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Planning for Bankruptcy

Bankruptcy is a major event in your life.  You can file for bankruptcy rarely.  You can claim bankruptcy under chapter 7 only once every 8 years.  Once you file a chapter 7, you can’t get a chapter 13 discharge for 4 years. Once you get a chapter 13 bankruptcy discharge, you can’t get a chapter 7 discharge for 6 more years.

It’s very important to get your bankruptcy right the first time you file it. The Bankruptcy Code penalizes repeat bankruptcy filers. This is called “serial filing”. People who are “serial filers” may lose important benefits of bankruptcy – the most important of which is the automatic stay – the protection against lawsuits and collection activities.

So if you are thinking about filing a bankruptcy case, you’ll want to plan to get the most benefit from it.

Here are some of the planning considerations we think about when representing you:

  • What has your income situation been?  How does that impact upon the “Means Test”
  • How does your financial situation look in the immediate future?  Will bankruptcy give you the fresh start you need to have a bright financial future?
  • Do you have assets which might be taken in by a bankruptcy trustee?
  • Might there be possible exemption planning which could benefit you and your family?
  • What might you legitimately do to protect your assets before you file a bankruptcy case?
  • What actions might you take that could get you into trouble or cause trouble to your friends or family?
  • What is legitimate bankruptcy planning and what might you do that could jeopardize your bankruptcy discharge or subject you to criminal liability?
  • When is the best time to file a bankruptcy case for you? Are there benefits to filing now? Are there benefits to waiting until a better time to file your bankruptcy case?

When things go wrong in bankruptcy, they go very wrong.  People who mess up in their bankruptcy could still be liable for some or all of their debts.  Even worse, people who lie in their bankruptcy case could face substantial fines and even imprisonment.  Help us help you by telling us the truth, the whole truth and nothing but the truth. Lakelaw wants you get the most from your bankruptcy and we’ll do everything we can to keep you and those you care about out of trouble

Frequently Asked Questions about Bankruptcy Planning

When is the best time for me to file my bankruptcy case?

The answer to this question is different for everyone. We recommend that you file your bankruptcy case when it is clear that you can’t resolve your financial situation without the benefits of bankruptcy. Please consider all non-bankruptcy alternatives before you decide to file your case.

For example, we have been asked to file a bankruptcy case for an elderly disabled veteran, more than 80 years old. He had no assets and lived in the VA hospital in North Chicago. He had only social security and military disability benefits, all of which are exempt, as income. Yet creditors were bothering him every day. There was no point to this man’s filing a bankruptcy case. He was judgment proof and all income was exempt. Lakelaw represented him pro bono. We told his creditors that we represented him, that he was judgment proof and that if they didn’t leave him alone, we would sue them under the Fair Debt Collection Practices Act. And that was the end of the story.

When can I file a bankruptcy to stop a foreclosure?

In Illinois, bankruptcy can stop a foreclosure if we file it before the sheriff’s sale. In Wisconsin, bankruptcy can stop a foreclosure if we file it before the sheriff’s sale is confirmed. Do not wait until the last minute. It takes some time to properly prepare a bankruptcy case.

When can I file a bankruptcy to stop wage garnishments?

The sooner the better. Frequently, we are asked to file a bankruptcy after the wage garnishment has started. The wage garnishment may be complete before we can file the case. Sometimes, we can recover wages which were garnished before bankruptcy.

When can I file a bankruptcy to stop a tax sale?

Bankruptcy can stop a tax sale in Illinois. In fact, because of a very important recent decision, chapter 13 bankruptcy can help you avoid a tax sale in Illinois as long as you start the case before the tax purchaser gets a deed to your property.

How long can bankruptcy planning last?

Usually, solid bankruptcy planning can take a month or two. Sometimes, your situation might call for bankruptcy planning going as long as 90 days or even up to a year. Ask your Lakelaw attorney about your particular situation.