Law Offices of David P. Leibowitz LLC
Lakelaw is a registered assumed name for Law Offices of David P. Leibowitz LLC
So many of our bankruptcy clients fear losing their house to mortgage foreclosure. We have done a good job of teaching our clients that chapter 13 bankruptcy can save your home from mortgage foreclosure. You can catch up with payments you haven’t made to your mortgage company.
In Illinois, you can lose your house even if you’ve made every one of your mortgage payments? How can this be? If you don’t pay every cent of the taxes you are obligated to pay on your house, a tax purchaser can literally pay those taxes for you. Then you must pay back the tax purchaser through the county clerk with very hefty interest charges. If you don’t do this, the tax purchase may pay taxes on your house for you for several years after that. You may not even know that this is happening. At the end, the tax purchaser has the right to be paid in full with very high interest for the taxes paid on your behalf for all those years. You might not have enough money to pay these taxes back all at once. So the tax buyer then has the right to get a deed to your house – literally stealing it from you even if you have a great deal of equity. This frequently happens to older people or people not fully conversant in English. They simply don’t understand the complicated legal papers they receive about tax sales.
This is where Lakelaw comes to your rescue. You can file chapter 13 bankruptcy to save your house. You can pay back all those taxes, maybe with substantially reduced interest, over a period of up to five years. All you have to do is to file the chapter 13 case before the property “goes to deed.”
Bankruptcy Judge Janet Baer wrote a very important decision about this issue in the United States Bankruptcy Court for the Northern District of Illinois here in Chicago. These cases called Romious and Watts established the very important principal that a tax sale was more like a lien until the actual deed in favor of the tax purchaser was recorded. Because the tax sale position is so secure, the tax buyer has nothing to lose as long as the owner is making payments under the chapter 13 plan. You can find the Romius-Watts decision here:
So if you are facing a tax deed, don’t despair. Call David Leibowitz at Lakelaw, 847 249 9100 and get the help you need immediately.
If you are filing for bankruptcy, either under chapter 7 or chapter 13, your income matters. Why? People who make more than the median income – the income more than 1/2 of the people make – are presumed to be abusing the system if they file a bankruptcy under chapter 7. For an individual, that’s around $40,000 and for a family of 4 that’s around $80,000. It’s better for most people to file chapter 7 than chapter 13 because in chapter 7, you are done with your bankruptcy in 4 months. In chapter 13, you pay more fees and you make monthly payments to a chapter 13 trustee toward payment of your debts for 5 years. This can be a good deal if you are trying to save property or catch up with mortgage arrears. It’s not such a good deal if you have a very little non-exempt property which you might lose in a chapter 7.
When you make more than the median income, we have to figure out if you overcome the presumption of abuse. We do that by analyzing your income and expenses under the government’s Means Test as adopted by the Bankruptcy Code.
Many of our clients are married. Frequently, one person in a marriage has debt and needs to file for bankruptcy but the other does not. Then what happens?
It’s not all that simple.
We have to figure out your projected disposable income. To figure this out, we need to know not only what you make and what your expenses are, we also need to know what your spouse makes and what your spouse’s expenses are. That’s because anything your spouse makes beyond your spouse’s own separate expenses are deemed to be available to you as disposable income to allow you to pay some of your debts. This additional disposable income might make a difference in determining (a) whether you are eligible to file a case under chapter 7 or (b) how much you’ll have to pay as a monthly payment if you have to file a case under chapter 13.
It might seem unfair that your spouse’s income must be considered if you are filing a bankruptcy case and your spouse is not. But Congress has spoken and we must help you obey the rules.
The good news is that if you file a bankruptcy case and your spouse does not, your bankruptcy case has no adverse impact on your spouse’s personal credit.
It’s complicated when one spouse files for bankruptcy and the other does not. Lakelaw’s board certified bankruptcy attorneys have great experience with complex cases like yours. Count on us to help you when you have tricky bankruptcy questions. Call Lakelaw in Chicago or Waukegan at 847 249 9100 or in Milwaukee or Kenosha at 262 694 7300.
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.