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Bankruptcy Doesn't Need To Be Stressful
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Grayslake Real Estate And Bankruptcy Law Blog

Why gray bankruptcy is on the rise

At the Law Office of Paul R. Idlas in Illinois, we have noticed that more and more of the people who come to us for help in filing bankruptcy are senior citizens. Even the New York Times has reported on this new “gray bankruptcy” phenomenon, reporting that seniors like you now represent 12.2 percent of all bankruptcy filers whereas you represented only 2.1 percent in 1991.

Unfortunately, a number of factors have coalesced into a perfect storm that often prevents your senior years from being your golden years, including the following:

  • Longer waits for Social Security benefits
  • Skyrocketing medical costs
  • Medicare coverage gaps
  • Extensive debt
  • Little or no savings

How divorce and bankruptcy are related

Divorce is an extremely difficult life situation to face, with emotional as well as financial stresses. In fact, the financial impact of a divorce can sometimes be so severe that it leads to the necessity of filing for bankruptcy.

While not all divorces necessarily end up in bankruptcy filings, there is a significant number of people who do end up having to file for bankruptcy due to the financial hardship brought on post-divorce. Here is some more information about how divorce can sometimes lead to the need for a bankruptcy filing, and ways to mitigate the situation where possible:

How do Americans feel about their personal debt?

If you are an Illinois resident who believes your household has never fully recovered from the 2009 financial crash, you are not alone. Despite frequent news reports of an economic recovery, many people across the nation have failed to feel its effects. If you are one of them, your amount of debt likely has increased in the past decade while your salary or wages have not kept pace.

Surprisingly enough, however, the results of a recent survey reported by Discover.com, show that while 80 percent of Americans reported having at least one type of debt, the majority of them do not think that they have too much debt. The figures break down as follows:

  • Only 40 percent of survey responders believe they have too much debt, with 47 percent of these between the ages of 35-54.
  • Only 43 percent of responders making less than $25,000 annually believe they have too much debt; the figure decreases to 34 percent for those making more than $75,000 annually.
  • The percentages split almost evenly between those with a high school education or less and those with a college or higher degree; 39 percent of the former believe they have too much debt, and 38 percent of the latter express the same opinion about their own debt.
  • Of the people who believe they have too much debt, however, only 18 percent of them are happy about their personal financial situation.

Can you strip a lien from your house?

In you are like many Illinois homeowners, your debts have gotten so out of hand that you cannot pay them and you fear losing your home to foreclosure. But what if you could strip the lien from your home that your second mortgage represents? As Home Guides explains, that may be exactly what you can do by means of a Chapter 13 bankruptcy

Unlike a Chapter 7 bankruptcy that discharges virtually all of your consumer debt, a Chapter 13 bankruptcy is a reorganization whereby you can renegotiate the terms and payment amounts of many of your debts, including your first mortgage. Once you file Chapter 13 bankruptcy, you have approximately 120 days during which you must come up with a plan to repay your debts over an extended period of time, usually three to five years. Your creditors cannot hound you for debt payments during your bankruptcy period, nor can your mortgage lender foreclose on your home.

What you know about Chapter 7

If you are considering bankruptcy as a way to regain hold of your finances, you are not alone. More than 796,000 people across the nation decided to file for divorce from June 2016 to June 2017. Of these filers, approximately 489,011 chose to file for Chapter 7 bankruptcy, or liquidation bankruptcy. As the most common type of bankruptcy, Chapter 7 has definite advantages and disadvantages when compared to other types of financial debt relief. Chapter 7 is designed to wipe out most of your debt, including medical expenses, credit card debt and other bills, and help you start fresh with a clean financial slate. Student loans, delinquent child support payments and money owed to the government cannot be eliminated in a chapter 7 bankruptcy.

In some cases, liquidation bankruptcy could mean that you lose certain items, such as your vehicle or home, during the course of the proceedings. The trustee who is assigned to the case will determine whether you have any valuable assets, property or items that are not protected. These items may be repossessed and sold for assets that will be distributed to creditors. You may be able to refinance your home or vehicle loan and not lose these items during bankrutpcy. Before this can occur, however, the trustee will determine whether you are eligible to file for Chapter 7. Once you qualify and have turned in your divorce paperwork, you will be asked to attend a creditors’ meeting and discuss your debt relief options to the court-appointed trustee.

Are your health problems caused by your drywall?

When you first move into your new house, you understand that there might be some changes to make before you feel like you can call the new place home. For example, you might be anxious to rip out the carpeting and replace it with sleek laminate flooring. Or you might be worried about the size of the shade tree outside and want to have it cut down before a branch falls and damages your roof. However, some new home buyers in Illinois and elsewhere may find themselves dealing with something that significantly lowers their property value and even affects their health.

Many homes across several states, including Illinois, were renovated with drywall outsourced from China, states the U.S. Consumer Product Safety Commission. Why is this a problem, you might wonder? The Chinese drywall in question was manufactured with substandard materials and contains a chemical called hydrogen sulfide. As it leaches into the air, the chemical has been found to damage plumbing and appliances and cause adverse health conditions in residents of the affected homes.

How an attorney can help you when you sell your home

When you decide to sell your Illinois home, you may face some confusing issues you never thought about before. While Illinois does not require that you hire an attorney to represent you during the sale process, doing so can save you a lot of headaches. If you simply list your home with one or more real estate companies, these people are not attorneys and cannot give you the legal advice you may well need.

Selling your home involves a myriad of paperwork, much of which can be quite complex and confusing. In addition, the standard forms used by many real estate companies may not cover everything involved or potentially involved in your particular sale. Your attorney can draft all these documents for you, or at the very least can answer any questions you have regarding your brokerage agreement, etc. and identify any issues not covered therein.

Can the HARP program save your home?

As an Illinois homeowner, you not only love your home, but it likely represents one of your biggest investments. Consequently, if you are thinking about bankruptcy as your only way out of overwhelming debt, you nevertheless want to save your home if at all possible. As Mortgage Reports explains, the Home Affordable Refinance Program may be the way you can do this.

HARP is the federal program that Congress established in 2009 to help homeowners such as you. Since then, over 3.3 million Americans refinanced their homes through HARP, often reducing their monthly mortgage payments by up to 30 percent in the process.

The basics of timing your bankruptcy

The financial difficulties you are experiencing may have had you considering bankruptcy for a while, but you might not realize that the time you file can have a positive or detrimental effect on the results of your bankruptcy discharge. In fact, when and how you file for personal bankruptcy might even result in fraud penalties. At the Law Office of Paul R. Idlas, we are prepared to answer the questions of Illinois residents to help them avoid potential penalties and make the most of the bankruptcy process.

You may be aware that bankruptcy might help you shed your insurmountable debt and avoid a home foreclosure. However, nobody told you that timing can be crucial. The following points are important to consider when timing your bankruptcy:

  • According to FindLaw, it can be a bad idea to file for bankruptcy soon after running up significant credit card debt. Unless these charges were necessary living expenses, the court may deem them “luxury” charges and rule them non-dischargeable.
  • You may want to delay filing for bankruptcy if you recently moved to Illinois, so you can qualify for bankruptcy exemptions in this state.
  • If you recently transferred property out of your name, you might be accused of defrauding your creditors, and the bankruptcy trustee may have authority to recover these assets.
  • If you foresee unavoidable debt within the next few months – such as an impending surgery – you might want to hold off on filing for bankruptcy, since necessary medical or credit card debt is often dischargeable.

What happens at my real estate closing?

You just bought a new Illinois home and life is good, not to mention exciting. The seller agreed to your purchase offer and you found a mortgage lender. Now the only thing standing between you and move-in day is the closing. If this is your first home purchase, that closing may be causing you some worry. What will happen there?

As Home Buying Institute explains, you really have nothing to worry about. The real estate closing is simply the final step of your home buying journey. This is where and when legal title to your new home passes to you from the seller.

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