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Monthly Archives: March 2010

Are you being hassled by hospital bill collectors in Illinois?

Posted by David Leibowitz on March 22nd, 2010 in Uncategorized

Our client’s mother was being hassled for by a law firm trying to collect $20,000 for a hospital bill.  Our client’s mother had no money. She had been visiting the United States from a foreign country to see her grandchildren when she needed emergency medical care.

No questions were asked.  She was attended to and got better.  She returned to her homeland.

Now she is being dunned for $20,000 in medical bills.

Nobody told her she could get care if she was unable to pay.  Nobody tried to give her a payment plan. Nobody offered her any help at all.

This is against the law in Illinois.

What are the Benefits of a Single Asset Real Estate case? (Third in a Series of Three)

Posted by Jonathan Brand on March 22nd, 2010 in Business Bankruptcy, Chapter 11, Illinois, Real Estate, Uncategorized, Wisconsin

Now that we have explored the characteristics of a Single Asset Real Estate debtor in bankruptcy (see the First and Second blawgs in this series), it is time to look at the advantages of filing a chapter 11 case for a Single Asset Real Estate debtor.  

One significant benefit of a Single Asset Real Estate entity filing chapter 11 is the automatic stay.  The Bankruptcy Code provides that all foreclosure and collection activity must stop when a debtor files bankruptcy. If your company  is facing an imminent Motion to Appoint a Receiver or a Foreclosure Sale in a state court case, filing chapter 11 will temporarily stop the state court action from moving forward. 

The automatic stay will also provide the Single Asset Real Estate debtor some flexibility to develop cash if the property has tenants and is producing cash flow or rental income.  If there is sufficient cash flow, a Single Asset Real Estate Debtor will be more likely to develop cash when the value of the loan is worth less than the value of the property.    

While the automatic stay is beneficial for many debtors, the automatic stay has a limited shelf-life in a Single Asset Real Estate case. The automatic stay is limited to a 90-day period in Single Asset Real Estate case.  At the conclusion of the 90-day period, the Single Asset Real Estate debtor must propose a plan of reorganization or begin to tender monthly payments due to the lender(s) of the debtor. 

Lakelaw understands how to plan so this deadline can work in favor your chapter 11 case.  The key to success is pre-bankruptcy planning.  Through planning prior to filing for bankruptcy, Lakelaw can prepare for the difficulties presented by the limited application of the automatic stay.

Despite the abbreviated period for the application of the automatic stay, a Single Asset Real Estate case still has  benefits. Generally, with proper planning, a Single Asset Real Estate debtor may be able to successfully cram down a lender.  A cram down, under the Bankruptcy Code, allows a debtor to modify the monthly payments (and the amount of principal) due to a lender under  loan.  If a Single Asset Real Estate debtor can propose a feasible chapter 11 plan of reorganization, then it is more than likely that the entity can:

  • Reduce the monthly payments which may have caused the entity problems prior to filing bankruptcy; and
  • Allow the debtor (or its investors) to enjoy any appreciation in the value of the property after the chapter 11 plan is confirmed.

To be clear, while there are some risk in filing a Single Asset Real Estate case; with the right counsel, strategy and planning, there are many rewards which may be realized by an entity (or its investors).  

Lakelaw appreciates and understands the complexities of the Bankruptcy process.  We can help you or your company successfully maneuver through the bankruptcy process.  With over 35 years of experience in evaluating Single Asset Real Estate cases, Lakelaw can identify what is the best option for your company.  Lakelaw serves clients with financial restructuring needs throughout Illinois and Wisconsin.

Bankruptcy can help your mental state

Posted by David Leibowitz on March 19th, 2010 in Uncategorized

These are challenging times. Many of our clients facing bankruptcy have profound psychological problems. Frequently, they simply can’t face their problems. They procrastinate. They ignore their problems. They don’t respond to creditors. They hope their problems will simply go away.

Problems won’t go away.

Bankruptcy will help deal with your financial condition. We frequently suggest that our clients seek counseling. We maintain a network of social workers, psychologists and psychiatrists who can help our clients get their heads together. Financial stress can lead to depression, anxiety and other mental issues.  This is no cause for shame or embarrassment.  We’ll help you get the help you need.

Bankruptcy and mortgage defense throughout Illinois and Wisconsin

Posted by David Leibowitz on March 17th, 2010 in Illinois, Wisconsin

Lakelaw files bankruptcy cases for people and businesses in Illinois and Wisconsin.  Lakelaw also defends residential and business foreclosures in Illinois and Wisconsin.  We thought we focused on the area from Chicago to Milwaukee. But Illinois and Wisconsin are big states.  People have been calling on us for help from all over Illinois and Wisconsin. So Lakelaw is developing a virtual consumer bankruptcy practice. We didn’t try to. But our clients wanted it. And we’ve responded.

Just today, we served clients from Wisconsin Rapids, Wisconsin, Lisle, Illinois, Naperville, Illinois, Lindenhurst, Illinois, Highland Park, Illinois, Ozaukee County, Wisconsin and Rosemont, Illinois.  Not one of these clients actually came to any of our offices.

How did this happen?  Technology.  Our clients find us on the internet.  So we connect with our internet-savvy clients by Skype, Facebook, telephone, and several other channels of communication. We gather information electronically. We offer our clients information through the web as well. We communicate very effectively. Each of these communications lead to our ability to taking on new clients from far and wide.

The distance between our client from the Wisconsin Rapids to our client in Naperville  is 245 miles.  And yesterday, we heard from a client in Effingham, Illinois.  That’s 211 miles south of our Chicago office.

We are grateful that clients throughout Illinois and Wisconsin have found our bankruptcy and mortgage foreclosure defense services to their liking.  Through our creative use of modern communications and information channels, we can give you prompt, efficient and personal service whether or not you choose to visit us in our offices.  As always, we thank you for your confidence in us and promise to serve you with Care, Kindness, Courtesy, Respect, Professionalism and Dedication.

What are the Characteristics of a Single Asset Real Estate case? (Second in a Series of Three)

Posted by Jonathan Brand on March 3rd, 2010 in Business Bankruptcy, Chapter 11, Real Estate

A Single Asset Real Estate case usually involves a commercial building, apartment complex, or even vacant land.  Generally, a Single Asset Real Estate case concerns a piece of property, or a project, owned by an an entity (a limited partnership, or more commonly now, a limited liability company).  The entity’s sole purpose is to operate the property with funds generated by the property.  

The most important creditor in a Single Asset Real Estate case is the entity’s mortgage lender.  In some deals, the entity has secured financing from second-tier or mezzanine lenders.  The Singe Asset Real Estate entity may also owe debts for taxes, utilities, or property management fees. 

Under the Bankruptcy Code, a Single Asset Real Estate case has the following three characteristics:

  • a single piece of real property or project (excluding residential property with less than four units);
  • which generates substantially all of the income for the debtor (who is not a family farmer); and
  • the company (or debtor) operates no substantial business other than operating the property or project.

A Single Asset Real Estate case is not limited to small projects.  It can include large commercial properties.  Even a large shopping center worth millions of dollars could be Single Asset Real Estate case.  If you are the member or owner of a Single Asset Real Estate entity, there are benefits to filing a chapter 11 case.  However, you have a more difficult road than a typical debtor in chapter 11.  Our third and final blog in this series will explore the benefits and difficulties associated with a Single Asset Real Estate case.  

We at Lakelaw know the details of Chapter 11.  David Leibowitz taught the course on Real Estate Bankruptcy Law to graduate law students at John Marshall Law School.  He was recommended for the job by former Bankruptcy Judge Ronald Barliant as a result of his work before the Bankruptcy Court.  Jonathan Brand has had exposure to real estate cases not only at Lakelaw, but also during his tenure as a law clerk with two different bankruptcy courts. Lakelaw is available to answer any of your concerns related to Single Asset Real Estate cases or your other bankruptcy needs.

I passed the means test, so how come I still have to file a chapter 13?

Posted by David Leibowitz on March 2nd, 2010 in Bankruptcy, BAPCPA, Chapter 13, Chapter 7

Most people who file bankruptcy want to file a chapter 7.  This eliminates most debts right away. Some people aren’t eligible for chapter 7.  Most of these people end up having to pay their creditors for up to 5 years in a chapter 13 case.  How come?

Back in 2005, Congress decided that people who could pay something to their creditors had to do so to get relief in bankruptcy. In fact, Congress decided that people who made more than the median income were presumed to be abusing the system if they tried to file a chapter 7 case to eliminate their debts.

So they devised a complicated means test.  If the prospective debtor “passed the means test” then that meant that the debtor no longer is “presumed to be abusing the system” by filing a chapter 7 case.

But that doesn’t mean that our prospective debtor is home free.

Every debtor has to prepare a budget of income and expenses and file it as part of their bankruptcy case.  And if that budget of income and expenses shows that the debtor has, or even may be expected to have, significant disposable income,  the United States Trustee might try to prove that the debtor is nevertheless abusing the system, even if the debtor “overcomes the presumption of abuse” by “passing the means test.”  If under the “totality of circumstances” the court determines that the debtor’s chapter 7 case is abusive, the court could still dismiss a debtor’s chapter 7 case for abuse.

Oddly enough, this entire analysis only applies for a debtor whose debts are primarily consumer debts – or debts incurred for personal purposes.  A debtor with predominantly non-consumer debts isn’t even subject to the means test at all.

Who says bankruptcy is easy?  For more information about consumer debts as opposed  to non-consumer debts in bankruptcy, click here.

For careful and thoughtful analysis of your case, call on Lakelaw – serving debtors in Illinois and Wisconsin – at 1 866 LAKELAW (525-5329).


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