• Sinking Incomes No Help for Underwater Homeowners

    In discussing the thousands of Illinois homeowners needing foreclosure help throughout the week, we concluded on Wednesday by noting the benefits of filing Chapter 13 bankruptcy for homeowners who are underwater on their mortgages. However, we noted that individuals need to have the income necessary to make Chapter 13 repayment plans work. Many recent reports suggest that households throughout Illinois are struggling to keep up with their bills after seeing declines in their incomes.

    On September 20, 2012, the Chicago Sun-Times reported that the Census Bureau estimated that the median household income of Chicagoans was $43,628 in 2011. This figure was nearly $7,000 less than the national figure of $50,502. According to the Chicago Tribune, the 2011 median household income was “$4,000 less than in 2009 and part of a steady decline over the past three years.”

    While these realities make it difficult for many homeowners to have the income necessary to enter a Chapter 13 repayment plan, the good news is that individuals who are underwater on their mortgages and have lower incomes may still be able to file Chapter 7 bankruptcy . Unlike Chapter 13, individuals filing Chapter 7 will not be able to save their homes. However, they can use Chapter 7 to walk away from the house owing nothing. Also, individuals filing Chapter 7 will be able to live rent-free for a few months and discharge most or all of their unsecured debt.

    If you are uncertain whether Chapter 7 or Chapter 13 is the best option for you and your family, our Chicago bankruptcy attorneys can help when you fill out the form on this page or contact our firm at (866) 930-7482.

    Benjamin Brand Services – Chicago bankruptcy lawyers

  • Homeowners Facing Foreclosure Should Know Three Benefits to Chapter 7

    On Monday, we discussed Illinois having the highest foreclosure rate in the nation in August and talked about some of the benefits that a Chapter 13 bankruptcy offers for homeowners needing foreclosure help . As we said on Monday, Chapter 13 certainly has its perks for individuals who have a reliable source of income and are determined to save their homes, but what about people who do not have the necessary income for a repayment plan or understand that they can no longer afford their homes?

    Chapter 7 bankruptcy is another option for these homeowners. While a Chapter 7 filing will not save an individual’s house, it does allow people to:

    • Live rent-free for a few months – While most Chapter 7 cases do not take more than four months to complete, individuals filing Chapter 7 can stay in their homes during this time. This gives people filing Chapter 7 the time they need to find somewhere else to live, but it also lets them save the money they may need for the transition. This aspect is especially important nowadays because last month, Crain’s Chicago Business reported that average apartment rents per square foot both downtown and in the suburbs had hit all-time highs.
    • Cancel most or all of their debt – Chapter 7 wipes out unsecured debts, such as credit card bills and medical bills. While it cannot erase certain debts such as child support or student loans, Chapter 7 can be beneficial for homeowners facing foreclosure because it eliminates their responsiblity for the deficiency balance (the difference between what the homeowner owed and what the house sold for at foreclosure).
    • Eliminate tax liability – The Internal Revenue Service (IRS) cannot tax an individual on a discharged deficiency balance. Filing Chapter 7 exempts that individual from tax liability for the discharge of his or her home loan, and we will further discuss tax issues facing struggling homeowners in our next blog post.

    Again, Chapter 7 bankruptcy has a lot of upsides for individuals who are ready to give up their homes because of foreclosures. You need to pass the bankruptcy means test before you can file Chapter 7, and our Chicago bankruptcy lawyers can help you get started when you complete the form on this page or contact our firm at (866) 930-7482.

    Benjamin Brand Services – Chicago bankruptcy lawyers

  • Famous Bankruptcies: Mike Tyson

    A former heavyweight champion who amassed roughly $400 million over two decades and could once command $30 million for a night’s work, Mike Tyson ultimately had to file bankruptcy in 2003. The New York Times reported in August of that year that Tyson had $23 million in debts specified in Chapter 11 petitions he filed with the United States Bankruptcy Court in Manhattan. In 2004 though, the Associated Press reported that Tyson owed $38.4 million to various creditors including the Internal Revenue Service and his ex-wife, Monica.

    As the Times put it, Tyson’s “record earnings in the boxing ring became a license to spend — on jewelry, mansions, cars, limousines, cellphones, parties, clothing, motorcycles and Siberian tigers.” For example, the Times reported in that article that Tyson had “picked up a $173,706 gold chain lined with 80 carats in diamonds” from a Las Vegas jewelry store, but never paid for the item.

    While it is highly unlikely that your own lifetime earnings or spending on extravagances are anywhere near as astronomical as Tyson’s, perhaps you can still relate in the sense that an increase in salary led you to spend more than you should have. Many people spent beyond their means when times were good and then found themselves unable to pay the bills when they became unemployed or took a new job that pays significantly less than what they had been earning.

    However, just like Tyson, filing bankruptcy can allow you to manage your debt if you are struggling to pay your bills or seeking foreclosure help . A Chapter 7 or Chapter 13 bankruptcy could allow you to reorganize or eliminate you debt, as well as deliver a knockout punch to creditor harassment.

    Benjamin Brand Services – Chicago bankruptcy lawyer

  • Ex-Football Punting Star Auctions Super Bowl Rings as Part of Bankruptcy

    Former punter Ray Guy is auctioning the Super Bowl rings he won while playing for the Raider’s in the 1976, 1980 and 1983 National Football League seasons. The auction is part of a Chapter 13 bankruptcy filing.

    Guy spent his 14-year career solely with the Raiders in Los Angeles and Oakland. The native of Georgia filed for bankruptcy protection in Augusta Georgia and received authorization to sell his rings on May 23, 2011, according to court records.

    Nate D. Sanders Inc., the auction house handling the sales, estimates the rings are worth $75,000 to $90,000, CBSSports.com reported. As of August 2, 2011, the current bid for the lot is $6,727 according to the Nate D. Sanders website. The auction ends August 9 at 8 p.m. east coast time.

    The Internal Revenue Service is the first-priority lien holder in the bankruptcy. They must approve any sale below $63,127.88. Any proceeds above that number will be paid to the chapter 13 trustee, according to the order approving the auction.

    Bankruptcy can be used to settle a number of debts for good, even some I.R.S. back taxes under specific conditions. Don’t live your life under a cloud of debt when you have a perfectly legal avenue to stop the collection activity for good. A bankruptcy gives you the opportunity to start your financial life over and rebuild your credit. You can’t rebuild credit if you don’t have the money to pay your debts.

    Benjamin Brand Services – Chicago bankrutcy attorney