the best option.

If you are facing foreclosure, you should take action. You need an attorney to help you sort through your options and choose the best remedy. Never hire a firm to help you with your foreclosure unless the firm is experienced in helping homeowners with all the possible remedies, loan modification, short-sales, deed-in-lieu, consent foreclosures, and bankruptcy. Before you do anything, you should give me a call. We can discuss all your options. Opem Tax Resolutions & The Law Office of Steven A. Leahy, PC (312) 664-6649. Call NOW to set up your FREE Consultation.

Filed Under: Uncategorized Tagged With: Bankruptcy, chapter 13, foreclosure defense, Illinois Mortgage Foreclosure Law

IRS Bankruptcy as a solution to your tax problems

March 18, 2013 by admin

Steven A. Leahy

Chicago: Should You Consider IRS Bankruptcy as a Solution to Your IRS Tax Problem?

Bankruptcy in Chicago – Should You Consider Bankruptcy as a Solution to Your IRS Tax Problem?

Many people facing a tax problem consider bankruptcy as a solution. But what many don’t realize is that bankruptcy may not solve the problem. There are very strict rules about tax debt and bankruptcy. And your tax debt may not be able to be included.

For example, payroll taxes cannot be discharged in a bankruptcy. And if you haven’t filed your taxes, your tax debts will not only be excluded from the bankruptcy, but you can be sent to jail.

If you are considering declaring bankruptcy, and have tax debt, or haven’t filed, then you must be sure to consult with a tax attorney first! Even if IRS bankruptcy won’t eliminate your tax problem – bankruptcy may be a tool in a comprehensive strategy to resolve your IRS Tax problems.

When you owe taxes or haven’t filed tax returns, dealing with the IRS on your own can be a nightmare. It can create massive financial havoc in your life, ruin your credit, and if you let it get bad enough, it can send you to prison.

We can guide you through the process of negotiating with the IRS, getting the law on your side, and getting your life back in order. And the sooner you take action, the sooner you can get the IRS off your back and out of your wallet.

IRS Bankruptcy can be a good option for some. It all depends on the individual situation. To discover more about this option and other strategies on how you can break free from the IRS and reclaim your life, call Opem Tax Resolution – The Law Office of Steven A. Leahy, PC (312) 664-6649. Call Now!

Filed Under: Uncategorized Tagged With: “non collectible”, “Owe Taxes”, “Tax Options”, “Tax Relief Chicago”, “Tax Relief”, Bankruptcy, Chicago Tax Help, currently non collectible, Help With IRS, IRS Bankruptcy, IRS Help, IRS Help Chicago, IRS Levy, irs non-collectible status, irs options, IRS Tax Debt, Relief, Tax, Tax Debts, Tax Help, Tax Levies, Tax Levy, tax resolution, Tax Return, Tax Solution, Tax-Consultants, TaxHelp

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