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Tag Archives: Exemptions

Use Illinois Exemptions to Protect Against Judgments and Citations to Discover Assets in Illinois

Posted by David Leibowitz on February 17th, 2014 in Exemptions, , ,

Gavel2Our client needs to file for bankruptcy but can’t file her case until August.  Why?  She wants to discharge income taxes and must wait until they have been due long enough. In the meantime, creditors were suing her and getting judgments.

Once a creditor in Illinois gets a judgment against you, it can take steps to collect the judgment.  Most frequently creditors will try to collect their judgment by using a citation to discover assets.  The creditor can direct the citation to discover assets to the debtor or to anybody else who the creditor thinks might have assets belonging to the debtor – like a bank or an employer for example.

Most people facing judgments in Illinois don’t know that they can protect themselves with the same exemptions which they might use in bankruptcy. Sure, we can file a bankruptcy case to protect against a judgment. But not everyone can file a bankruptcy and it could be a problem for someone to file a bankruptcy right away.  Maybe it’s been less than 8 years since a prior bankruptcy.  And maybe we need to wait to let an important deadline pass.  There’s a 3 year waiting period from the last day to file a tax return for discharge of certain taxes.  There’s a 4 year waiting period from certain transfers which could be avoided as fraudulent transfers.  There’s a 1 year waiting period from payments of debts to friends family or relatives.

In the meantime, we can claim exemptions for a judgment debtor to prevent a creditor from taking assets.  What did we protect for our client this week?

  • We protected $2400 equity in her car using the automobile exemption
  • We protected another $4000 equity in her car using the wild-card exemption
  • We protected 85% of her wages using the wage exemption
  • We protected 100% of the cash surrender value of her life insurance because it was for the benefit of her children
  • We protected 100% of the money in her children’s bank accounts for which she was custodian because this was proceeds of social security, a public benefit.
  • We protected 100% of the money in her IRA because this is fully exempt under Illinois law.

These are just a few of the important assets which creditors can’t touch if they have a judgment against you. Click here for additional information about exemptions in Illinois and Wisconsin. 

While our client will certainly have some challenges from now until the time that it is optimal for her to file her bankruptcy case, we at Lakelaw will continue to protect her outside of bankruptcy until we can get complete relief for her in bankruptcy.

If you are facing judgments but can’t file bankruptcy today, call David Leibowitz at Lakelaw today at 847 249 9100.  We can intervene today to help you solve your immediate problems while we develop a lasting and permanent solution to your financial distress.

 


Personal Injury Claims must be disclosed in bankruptcy filings

Posted by David Leibowitz on January 29th, 2009 in Bankruptcy, Chapter 7, Exemptions, , , ,

If you file a bankruptcy case, you must list all of your assets.  This includes lawsuits for personal injury claims.  It also includes personal injury claims even if you have not yet filed a lawsuit.  

Failure to list all assets in a bankruptcy case could lead to loss of your discharge in bankruptcy or even criminal prosecution.

You can exempt a portion of your claim – up to $15,000 in Illinois and up to $25,000 in Wisconsin.  

Many people who have been involved in automobile accidents or medical malpractice claims find themselves facing bankruptcy during the long delays prior to trial or settlement.  Unfortunately, their personal injury attorneys frequently have no experience with bankruptcy.  And it would be unethical for them to help their clients out financially while waiting for trial or settlement.  Even worse are the companies who try to get the victim to sell a portion of his personal injury claim for a big discount in order to pay living expenses.

So victims of automobile accidents or other major tort claims may have to file a bankruptcy case before they get their settlement.  

Tell your bankruptcy lawyer about these claims.  We at Lakelaw will ask you.  

If you file a bankruptcy case, you won’t “lose” your rights.  If you have a smaller claim, it will be exempt from creditors.  If you have a larger claim, you will keep the first $15,000 in Illinois or  the first $25,000 in Wisconsin.  The next dollars will go to pay your creditors until they are paid in full.  And if you were unfortunate to have suffered a significant claim, you will get to keep the balance.  Sometimes, a personal injury claim settlement can be structured so that a significant part is allocated to your wife or family.  If these people are not filing a bankruptcy case, this may be a legitimate way to protect your claim from creditors.

We will work with your personal injury lawyer to maximize the amount of money you keep from your personal injury settlement even though you are filing a bankruptcy case.


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