Category Archives: Bankruptcy And Your Home

Are short sales worth the risks and is bankruptcy a better option?

 

When bad things happen to good people homes may fall into foreclosure. In too many cases, houses are not worth what the owner owes on the mortgage. This is common with people who bought their homes before the recession when prices were high. If the lender forecloses on the house it will be sold to the highest auction bidder. If the house sells for less than is owed, there may be an opportunity for the lender to sue and collect the deficiency judgment, or balance due after foreclosure. If the market is flooded with foreclosure homes, they could be sold off for significantly less than they would be worth in a healthier economy and real estate market. As foreclosure sales created more financial damage to many, the alternative method of short sales became more popular, giving homeowners an easier way out of their mortgages.

While short sales allow is a sale of your home to a new homebuyer for less money than you owe on your mortgage. If the lender bank agrees to a short sale deal, you may sell the house and be released from the mortgage lien and may go on your way to rent or purchase a more affordable home. While this sounds like a dream come true, there may be a few catches.

Here is a short list of considerations when you have the option to short sell your home:

  1. The lender bank and decision maker on your mortgage has no duty to accept a short sale deal. When you owe the money, you owe the money, plain and simple. The bank may be motivated to do a short sale if the market is flooded with upside down deals and the home is likely to sell under value at auction. Instead of fighting to then also collect the deficiency judgment against you, a lender may be more likely to work with you on a short sale deal, to get the house sold for fair market value.
  2. Even if the bank allows the short sale deal, they may not operate at the speed of business and it may be easier to lose buyers who cannot wait for a slow-moving lender bank. If the lender has a large volume of short sale deals, it may be even more difficult to get things done in a timely manner. Losing buyers and increased aggravation are possible in many short sale deals.
  3. Deficiencies are also possible with short sale deals. Even if you get more money for your house in a short sale, the amount you owe may still leave you short. It is a good idea to have a financial advisor assist you with your options to see what makes the most sense. If the short sale is still going to leave you high and dry, it may be better to proceed with a simpler foreclosure.

Short sales are long and complicated. There are more people involved in the transaction, more tax implications, more chances for something to go wrong. The more complicated the process, the easier it is for people to get frustrated and walk away from a deal.

Why would bankruptcy be a better option?

Depending on a review of your financial situation, a Chapter 7 or Chapter 13 bankruptcy may help you keep your home and avoid foreclosure. If you know you are badly upside down on your home and want to get out of your mortgage regardless, a bankruptcy can help you wipe out the amount of the deficiency judgment and give you a fresh start.

Depending on what you owe, how much you own and your income, a Chapter 7 full discharge will stop your bill collectors and wipe out all your dischargeable debts. If you do not qualify for a Chapter 7, a Chapter 13 reorganization bankruptcy will allow you to pay back a fraction of your debts over a three to five-year period, which may help you stay in your home and avoid making the foreclosure versus short sale decision.

About us: Joseph Wrobel, Ltd., works with clients to find out if they qualify for Chapter 7 or 13 bankruptcy, and their options and rights under the law. The firm will also advise and assist clients with questions and concerns about the collectors and their rights to pursue you.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

 

January 2017 Chicago Bankruptcy Question and Answer Podcast with Joseph Wrobel

Chicago bankruptcy and consumer credit attorney Joseph Wrobel shares news and updates in bankruptcy law as well as business and consumer financial matters. It has been documented that financial troubles can cause all sorts of ailments, the most common of which is sleeplessness. Joseph Wrobel helps clients alleviate their anxiety created by the inability to pay bills and the embarrassment of financial distress. Click/tap here to listen to this podcast interview anytime.

Sample questions answered in this 30-minute show:

  • What happens when my cosigner files for bankruptcy and I am still making loan payments?
  • Is filing bankruptcy the best option when there is a significant lawsuit filed against you?
  • Do I still have to pay when a credit card company writes off a debt as a charge off?
  • Can my tollway fines, and other tickets be included in a Chapter 7 bankruptcy?
  • Can I file bankruptcy to reduce or remove past child support obligations?

Joseph Wrobel has been a practicing attorney since 1973 and has experience in a wide variety of law relating to legal matters for individuals and families. Wrobel helps clients get out of debt and get a fresh start. He is an active member in several bar associations and the Bankruptcy Panel of Pro Bono Program of the Chicago Volunteer Legal Services. After serving the U.S. Army Reserve 363rd Civil Affairs Unit, Wrobel earned a B.A. in Psychology from Northwestern University and in 1973, he earned a JD from DePaul University Law School.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

Visit our Chicago Bankruptcy website online for more about the firm or call for more information at (312) 781-0996 or e-mail at JosephWrobel@ChicagoBankruptcy.com.

7 situations leading people to take advantage of bankruptcy laws

Despite our best efforts at living responsible lives, paying our bills on time and saving for the future, bad things happen to good people. Instead of being saddled with debts you cannot pay and bill collectors hounding you, consider wiping the slate clear of misfortune and getting the fresh start you need with a Chapter 7 or Chapter 13 bankruptcy. These laws exist to level the playing field and help people out in the face of economic disaster. Most people who are fearful of bankruptcy report that after they filed for bankruptcy, the process was easy, painless, and led to a speedier economic recovery.

The following is a list of realistic situations that lead many people to seek bankruptcy protection:

  1. Your company went out of business.

In the news, we watch reports of manufacturing facilities and companies closing their doors for a variety of reasons. Many people who may have worked for these businesses, some for most their working life, have difficulties finding a new job with similar pay and benefits. Too often people take one or two jobs to make up lost income. In the meantime, bills can go unpaid or underpaid, and when it is your mortgage that falls behind to the point of foreclosure, bankruptcy may be the only way to save your shirt, and your home.

  1. You lost your ability to do work.

Injuries happen and may be nobody’s fault. A slip and fall at home shoveling a snowy and icy driveway can be enough to put you out of work. Ideally you can seek proper medical care and find a way to keep your job. When the inability to work cripples your finances and you risk losing it all, you can save yourself with bankruptcy protection. If injured at work you may be pursuing a worker’s compensation claim or a disability claim with Social Security regardless of where you were injured. These cases can take time and you may not be able to wait it out as the bill collectors become more aggressive and the bank or landlord is threatening foreclosure or eviction.

  1. An uninsured driver hit you and caused injuries.

Despite having your own insurance policy to protect against uninsured or under-insured motorists, there can be problems when insurance companies fail to pay or do not pay enough money to sustain your financial needs if you are injured, unable to work or have significant unexpected expenses. Being admitted to the hospital can be very expensive. It can also be expensive trying to pay a high deductible for health insurance if you are forced to seek recovery for injuries on your health insurance when drivers’ insurance fails to cover expenses. Suing the person who hit you without sufficient insurance can be a zero-sum game if the person has no assets. Bankruptcy may be your only way out from behind the financial eight ball.

  1. A divorce makes it impossible to pay old debts.

When things move from I do to I want out, the financial landscape changes very quickly. If you and your spouse were already barely making ends meet, the extra money for divorce lawyers and the additional expenses of supporting a spouse with temporary alimony, as well as court ordered child support can cripple an individual’s ability to keep up with debts and expenses. Divorce may trigger a good reason to use bankruptcy to wipe out credit card debts and old bills in collections. Please understand however, you may not use bankruptcy to eliminate your duty to pay child support or alimony.

  1. An investment or business deal failed.

Television shows about greedy swindlers and crooks show us how easily some people can lose their life savings in failed investment deals and scams. Whether the loss is a result of a swindler or simply an investment that failed to produce returns, your banks and creditors want their money and are not likely interested in your excuse of a failed business or investment deal that prevents you from keeping up with your bills. Bankruptcy may be the best option for you to eliminate debts you cannot repay after a financial loss.

  1. Missed and late payments affected payment arrangements.

In many payment arrangements, there is an acceleration clause stating that if you miss a certain number of payments during a period, you may be responsible for paying the full amount due. Collection companies may file suit against you to obtain a money judgment and try to seize your assets or garnish your wages. Depending on your finances and the amount you owe, a bankruptcy can stop this type of collection activity when you qualify for a Chapter 7 or 13 bankruptcy.

  1. You are sued and found liable for a wrong you cannot afford to right.

In a similar situation to a failed payment arrangement, a lawsuit and money judgment entered against you can also involve attempts to collect the amount of the judgment using asset and income seizures. When people are sued, the role of the court is to decide whether the plaintiff is owed money and how much. If you are the defendant and are sued and lose, all the plaintiff has over you is a court judgement. While that judgment would allow them to collect on the judgment, you have every right to get rid of it using bankruptcy. The court knows you have a right to use the bankruptcy laws and there is nothing a civil court judge can do if you chose to seek relief through bankruptcy laws.

When you for bankruptcy protection, the Automatic Stay provision kicks in and the collectors must cease and desist the phone calls and collection activity. You have an initial court appearance at the Notice of Creditors meeting and after that, most wait for further instructions, if any, from their bankruptcy attorney. The process can be accomplished in only a few short months in many cases, making bankruptcy one of the more efficient legal processes.

To learn more, call us at Joseph Wrobel, Ltd. to learn how we can help you. (312) 781-0996.

About us: Joseph Wrobel, Ltd., works with clients to find out if they qualify for Chapter 7 or 13 bankruptcy, and their options and rights under the law. The firm will also advise and assist clients with questions and concerns about the collectors and their rights to pursue you.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

 

November 2016 Chicago Bankruptcy Question and Answer Podcast with Joseph Wrobel

Chicago bankruptcy and consumer credit attorney Joseph Wrobel shares news and updates in bankruptcy law as well as business and consumer financial matters. It has been documented that financial troubles can cause all sorts of ailments, the most common of which is sleeplessness. Joseph Wrobel helps clients alleviate their anxiety created by the inability to pay bills and the embarrassment of financial distress. Click/tap here to listen to this podcast interview anytime.

Sample questions answered in this 30-minute show:

  • When I file Chapter 13, will the judge go over the credit card statements?
  • Can you file Chapter 7 bankruptcy in another state from where the debt came from?
  • If I declare bankruptcy for my medical bills, will my wife be accountable for my bills?
  • What can I anticipate as the amount of Chapter 13 payments on a certain amount of debt?
  • Can I file for bankruptcy before an inheritance check comes in?

Joseph Wrobel has been a practicing attorney since 1973 and has experience in a wide variety of law relating to legal matters for individuals and families. Wrobel helps clients get out of debt and get a fresh start. He is an active member in several bar associations and the Bankruptcy Panel of Pro Bono Program of the Chicago Volunteer Legal Services. After serving the U.S. Army Reserve 363rd Civil Affairs Unit, Wrobel earned a B.A. in Psychology from Northwestern University and in 1973, he earned a JD from DePaul University Law School.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

Visit our Chicago Bankruptcy website online for more about the firm or call for more information at (312) 781-0996 or e-mail at JosephWrobel@ChicagoBankruptcy.com.

5 ways to save money as business activity picks up now that the elections are over

Business and the economy generally, tend to slow down during election cycles. People are not spending as much money in retail stores and they seem to not make large purchases when the media tells them various reports about the state of the world and our country. It is also common for employers not to be hiring as many new employees during the tail end of an election cycle. Why does everything slow down? Humans do not like uncertainty. In a world of uncertainty, the natural reaction is to hold onto what you have and wait out the doubt. When the dust settles, and it always does, business and the economy picks up again and people have more money.

Here are a few things you can do to have a positive attitude to lead to new financial success:

  1. Apply for a new job.

Even if you are doing well, you can look for a job that makes more money. The most employable people are the ones who are happily employed. Of course, keep your job hunt quiet, don’t jeopardize your current position. If you are unemployed, remind yourself that the election is over and companies are going to start hiring again. Keep a positive attitude and you will find the perfect job you love.

  1. Start your own business.

While you keep your primary job, find a way to make some new money with a side business, assuming your employer allows it. You could do something as simple as making bird houses in the garage and sell them online. There are all kinds of work from home small business opportunities that require little to no startup money or inventory.

  1. Refinance your home.

There are more and more new finance companies finding new and creative ways to refinance your mortgage and save some money. When it comes to refinancing, we often assume the answer will be negative or it will take too much time and hassle. It is a good idea to ask your friends on social media for referrals to financial professionals who can help you work on refinancing.

  1. Do a credit cleanup.

There are credit repair companies, not to be confused with debt consolidation companies, who use sophisticated methods to dispute zombie debt and incorrect negative information on your credit reports. For less than the cost of a vacation, you can pay a professional to help boost your credit score so you can save money and have the credit available when you need it.

  1. Renegotiate your utilities.

You never know when your electric companies, cell phone and Internet providers have special deals. All you must do is call and ask a customer service person if there is any way you could save money on your bill. Sometimes people end up paying late and end up with increased rates and never realize it. The more you talk to the people at the utilities, the better you can learn how they charge and how you can save money.

When we focus on thinking positively and taking small steps towards financial success, we can start achieving our goals. Sometimes it is slow making progress, but when you set reasonable goals and start seeing results, it reinforces your willingness to keep at it, until you have whatever you want in life.

About us: Joseph Wrobel, Ltd., works with clients to find out if they qualify for Chapter 7 or 13 bankruptcy, and their options and rights under the law. The firm will also advise and assist clients with questions and concerns about the collectors and their rights to pursue you.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

Being prepared to avoid scams and identity thieves

The beginning of November is a real kickoff to the holiday season. Along with the holidays comes identity theft. Is it because we are all so busy that we let our guard down? Is it because the increase in spending means there is more data to hack and grab? In addition to identity theft, scammers are also working to lighten your wallet and drain your bank account. There are habits you can learn and put into place to protect yourself during the holidays and all year round.

Step 1: Find a “techie” person who can research and spot the wolves in sheep’s clothing

Do you get phone calls from telemarketers who have the most amazing offer that will change your life? Maybe the person is selling gold currency or reverse mortgages. How do you know if they are scamming you? A good rule of thumb is when you want a product or service, you should do your research and find it locally. If you inclined to answer telemarketer calls, take down all the information and do some research on the legitimacy of the offer and the organization contacting you. If you do not feel comfortable in your investigation skills, find a family member who can help you out. It’s better to put your pride aside and ask for help than allowing yourself to be scammed or have your identity stolen.

Step 2: Get back to using cash or gift cards when you can

Remember the big chain stores having problems with credit card information being stolen? How about getting gas at one of the gas stations with the card skimmers? The volume of credit and debit card activity is significant around the holidays, and that means there can be a greater risk of identity theft. Maybe cash is not your preferred payment method and you want to swipe – find a gift card you can put money on and use for holiday shopping. It’s better than someone getting your debit or credit card and cause you undue burdens and stress.

Step 3: Learn about how the Consumer Financial Protection Bureau helps identify theft victims

The Consumer Financial Protection Bureau (CFPB) is an excellent source of information about identity theft and consumer scams. You can report scams and identity theft right on their website. They also share the laws that protect us from consumer fraud. Your credit rating is an asset and if the credit reporting bureaus fail to restore your credit rating after identity theft, you can sue them. We can connect you with a consumer law firm specializing in just that.

Step 4: Make it a habit to write down and log all your incoming phone calls

If you are receiving robo calls from telemarketers or bill collectors, you can act against them and will need to list the dates, times and what was generally said on the call or voicemail. When you answer the phone and someone on the other end has the deal of a lifetime to offer you, ask for their name or operator identification number. If they don’t tell you who they are you have good reason to disconnect the call and make a note that they called and refused to identify themselves. Information is power and the more you take control of these situations, the more empowered you may be to do something about it.

Step 5: Bolster your expectations of privacy and be vigilant with your personal information

For a few years people became lazy about expectations of privacy. Many assumed the banks and merchants would protect us and nothing bad would happen other than the loss of a few bucks we could get back easily. What happens when the identity thief gets a driver’s license in your name and kills someone in a DUI hit and run, with license plates in your name? Instead of giving out information like your social security number, take the extra time to use a different way to identify yourself. The damage a crook can do to your credit and identity is significant and well worth an ounce of prevention.

About us: Joseph Wrobel, Ltd., works with clients to find out if they qualify for Chapter 7 or 13 bankruptcy, and their options and rights under the law. The firm will also advise and assist clients with questions and concerns about the collectors and their rights to pursue you.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

 

PODCAST: September 2016 Chicago Bankruptcy Question and Answer Podcast with Joseph Wrobel

Chicago bankruptcy and consumer credit attorney Joseph Wrobel shares news and updates in bankruptcy law as well as business and consumer financial matters. It has been documented that financial troubles can cause all sorts of ailments, the most common of which is sleeplessness. Joseph Wrobel helps clients alleviate their anxiety created by the inability to pay bills and the embarrassment of financial distress. Click/tap here to listen to this podcast interview anytime.

Sample questions answered in this 30-minute show:

  • Can I stop a debt consolidation and file bankruptcy instead of continuing to make payments?
  • As a foreign resident in the U.S., can I also file for bankruptcy protection without being citizen?
  • Can I file for bankruptcy to discharge personal tax liability to the state in which I live?
  • I am facing an eviction and worried about the money I may owe, should I file for bankruptcy?
  • Can I file for bankruptcy if a creditor threatens to revive a money judgement against me?

Joseph Wrobel has been a practicing attorney since 1973 and has experience in a wide variety of law relating to legal matters for individuals and families. Wrobel helps clients get out of debt and get a fresh start. He is an active member in several bar associations and the Bankruptcy Panel of Pro Bono Program of the Chicago Volunteer Legal Services. After serving the U.S. Army Reserve 363rd Civil Affairs Unit, Wrobel earned a B.A. in Psychology from Northwestern University and in 1973, he earned a JD from DePaul University Law School.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

Visit our Chicago Bankruptcy website online for more about the firm or call for more information at (312) 781-0996 or e-mail at JosephWrobel@ChicagoBankruptcy.com.

Aging parents and questions about bankruptcy and finances

Many of us have aging parents and as adult children we find ourselves in the position to advise and assist our parents when they have financial troubles they might not be able to handle on their own. For purposes of this article we are focusing on the scenario involving a question we received and addressed on our recent monthly Bankruptcy FAQ podcast show – click/tap here to listen to the program.

Our hypothetical parent is your widowed mother who does not work but collects Social Security. She has some cash savings but not so much a creditor is likely to sue her to collect and try to enforce a money judgment. Mother obtained a reverse mortgage and the current equity in the home is less than its fair market value in the real estate market. Over time mother has almost $25,000 in credit card debt and fell behind on payments after she had an unexpected and expensive car repair. Mother was researching bankruptcy online and learned that filing for bankruptcy can stop the annoying creditors from calling during her favorite programs. Mother does not have cable recording or DVR so she cannot pause her favorite programs when the phone rings. What can we do to help her?

Note that you have some concerns about mother’s capacity to handle a bankruptcy case own her own and you are afraid she is going to need your help if she decides to file for bankruptcy.

You may need to be a court-appointed guardian if you want to help mother.

Most of us on a good day are nervous hiring lawyers or appearing in court for something like a bankruptcy case. The good news is that unlike some other types of court actions, a bankruptcy does not require the petitioner to attend frequent court appearances. Once you meet with your bankruptcy lawyer and they file the case, you must appear at one court appearance and that is all. Of course there could be more required appearances if the case ends up in contested litigation; not a concern for most people.

If mother cannot sign the documents or appear in court, you may be appointed by the court as a guardian to represent your mother’s interests as the bankruptcy petitioner. The guardianship appointment is an additional step, but it is not a difficult process.

Mother might be considered judgement proof and may not need to file for bankruptcy.

Creditors take action against debtors, suing and collecting money judgments when there is a likelihood of successful collection. The amount of resources necessary to sue and collect a judgement from someone who does not have money to collect simply does not make sense for most creditors. If mother does not have wages to garnish or significant assets, it is unlikely mother will ever get sued on the outstanding credit card debt; more likely the creditor may write it off as a loss.

With the reverse mortgage and mother’s house being worth less than the fair market value there is nothing for a creditor to pursue. Also, in many instances it may be difficult for a creditor to sue to foreclose on a property to collect a debt, especially with a reverse mortgage in place to be repaid before any following creditors.

Even if mother qualifies for a Chapter 7 bankruptcy, it might not be necessary, although it can stop those annoying phone calls.

Depending on the equity in the home, mother may or may not qualify for a Chapter 7 discharge – the means income testing might show that she only qualifies for a Chapter 13 reorganization bankruptcy where she repays the credit card debt over a three to five-year payment plan. Even based on the facts set forth in this situation, the bankruptcy attorney may need additional information to determine which chapter, 7 or 13, would be available to mother.

Mother is probably judgment proof and does not need to file a bankruptcy. She may tell you she wants to file one anyways, simply to stop the credit card companies from calling during her shows. At her age, you might just want to indulge her wishes and help however you can.

Joseph Wrobel, Ltd., works with clients to find out if they qualify for Chapter 7 or 13 bankruptcy, and their options and rights under the law. The firm will also advise and assist clients with questions and concerns about their aging parents.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

 

July 2016 Chicago Bankruptcy Question and Answer Podcast with Joseph Wrobel

Chicago bankruptcy and consumer credit attorney Joseph Wrobel shares news and updates in bankruptcy law as well as business and consumer financial matters. It has been documented that financial troubles can cause all sorts of ailments, the most common of which is sleeplessness. Joseph Wrobel helps clients alleviate their anxiety created by the inability to pay bills and the embarrassment of financial distress. CLICK/TAP HERE TO LISTEN NOW!

Sample questions answered in this 30-minute show:

  • Must all my debts be included in my bankruptcy filing?
  • What are some of the dangers of filing bankruptcy without an attorney?
  • Ex-husband filed for bankruptcy, am I stuck with the debt?
  • How can I keep my house if I file for bankruptcy protection?
  • I am newly married, can I file for bankruptcy and not include my wife?

Joseph Wrobel has been a practicing attorney since 1973 and has experience in a wide variety of law relating to legal matters for individuals and families. Wrobel helps clients get out of debt and get a fresh start. He is an active member in several bar associations and the Bankruptcy Panel of Pro Bono Program of the Chicago Volunteer Legal Services. After serving the U.S. Army Reserve 363rd Civil Affairs Unit, Wrobel earned a B.A. in Psychology from Northwestern University and in 1973, he earned a JD from DePaul University Law School.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

Visit our Chicago Bankruptcy website online for more about the firm or call for more information at (312) 781-0996 or e-mail at JosephWrobel@ChicagoBankruptcy.com.

Don’t believe the hype: Get the real truth about bankruptcy, ignore the rumors

Among the options for researching and gathering information about bankruptcy, there are some wrong sources of information. Asking your mother, neighbor, or someone in line at the grocery store about bankruptcy law is not a good idea for several reasons. First, the bankruptcy laws change over time and what could have been true at one point could be different later. Second, every individual’s financial circumstances are unique; what conditions of bankruptcy apply to one, may not apply to another. Third, there are so many variables in bankruptcy law that anyone who is not an experienced bankruptcy lawyer could overlook significant details that could seriously affect the outcome of a bankruptcy filing, when someone attempts for file for bankruptcy on their own and without a lawyer. Experienced bankruptcy lawyers hear most if not all of the myths or “old wives’ tales” about divorce. The following is this week’s top 5 list of dispelled bankruptcy myths.

Joseph Wrobel, Ltd. Top 5 Bankruptcy Myths: Setting the Record Straight:

  1. Your financial future will forever be ruined and you’ll never be able to finance anything again.

Wrong! Many people are able to obtain credit cards, home and auto loans within a few years of a bankruptcy filing. Lenders look at your ability to make payments. If you owe everyone under the sun the chances are higher that you may default on your obligations. If however, you went through a bankruptcy and were able to reorganize or wipe out your regularly serviced debts, you may have more money to pay bills, which makes you a better candidate to be given credit to finance house hold items, cars and homes.

  1. The bankruptcy trustee is going to come to your house and take everything and the kitchen sink.

Wrong again! Every state has exemption laws that allow you to keep a certain amount of personal property, vehicles and even equity in your home. In Illinois, for example, you may keep money you receive in child support or alimony. You may also keep any money ordered to you in restitution for being a crime victim. Home equity may also be kept, up to $15,000, so if you owe more than your home is worth or do not have more than $15,000 you may be able to keep your home. Of course there are differences between Chapter 7 and Chapter 13 bankruptcy filings, but in many cases people are able to keep their cars, homes and personal property, up to a certain dollar value. So you will not have to run out and beg on the streets for shirts and pants because you file for bankruptcy.

  1. You will be better off if you suck it up and pay off the debts you owe; until the day you die.

Nope, incorrect. The financial emergencies, whether sudden or developing slowly over a period of time, could put you so far behind the starting line that you will never be able to get ahead. Imagine you earn $50,000 a year and have a debt from a lawsuit judgement or medical emergency and owe $500,000 or more. You could make minimum payments of $1,000 for the rest of your life and never pay off more than a small fraction of that debt. This is exactly why we have insurance and bankruptcy laws. Even if your debt is $50-100,000, your ability to save for retirement may be greatly diminished or extinguished by outstanding debt. Taking advantage of the bankruptcy laws can give you a fresh start.

  1. Bankruptcy will wipe away all your debts including taxes, student loans and court obligations.

Don’t believe the hype. While Chapter 7 may help you eliminate most debts, assuming you qualify financially, Chapter 13 bankruptcy may be your better or only option to reorganize your debt and get caught up on a monthly payment plan for several years. First, forget about discharging your student loan debt. It is virtually impossible to prove the hardship necessary as a matter of law, and on the bright side, even if they garnish your wages, they can only take a certain limited amount and not the majority of your paycheck. Child support and certain court orders in family law are non-dischargeable, as opposed to civil money judgments which may be eliminated in bankruptcy. Taxes, utilities and other debts may or may not be dischargeable depending on their age and whether they meet certain conditions, which an experienced bankruptcy lawyer can explain.

  1. If you file for bankruptcy, you have to admit you are a failure and are personally flawed.

Do not be silly. Just about any situation can occur, such as a car accident rendering you incapacitated for six months or more; that would wipe almost anyone out financially. If you cannot work to pay your bills and spend down your savings you may have a bankruptcy in your future. Face it, bad things happen to good people, and that is another reason the bankruptcy laws exist, to help us with a fresh start when we need it the most. Furthermore, do not feel that you are going to be in big trouble with the court if you discharge a money judgement against you in bankruptcy. The bankruptcy laws are bigger than the court order to pay off a money judgement against you in most civil cases.

This list is hardly a complete account of all the misinformation and misunderstandings about State and Federal bankruptcy laws, and if you have any questions, even if you think they are “dumb” questions, do not hesitate to reach out and ask us. We’ll set you on the better track.  

Joseph Wrobel, Ltd., works with clients to find out if they qualify for Chapter 7 or 13 bankruptcy, and their options and rights under the law. The firm will also advise and assist clients with best credit repair options.      

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!