Free LUCHA First Time Homebuyer Seminar - Sat 6/25 10A-2P 1152 N Christiana Chicago IL Call 773-276-5338 To Reserve Spot

On 7/16/2011 10A-2P Stop Foreclosure Open House Sponsored by Lucha at 1152 N Christiana Chicago CALL 773-489-8484

Marine Forecast for Latitude 41.92°N and Longitude 87.61°W

Excellent Marine Forecast for Sailors who race their yachts just off of Montrose Harbor.

Marine Forecast for Latitude 41.92°N and Longitude 87.61°W

NLO Nelson Law Office will be closed 7/2 for the 4th Weekend. Open 6/25 & 7/9 12 N to 4P 2215 S California, Chicago

Transfer Tax Real Estate Summary In Illinois

In Illinois Municipalities can levy a transfer tax on a buyer and/or a seller.  A transfer occurs when a piece of real estate is sold and/or transferred.  Don't be mislead, a transfer tax is in its very essence a sales tax on the purchase of real estate.

In Chicago, the transfer tax is 0.75% of the purchase price for the buyer.   That means that the buyer pays a 0.75% sales tax when they buy a home in Chicago.  For example, if a buyer purchases a new home for $100,000, his or her closing costs will include a $750 sales tax.  Be advised that the seller will also pay a transfer tax as well.

Every, City, Town, Village or other municipality has a transfer tax, to determine when your transfer tax will be, please visit the Transfer Tax Summary.  This is a PDF document that is a great resource for realtors, buyers, sellers and anyone interested in the local transfer tax.  Please Click Here

If you are considering the sale of your home and need an attorney, please email my office for a free quote on legal services (include name, telephone, email and any other pertinent information):  Click Here

If you are a buyer and want to know how much you may have to pay in sales tax to purchase a home, email your purchase information (address and purchase price):  Click Here

Same-Sex Married Couples can File a Joint Bankruptcy Petition (Illinois Civil Unions)

In a ruling filed on June 13th, in the Central District of California by the Bankruptcy Appellate Court, Same-Sex Couples legally married in California can file a Joint Marital Bankruptcy Petition.  While the issue will remain unsettled for some time to come as this issue eventually heads to the Supreme Court, it is interesting to note just how unified and strong the support of ALL judges of the Central District.

So what does this mean to us in Illinois?  As of June 1, 2011; Same-Sex Couples in Illinois can entered into Civil Unions.  It would appear that a Joint Bankruptcy Petition can be filed for these couples who are in a valid Civil Union.

Why is this important?  A joint bankruptcy is simply less costly, works better in a Chapter 13 and better reflects the debts and assets of any couple cohabitating regardless of whether they are a heterosexual marriage or not.

To See the Court's Opinion:  Click Here

For a Bankruptcy Consultation, please request a consultation by clicking the email link:  Click Here

Citation to Discover - The Hearing you Never Want to Miss!

Oftentimes, client's will come into my office with a stack of bills, primarily credit cards and several unpaid default judgments.  However, the court hearing that usually makes them come in an deal with the bills and unpaid judgments is the "Citation to Discover".  The real name for this hearing should be "Garnishment Alert - You've got about one month until 15% of your gross paycheck starts to Disappear".

Bottom line - what is a "Citation to Discover".  Put simply it is a hearing that demands your presence to learn about all of your assets and your place of employment.  Unlike simply seeking a garnishment, a "Citation to Discover" seeks to also learn about the location of your bank accounts and any other assets you may have.

What's the result of not showing up?  A body attachment which is a nice way of saying a warrant is out for your arrest so that you can appear at this hearing and explain why you are in contempt of court.....for not showing up at the scheduled "Citation to Discover" hearing.

So if you show up - what happens:  You tell the creditor the location of your employer/s and your bank account/s.  Depending on the size of the unsatisfied judgment, all of your bank accounts will be emptied and the remaining balance of the unsatisfied judgment will be taken as a garnishment.  A garnishment is 15% of your gross income until the judgment is satisfied.

What if I already have two other garnishments occurring?  No Problem, the court simply allows the first two garnishments to complete.  Then when those judgments are fully paid, your new garnishment starts automatically.  In effect, you always see 15% of your gross pay deducted for garnishments all of the time until all three unsatisfied judgments are paid off.

Conclusion:  You should always show up at a "Citation to Discover" hearing.  You should meet with a bankruptcy attorney about one to two weeks before the hearing to determine whether a bankruptcy is good alternative to being garnished.  You should also consult with an attorney regarding any balances that you have in your bank accounts because shortly after your testimony at a Citation hearing, all balances in your accounts will be taken by the creditor just before the garnishment starts.

Chapter 13 Bankruptcy is a great solution to the "Citation to Discover" Trap.  Let's say you have no savings, are already in a garnishment and now face the prospect of two more garnishments.  In this situation, you already are putting out 15% of your gross income towards the garnishments.   Most Chapter 13 plans only pay out 10% to unsecured creditors - that's all creditors with all of your debts discharged in five years or less.  In a garnishment you pay 15% and not all of your debts are cleaned up.  Chapter 13 is less costly and globally solves all of your debt issues.

For more information about how to deal with "Citation to Discover" Hearings, Garnishments and Chapter 13, please call our office at 877-GO-GO-NLO or email to schedule an appointment:  Email Bankruptcy Consultation

Tax Refunds in Bankruptcy - Why are they great and dangerous?

We are just winding down the tax refund season here in June.  By now most people have filed their 2010 taxes and have gotten their refunds.  However, for the debtor who files their bankruptcy within 180 days of receiving the tax refund, the benefit of receiving a tax refund can be put in jeopardy.

Here's how it works.  Say you receive a $6000 tax refund in April and use it to file a bankruptcy in May.  In June, the bankruptcy trustee will ask your attorney for information about how much your tax refund was and how it was spent.  So here's how it goes:

Jane spent here tax refund on:

Bankruptcy Attorney $2200.00
Pay off loan from Mom:  $2000.00
Paid off Macy's Charge Card:  $1800.00

Here's what the trustee would say:  The amount of money spent by Jane on the bankruptcy attorney is exempt and cannot be seized by the trustee.  However, the loan to an "insider"  is not exempt.  Neither is the payment to Macy's.  Bottom line, Jane is consider to have received $3800 in cash that is subject to the jurisdiction of the trustee.

Here's the problem, Jane needs an exemption to keep this money - so how does she do it?  Well....she can use the Illinois "Wildcard" exemption for $3800, but now she only has $200 left and still needs to exempt about $2000 of her furniture and other personal possessions.  Bottom line, in this case, Jane ends up "paying" the bankruptcy trustee $1800 because she doesn't have enough exemptions to keep her tax refund.

What's the morale of the story - tell your bankruptcy attorney how much you are expecting in tax refund, file your taxes promptly and provide a tax return copy to your attorney so that he or she can counsel you on how to spend or save your tax refund.

For more information about bankruptcy email:  info@nelsonlawoffice.com

Why is the "Right of Set-Off" So Dangerous?

Here's the bottom line, it means the bank can take your assets without a court order.  Here's an example:

Sam has $1000 in a Savings Account at US Bank.  Sam owes US Bank $20,000 on a credit card.  Sam hasn't paid the credit card in 3 months and is in default.  One day, Sam notices that the $1000 in his savings account has been taken by US Bank as payment on the $20,000 credit.  This is the right of set-off.

Most commonly, people who file bankruptcy experience the effect of "set-off".  Commonly debtors will owe $5000 to a credit card issued by Chase Bank and also have their checking account at Chase.  Sometimes a debtor will file bankruptcy on Monday and receive their paycheck on Friday.  Chase can "take" the entire balance of the checking account including the paycheck without warning as a set-off against the credit card because the filing of bankruptcy immediately puts the credit card in default..

Recommendation:  If you are considering filing bankruptcy, make sure to get rid of all of your asset checking and savings account from a bank that you owe money to.  This will ensure that the right of set off does not occur.

Land Contracts - An Appealing Way to Sell a Home with Seller Financing

Have you ever wondered what people do when they can't sell a home because buyer's can't get financing?  Well there are several options:  1)  Simply Rent the Home until a better Selling Market Materializes  2)  Stay in the home and don't sell  3)  Surrender the Home through Bankruptcy, Foreclosure, Deed-in-Lieu of Foreclosure or Short-Sale......4) OR the venerable Land Contract.

Good Candidates for a Land Sale Contract:

1)  Beautiful Home that is "just too nice" to rent on a short-term basis
2)  Condominium that is highly desirable but with a condominium association that is in bad shape
3)  Home that cannot be sold for a reasonable price except by waiting five years to sell.

Here's how it works:  Seller and Buyer Agree on a Price.  A land contract is signed with a closing date.  The date of closing is when all documents are finalized and the first month's payment is collected and permission is given to the buyer's to move in.  So what are the terms?  Price, Monthly Payment, Taxes & Repairs, Length of contract, Provisions for Eviction in the Event of a Default.

a.  Price:  This is alot harder than in a normal sale because you are trying to sell the home for fair market value.  What happens if the value of the home is 40% high at the end of the land contract.  Bottom line:  Windfall for the buyer.  So as a seller you are looking to sell for the highest price possible and hopefully no less than is required to pay for the existing mortgage, taxes, and any other expenses of the home.

b.  Monthly Payment:  This is arrived at by the following formula:  Pay-off less than 20% of value of the home, Apply an interest rate high enough to make sure that less than 20% of the value of the home is paid off.  The monthly payment should also make sure to cover the mortgage, taxes and any other seller responsibility expenses.

c.  Taxes and Repairs:  This is a tricky one - sometimes sellers want to be rid of all responsibility and ask the buyers to pay the taxes, make repairs and sometimes even send in payments directly to the mortgage holder.  This is a bad idea.  As the seller, you want to control all of these aspects to make sure that you don't have unpaid taxes, mortgage and unfinished repairs.  Bottom line - always assume that in the 59th month the buyer defaults and you take the home back via the simple Illinois Eviction Procedures allowed by statute.  Bottom line, you've lost your buyer and basically have five years of a rental.   You want to make sure you haven't lost anything in the value of your home.

d.  Length of Contract.  The Land Contract Cannot be more than 60 months long.  WHY?  Because if it is longer than 60 months, the defaulting buyer has to be evicted using foreclosure proceedings which take 9 to 14 months.  Whereas if the contract is 60 months or less, the defaulting buyer's can be removed in less than 3 months under eviction law. 

What happens at the end of the contract, the buyers typically have one month to close on a purchase of the home for the amount of the purchase price that is left.  So what if the buyer can't purchase the home?  New Land Contract or they leave and new purchasers are found.  Why is so this so amazing?  Because if the buyers default but made 60 months of "rent" payments and kept the home in good shape, you have an opportunity to sell your house in a different and possibly better market at a higher price even though you had a 60 month "lease" where you were paid above average rent.

e.  Provisions for Default - this is the most important issue and is generally regulated by statute and case law except in the determination of what constitutes a default.  It is very important to adequately define what constitutes a default.

How much does it cost to do a land contract transaction?  About the same as an ordinary sale, but the fees are spent in different areas.  Here is a comparison

In a typical sale transaction for a $200,000 home:

a.  Attorney  $700
b.  Title:  $1500
c.  Other seller charges $1000

In a typical land sale contract:

a.  Attorney $2500
b.  Title:  Possibly No Expense
c..  Other seller charges:  $500.

For more information about land sale contracts, please click here:   info@nelsonlawoffice.com

Illinois Tollway Authority - Are Tolls, Penalties and Fines Dischargable in Bankruptcy?

Can all or a portion of your Illinois Tollway Authority Bill be discharged in bankruptcy?  Yes and No.

In Illinois, when you file for bankruptcy, the tollway authority is usually listed in Schedule E as a priority debt.  The reason behind this is that in a Chapter 7 Bankruptcy fines and penalties are generally not discharged.  However, with Tollway Authority, the policy of the tollway is that all of the late charges, penalties and other non-toll charges are removed.  However, you still owe the tolls.  Bottom line - your IPASS will not be re-enabled for regular use until the tolls are paid.

Example:

Debtor files a Chapter 7 Bankruptcy in Illinois.  Debtor lists a $930 debt to the Illinois Tollway Authority.  Most of the debt is late payments, fines and penalties.  About one month after filing, Illinois Tollway Authority sends bill to debtor asking him to pay $110.00 for unpaid tolls.  Upon payment of the tolls, the remainder of the debt which is fines and penalties is wiped off of the account and the IPASS is reset for regular use.

So why does this happen - even though the bankruptcy act no longer discharges fines and penalties, the tollway has its own internal procedure whereby they have elected to write off these debts upon a debtor's filing of Chapter 7.  So why does the debtor have to pay the toll?  Because it is a debt to a government entity that is in the nature of tax.  This obligation is generally not discharged unless it is over 3 years old.  Usually most tollway tolls are less than 3 years old.  In practically, your IPASS will not be reset until you pay the tolls.

This is one of those areas where bankruptcy law and internal procedures mesh to form an odd result that in general is good for debtors.  Social Security, Unemployment and other types of benefit overpayments have a similar treatment and are often treated in a similar fashion.  I will take up these issues in another blog.

Click Here for more information about bankruptcy

Utilty Bills, Security Deposits, Estimated Bills and Bankruptcy

When you file bankruptcy, you generally list all of your assets and all of your debts including all utility bills such as gas, light, cable, telephone and others.  In Illinois, the result is that the bill accrued prior to the filing date is discharged.  However, the cost of doing this is a 4 month security deposit equal to four times your average monthly bill.

Example:  A customer files bankruptcy on January 31, 2011.  Customer has been living in a new condominium conversion unit that has never been billed yet for electrical service.  On February 15, 2011; customer receives a bill for "estimated" electrical usage for the last two years.  What does the customer owe:

1) For the period of usage prior to January 31, 2011; the customer does not owe anything - the debt is discharged even though it was billed after the petition for bankruptcy was filed.
2)  For the period of usage February 1, 2011 to the present, customer owes all of electrical usage bill for this period.
3)  Security Deposit.  The customer's average monthly bill is $100.00.  Therefore, the security deposit required typically within 2 months of filing bankruptcy is $400.00.  This security deposit is in addition to the actual bill that is also required to be paid.
4)  Two years from now, the customer moves.  What happens to the security deposit?  It is returned because it is the customer's money.
5)  If the customer establishes electrical service at the new location with the same utility company, will the customer have to put down a security deposit?  Maybe, but probably no.  If the customer has a good payment history it is likely the security deposit will no longer be required.

For more information about bankruptcy, please click on the link below:

www.nelsonlawoffice.com/Bankruptcy.html