Recognized for Excellence in Bankruptcy – Your Financial Life-Saver TM

Bankruptcy and mortgage help for people and business in Illinois and Wisconsin sm

Monthly Archives: January 2010

What’s a "custodian" in bankruptcy? One of a series

Posted by David Leibowitz on January 17th, 2010 in Uncategorized

One of the biggest benefits of a bankruptcy case is that the debtor can get a discharge of most, if not all, of his debts. Another benefit which is often overlooked is the right to get property back which someone else may have taken away. 

In order to better understand that, you want to know what the Bankruptcy Code means by the term “custodian”.

Under the Bankruptcy Code, a “custodian” means:

  •  receiver or trustee of any of the property of the debtor, not in bankruptcy
  • assignee under a general assignment for the benefit of the debtor’s creditors; or
  •  anyone who to takes charge of property of the debtor to enforce a lien against such property, to sell it for benefit of the debtor’s creditors.

Why is this important to you?  Well, it can be vital if somebody repossessed your car just before you filed a bankruptcy case.  This happens pretty often.  The Seventh Circuit Court of Appeals, covering Illinois, Wisconsin and Indiana recently decided in Thompson v. GMAC that a creditor who repossessed a debtor’s car prior to a bankruptcy case but had not yet sold it was a “custodian” .  This was vital to the debtor because under the Bankruptcy Code, a “custodian” must give back to the debtor, or the trustee as the case might be, any property which it may have in its possession on the day the case is filed. 

If you’re thinking about filing a chapter 13 case or keeping your car in a reaffirmation agreement, you can claim that the creditor was acting like a custodian when it took back your car before your bankruptcy.  Make your lawyer get it back.

Lakelaw helps people keep their cars in bankruptcy in Illinois and Wisconsin.


Can I keep a credit card after bankruptcy?

Posted by David Leibowitz on January 17th, 2010 in Uncategorized

Clients frequently ask if they can keep a credit card after they file for bankruptcy under chapter 7.  They often think that just because they have a zero balance, the credit card company will still allow them to use the credit card after bankruptcy. 

Unfortunately, we can’t be sure whether or not you’ll be able to keep using your credit cards?

Why? 

Credit cards give you the opportunity to incur debt in the future.  From the standpoint of the credit card company, a credit card is a “financial accommodation.”  Why is this important?  A “financial accommodation” is a special kind of a contract when it comes to bankruptcy. When you file a bankruptcy case, the company which extends you a “financial accommodation” is not under any obligation to continue to do so.  So the credit card company might allow you to keep using it – but then again, it might not. 

If you have “closed end” credit – where you owe money but can’t borrow new money – you’ll have the opportunity to reaffirm the debt and pay it off after bankruptcy.  In exchange, you won’t be held in default and you won’t lose your collateral.  But for “open end” credit, there’s no assurance that you’ll be able to pay as normal and borrow new money after bankruptcy.

So when filing your bankruptcy case, be prepared to move to a cash economy until you rebuild your credit.  And you will rebuild your credit.  Lakelaw Cares and will help you rebuild your credit after bankruptcy.


Wisconsin Bankruptcy Law

Posted by David Leibowitz on January 12th, 2010 in Wisconsin

Clients ask us if we practice Wisconsin Bankruptcy Law.  Strictly speaking, we don’t do that.  What we do is represent clients in bankruptcy law in Wisconsin. 

There’s a big difference between the two.

Under our Constitution, there is just one bankruptcy law.  It’s federal.  In just one sentence of the Constitution, our Founding Fathers gave the United States federal government gave Congress the exclusive right to regulate both bankruptcy and immigration.  That’s quite an assignment for one sentence.

Even though we practice federal bankruptcy law, Wisconsin law is still very important to our Wisconsin debtors in bankruptcy.  Why?  That’s because all property rights are determined by State law.  In  Wisconsin, unlike Illinois, you get to select whether you’d like to take advantage of Wisconsin exemptions or federal exemptions in a bankruptcy case.  The federal exemptions can be very advantageous if you don’t have any equity in your house.  You can then use the federal homestead exemption to protect personal property.

On the other hand, Wisconsin exemptions have just been amended to be much more liberal.  So planning your bankruptcy case with reference to allowable exemptions is very important.

If you have moved into Wisconsin from another state within the past two years, other state law may decide what you get to keep.  But that’s a different question for a different day.

So remember.  Lakelaw practices bankruptcy law in Wisconsin. Don’t let anyone tell you that they practice Wisconsin Bankruptcy Law.  If they do, run in the opposite direction!!


Illinois Bankruptcy Law

Posted by David Leibowitz on January 12th, 2010 in Illinois

Clients ask us if we practice Illinois Bankruptcy Law.  Strictly speaking, we don’t do that.  What we do is represent clients in bankruptcy law in Illinois.  What’s the difference?

Plenty.

Under our Constitution, there is just one bankruptcy law.  It’s federal.  In just one sentence of the Constitution, our Founding Fathers gave the United States federal government gave Congress the exclusive right to regulate both bankruptcy and immigration.  That’s quite an assignment for one sentence.

Even though we practice federal bankruptcy law, Illinois law is still very important to our Illinois debtors in bankruptcy.  Why?  That’s because all property rights are determined by State law.  Not only that, in Illinois, all exemptions – property you can keep in bankruptcy – is determined exclusively by Illinois law. 

Now, if you moved into Illinois from another state, other state or even federal law may decide what you get to keep.  But that’s a different question for a different day.

So remember.  Lakelaw practices bankruptcy law in Illinois. Don’t let anyone tell you that they practice Illinois Bankruptcy Law.  If they do, run in the opposite direction!!


SUBSCRIBE

Blog Categories

Archives

Tags


LakeLaw – Recognized for Excellence