• An Undue Hardship Ruling Can Wipe Out Student Debt

    We can probably all agree that 2020 in Chicago has been a tough year. If you are overwhelmed with debt but don’t want to file for bankruptcy because it doesn’t help with your student loans, you may want to reconsider. Although Chapter 7 and Chapter 13 don’t automatically discharge student loan debt, it can be wiped out. At Benjamin Brand, LLP, I can help you determine if you qualify for student loan bankruptcy and if it is your best option.

    Birth of the Student Loan Bankruptcy Exception

    Education loans were treated the same as other unsecured debt, such as credit cards, before 1976, but with the introduction of the U.S. Bankruptcy Code in 1978, things changed. It limited the ability to discharge student loans. Over the last 40 years, a variety of amendments and statutes have tightened requirements for having student loans forgiven in bankruptcy. Legislation includes the Federal Judgeship Act of 1984, The Higher Education Amendments of 1992 and 1998, as well as the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.

    Student Loan Default in the 21st Century

    Since the 1970s, tuition has surged, and student loan debt has swelled with it. Fast forward to today, and the U.S has more than $1.56 trillion in student loan debt. Many Chicagoland residents from Millennium Park to Woodlawn and beyond the Loop have education debt in the six figures.

    To reduce the number of defaulted and discharged student loans, the law allows student loan servicers to garnish wages and take up to 15% of retirement benefits and SSD for education loan repayment. Private loans and federal loans also have different guidelines, which adds to the complexity of the statutes. 

    The court is starting to view education loan defaults differently than they did 20 years ago. Student loans add complexity to the bankruptcy process, but they can be discharged successfully if you meet one of these criteria:

    • You are the victim of institutional fraud or identity theft
    • Your school engaged in misconduct
    • Your school closed during the enrollment period
    • You withdrew from school, and it closed within 120 days
    • You have a permanent disability
    • Your repayment would result in undue hardship

    To be released from your student loan debt, you must file an action that is separate from the bankruptcy process.

    Adversary Proceedings

    Even if you meet the criteria for student loan discharge, it is not automatically part of your bankruptcy. You must file an adversary proceeding, during which the court looks at your unique situation. It looks at whether repaying your loans would cause you and your family undue hardship. You should prepare yourself, the requirements can be harsh. Less than half of those who file have their education debt discharged.

    If you file Chapter 13 and student loan debt remains at the end of the payment plan, you can file an adversary proceeding. If you have huge medical debt, are unemployed or have been underemployed for a significant time, you may win a hardship discharge. If you file for Chapter 7, the court looks at the value of your assets when determining whether you qualify for a discharge.

    Student loan debt in Chicago and throughout the U.S. is soaring. The laws regarding bankruptcy and education debt change frequently, making it a challenge to keep up with the latest facts and requirements. Filing bankruptcy is complex and takes a toll on you emotionally as well as financially. Don’t try to wade through the proceedings alone. You deserve to have an experienced attorney fighting for you.

    Contact Me Today

    Contact me to schedule your free consultation in person, on the phone or via video conference. We can discuss whether bankruptcy is right for you or if other options may fit your needs better. I can help you understand the process and ensure it is done correctly so that you can attain debt relief and move forward with the rest of your life.

  • Disabled Veterans Finally Get Bankruptcy Protection

    Illinois veterans injured in the line of duty are entitled to monetary benefits under federal law. However, these benefits do not compensate for the loss of wages or the medical bills that pile up quickly. Those facing severe financial circumstances could file bankruptcy, but it came at a high cost. Until recently, veterans often had to relinquish some of their federal benefits and sacrifice assets to get a small amount of relief.

    However, after the passage of Honoring American Veterans in Extreme Need Act of 2019, disabled veterans finally have greater protections. They are exempt from the means test that debtors must take before qualifying for bankruptcy. Benjamin Brand, LLP can help you determine if bankruptcy is right for you and the best way to proceed.

    Before the HAVEN Act

    Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act in 2005. It prevented many Chicagoland residents from filing Chapter 7, which could discharge most debt. Instead, the option was filing Chapter 13. It restructures debt, setting up a three to five-year repayment plan. Under this form of bankruptcy, the Department of Defense and Federal Department of Affairs payments were considered disposable income. As a result, creditors could claim those funds.

    Chicago Bankruptcy Means Test

    This test determines who qualifies for debt forgiveness through Chapter 7 bankruptcy. It takes income, family size and expenses to determine if you have enough disposable income to repay debts. If your income is below the Illinois median income, you may qualify. Expenses for the last six months, from clothing and groceries to doctor’s bills and rent/mortgage make up allowable expenses. Personal disposable income is calculated by subtracting income taxes from income, also referred to as net pay.

    After the HAVEN Act

    Bankruptcy law no longer views VA benefits as disposable income. They are similar to Social Security benefits, which are already exempt. This makes it easier for disabled veterans to qualify for Chapter 7 bankruptcy. Income sources that are now excluded from the means test include:

    • Combat-Related Special Compensation
    • Survivor Benefit Plan for Chapter 61 Retirees
    • Disability & Death Benefits
    • Disability Severance Pay
    • Permanent & Temporary Disability Retired Pay
    • Special Compensation for Assistance with Activities of Daily Living

    Retired military personnel make up nearly 10% of the United States population. However, they comprise almost 15% of those who file for bankruptcy. Chapter 7 bankruptcy gives disabled veterans and their families the ability to get out from under crushing debt caused by unemployment and overwhelming medical expenses. 

    Whether you’re in the Heart of Chicago, Tri-Taylor or Little Italy, I am nearby and ready to help. Call me at 312-853-3100 or schedule an appointment to learn more about your options for handling bankruptcy, foreclosure and student loan debt. We can meet at my West Loop office, teleconference use video for the consultation.

  • Filing for bankruptcy without ruining your spouse’s credit

    Life for a large percentage of Chicagoland residents has drastically changed in the first quarter of 2020.  Whether you’ve been furloughed with an uncertain return date or laid off with a severance, chances are money is tight. If you have been struggling for several months already, bankruptcy may start looking like a good option.

    It can give you some breathing room for the bills that continue to arrive, despite there being less money to pay them. I can help you determine if filing for bankruptcy in Chicago is your best option and provide you with the information to decide if Chapter 7 or Chapter 13 fits your needs better.

    File bankruptcy as single or married

    It makes sense that you can file for bankruptcy if you’re single, and many couples file jointly for Chapter 7 or 13. However, did you know you can also petition as an individual even if you are married? Although the law allows a married couple to file bankruptcy, it doesn’t require it.

    Why file as an individual

    There are strategic reasons to do this, depending on your specific circumstances. For example, if you want to buy a home in the near future, you can file for Chicago bankruptcy and prevent significant damage to your spouse’s credit. Debt that you accrued on your own, such as a credit card, does not become your partner’s legal burden. If the liability qualifies for discharge in bankruptcy, creditors cannot attempt to collect the debt from your other half.

    Only joint debt, such as a mortgage that you both sign, is a shared responsibility. However, if there is joint debt, and only you file, creditors could pursue collections from your spouse. If you share a significant amount of liability, it may be better if you also file for bankruptcy jointly. 

    Spousal income counts

    A point that is often overlooked is spousal income. It counts in the bankruptcy filing, even if you plan to file as an individual. Under Chapter 7, his or her income must be below a certain level. When considering Chapter 13, the income must be above a particular level. 

    Bankruptcy myths

    A common myth is that you won’t be able to get credit after filing bankruptcy, or that it will be a decade before you can get back on your feet. Neither of these are true. Yes, bankruptcy stays on your credit for seven to ten years, but you will also likely start receiving credit card offers within weeks of the debt discharge.

    Chances are the offers will be for secured cards with a low limit. This gives you the opportunity to begin rebuilding your credit almost immediately. If you have responsible spending habits, your credit score can jump quickly.

    Another common myth is that you’ll lose everything. This is not true. When done correctly, your house, vehicles and other assets are still yours. However, not all debt is wiped out in bankruptcy. While personal loans, utility bills, medical expenses and rent are discharged, student loans, back child support and spousal support remain.

    Learn more about Chicago bankruptcy

    Filing for Chapter 7 or Chapter 13 doesn’t mean you’ve been financially irresponsible. Life happens. Long term unemployment or underemployment and medical bills are driving more people to file bankruptcy than ever before.

    No one should have to live with staggering debt looming over them. Contact me today or call 312-853-3100 if you’re ready put your finances in order and get your life back on track. My W Jackson Blvd office near S. Morgan St is easy to reach, but you don’t need to come in for a consultation with me. I’m happy to schedule a phone appointment at a convenient time.

  • Questions to Ask Yourself Before Filing Bankruptcy

    If you are like most people, you like to pay your bills on time, fill up the gas tank when it gets low and enjoy happy hour with friends and co-workers. However, sometimes, life in Chicago goes sideways. Suddenly, bills are unpaid, late fees are accruing and things are getting out of control. You may think that filing bankruptcy is the best thing to do to buy some breathing room.

    Money Crashers reports that bankruptcy can save you money, provide peace of mind and get you back on track, financially. However, it is not always the right step. In addition to having a huge impact on your credit score, it can be expensive. At Benjamin Brand, LLP, we often help our clients decide if bankruptcy is right for their circumstances.

    Filing Chapter 7, 11 or 13 can have long-term effects on many aspects of your life. You may not be able to buy a new car, get a mortgage or pass the background check for a new job. Unfortunately, waiting until you’re completely broke before declaring bankruptcy can also work against you. Here are some questions to ask yourself when the bills are piling up, and you’re not sure if bankruptcy is right for you.

    Do you know where your money goes?

    If you don’t follow a budget, you may not know where your money goes on payday. How much of it goes toward bills such as utilities and rent? How much goes towards food? Do you have a car that guzzles gas? Tracking your expenses by using a budget program can help you see where your money goes and shows you how to make small changes that can make a big difference.

    Can you find the money another way?

    Picking up a second or third job may not be on your list of favorite things to do. If it’s temporary and it can help you get the breathing room you need, it may be worth it. Getting a part-time job and putting that paycheck toward bills can put a big dent in your debt.

    Is your situation temporary?

    Life happens! Unemployment, illness and other events can drain your bank account quickly. If you’ve lost your job, do you qualify for unemployment? What are your new job prospects? Consider waiting a few months to see if your situation improves.

    Have you approached your lenders?

    Lenders don’t want you to lose your house or file for bankruptcy. Many have programs you may qualify for that can help you stay afloat without filing for bankruptcy. Loan modification programs for Chicago mortgages and low fixed rate interest on credit cards can lower payments. These programs may change your repayment schedule or tie your payments to your income level. In either case, these options can help you preserve your credit score and still save you money.

    Have you tried credit counseling?

    Consumer credit counseling agencies can help you negotiate with lenders, create a realistic budget and help you develop a pay-down plan. There are many shady firms out there, so check with the Department of Justice for approved agencies so that you get the help you need, not a scam.

    Filing for bankruptcy is a time-consuming process, and it requires that you meet specific requirements. It can also affect your day-to-day life, ensuring your disposable income goes to pay debts. The court has strict guidelines about what is considered “disposable.” Talking with an attorney experienced in bankruptcy and foreclosure can help you determine if bankruptcy is right for you, based on your circumstances. 

    Located west of the Circle Interchange, our office is easily accessed from S Morgan St off I-290. There is street parking on Jackson Blvd and S. Morgan St. There is also pay for parking at 222. S Sangamon St, across the street.

  • What to Look for in a Student Loan Repayment Plan

    If you are an Illinois student entering your college senior year this month, congratulations! With only two semesters left, you are about to embark on the rest of your life. You may already be worried about how you’re going to make student loan payments in 2020. For those with federal student loans, there are several repayment plans. At Benjamin Brand, LLP, we are experienced in handling federal student loan issues and helping clients get back on track with payments that fit your budget and your life.

    Nearly two-thirds of all college graduates finish school with $30,000 or more in debt. Choosing the right plan for repaying student loans can make the difference between being able to afford the monthly installment and debt that escalates and balloons out of control. Although it may be tempting to choose the plan that gives you the lowest required payments and be done with it, that may not be best for your long-term goals.

    The first payment is due six months after you leave school, whether you graduate or not. If you do nothing, you will be placed on a standard repayment plan. This is your student loan amount and interest added together then divided into 120 installments, which is 10 years. For example, if you have $60,000 in loans, the payments will be in the vicinity of $515 per month, depending on the actual interest rate.

    If you prefer a different payment option, you should apply 46 to 60 days before the bill is due. If you graduate in May, the first bill is due in November, which means you should plan on addressing the plan options in September. A lot can happen in ten years and you can switch plans as needed. Re-evaluating your needs every few years, or when there is a major life event, such as a wedding or new job, can help you maintain control over your student loan debt.

    For federal student loans, there are currently eight repayment plans. However, if you have private loans or you are a parent with PLUS loans, there are not as many options. Typically, you cannot alter payment terms with private loans, unless you default. An attorney with experience in student loan law can help you select the terms that help you pay off your loans and preserve your credit.

    We help clients with student loan debt, avoid foreclosure and assist with filing bankruptcy. Our Chicagoland offices in the West Loop area are near loft residences, shopping and professional services near West Jackson Blvd and Morgan Street. Contact us or call 312.853.3100 to learn more about or to schedule an appointment.

  • Can Bankruptcy Discharge Tax Debt?

    Bankruptcy can help Chicago businesses and individuals that cannot pay their debts. Three common bankruptcy codes set the rules, and each deal with debt differently. However, whether you file Chapter 7, Chapter 11 or Chapter 13 depends on how much you will be required to pay, and which debts are forgiven. At Benjamin Brand, LLP, we assist clients in filing bankruptcy and finding the best solution to save your home.

    Credit Karma reports that most unsecured debt can be discharged, such as personal loans and credit card debt. Other forms of debt, such as Chicago child support, alimony and student loan debt, cannot be excused. Mortgages and car loans may or may not be discharged, depending on the type of bankruptcy you file. Tax debt is a bit more complicated.

    Requirements for Discharging Tax Debt

    The court considers three factors for discharging tax debt:

    • Taxes must be assessed within 240 days before you file.
    • Bankruptcy cannot forgive taxes until three years after they are due.
    • A tax return must be filed for the taxes owed at least to years before filing for bankruptcy.

    Even though bankruptcy is supposed to help you get a fresh start, it can affect more than your credit scores. If you tried to avoid Illinois or Federal taxes, they and any applicable penalties are not discharged. Income taxes can be forgiven under very limited circumstances. It should be noted that even if taxes are discharged, there may be tax liens that must still be paid. In situations where the lien is recorded before you file bankruptcy, it may be impossible to sell your property until the debt is settled.

    Filing Returns After Filing Bankruptcy

    Although you may be able to deal with past tax debt through filing bankruptcy, it does not protect you from current or future IRS obligations. Tax returns are due as usual, either on time or by submitting an extension. Taxes and bankruptcy are both complex issues. You don’t need to tackle them alone. Working with a Chicago attorney can help you choose the right type of filing for your needs.

    Located in the Heart of Chicago’s West Loop

    Our West Jackson Blvd office is convenient to 1000 W. Adams Condo Association, Brooklyn Boulders Chicago and a broad range of retail locations, so you can make an appointment to discuss your situation and still finish your errands. Contact us today or call 312-853-3100

  • Avoid 5 Common Mistakes and Pay for College in 2020

    If you are the parent of a student starting their Senior year of high school in Chicago, you may be panicking about how to pay for college in 2020. One of the questions parents ask more often now than in the past is, “Will my personal student debt affect my child’s ability to get student loans?” On the upside, the short answer is typically “No.”

    On the downside, if you are struggling with loan payments while still making ends meet, you may need some help of your own. Contact the team at Benjamin Brand, LLP Attorneys at Law to learn more about how we can provide options that make dealing with your federal student loan debt in Chicago easier.

    While the status of your student loans does not affect your child’s eligibility for student financial aid, other issues affect your ability to pay for his or her college tuition. Here are five tips to help you avoid some of the most common mistakes parents make when helping their students plan for college.

    Mistake 1: Savings account for college in the student’s name instead of yours

    If the account is in your child’s name, it will be reported as a student asset on the FAFSA. This reduces eligibility for need-based aid by 20% of the account’s net worth. Depending on the type of account, you may be sheltered by the financial aid formula which can help you pay for college in 2020

    Mistake 2: Failing to file the Free Application for Federal Student Aid

    You may assume that your student will not qualify for need-based aid. That is not necessarily true. The financial aid formulas are complex and virtually impossible to predict. They take into consideration numerous factors, including whether you have another child in college. Retirement plans and net home equity are omitted from the process.

    Mistake 3: Waiting to file the FAFSA

    Students who submit their applications in January, February and March often receive considerably more aid than those who file later in the year. As much as double the amount. Some schools and states have very early deadlines and award grants on a first-come, first-served basis until they are out of money. Don’t wait to file tax returns or the admission letter. Apply as soon as possible. You can update all other information later.

    Mistake 4: Disregarding scholarships

    Most families wait until the last half of the student’s senior year to start the hunt for scholarship funds. By then, many of the application deadlines have passed. There are also scholarships awarded when students are in lower grades. The sooner you start searching for money to pay for school, the more likely you are to make it an integral part to help pay for college in 2020 and keep federal student loan debt to a minimum.

    Mistake 5: Choosing a school based on the aid amount vs. net price

    To get the net price of college, subtract the total of all gift aid (i.e., grants, tuition waivers, scholarships and other aid that does not need to be repaid) from the total college costs. This is the amount that the family will have to contribute to cover college costs. For example, your student is looking out of state, and the school costs $50,000 per year. They offer a merit-based scholarship for $5,000. The net price is $45,000. There are many Chicago schools that may offer equivalent scholarships, and you would be able to take advantage of in-state tuition. This could bring the net price down significantly.

    The general rule of thumb is that the student loan amount shouldn’t be more than a single year’s salary. Although that may not be practical in your situation, it is a place to start planning. When looking at schools, don’t completely disregard the costs because your student has his or her heart set on going there. If it drains all the family’s resources, or they drop out of school because they can’t come up with enough money, they will carry the debt for years, possibly decades.

    Contact Us Today

    Is your federal student loan debt in Chicago making it difficult to buy a home, go on vacation or finance a new car? Contact us today or call 312-853-3100. Located in the West Loop, we are easily accessed from I-90/I-290. The Benjamin Brand, LLP office is close to the University of Illinois at Chicago as well as the UIC-Halstead and Racine Metro stations. If you live or work in Little Italy, Greektown or the Near West Side, our office is nearby.

  • Tips to Take Control of Your Student Loan Debt

    When you decided to go back to college or start your degree in the Chicago area, chances are you took out student loans. If you are like millions of Americans, you have finished school, but are saddled with overwhelming student loan debt.  Not only have your financial conditions not improved, but you are stressed about the way the debt affects other aspects of your life from buying a car to qualifying for a mortgage. At Benjamin Brand, LLP, we often help clients in the West Loop address financial issues, from bankruptcy and student loan debt to mortgage restructuring and foreclosure.

    Take Back Financial Control

    If your life is full, juggling family, work and friends, it’s tempting to avoid dealing with student loans and other financial issues. Take the first step toward escaping student loan debt by analyzing the information in the emails or envelopes delivered by USPS from your student loan servicers. Here are some tips to reclaim control of your school debt by getting to know it a bit better.

    Start by writing everything down or entering it into a spreadsheet. Sometimes it helps to be able to see everything laid out.

    • How many student loans do you have? Are they public or private? The federal government backs public loans, but each type has different borrower protections. Take some time to read the fine print and understand what they are.
    • What are due dates and minimum payments for each?  This can help you build a realistic monthly budget that incorporates the amounts.
    • What is the repayment timeline for each loan? Most default to a 10-year plan, but if you can pay them off sooner, you’ll pay less in interest over the loan’s term. Make sure there are no prepayment penalties.
    • What is the balance and interest rate for each? This will tell you how much you are estimated to pay over the life of the loan. It can also help you decide if refinancing the loan is a viable option.

    Because student loans are installment loans instead of revolving debt, like credit cards, credit scoring models are generally more forgiving. Make on-time minimum payments to give your credit score a boost and limit credit card use. Maxing them out hurts your score.

    Consult with a Chicago Attorney Near Me

    Our team can help you make sense of your student loan paperwork and work with you to develop a plan to get your financial life back on track. Are the default minimum requirements out of the question?  We will discuss which repayment plans work best for your budget and current situation. Deferment may sound good, but the downside is an inflated balance due to interest fees. Contact us today to schedule an appointment and learn more about how we can help you take back control of your student loans and move on with your life.

  • Senior Citizens and Chapter 7 Bankruptcy

    It used to be that people grew up, got jobs, raised families and happily retired. If you are like many older residents in Chicagoland, life has gotten more complicated than that. Your savings and Social Security payments may not be enough to cover your needs. Our team at Benjamin Brand, LLP, has the experience to assist clients when bankruptcy becomes the best option to get out from underneath overwhelming debt.

    For most seniors living in Chicago’s Lower West Side, Near West Side, East Garfield Park and West Town, bankruptcy is not one of the first options considered. However, according to the Washington Post, increased health care costs and reduced income result in more Americans filing for bankruptcy than ever before. It can help eliminate debt and provide protection from creditors so that they cannot seize personal assets or garnish wages.

    Protection Under Chapter 7 Bankruptcy

    Medical debt is one of the primary reasons people 65 and older file for bankruptcy. Chapter 7 can significantly decrease the amount due and help make payment plans manageable. Most retirees depend on retirement accounts throughout the golden years.  Federal law protects the following types of accounts from creditors:

    • Profit sharing plans
    • IRA’s
    • 402(b)s
    • 401(k)s
    • Defined benefit plans

    Social Security income is also protected under Chapter 7. While not everyone who files for bankruptcy qualifies, if the bulk of your funds come from SSI, you likely will.

    Alternatives to Bankruptcy

    Bankruptcy can cause a lot of changes in your life. Take the time to explore alternatives, such as interest debt reduction, deferment of debt and renegotiation of secured loans to find out if they can provide enough relief. If it looks like Chapter 7 is your best option, retaining an attorney can help ensure the process goes smoothly.

    You worked hard to get to your golden years. Filing for bankruptcy in Illinois can help protect your home, vehicle and other assets, lifting a heavy financial burden from your family. Visit our webpage or call us at 312.853.3100 to schedule an appointment.

  • Tips to Take Control of Your Student Loan Debt

    When you decided to go back to college or start your degree in the Chicago area, chances are you took out student loans. If you are like millions of Americans, you have finished school, but are saddled with overwhelming student loan debt.  Not only have your financial conditions not improved, but you are stressed about the way the debt affects other aspects of your life from buying a car to qualifying for a mortgage. At Benjamin Brand, LLP, we often help clients in the West Loop address financial issues, from bankruptcy and student loan debt to mortgage restructuring and foreclosure.

    Understand your Student Loan Debt

    If your life is full, juggling family, work and friends, it’s tempting to avoid dealing with student loans and other financial issues. Take the first step toward escaping student loan debt by analyzing the information in the emails or envelopes delivered by USPS from your student loan servicers. Here are some tips to reclaim control of your school debt by getting to know it a bit better.

    Start by writing everything down or entering it into a spreadsheet. Sometimes it helps to be able to see everything laid out.

    • How many student loans do you have? Are they public or private? The federal government backs public loans, but each type has different borrower protections. Take some time to read the fine print and understand what they are.
    • What are due dates and minimum payments for each? This can help you build a realistic monthly budget that incorporates the amounts.
    • What is the repayment timeline for each loan? Most default to a 10-year plan, but if you can pay them off sooner, you’ll pay less in interest over the loan’s term. Make sure there are no prepayment penalties.
    • What is the balance and interest rate for each? This will tell you how much you are estimated to pay over the life of the loan. It can also help you decide if refinancing the loan is a viable option.

    Because student loans are installment loans instead of revolving debt, like credit cards, credit scoring models are generally more forgiving. Make on-time minimum payments to give your credit score a boost and limit credit card use. Maxing them out hurts your score.

    Consult with a Chicago Attorney Near Me

    Our team can help you make sense of your student loan paperwork and work with you to develop a plan to get your financial life back on track. Are the default minimum requirements out of the question?  We will discuss which repayment plans work best for your budget and current situation. Deferment may sound good, but the downside is an inflated balance due to interest fees. Contact us today to schedule an appointment and learn more about how we can help you take back control of your student loans and move on with your life.

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