Tag Archives: Joseph Wrobel Chicago Bankruptcy

Debate: More talk about potential downfalls of allowing for student loan bankruptcy relief

So many Americans are afraid of any “bursting bubble.” The bursting housing bubble, for example, crippled many individuals and families when home values dropped and people went from having equity in their homes to being upside down. When jobs in several industries were scarce, many people lost their savings. Too many innocent single parents ended up moving in with their own mothers and fathers to give their kids food and shelter.

Can student loan bankruptcy allowances lead to a bursting student loan bubble?

Student debt is incurred through public and private lenders. Some loans are secured by the U.S. government and others are not. In any industry, the failure to pay back loans, or make good on one’s end of a deal, can lead to the floor dropping out and financial failure of the individuals and organizations involved. Many financial critics talk about the repayment of student loan debt being used to lend more money to new students applying for financial aid and loans for school.

According to another recent article, “Disaster looms with student loan bankruptcy consideration[i],” the approximate amount of current student debt is $1.3 trillion, with the federal government guaranteeing 90 percent of those student loans. As we reported in our last blog on this issue, “Should Congress move forward with student loan forgiveness in bankruptcy courts,” the average student loan debt is around $30,000 but many more students have more than $100,000 in student loan debt!

Will students consider bankruptcy as part of their financial plan to pay for college and graduate school?

While many optimists believe that students today know the financial and educational challenges ahead of them and those students desire a good credit rating and clean financial record without collections or bankruptcies. However, the best plans in life can be prevented or influenced by considerations beyond our control. In those situations, it might make sense to extend bankruptcy protection to student loans in addition to the other personal and household debts dischargeable under bankruptcy law.

An alternative to bankruptcy, for those concerned about debt, might be one of the many federal student debt relief programs. For example, “The William D. Ford Federal Direct Loan Program was established in 2007 so students can reduce their debt. Students who pursue careers that are deemed to be in the public interest and have relatively low salaries, such as nursing and teaching, can have a portion of their loan debt forgiven.[ii]

Until there is a change in the law and bankruptcy becomes an option for student loan debtors, we can only speculate about what could happen and how many student loan cases are likely to result in bankruptcy. There will be much more debate on this issue in upcoming news stories.

Joseph Wrobel, Ltd. will follow the student loan forgiveness news to keep you informed of your 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. To keep in touch and read about consumer finance news and stories you can Like the firm’s Facebook page and Follow Joseph Wrobel. Ltd. on Twitter. If you need immediate legal assistance, please call Joseph Wrobel, Ltd. by calling (312) 781-0996 to talk to an attorney today.

 

[i] Times Leader, Disaster looms with student loan bankruptcy consideration, by Eileen Godin, Apr. 9, 2015.

[ii] See HNi above.

The automatic stay: It has exceptions and there are ways you could lose its protection

In a previous article about the automatic stay provision of the bankruptcy code we lined up a few situations in which this section of the bankruptcy law stops bill collectors in their tracks. As a general rule, when a petition for bankruptcy relief is filed and accepted by the bankruptcy court, the automatic stay provision is effective and remains in place until the bankruptcy is over.

As a debtor, you do not have to do anything to use your automatic stay benefit. Rather, all your listed creditors should receive notice sent by your bankruptcy attorney informing them about the bankruptcy and the law prohibiting collection of debts while you are in a bankruptcy case. Having said so, it is important to note the scenarios in which actions and obligations cannot be avoided through a bankruptcy filing.

There are some legal actions not stopped by the automatic stay:

  • Tax proceedings are allowed to proceed despite the automatic stay provision in bankruptcy.
  • Pension loans are still collectable and are properly withheld from an individual’s paycheck to repay a loan from a qualified pension.
  • Divorce proceedings continue and are not stopped by a bankruptcy filing. The automatic stay does not affect child support and spousal maintenance cases, however the underlying factors leading to the bankruptcy might impact financial outcomes.
  • Child custody and visitation proceedings also continue in family court despite a bankruptcy case. Paternity of children can also be established with no concern for a bankruptcy matter.

It is possible to lose the protection of the automatic stay:

  • If you had an earlier pending bankruptcy case filed within one year of your current case, the judge might not allow your automatic stay protection to take effect, based on certain facts and circumstances.
  • If there are deadlines you must meet for addressing collateral property securing other debts, and you fail to comply, you might lose your automatic stay protection.

Eviction cases have special rules where the automatic stay will not matter:

  • Creating a dangerous situation or condition or using illegal substances in connection with a rental property can lead to eviction the automatic stay will not prevent.
  • Landlords obtaining judgments of possession before a tenant files for bankruptcy can still have tenants removed despite an automatic stay, in most cases subject to exception.

The bankruptcy code is full of general rules, exceptions and conditions in which exceptions might not apply. It is important to talk to an experienced bankruptcy attorney to find out how the automatic stay provision of the bankruptcy code can help you in your specific situation.

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. To keep in touch and read about consumer finance news and stories you can Like the firm’s Facebook page and Follow Joseph Wrobel. Ltd. on Twitter. If you need immediate legal assistance, please call Joseph Wrobel, Ltd. by calling (312) 781-0996 to talk to an attorney today.

The automatic stay: It stops bill collectors in their tracks

Compared to many laws on the books in the U.S., the bankruptcy code sometimes seems like magic. For no other reason than you have a right to apply for it and a desire to wipe out debt, you can petition the bankruptcy court to either eliminate your debts and/or pay them back for pennies on the dollar. The moment you enter the magical world of bankruptcy it my feel like you have stepped into a protective bubble in which the torture of financial stress does not exist. The exterior lining of the bubble might be the automatic stay provision.

When a petition for bankruptcy relief is filed and accepted by the bankruptcy court, the automatic stay provision is effective and remains in place until the bankruptcy is over. As a debtor, you do not have to do anything to use your automatic stay benefit. Rather, all your listed creditors should receive notice sent by your bankruptcy attorney informing them about the bankruptcy and the law prohibiting collection of debts while you are in a bankruptcy case.

The automatic stay provision in the bankruptcy code has the following direct affects:

  • No wage garnishments are allowed. Some people have multiple wage garnishments and creditors in line to garnish wages. When wages are garnished to pay off judgments it can be tough to keep up with the current food, housing and utilities payments. When there is not enough cash flow to live and the situation is based on fixed income, bankruptcy and the automatic stay will allow you to take home your entire salary.
  • The government cannot claw back overpayments of benefits. Public benefit payments are usually recollected through deductions on future benefit checks and through billing the recipient. The automatic stay provision, however, only applies when you are still eligible to receive public benefits.
  • Evictions are stopped in most cases*[i]. If your landlord already has an order of possession to kick you out, the automatic stay is not going to help you. But if there has not been an eviction procedure yet filed, you might be able to use the automatic stay provision to stay in the home for a few days or weeks.
  • Foreclosure proceedings are stopped. Once your bankruptcy is over and the automatic stay is lifted a bank holding a delinquent mortgage over your head may still be able to continue foreclosure proceedings. Many people who want to keep their home use a Chapter 13 bankruptcy when they might not otherwise be able to stay in their home with a Chapter 7 bankruptcy.
  • Your utilities cannot be disconnected. This is not a permanent bar to disconnect, but the automatic stay will help you keep the phone, gas, water or electric on for at least 20 days.

These are a few of the ways you can take advantage of the bankruptcy code and the automatic stay provision to stop collectors and keep your salary while you go through the process of getting a fresh financial start.

There are several general rules and exceptions to them in bankruptcy. The difference between Chapter 7 and Chapter 13 is also significant and it is important to hire an experienced bankruptcy attorney when you want to make the best of your decision to file for bankruptcy.

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. To keep in touch and read about consumer finance news and stories you can Like the firm’s Facebook page and Follow Joseph Wrobel. Ltd. on Twitter. If you need immediate legal assistance, please call Joseph Wrobel, Ltd. by calling (312) 781-0996 to talk to an attorney today.

[i] *While the automatic stay may be able to stall an eviction, there are certain situations in which you could still be removed from your home and a bankruptcy attorney can best explain what might happen to you based on the facts and circumstances involved.

Bankruptcy Basics: January Frequently Asked Bankruptcy Questions

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 THE PODCAST

Topics covered in this 30 minute show:

  • What happens when you list non-dischargeable debts on the bankruptcy petition?
  • How long is the statute of limitations for wage garnishments for money judgments?
  • Can I file a bankruptcy petition after a judgment or wage garnishment order?
  • How can I find out if I am eligible to file for bankruptcy?

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. 

Visit our Chicago Bankruptcy Site online for more about the firm. You may also contact Joseph Wrobel for more information at (312) 781-0996 and by e-mail at JosephWrobel@ChicagoBankruptcy.com

About mandatory credit counseling in the bankruptcy process

If you are considering filing for bankruptcy, you should be aware that before you file a petition for Chapter 7 or Chapter 13 bankruptcy, you are required to complete mandatory credit counseling. Only a certified credit counseling agency approved by the Office of the U.S. Trustee. Joseph Wrobel, Ltd. keeps a current list of qualified credit counselors.

The credit counseling process is straightforward and can take place in person, online or by telephone, however the individual agencies offer various course options. The U.S. Department of Justice Trustee Program requires credit counseling before the bankruptcy case is filed and debtor education after the case is filed. In many cases, the same agency provides both credit counseling and debtor education.

Typical credit counseling sessions vary in length as individual clients present their finances and concerns. In most cases, the session takes about an hour.

The goal of credit counseling is to help individuals and spouses better understand their financial obligations, income and a plan to pay past, present and future bills. During the course of credit counseling individuals may determine that bankruptcy is the right option to provide a fresh financial start. The course counselor cannot give legal advice to the client as to whether or when they can file bankruptcy. Clients should make this decision on their own and often with the counseling of an experienced bankruptcy attorney.

In some cases, the individual planning to file a bankruptcy is unavailable due to hospitalization or incarceration. When a power of attorney document is signed, the appointed people with power to file a bankruptcy petition for the individual, they may also complete the credit counseling course on their behalf. In cases where a client has given an attorney power of attorney, the attorney may also satisfy mandatory credit counseling requirements for the client.

After counseling is completed, the participant receives a certificate of completion, which must be attached when filing a petition for Chapter 7 or Chapter 13 bankruptcy.

There are additional statutory rules about mandatory credit counseling and provisions for clients with special needs such as language and special accommodation requests. The attorneys at Joseph Wrobel, Ltd. can answer all your questions about mandatory credit counseling as it applies to the bankruptcy process.

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. To keep in touch and read about consumer finance news and stories you can Like the firm’s Facebook page and Follow Joseph Wrobel. Ltd. onTwitter. If you need immediate legal assistance, please call Joseph Wrobel, Ltd. by calling (312) 781-0996 to talk to an attorney today.