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Lisle Bankruptcy Law Blog

Types of creditor under Chapter 13 in Illinois

We've previously discussed some of the basic requirements for filing a bankruptcy case under Chapter 13 of the federal bankruptcy code in Illinois, including the debt limits for different types of debt, and the fact that the debtor should not have failed to appear or comply in a similar case in the prior 6 months. We've also touched on some of the differences between a Chapter 7 filing, which is sometimes called a 'liquidation,' and a Chapter 13 restructuring of debt.

Since Chapter 13 is often used by debtors to hold on to certain property they might otherwise be required to sell or give up to a creditor to satisfy a claim, it is important for those considering it to understand that there are different types of creditors. The bankruptcy law places creditors, or the entities to which the debtor owes money, into three basic categories, and these categories determine how the debtor's repayment plan must be structured.

Why car title loans should be avoided

During tax season, it is popular for tax preparation companies to advertise refund anticipation loans to placate people who just can’t wait for their refund checks to arrive. These loans are high interest, high risk loans that consumers should stay away from, but given the advertised sales for a number of items (particularly vehicles), it is not surprising that these loans have such a following.

For those who are not in the market for a car, those who need money to meet a temporary crisis may be tempted by car title loans. These are high interest loans that are based on the value of one’s car. According to the American Association of Retired Persons (AARP), car title lending generates $5.2 billion worth of business per year.  

What are Chapter 7 bankruptcy exemptions in Illinois?

Illinois residents have likely heard of the concept of filing for bankruptcy. They probably are aware that the process is meant to help people who cannot fully pay their debts, and that they may have to sell some of their assets in order to make partial payments. While this may be true in certain instances, it should be noted that Illinois, as is the case with most states, exempts certain property from being subject to sale in certain types of bankruptcies.

As mentioned above, bankruptcy is supposed to give a filer a fresh financial start by getting rid of certain dischargeable debts. One often-used type of bankruptcy for this purpose is called 'Chapter 7,' also known as a 'liquidation.' In this form of bankruptcy, the trustee will oversee the sale of the filer's property and disburse the proceeds to various creditors based upon a legal schedule of prioritized debt. However, not all the filer's property is subject to sale in this process, as state law pronounces certain amounts of some type of property as 'exempt' from the bankruptcy estate.

Restrictions on Illinois hospitals collecting from the uninsured

It is an unfortunate fact of modern economies that the costs of services tend to rise over time. This is especially true of necessary services such as medical care. Even though such costs have risen at a slower rate recently than prior to 2010, expenses remain high for certain types of care. And, while the number of people who are uninsured has dropped dramatically in recent years, there are still those without medical insurance, a population which may rise in the near future, given the uncertainty about federal law in this area.

Having no health insurance, however, does not protect one from being injured or becoming ill. When such injury or illness requires a hospital stay, especially a lengthy one, the out-of-pocket expense to an uninsured patient can be catastrophic. For most Illinois residents in this situation, the possibility of paying such a sum all at once is out of the question.

Who is eligible to file Chapter 13 in Illinois?

When most Illinois residents hear the term 'bankruptcy,' they likely picture a liquidation, where all a person's major possessions are sold to pay off his or her debt. While a Chapter 7 filing might require some of that -- though there are exemptions for certain property -- there are other types of bankruptcy filing as well. One of these is a Chapter 13, or 'wage earner's plan.' This types of filing allows the debtor to submit a repayment plan that proposes to pay some part of the debt over a certain number of years, usually three or five. One advantage of this kind of filing is that, under certain circumstances, it can stop a foreclosure or other repossession action.

But who is eligible for a Chapter 13 filing? First, Chapter 13 is for individuals, not businesses. The individual filing has to have less than $383,175 in unsecured debt and secured debt below about $1.15 million. The individual filing must not have had a bankruptcy cases dismissed in the prior 180 days due to the fault of the debtor such as failure to appear or comply with a court order. Further, the filing debtor must have completed an approved credit counseling course within 180 before filing the petition.

Could HAMP still protect Illinois homeowners from foreclosure?

In the wake of the 2008 financial crisis, many people blamed the housing bubble. This was apparently a combination of over-construction of houses as well as systemic use of bad lending practices in the banking and mortgage industries. Whatever the reasons, many Americans, including Illinois residents found themselves facing losing their homes to foreclosure. Because of this, in 2009 the federal government introduced the Making Home Affordable Program. This initiative consisted of two parts, one of which was the Home Affordable Modification Program. HAMP expired at the end of 2016, but Fannie Mae and Freddie Mac, two government-sponsored corporations that deal in secondary mortgage markets, have announced replacements.

First, let's take a look at what the HAMP program meant for people who were in danger of having their houses foreclosed on by their mortgage holders or servicers. Many homeowners are likely familiar with letters received periodically about their mortgages that say that such-and-such a company is now servicing the loan. In many cases, the institution that originally extended the mortgage to the customer has sold the asset of the mortgage to a servicer. These are the entities that collect the money for the mortgage and, if necessary, begin foreclosure proceedings. Many of these servicers are connected in one way or another to Fannie Mae and Freddie Mac.

Can you make a plan to pay down credit card debt?

The reports on the national economy for the last several months have been mostly positive. However, there is always one big issue that could be a potential wrecking-ball: debt. Millions of Americans are dealing with debt of all kinds: student loan debt, mortgage debt and, perhaps most important of all, credit card debt. For those Illinois residents who are facing thousands of dollars in credit card debt, a recent article had a few tips on how to dig out from this hole.

The first tip might seem obvious: stop adding to the problem. When it comes to credit cards, that means stop using credit cards to pay bills or buy items. It can help to think of credit card debt as borrowing money; you aren't using a cash-based financial system when you use a credit card to make a purchase. Stopping the credit card use is the first and most important step.

How can Illinois residents address medical debt?

Americans everywhere deal with debt issues on a daily basis. For some, primarily younger people, the primary concern is student loan debt. For others, the primary concerns are mortgage debt, credit card debt and auto loan debt. However, for older Americans, there is another type of debt that could be the primary point of concern: medical debt. So, for Illinois residents who are facing problems with medical debt, what options are available?

The primary option is to buckle down on the finances and prioritize paying off this debt. However, that can be easier said than done. Approximately 17 percent of people aged 55 to 64 have some medical debt, while another 9 percent of those aged 65 and older have medical debt. What is the primary obstacle for older people when it comes to making a plan to pay off medical debt? Retirement. They may be accumulating this debt at a time when they are winding down a working career, and thus winding down earning potential.

Illinois residents use Chapter 7 to pursue debt relief

Millions of Americans are struggling with debt. For some, the problem is with a mortgage, and as a result, foreclosure may be on the horizon. For others, credit card debt has piled up for some reason, whether it is due to an unexpected loss of a job or an unforeseen medical issue. No matter how an Illinois resident has run into financial problems, it is important to realize that there may be legal options to help address these issues.

For some Illinois residents, Chapter 7 bankruptcy can be a useful tool to address debt problems. Although most people are only familiar with what they perceive to be the bad points about filing for bankruptcy, those who take the time to learn more about this useful consumer tool will likely learn that the good points sometimes outweigh the bad.

Bankruptcy may help to eliminate unpaid medical debt

One of the most prominent reasons that an Illinois resident can run into financial trouble is through medical expenses. These can be due to an unexpected accident or incident, or an ongoing illness or condition. While the government has been seeking ways for people to have health coverage to avoid running into massive hospital bills, these methods are in flux, with confusion as to what will eventually happen. Often, those who are confronted with medical expenses so large that they have no hope of paying them will reference having no health insurance as a reason. There is hope for those who are dealing with this all-too-common issue: filing for bankruptcy.

Research has indicated that more than 60 percent of people who file for bankruptcy do so because of medical bills. This does not necessarily have to be a long-term illness. Even those who have a short hospital stay might find themselves in financial trouble because of missed time at work and the shockingly large costs of the hospital stays, treatment and medications. Other issues come up when people are caring for a sick child or relative.

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