Chapter 7 Trustee’s Meeting in Will Co.

Chapter 7 Trustee’s Meeting in Will County – a different experience

By Bankruptcy Info Blog | October 13, 2014 at 11:56 AM EDT | No Comments

My usual stomping ground for trustee’s meetings is downtown Chicago.  I often attend meetings in Lake County and Du Page County and I have even been out to Rockford a time or two.  But last week I attended my first bankruptcy trustee’s meeting in Joliet – that’s in Will County.

Before I even attended the meeting I received an email from an attorney asking if he could attend the meeting in my place for a nominal fee of only $100.  It seems that many attorneys don’t want the bother of going all the way to Joliet.  I don’t know … I guess it’s not cost effective.  I sent a polite “no thank you” email.  My clients are usually stressed enough.  I would never ask them to meet a stranger at a time like that.

Unlike Cook County, in Will County the meetings are not behind closed doors so everyone gets to listen in on every meeting taking place.  Most meetings went smoothly but there were a few cases that experienced some bumps.  One meeting was a disaster.

In a couple meetings the trustee was annoyed because documents had not been delivered prior to the meeting.  In one case the attorney handed the documents to the trustee so we all sat there quietly while the trustee reviewed paycheck stubs and income tax returns.  This is something the trustee usually does prior to the meeting to move things along.  In the other case the attorney did not have the documents with him.  I wondered whether this was one of the cases with a hired substitute attorney.

In one case the debtor had a claim for $80,000. against someone but had no money to continue the lawsuit.  The trustee might take over the lawsuit.  If he is successful the creditors would be paid and the debtor would receive the balance of funds, if any.  That would be a wonderful outcome.

Then there was the disaster! … The debtor’s answers to the trustee’s questions were so bizarre.  He testified that his house was worth $400,000. and that he owed only $200,000. on it.  The trustee pounced on that statement. Finally the debtor’s attorney stepped in and said “The debtor is not in his right mind.  He is giving answers that are not right.”  He went on to say the debtor was waiting for an operation and was heavily sedated.  The trustee wanted to continue the meeting to a different date but the attorney inexplicably wanted his client to continue answering questions. The trustee said “You just said your client is not in his right mind.  How can I continue?”  So the case was given a 2 month continuance.  I hope they can get their act together for the next meeting or the debtor will lose his home.

The other strange thing about the creditor’s meetings was that the trustee asked each attorney how much he charged the debtor for handling their bankruptcy.  Usually the trustee just asks if all fees have been paid.  My fees are very reasonable so I didn’t mind letting everyone know what I charge.  But one attorney had 6 cases and the fees he charged ranged between $1,600. to $2,400. per case.  I personally think that’s outrageous!  Maybe those fees would be okay for a Chapter 13 – but not for a Chapter 7.  I wonder how his clients felt when they realized they paid hundreds of dollars more than everyone else.  The moral here is to always check around when pricing ANYTHING.

Thus ended my trip to Joliet.  It was really a “different” experience.

Your House & Bankruptcy

Your house and bankruptcy

By Bankruptcy Info Blog | September 13, 2014 at 04:09 PM EDT | No Comments

You have a home and a mortgage and you are in financial trouble.  Now what?  The following are some scenarios that just might fit your situation:

Scene one:  Jane  and John Doe have a home worth $100,000.  Their mortgage balance is $70,000. and they are current in their house payments but behind in just about everything else.  They think if they could just get rid of the credit card debt they will be okay.  They could file a chapter 7 bankruptcy, wipe out all that credit card and medical debt and still keep their house.  In Illinois each bankruptcy filer is allowed a $15,000. homestead exemption.  In this case husband and wife stack their exemptions.

Scene two:  Jane and John Doe’s house is still worth $100,000. but their mortgage is only $45,000. If they file a chapter 7 the bankruptcy trustee would want the house.  It would be sold and the Does would receive their exemption amount of $30,000. – not their $55,000. equity.  They would lose $25,000. which would be distributed to creditors.  In this situation a chapter 13 payment plan would be a better option.  They keep their house and make payments through the plan up to the amount of their unprotected equity ($25,000.).  If they have $20,000. in total debt they must pay 100% of their debt.  But if they have $200,000. in total debt they only have to pay around 12% of their unsecured debt.

Scene three:  The Hunters are 4 months behind in their mortgage payments and the bank has just served them with foreclosure papers.  But Edward Hunter lost his job and can’t find another.  His wife’s salary is not enough to cover the mortgage and keep food on the table.  They cannot keep their home.  They can’t file a chapter 7 and keep their home because the mortgage company would simply ask the bankruptcy court for permission to continue their foreclosure action because they are not getting current mortgage payments.  They can’t file a chapter 13 because after paying all their current living expenses they do not have enough money to pay into a plan.  If the Hunters have a lot of equity in their home they should immediately try to sell their home.  If they have little or no equity they should consider staying in the home but not making mortgage payments for the many months it takes before the foreclosure is final.  They might consider filing a chapter 7 at some point in the future to wipe out all their debt and get a fresh start.

Scene four:  Mary bought her condo in 2007 just before the housing market fell apart.  It is now worth $40,000. less than the mortgage balance.  Her house is “under water”.  Her mortgage payments are killing her and she finds she is falling farther and farther into credit card debt.  She can’t sell the house unless the mortgage company agrees to take less than the full balance.  This is called a “short sale”.  She could also offer to give the condo back to the bank if they release her from making future payments.  This is called giving a “deed in lieu of foreclosure”.  Mary could also file a chapter 7 and just walk away from her mortgage and other debt.  She would have to move but she would be able to sleep at night.

Scene five:  Jack and Jill own a house that is underwater by a substantial amount.  They have been able to keep current on their low monthly mortgage payments but not their other bills.  A creditor filed a lawsuit and Jack’s wages are being garnished.  They have a son in high school and don’t want him to change schools but don’t want to be stuck in their unsellable home forever.  They can file a chapter 7 now and immediately stop the wage garnishment.  Jack and Jill have decided to continue making their mortgage payments until their son graduates.  If the housing market has improved in 3 years they will sell their home.  If they can’t sell it they will simply walk away.  The bank will be able to foreclose on the property but they won’t owe a dime because of the chapter 7.

If you are worried about your house and your debt give me a call or send me an email.  I can help you go through your many options and perhaps together we can find a solution that works.

Rebuilding Credit after Bankruptcy

REBUILDING CREDIT AFTER BANKRUPTCY

By Bankruptcy Info Blog | August 20, 2014 at 01:02 PM EDT | No Comments

 1)  REPAIR: Dispute any errors on your credit report.

What should your credit report look like after bankruptcy? The accounts on your credit report don’t simply disappear from the report. For all debts discharged in bankruptcy, the account entry should show (1) zero balance due, (2) the comments or status section should state “included in bankruptcy,” and (3) no late payments stated after the date you filed bankruptcy. However, negative entries that predate your bankruptcy stay on your report. Obtain a free copy of your credit report from www.annualcreditreport.com about 2 months after your bankruptcy discharge. If any entry is not reported as stated above, you need to dispute the account with the Credit Reporting Agencies.  Don’t contact the creditor directly.  Each agency’s website contains instructions on disputing entries.  The best way to do so is in writing.  The dispute process takes about 30-45 days and most of the time it will resolve the issue.

2)  REBUILD: Obtain new credit.

Credit cards have the greatest impact on your credit score so focus on obtaining ONE new credit card as soon as possible. Try to get an unsecured card with no annual fee, but if you can only get a secured card that’s okay too.  Note:  secured credit cards are not prepaid debit cards.  Prepaid debit cards are not reported to the credit agencies. Also, make sure the card you end up choosing does report to the credit reporting agencies.  Some small credit union cards don’t report. These cards initially will have low available balances.  Charge no more than 10% of the available balance per month and pay it off each month ON TIME. For example, if the available balance is $1,000, charge no more than $100 per month.  DO NOT PAY LATE AND DO NOT SKIP PAYMENTS!!  Your goal is eventually to have three credit cards so you immediately want to start with whatever card you can get.  For the other two cards, wait until your credit recovers to the point that you can get unsecured, non-subprime credit cards from major providers.

 

3)  RELAX:  Time heals all wounds.

Bankruptcy is not a 10 year death sentence to your credit. As negative items age the entries have less impact on your credit score. Although a bankruptcy will be on your credit report for 10 years it only meaningfully impacts your credit for about 3 years. For example, current FHA mortgage lending guidelines will not disqualify a borrower for filing a bankruptcy after two years from the bankruptcy discharge.  The natural passage of time should heal your credit.

4)  Additional DONT’s

DON’T pay for credit monitoring. DON’T pay for a credit repair service. Most are scams and the ones that aren’t do what you can do easily yourself. DON’T listen to anyone that says he/she can delete your bankruptcy from your credit report. Your credit report is allowed to contain true information about you. (However, inside tip, if the entry about your bankruptcy has an error, e.g. wrong date, you can dispute it and sometimes the bankruptcy gets removed).  DON’T reaffirm a debt in your bankruptcy for the sake of credit reporting. Your credit will recover after filing a bankruptcy without reaffirming needless debts.

5)  Additional DO’s

DO sign up for free credit monitoring. www. annualcreditreport.com only allows a free credit report per year. Depending on how bad your credit was prior to bankruptcy, the repair phase can take a while and even if you fix an item, it can reappear. So, you will want to monitor your credit for about a year after bankruptcy.  DO consider paying cash and putting off purchases until you can afford to pay for them.  The credit you rack up today affects your life tomorrow.

Additional Resources:

To access your credit report for free, visit http://www.annualcreditreport.com.  The credit reporting agencies:  http://www.transunion.com/  http://www.experian.com  and http://www.equifax.com.  Free Credit Monitoring:   http://www.creditkarma.com/ (Credit Karma uses your information to make offers to you).

Taking the anxiety out of attending the Trustee’s Meeting

Taking the anxiety out of attending the Trustee’s Meeting.

By Bankruptcy Info Blog | August 12, 2014 at 05:45 PM EDT | No Comments
When a debtor files a Chapter 7 Bankruptcy he has to attend one meeting with a person called a “Trustee”.   After being told about this meeting my clients invariably exhibit signs of anxiety and worry.

I’m here to tell you to stop biting your nails.  You aren’t going to jail.  You aren’t going to lose everything you have.  You aren’t even going to appear in front of a Judge.  And I will be with you every step of the way.

A Trustee’s Meeting is also known as a 341 Meeting or a Creditor’s Meeting.  In almost every case no creditors bother to show up to the meeting.  A Trustee is merely a lawyer who has been assigned to review your case.  His job is to see if there are any assets available AFTER EXEMPTIONS to administer for the benefit of creditors.  In most of my cases ALL of my client’s assets are exempt.  In other words, you get to keep everything you have.

Bring your driver’s license and social security card to the Trustee’s Meeting.  There isn’t anything else you have to bring.

These are typical questions the Trustee will ask you:

– Did you read the bankruptcy schedules before you signed the Declaration of Electronic Filing?

– Did you list all your assets and all your liabilities on the schedules?

– Do you own any real estate and if so what is the fair market value?

– Do you have a claim against anyone, such as a personal injury lawsuit?

– Does anyone owe you any money?

– Do you expect to receive an inheritance in the next six months?

The typical Trustee’s Meeting takes five minutes or less.

At the end of the meeting the Trustee makes a finding of “NO ASSETS” to administer.

So don’t lose a second of sleep over the Trustee’s Meeting.  Relax.

Give me a call or send me an email if you have any questions at all.  I would love to hear from you.