Law Offices of David P. Leibowitz LLC
Lakelaw is a registered assumed name for Law Offices of David P. Leibowitz LLC
My client called and was frantic. ”The bank took all the money from my account – I can’t make payroll and my checks are bouncing. Can they do that?
This is called “set-off”. And yes, the bank can do that.
Here’s the idea. If you have money in the bank, it is money that the bank owes you. But suppose you also owe money to the same bank. This typically happens to businesses which have loans with a bank and naturally maintain their checking account with the bank. So the debt you owe the bank – say a business loan – may be offset by a debt that the bank owes you – your money in the bank.
If you are in default with your bank under your loan agreement, even if you simply haven’t abided by various covenants or agreements in your loan agreement with the bank, the bank has the right to enforce its agreement with you.
For example, the bank has the right to set off the money in your checking account against the debt you owe the bank. This can be mighty inconvenient. Your employees won’t get paid and your checks will bounce. The bank also would have the right to enforce its security agreements with you – for example collect accounts receivable directly from your customers or even sell your assets at auction.
Chapter 11 of the bankruptcy code is your strongest response to these actions.
You’ll need a plan. You’ll need financing to operate while you are in reorganization. And you’ll need good legal counsel – like Lakelaw – to represent you in your chapter 11 case.
If your business can recover, you owe it to yourself to try. Otherwise, your business and life work will face liquidation and a rapid demise.
What is projected monthly income? And why do we care? It tells us your monthly payment in a chapter 13 case.
If you are a debtor in a chapter 13 case, you need to know the amount of your projected monthly income because that is the amount of money you have to pay to the chapter 13 trustee during your applicable commitment period.
What’s an applicable commitment period? That’s the time a debtor must remain in chapter 13 case – 3 years for someone who made less than the median income for the six months before banrkuptcy and 5 years for everyone else.
But what is projected monthly income? We really don’t know because this term is not defined in the Bankruptcy Code. We know that current monthly income is the average income you made from all sources during the six months prior to your bankruptcy case. But we don’t know whether what you made before is what you are likely to earn in the future. Nor do we know whether your present budget is going to be the same in the future. You may have a new job. Or you may be threatened with layoff or furlough. And your expenses might change. So current monthly income isn’t necessarily the same as projected monthly income.
We have 11 different judges in Illinois and another 6 judges in Wisconsin. There is no uniformity yet among these judges. So when we know the judge who will oversee your case, we will know how to calculate your responsibilities under a chapter 13 plan.
And soon, we hope that the Seventh Circuit Court of Appeals, which oversees all federal courts in Illinois, Indiana and Wisconsin, will give us some clarity on how to deal with these issues in a case called In re Johnson.
So keep up with Lakeblawg and we’ll keep up on the latest developments in chapter 13 cases for you.
Clients frequently ask “Can bankruptcy eliminate student loans?” It’s a good question. If you don’t pay a student loan, the lender can garnish your wages. The lender can intercept your income tax refund. You are treated very harshly.
The simple answer is that you can’t get rid of a student loan in bankruptcy unless paying the student loan is an “undue hardship.” That doesn’t sound so bad. But it is. Your idea of what “undue hardship is” and the courts’ idea are different.
Most bankruptcy courts adopt the so-called Brunner standard – named after a case from New York. In this case, the court decided that the student-loan borrower had to prove three things to prove “undue hardship” and get a discharge of the student loan:
This is a very difficult standard to prove. You have a better chance if many years have passed since your education and you’ve been unable to get work. You have a better chance if you have some sort of permanent disability. You have a better chance if you’ve tried hard to pay this loan off over a period of time.
If you seek a discharge of a student loan, you need to be prepared to file a separate lawsuit in addition to your bankruptcy. Ironically, this costs money – and you probably don’t have very much money to begin with if you are considering bankrutpcy and struggling over paying a student loan.
Catch 22 is alive and well.
People don’t always realize that you don’t have to be a student to be liable on a student loan. For example, if you are a parent who assumed personal liability on a student loan, you are subject to the same limitations and restrictions as you would have been as a student liable on a student loan.
These are difficult questions. Lakelaw helps debtors with student loans. Call us at 1 866 LAKELAW.
It’s not easy to contact a mortgage servicer. They say they want to help you get a loan modification agreement. But first, you have to find them. Here’s a handy list of phone numbers. Hopefully, this will help you on your way. And if you need more help, call Lakelaw at 1 866 LAKELAW instead of the mortgage modification company scammers that the United States Department of Justice and Attorneys General around the company are trying to shut down
HOW TO REACH YOUR MORTGAGE COMPANY
Phone: 800-848-9136 (Mortgage)
Phone: 800-836-5656 (Home Equity)
These numbers and the identities of the banks and mortgage companies are changing every day. If you find out any updates, please let us know and we will post them here.
The Servicemembers Civil Relief Act protects our soldiers, sailors and airmen. Lakelaw supports our troops. We offer our servicemen and servicewomen bankruptcy and other legal services at substantial discounts. We always have and always will.
Recently, Lakelaw heard from an Army medic in Afghanistan who was threatened with foreclosure. I told him not to worry so much. The Servicemembers Civil Relief Act gives a lot of protection to our active duty servicemen and servicewomen.
Here are some of the most important features:
Service connected life insurance is increased while you are on active duty. There are other provisions which are all more fully explained in this link: Servicemembers Civil Relief Act
If you are on active duty and came anywhere from the Chicago metropolitan area or Southeast Wisconsin – call on Lakelaw. We support our troops. We’ve got your back.