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Why people chose Chapter 13 bankruptcy

Why people chose Chapter 13 bankruptcy

Chicago bankruptcy attorney Joseph Wrobel is often asked why people chose Chapter 13 bankruptcy. His frequent answer is, “It depends.” After the initial meeting with your bankruptcy attorney you should be advised whether you qualify for a Chapter 7 or a Chapter 13 bankruptcy. Your bankruptcy attorney asks for certain documents and your financial statements, so they can analyze your financial status using the bankruptcy means test. The means test is a rather complicated mathematical process your bankruptcy attorney uses to determine whether your income and finances allow you to qualify for Chapter 7 or Chapter 13 bankruptcy.

What is the difference between Chapter 7 and 13?

When most people think about bankruptcy they are thinking about Chapter 7, the full discharge and wipeout of all the bills and debts allowed to be discharged in bankruptcy. You must qualify for Chapter 7 as set forth in the means test your attorney will calculate. If you make too much money, you might not qualify for Chapter 7 discharge and you can use the option of Chapter 13 instead. While a Chapter 7 bankruptcy is a relatively quick discharge of the qualified debts you can eliminate, a Chapter 13 bankruptcy is more like a repayment bankruptcy, where you pay back a portion of your debts by making a fixed payment to the bankruptcy trustee once a month for up to five years.

If you have too much equity in your home, have assets of special value like an inherited collector automobile, or simply make too much money to qualify for Chapter 7, you can file a Chapter 13 bankruptcy.

Getting immediate relief from creditors and bill collectors

As soon as either a Chapter 7 or 13 bankruptcy petition is filed, you are protected under the Automatic Stay provision of the U.S. Bankruptcy Code. The Automatic Stay is the law that prohibits any of your creditors or collection agencies from making any efforts to contact you during your bankruptcy. If you have a Chapter 13 bankruptcy, your creditors cannot call you for the entire term of the bankruptcy, even if it is the entire five-year period while you make monthly payments to the trustee who pays the creditors.

Garnishments are also stopped by the Automatic Stay when you file a Chapter 7 or 13 bankruptcy. The threat of garnishment alone is enough for many people to decide to file for bankruptcy.

For more about “Automatic Stay,” read our article, “Examples of the automatic stay and how it operates in bankruptcy law.”

Taking up to five years to repay your debts under a Chapter 13 plan

When people desire time to get caught up on their bills, a five-year Chapter 13 repayment plan can mean financial freedom and peace and quiet when the collectors stop calling. Depending on your finances and the results of your means test, your bankruptcy attorney may be able to get you on a plan where you only repay a portion of your debts.

Keep your home and your car with a Chapter 13 bankruptcy

Do you have a great interest rate or mortgage deal you don’t want to lose? Chapter 13 allows you to keep your home and your equity while you repay the debts and bills you were otherwise unable to pay. This also applies to your car. If you have car payments, they can be included in the monthly payments to the Chapter 13 bankruptcy trustee over your five-year plan. Of course, if you want a shorter plan, that may be an option for you.

When people find out about the benefits of a Chapter 13 bankruptcy plan, they often wish they had known so long ago. To find out more about Chapter 13, call Joseph Wrobel, Limited.  

Why people chose Chapter 13 bankruptcy
Helping people get out of debt with dignity and respect for over 40 years.

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. (312) 781-0996.

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

How well do you know reverse mortgages?

By now, anyone who watches TV has likely seen advertisements for reverse mortgages. Targeted towards senior citizens who own their homes free and clear. Ads highlight that the Federal Housing Authority (FHA) insures over 98 percent of all the reverse mortgages in United States. A reverse mortgage loan allows a home owner, at least 62 years of age, to convert the equity in their home into cash. Some people take monthly payments, lines of credit as well as lump sums of cash as needed. The loan against the equity in the home is secured by the home itself.

When the owner passes away the loan becomes due in full and is often taken from the proceeds of the sale of the home. In other cases, a life insurance policy may be used to repay the loan if home and other property is given to others in a will. The lenders offering reverse mortgages charge fees and surcharges along the way. These fees and the terms of the loan are a function of the life expectancy of the home owner, the value of the home and other factors.

Doing your research is important. The more you can learn about the pros and cons of reverse mortgages, the better decisions you and your family can make.

As the reverse mortgage ads suggest, the children of aging parents can be involved in the process of researching reverse mortgage loans and the lenders. Even if your parents are well-able to manage their financial affairs, it is always helpful to get another opinion, especially when there are so many new financial opportunities for seniors budgeting for and funding their retirement years. While researching, pay attention to credible alerts and warnings published online. Be careful because in the sea of information there is plenty of what looks like news but is really advertising telling you that reverse mortgages are risk free and there is never a need to look any further.

The loans are only as good as the lenders. Homeowners considering reverse mortgages should be notified by their lender that while the reverse mortgage is in place, the homeowner must still pay taxes and insurance on the property and that is not something covered by the lender. Lenders may also charge high fees on loans and get away with it when working with seniors who may have less bargaining power in negotiating the terms of the loan. It is important to know what financial terms are reasonable in the current time and market. Knowing what the competition is offering makes it easier to negotiate a fair reverse mortgage loan.

Beware of what you are risking with reverse mortgage loans and be vigilant. If you must, hire a professional to help you negotiate a better deal and avoid the awful stories told by several loan victims.

Read these stories at Center for American Progress: Treasury Secretary Nominee Steve Mnuchin’s Bet Against Seniors:

  • Only press coverage stopped the eviction of a 103-year-old grandmother on a technicality
  • 92-year-old widow evicted for 27-cent shortfall
  • Foreclosure actions that defy common sense

At Joseph Wrobel, Ltd., we help get our clients a fresh start at financial success. We feel strongly that everyone should be financially successful when they have the right tools and knowledge to make the best deals that protect their savings and help grow for the future.

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!