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Thursday, January 19, 2012
Saturday, January 14, 2012
Friday, January 6, 2012
When will I receive my W-2?
When will you receive your W-2? Anytime on or prior to January 31st. This means that within about one week you can electronically file your tax return and receive a refund as early as mid-February. This means that for many people who have already met with a bankruptcy attorney, that their Chapter 7 Bankruptcy can be filed before the end of February. This provides immediate relief against the claims of creditors including lawsuits, garnishments and set-offs.
To learn more about when your W-2 is coming out, click here!
Make less than $57,000? File your taxes electronically....for free...click here!
For Chicagoland Residents - looking for a good full service accountant to do your taxes, try Accounting Solutions!
Need a Bankruptcy Consultation, Call 877-GO-GO-NLO or Email NLO click here!
To learn more about when your W-2 is coming out, click here!
Make less than $57,000? File your taxes electronically....for free...click here!
For Chicagoland Residents - looking for a good full service accountant to do your taxes, try Accounting Solutions!
Need a Bankruptcy Consultation, Call 877-GO-GO-NLO or Email NLO click here!
Tuesday, December 27, 2011
New Year Bankruptcy Timeline
NLO Nelson Law Office is a Debt Relief Agency offering debt relief through bankruptcy.
1) Get Through the Holiday, spend wisely and see our post about credit card use during the holidays
2) File your taxes as soon as possible
3) See a Bankruptcy Attorney about Debt Relief Options early in January to find out your options
4) Receive your tax refund in February and file your bankruptcy.
Why is the New Year such a popular time to file bankruptcy?
Tax Refunds are usually received prior to May 31st of the New Year. Tax Refunds can be used for legal fees and court costs in a bankruptcy. The tax refund is listed on the bankruptcy petition, but the portion used for legal fees and filing fees is exempt.
Holiday spending often times puts people "over the top" after years of family budget deficits caused by medical bills, illness, loss of job or overspending.
What should I do if I don't have much of a tax refund?
You can either wait to file your bankruptcy later after you have saved enough money to pay for it, or you can file a Chapter 13 bankruptcy which allows for all of your legal fee to be included in the bankruptcy "plan".
Need more options? Have Questions?
Call David Nelson at 877-464-6656 to set up a free bankruptcy consultation.
See me on Facebook!
1) Get Through the Holiday, spend wisely and see our post about credit card use during the holidays
2) File your taxes as soon as possible
3) See a Bankruptcy Attorney about Debt Relief Options early in January to find out your options
4) Receive your tax refund in February and file your bankruptcy.
Why is the New Year such a popular time to file bankruptcy?
Tax Refunds are usually received prior to May 31st of the New Year. Tax Refunds can be used for legal fees and court costs in a bankruptcy. The tax refund is listed on the bankruptcy petition, but the portion used for legal fees and filing fees is exempt.
Holiday spending often times puts people "over the top" after years of family budget deficits caused by medical bills, illness, loss of job or overspending.
What should I do if I don't have much of a tax refund?
You can either wait to file your bankruptcy later after you have saved enough money to pay for it, or you can file a Chapter 13 bankruptcy which allows for all of your legal fee to be included in the bankruptcy "plan".
Need more options? Have Questions?
Call David Nelson at 877-464-6656 to set up a free bankruptcy consultation.
See me on Facebook!
Monday, December 19, 2011
Can I use my Credit Cards for Christmas Gifts and Still File Bankruptcy?
NLO Nelson Law Office is a Debt Relief Agency offering Debt Relief through Bankruptcy
Yes, you can use your credit cards for Christmas and still file bankruptcy. However, you must be extremely careful. If you are filing within ninety days of using your credit cards, you must make sure that you have used them only for "necessary" items and not for "luxury" items. If you are filing more than 90 days since you last used your credit card, you can essentially charge anything onto the credit cards except it cannot be in bad faith or with a fraudulent intent. Schedule a Bankruptcy Consultation
At this "Christmas" time of year, people spend excessively and often use credit cards. A large portion of Chapter 7 Bankruptcies are filed in the months of February, March and April because tax refunds can be used for paying your bankruptcy attorney fees, filing fees and due diligence costs such as credit reports.
1. Best Solution: Do not use your credit cards - At All. File Bankruptcy with your tax refund as early as January or anytime after you receive your tax refund.
2. Fair Solution: Use your credit card over the holidays and prior to your bankruptcy for "necessary" items such as groceries and clothing from non-luxury retailers. File Bankruptcy with your tax refund as early as January or anytime after you receive your tax refund. Before even considering this solution, you should seek out a qualified bankruptcy attorney.
3. So-So Solution: Use you credit card for non-luxury items that might be objectionable as non-necessary, such as toys, electronics or other items are not basic survival items, such as food and clothing. You could possibly file in January, February or March but best choice is to file April 30th or later.
4. Not so great solution: Use your credit card for all items at all retailers, including luxury retailers. Purchase jewelry, electronics and just about anything you want. File your bankruptcy at least ninety days after the last purchase. Take the chance that you have made such flagrantly offensive purchases that the creditor files an adversary petition to take away your discharge, or, worse yet, fraud. Bottom line: this is risky at best, but if the purchases are small enough, a calculated risk.
5. Terrible solution that will nearly always run into problems: Use your credit card during the holidays on anything and run every card up to the limit. Include luxury items at luxury retailers. File your bankruptcy whenever you want, such as February. Chances are that if the purchase is over $500 at any one creditor, the creditor will file an adversary lawsuit.
One scenario that happens over and over again (often times with bad results) is the "blowout" Christmas Charger who decides to "let it all out" one last time before filing for bankruptcy. This charger may still have up to $1000 left in credit and may often purchase entirely luxury goods such as an IPAD, Wii, Xbox, large screen TV, unnecessary computer, a trip to the Caribbean, or a bunch of jewelry. Then the charger stops in to a local attorneys office and doesn't mention the charging, the bankruptcy attorney doesn't check out the charge bills, the bankruptcy is filed in February and then a lawsuit is file by the credit card company to take away the bankruptcy discharge with regard to the credit purchases. Usually, the debtor is forced to hire a second attorney at $2000 or more to represent the debtor in a defense of the discharge action and usually results in the debtor entering into a promise to pay the entire debt to the creditor with interest over a period of time.
What is the lesson of this article? If you are contemplating bankruptcy, stop using your credit cards and keep it simple. If you must use your credit cards, then use them only on food and clothing and at non-luxury retailers. Under all circumstances, try to not use your credit cards at all 90 days prior to the filing of your bankruptcy.
Three true stories:
Client purchases an $8,000 hot tub one week prior to filing on a line a credit issued from a credit card style creditor. Client files bankruptcy. 2 & 1/2 month after filing bankruptcy, debtor is sued by the credit card company. Creditor seeks to take away the debtor's discharge with regard to the $8000 debt plus attorney fees and interest or about $10,500 total. If the case was not settled, this would have eventually been a garnishment on debtor's income for about five years at 15% of his gross salary. Due to a settlement, the debtor was able to pay off the debt under a new agreement over 5 years at a reasonable interest rate. What does this teach us? A luxury item purchased within 90 days prior to a bankruptcy filing that is obnoxious and unnecessary and expensive will result in a nasty lawsuit that will cost the debtor another $1000-2000 in legal fees and possibly ruin all of the benefit of the bankruptcy.
Client purchases a tennis bracelet at Nordstroms as a "gift to herself" for filing bankruptcy...Good Luck! Nordstrom filed suit against the debtor, debtor ended up returning the item and paying about $600 in attorney fees to Nordstrom as a settlement instead of a fraud judgment, which would have resulted in the denial of an entire discharge of all debts. Bottom line: no "gifts" for successfully filing bankruptcy. No jewelry purchases on credit cards included in the bankruptcy up to one day before filing.
Client knows he isn't going to be able to afford a new riding lawn mower for many years after filing bankruptcy, and one week prior to bankruptcy he purchases a new riding lawn mower for $1500.00. Client files bankruptcy one week later. Client does not tell his attorney about this purchase and does not make the bill available to the attorney, and the attorney must rely upon a credit report to file the bankruptcy petition. Debtor is sued in an adversary petition to deny the discharge of this debt. Result: client ends up paying the debt back over 36 months at 10% interest. Not much better result than if he had purchased it one year after the bankruptcy legitimately.
The one resounding rule throughout these cases seems to be that creditors object to the discharge, but this "un-permitted" purchasing in effect gives the debtor access to a tool right away that he may have needed immediately but would not have been able to get after the bankruptcy. Bottom line: even though the behavior above is in violation of the bankruptcy code and even though creditors dislike this behavior, they do end up preferring to extend a loan at a reasonable interest rate.
NLO Nelson Law Office is a debt relief agency offering debt relief through bankruptcy. To schedule a free confirmation click here and write "Bankruptcy Consultation Request" and hit send. Our office will respond with a variety of times and date for your consultation. Or...call our national toll-free number 877-GO-GO-NLO or 877-464-6656.
Yes, you can use your credit cards for Christmas and still file bankruptcy. However, you must be extremely careful. If you are filing within ninety days of using your credit cards, you must make sure that you have used them only for "necessary" items and not for "luxury" items. If you are filing more than 90 days since you last used your credit card, you can essentially charge anything onto the credit cards except it cannot be in bad faith or with a fraudulent intent. Schedule a Bankruptcy Consultation
At this "Christmas" time of year, people spend excessively and often use credit cards. A large portion of Chapter 7 Bankruptcies are filed in the months of February, March and April because tax refunds can be used for paying your bankruptcy attorney fees, filing fees and due diligence costs such as credit reports.
1. Best Solution: Do not use your credit cards - At All. File Bankruptcy with your tax refund as early as January or anytime after you receive your tax refund.
2. Fair Solution: Use your credit card over the holidays and prior to your bankruptcy for "necessary" items such as groceries and clothing from non-luxury retailers. File Bankruptcy with your tax refund as early as January or anytime after you receive your tax refund. Before even considering this solution, you should seek out a qualified bankruptcy attorney.
3. So-So Solution: Use you credit card for non-luxury items that might be objectionable as non-necessary, such as toys, electronics or other items are not basic survival items, such as food and clothing. You could possibly file in January, February or March but best choice is to file April 30th or later.
4. Not so great solution: Use your credit card for all items at all retailers, including luxury retailers. Purchase jewelry, electronics and just about anything you want. File your bankruptcy at least ninety days after the last purchase. Take the chance that you have made such flagrantly offensive purchases that the creditor files an adversary petition to take away your discharge, or, worse yet, fraud. Bottom line: this is risky at best, but if the purchases are small enough, a calculated risk.
5. Terrible solution that will nearly always run into problems: Use your credit card during the holidays on anything and run every card up to the limit. Include luxury items at luxury retailers. File your bankruptcy whenever you want, such as February. Chances are that if the purchase is over $500 at any one creditor, the creditor will file an adversary lawsuit.
One scenario that happens over and over again (often times with bad results) is the "blowout" Christmas Charger who decides to "let it all out" one last time before filing for bankruptcy. This charger may still have up to $1000 left in credit and may often purchase entirely luxury goods such as an IPAD, Wii, Xbox, large screen TV, unnecessary computer, a trip to the Caribbean, or a bunch of jewelry. Then the charger stops in to a local attorneys office and doesn't mention the charging, the bankruptcy attorney doesn't check out the charge bills, the bankruptcy is filed in February and then a lawsuit is file by the credit card company to take away the bankruptcy discharge with regard to the credit purchases. Usually, the debtor is forced to hire a second attorney at $2000 or more to represent the debtor in a defense of the discharge action and usually results in the debtor entering into a promise to pay the entire debt to the creditor with interest over a period of time.
What is the lesson of this article? If you are contemplating bankruptcy, stop using your credit cards and keep it simple. If you must use your credit cards, then use them only on food and clothing and at non-luxury retailers. Under all circumstances, try to not use your credit cards at all 90 days prior to the filing of your bankruptcy.
Three true stories:
Client purchases an $8,000 hot tub one week prior to filing on a line a credit issued from a credit card style creditor. Client files bankruptcy. 2 & 1/2 month after filing bankruptcy, debtor is sued by the credit card company. Creditor seeks to take away the debtor's discharge with regard to the $8000 debt plus attorney fees and interest or about $10,500 total. If the case was not settled, this would have eventually been a garnishment on debtor's income for about five years at 15% of his gross salary. Due to a settlement, the debtor was able to pay off the debt under a new agreement over 5 years at a reasonable interest rate. What does this teach us? A luxury item purchased within 90 days prior to a bankruptcy filing that is obnoxious and unnecessary and expensive will result in a nasty lawsuit that will cost the debtor another $1000-2000 in legal fees and possibly ruin all of the benefit of the bankruptcy.
Client purchases a tennis bracelet at Nordstroms as a "gift to herself" for filing bankruptcy...Good Luck! Nordstrom filed suit against the debtor, debtor ended up returning the item and paying about $600 in attorney fees to Nordstrom as a settlement instead of a fraud judgment, which would have resulted in the denial of an entire discharge of all debts. Bottom line: no "gifts" for successfully filing bankruptcy. No jewelry purchases on credit cards included in the bankruptcy up to one day before filing.
Client knows he isn't going to be able to afford a new riding lawn mower for many years after filing bankruptcy, and one week prior to bankruptcy he purchases a new riding lawn mower for $1500.00. Client files bankruptcy one week later. Client does not tell his attorney about this purchase and does not make the bill available to the attorney, and the attorney must rely upon a credit report to file the bankruptcy petition. Debtor is sued in an adversary petition to deny the discharge of this debt. Result: client ends up paying the debt back over 36 months at 10% interest. Not much better result than if he had purchased it one year after the bankruptcy legitimately.
The one resounding rule throughout these cases seems to be that creditors object to the discharge, but this "un-permitted" purchasing in effect gives the debtor access to a tool right away that he may have needed immediately but would not have been able to get after the bankruptcy. Bottom line: even though the behavior above is in violation of the bankruptcy code and even though creditors dislike this behavior, they do end up preferring to extend a loan at a reasonable interest rate.
NLO Nelson Law Office is a debt relief agency offering debt relief through bankruptcy. To schedule a free confirmation click here and write "Bankruptcy Consultation Request" and hit send. Our office will respond with a variety of times and date for your consultation. Or...call our national toll-free number 877-GO-GO-NLO or 877-464-6656.
Sunday, December 11, 2011
The Two Hour Closing - How to Stick to It and Never be Late for Dinner Again
CLICK HERE TO HIRE NLO FOR YOUR NEXT REAL ESTATE CLOSING!
Recently, I represented a buyer in a closing that lasted over five hours. The primary reason for the long closing was funding from the buyer's lender. I wasn't late for being home from this closing and there is a reason: There is simply no change that should be occurring on the part of the lender that can't be resolved remotely to the title company. The seller or power of attorney should remain, the buyer should remain, but service professionals such as attorneys and realtors should be able to leave.
Here's why:
1) During the first hour of the closing, the buyer signs all of the loan documents, and typically the buyer's attorney reviews, title, deed, related transactional documents.
2) During the top of the second hours, the closer usually has the HUD for review and it is usually approved by all parties by the middle of the second hour.
3) Next the documents are sent to the lender who usually raises any substantial objections before the close of the second hour.
4) The fixing of the lender issues is typically a 15 minute task that is resolved in substance by the end of the second hour.
5) If the attorneys and realtors leave at this point, they will have their check mailed to them along with supporting documentation.
6) The risk: if you are a buyer's attorney, the worst thing that can happen is that the lender forces a change and the HUD is re-signed. Since the lender calls all the shot here and doesn't really allow for any attorney input, this is the point where a simple call to the attorney's mobile phone will confirm whether any changes are undesirable to the buyer going through with the transaction.
7) For the seller's attorney, the risk is more substantial if he or she is power of attorney for the seller and the HUD must be re-signed. Bottom line: seller's attorneys who agree to be powers of attorney should add $200 per seller for additional work and significant risk of additional time at the closing table.
8) For realtors, there is no reason to be at the table after the second hour because their commission is confirmed after the agreement to the first HUD. Only in a short sale should realtors be gravely concerned about having their commission "chopped down" at the last minute. But even in these cases, there isn't much that can be done to bring it up if the lender will not approve the short sale with higher commission than the lender's standards allow.
Why is it important in our profession to set reasonable fees but be firm with regard to staying longer than two hours?
1) It is critically important that we as members of the bar maintain a buyer's ability to afford reasonable cost representation in a real estate closing to ensure that buyers are not taken advantage of and have the opportunity for "good counsel".
2) Staying at the closing for a "reasonable" amount of time ensures adequate profitability to ensure the ability to continue representing a variety of clients from all socioeconomic groups.
3) There is simply no reason to be a martyr and stay at a closing just to say you made it to the end, only to stop taking cases that have the potential to be long closings.
How do I ensure that my fees are reasonable and that I am guaranteed to be paid even when the deal falls through?
The best choice is to use our firm's proposal for a "multi-board" residential attorney client representation agreement. This novel agreement allows for full pre-payment of fees by deposit into the lawyer's client trust account. This allows the attorney to bill the full fee on the HUD and then return the deposit to the client or not bill to the HUD if the lender is objecting. Some attorneys will want to bill the full rate regardless of where the representation terminated; others may choose to charge half when the transaction cancels before closing.
ARE YOU AN ATTORNEY WHO WOULD LIKE TO USE OUR REPRESENTATION AGREEMENT? IT IS FREE TO MEMBERS OF THE ILLINOIS BAR WITH PERMISSION.
The challenge for residential real estate attorneys in the next decade is to:
1) Not set fees too low
2) Not spend excessive time at the the closing table
3) Bill up-front for fees
4) No longer view real estate work as "contingency" work
5) Turn away "low-ball" business that has no future in providing referrals or subsequent business.
There is also benefit to realtors. It has often been said that realtors are the keys to the car, and that you won't have real estate closings unless you cave-in to the demands of the realtors who refer the business. This may be true. But why work for free or for excessively low fees - leave the residential real estate business and take on cases at the Daley Center and make twice the money. Many people believe Illinois Realtors have been waiting for this day with bated breath. I disagree - without good Illinois Residential Real Estate lawyers, the percentage of transactions that make it to closing will fail; more abuses will occur against clients leading to more regulation of the industry; and ultimately, even less real estate transactions will close.
ARE YOU A REALTOR? CLICK HERE TO SPEAK WITH DAVID NELSON TO START A NEW REALTOR/ATTORNEY BUSINESS RELATIONSHIP
Bottom line: residential real estate is and will always be a team sport. The team: Realtors to take the client to the property; Inspectors to make sure it is right; Lenders to provide the ability to pay; title companies to do the banking; and Attorneys to make sure that what was agreed upon actually occurs.
Recently, I represented a buyer in a closing that lasted over five hours. The primary reason for the long closing was funding from the buyer's lender. I wasn't late for being home from this closing and there is a reason: There is simply no change that should be occurring on the part of the lender that can't be resolved remotely to the title company. The seller or power of attorney should remain, the buyer should remain, but service professionals such as attorneys and realtors should be able to leave.
Here's why:
1) During the first hour of the closing, the buyer signs all of the loan documents, and typically the buyer's attorney reviews, title, deed, related transactional documents.
2) During the top of the second hours, the closer usually has the HUD for review and it is usually approved by all parties by the middle of the second hour.
3) Next the documents are sent to the lender who usually raises any substantial objections before the close of the second hour.
4) The fixing of the lender issues is typically a 15 minute task that is resolved in substance by the end of the second hour.
5) If the attorneys and realtors leave at this point, they will have their check mailed to them along with supporting documentation.
6) The risk: if you are a buyer's attorney, the worst thing that can happen is that the lender forces a change and the HUD is re-signed. Since the lender calls all the shot here and doesn't really allow for any attorney input, this is the point where a simple call to the attorney's mobile phone will confirm whether any changes are undesirable to the buyer going through with the transaction.
7) For the seller's attorney, the risk is more substantial if he or she is power of attorney for the seller and the HUD must be re-signed. Bottom line: seller's attorneys who agree to be powers of attorney should add $200 per seller for additional work and significant risk of additional time at the closing table.
8) For realtors, there is no reason to be at the table after the second hour because their commission is confirmed after the agreement to the first HUD. Only in a short sale should realtors be gravely concerned about having their commission "chopped down" at the last minute. But even in these cases, there isn't much that can be done to bring it up if the lender will not approve the short sale with higher commission than the lender's standards allow.
Why is it important in our profession to set reasonable fees but be firm with regard to staying longer than two hours?
1) It is critically important that we as members of the bar maintain a buyer's ability to afford reasonable cost representation in a real estate closing to ensure that buyers are not taken advantage of and have the opportunity for "good counsel".
2) Staying at the closing for a "reasonable" amount of time ensures adequate profitability to ensure the ability to continue representing a variety of clients from all socioeconomic groups.
3) There is simply no reason to be a martyr and stay at a closing just to say you made it to the end, only to stop taking cases that have the potential to be long closings.
How do I ensure that my fees are reasonable and that I am guaranteed to be paid even when the deal falls through?
The best choice is to use our firm's proposal for a "multi-board" residential attorney client representation agreement. This novel agreement allows for full pre-payment of fees by deposit into the lawyer's client trust account. This allows the attorney to bill the full fee on the HUD and then return the deposit to the client or not bill to the HUD if the lender is objecting. Some attorneys will want to bill the full rate regardless of where the representation terminated; others may choose to charge half when the transaction cancels before closing.
ARE YOU AN ATTORNEY WHO WOULD LIKE TO USE OUR REPRESENTATION AGREEMENT? IT IS FREE TO MEMBERS OF THE ILLINOIS BAR WITH PERMISSION.
The challenge for residential real estate attorneys in the next decade is to:
1) Not set fees too low
2) Not spend excessive time at the the closing table
3) Bill up-front for fees
4) No longer view real estate work as "contingency" work
5) Turn away "low-ball" business that has no future in providing referrals or subsequent business.
There is also benefit to realtors. It has often been said that realtors are the keys to the car, and that you won't have real estate closings unless you cave-in to the demands of the realtors who refer the business. This may be true. But why work for free or for excessively low fees - leave the residential real estate business and take on cases at the Daley Center and make twice the money. Many people believe Illinois Realtors have been waiting for this day with bated breath. I disagree - without good Illinois Residential Real Estate lawyers, the percentage of transactions that make it to closing will fail; more abuses will occur against clients leading to more regulation of the industry; and ultimately, even less real estate transactions will close.
ARE YOU A REALTOR? CLICK HERE TO SPEAK WITH DAVID NELSON TO START A NEW REALTOR/ATTORNEY BUSINESS RELATIONSHIP
Bottom line: residential real estate is and will always be a team sport. The team: Realtors to take the client to the property; Inspectors to make sure it is right; Lenders to provide the ability to pay; title companies to do the banking; and Attorneys to make sure that what was agreed upon actually occurs.
Wednesday, December 7, 2011
Student Loans Chapter 7 Bankruptcy Discharge What to do after the bankruptcy is over?
One of the thorniest issues in a Chapter 7 Bankruptcy is often what happens to student loans. Student loans are not dischargeable - i.e. they do not go away as a result of filing bankruptcy! However, student loans do eventually disappear sort of like a "balloon loan". All student loans die after 25 years after the date of first repayment plus deferments.
Until that time - you are on the hook and must continue paying. Recently, a client shared with me his experience in dealing the aftermath of a Chapter 7 Bankruptcy. Below is a narrative of the status of the loan mid-way just after the 341 meeting:
Debtor's account is not past due.
Sallie Mae received the 341 Meeting of the Creditors
Notice.
Student loans placed on hold while in bankruptcy status.
No payments due during the life of the bankruptcy.
This hold on the accounts does not affecting Debtor’s
credit.
Debtor needs to call Sallie Mae when bankruptcy is
discharged. At that time, his account is reactivated and billing will
begin again. Debtor will then begin to owe payments.
There will be no arrears at the time of
reactivation. Interest will accrue during the bankruptcy’s life, but Sallie Mae
cannot advise Debtor of what the interest may be or has been because that
can be construed as trying to collect on the debt.
Sallie Mae cannot tell Debtor what his balance is, but
they can confirm or deny what he says the balance is.
Debtor does not have access to his account via the
internet during the bankruptcy.
This exception gives us a rare window into the behavior of the student loan servicer during the pendency of a Chapter 7 Bankruptcy.
Summary of Student Loan Treatment before, during and after a Chapter 7 Bankruptcy:
- Prior to Filing your Bankruptcy, you should pay on your student loans or seek deferment.
- Failure to do this will result in garnishment up to 15% of your gross income
- After you bankruptcy is filed, you CAN make voluntary payments on the student loan.
- This will keep your balance from rising.
- This IS NOT necessary.
- Only manual payments (check)
- Taking a "break" from payments for 4-6 months may allow you to improve your cash flow position to give you a "fighting chance" to be in good financial standing
- After your bankruptcy is closed, you should resume making your payments.
- Recommend calling lender to confirm amount of payment and how to make payment
- Electronic payments resume being available
For more information about filing a Chapter 7 or Chapter 13 Bankruptcy, please email NLO Nelson Law Office Bankruptcy Information
To Call and speak with a Bankruptcy Attorney and Set-Up a free Bankruptcy Consultation, please call 877-GO-GO-NLO (877-464-6656).
Wednesday, October 12, 2011
New Illinois Power of Attorney for Health Care Effective July 1, 2011
Attached is the New Illinois Power of Attorney for Health Care Form. This form is unedited and is exactly as formatted and presented in the Illinois Statute.
Illinois Power of Attorney for Health Care Form Effective 7-1-2011
For assistance in filling out this form please call NLO Nelson Law Office at 877-GO-GO-NLO or EMAIL NLO
Illinois Power of Attorney for Health Care Form Effective 7-1-2011
For assistance in filling out this form please call NLO Nelson Law Office at 877-GO-GO-NLO or EMAIL NLO
Thursday, October 6, 2011
"Cramming Down your Auto Loan" How to Lower Your Interest Rate and Increase the Amount of time to Pay Off your Car!
How to lower the interest rate on your auto loan. How to increase the amount of time to pay off your auto loan. How to lower your payments. It's all a part of filing a Chapter 13 Bankruptcy and properly modifying your loan in the bankruptcy plan.
Here's how it works:
If your car was purchased more the 910 days in the past and the current loan was used to purchase it...oftentimes referred to as a "purchase money loan" you are allowed to both reduce the total loan balance to the appraised value of the car on the date of filing your bankruptcy PLUS you can also reduce the Interest rate the Till rate. The Till rate is :
PRIME RATE (Click Here for Today's Prime Rate) + RISK FACTOR (1-3%)
TILL v. SCS CREDIT CORPORATION, 124 S. Ct. 1951, 158 L. Ed. 2d 787, 541 U.S. 465 (S.Ct., 2004)
To Read More about Till Case, Click the Attached link:
TILL v. SCS CREDIT CORPORATION
Example:
Jeff's 2002 Mitsubishi Galant is worth $2400.00. Jeff's automobile loan is with Wells Fargo. The loan balance at the time of filing his Chapter 13 bankruptcy was $5500.00. The interest rate on this his loan was 22%. He had 24 payments left on his loan. Jeff's attorney modified the loan as follows in his bankruptcy plan:
Balance to pay off: $2400.00 (This is the current appraised value of the auto)
Interest Rate of Loan: 6.25% (Current Prime Rate of 3.25% plus maximum risk factor of 3% from the Till case.)
What is my auto loan is only 30 days old?
No problem, you can still modify the interest rate down to the Till rate of Prime Rate + Risk Factor BUT YOU CANNOT reduce the loan balance amount.
In this example, Jeff's 2002 Mitsubishi Galant is still worth $2400.00. Jeff's automobile loan is still with Wells Fargo. But the loan is only 30 days old and the balance is $5500.00. The interest rate is 22%. Jeff still has only 24 payments to go, but the loan is only 30 days old. In this case:
Balance to pay off stays at $5500.00
Interest Rate of the Loan goes to: 6.25% (Current Prime Rate of 3.25% plus maximum risk factor of 3% from the Till case).
Summary:
Chapter 13 Bankruptcy offers the ability to modify an automobile loan by either reducing the interest rate to Prime Rate Plus a Risk Factor or both reducing the interest rate AND reducing the loan payoff amount to the appraised value of the automobile depending on whether the auto loan is 910 days or older. The Till case is a watershed case that has been followed for years in providing for this treatment of the interest rate. However, the Bankruptcy Act of 2005 added the 910 day rule.
For more information about Chapter 13 Bankruptcy in Illinois, please call NLO Nelson Law Office at 877-GO-GO-NLO (877-464-6656) or email NLO Nelson Law Office Information
Wednesday, October 5, 2011
Do You Need to Attach a Summary of the Chicago Residential Landlord Tenant Ordinance to Your Tenant's Lease
Do you need to attach a summary of the Chicago Residential Landlord Tenant Ordinance (RLTO) to your residential tenant lease?
Answer: Yes & No
You DO NOT need to attach a summary if you as a landlord are not subject to the Chicago RLTO. You are NOT subject to the RLTO if your rental building is six units or less AND is owner-occupied.
You DO need to attach a summary if you are subject to the Chicago RLTO. All landlords who rent buildings that are NOT owner-occupied ARE subject to the RLTO regardless of whether it is six units or just one unit. For example if you own a 1 bedroom condominium in Chicago and rent it out but reside in your own home, the rental unit is not owner-occupied and subject to the RLTO. However, if you own a six flat and live in one of the units, this rental building is an owner-occupied building and NOT subject to the RLTO.
In a nutshell; if you building is six units or less, occupied by you as an owner, your building is not subject to the RLTO and the summary of the RLTO is not required. The RLTO in general is geared towards regulating non owner-occupied rental buildings with any number of units. Any time you are an absentee landlord, you are covered under all the provision of the RLTO with some small exceptions - see the RLTO code below.
If you are subject to the Chicago RLTO, please click on the attached link for a copy of the summary required to be attached to your residential lease. Chicago RLTO Summary
To view a copy of the Chicago Residential Landlord Tenant Ordinance, please click on the attached link: Chicago RLTO Ordinance
Has it been a while since you tuned up your rental operation? As a landlord, please consider calling NLO Nelson Law Office to set up a consultation for a leasing and landlord tune-up. Call 877-464-6656 or click info@nelsonlawoffice.com to email our office for more information.
Answer: Yes & No
You DO NOT need to attach a summary if you as a landlord are not subject to the Chicago RLTO. You are NOT subject to the RLTO if your rental building is six units or less AND is owner-occupied.
You DO need to attach a summary if you are subject to the Chicago RLTO. All landlords who rent buildings that are NOT owner-occupied ARE subject to the RLTO regardless of whether it is six units or just one unit. For example if you own a 1 bedroom condominium in Chicago and rent it out but reside in your own home, the rental unit is not owner-occupied and subject to the RLTO. However, if you own a six flat and live in one of the units, this rental building is an owner-occupied building and NOT subject to the RLTO.
In a nutshell; if you building is six units or less, occupied by you as an owner, your building is not subject to the RLTO and the summary of the RLTO is not required. The RLTO in general is geared towards regulating non owner-occupied rental buildings with any number of units. Any time you are an absentee landlord, you are covered under all the provision of the RLTO with some small exceptions - see the RLTO code below.
If you are subject to the Chicago RLTO, please click on the attached link for a copy of the summary required to be attached to your residential lease. Chicago RLTO Summary
To view a copy of the Chicago Residential Landlord Tenant Ordinance, please click on the attached link: Chicago RLTO Ordinance
Has it been a while since you tuned up your rental operation? As a landlord, please consider calling NLO Nelson Law Office to set up a consultation for a leasing and landlord tune-up. Call 877-464-6656 or click info@nelsonlawoffice.com to email our office for more information.
Free Credit Report - This is the actual free credit report - not the scam to charge you money for a "free" credit report
Links to the Actual Government Regulated Free Credit Report
Information about the Free Credit Report
Where to Order your Free Annual Credit Report
The Government Mandates that every U.S. Citizen is entitled a free (that's right - free) annual credit report. This report is the same report that banks and other credit providers use, however, it does not include your credit score which is a separate service that you must pay for. Be advised that your credit score usually not really necessary to find out because it is the actual information in the report that needs to be analyzed.
As an advocate for consumer credit rights, I recommend choosing the "pure" free credit report and receiving it via U.S. Mail. The electronic credit report is often difficult to save as a readable file and often turns into a trick to get you to have to order a non-free report later. If you must order the report via electronic format, be sure to save the report on your hard drive or print out right away so that you have it for later use.
For more information about credit reports, debt relief and other legal services, please email NLO Nelson law Office at info@nelsonlawoffice.com or Call 877-GO-GO-NLO (877-464-6656)
Information about the Free Credit Report
Where to Order your Free Annual Credit Report
The Government Mandates that every U.S. Citizen is entitled a free (that's right - free) annual credit report. This report is the same report that banks and other credit providers use, however, it does not include your credit score which is a separate service that you must pay for. Be advised that your credit score usually not really necessary to find out because it is the actual information in the report that needs to be analyzed.
As an advocate for consumer credit rights, I recommend choosing the "pure" free credit report and receiving it via U.S. Mail. The electronic credit report is often difficult to save as a readable file and often turns into a trick to get you to have to order a non-free report later. If you must order the report via electronic format, be sure to save the report on your hard drive or print out right away so that you have it for later use.
For more information about credit reports, debt relief and other legal services, please email NLO Nelson law Office at info@nelsonlawoffice.com or Call 877-GO-GO-NLO (877-464-6656)
Thursday, September 29, 2011
File a Bankruptcy on Your Own....In Five Minutes!
Ever wondered how to file a bankruptcy on your own? Well wonder no more, here is the quick 5 minute course on how to do it!
That's it. How hard can it be? Avoid attorney fees and file it on your own.
So what's the catch? Why do people use attorneys in probably 95% of all cases:
Bottom line - filing on your own is a good option when you have a lot of time on your hands and can go to the bankruptcy assistance desk to help along the way to confirm your filings are done right. This is great for people who have racked up alot of debt say $60,000 in credit card debt are now unemployed, getting harassed by creditors and will not likely be re-employed for at least one year. This is true of people in the construction business and other long cycle industries. Another good application for filing on your own is when you have made alot of money in the past, have lots of debt and then suffer a disability which becomes permanent leaving you with an income that is often only 20% of your former income. In this case you won't be taking on more debt in the future and you are really in no danger of a lawsuit or garnishment, but you simply want to clean up and get rid of all of the old debt so that you can focus on your new life. Many times these folks will do best using legal aid associations providing pro-bono - free bankruptcies. One large organization that is used in Cook County is: Legal Assistance Foundation of Metropolitan Chicago
For a free 1/2 hour bankruptcy consultation to learn whether you qualify for debt relief under bankruptcy or should even consider filing on your own, please call 877-GO-GO-NLO (877-464-6656) or Click this link and email your request for a consultation.
- Fill Out the Required Bankruptcy Forms
- Take your pre-bankruptcy credit counseling course at least one calendar day prior to your filing
- File your bankruptcy by going to the Federal Clerk of Court in your district
- Submit your Chapter 341 Documents within 14 days to the bankruptcy
- Attend your 341 Meeting
- Wait for your Discharge Order!
- Need Help - Contact the Bankruptcy Assistance Desk
That's it. How hard can it be? Avoid attorney fees and file it on your own.
So what's the catch? Why do people use attorneys in probably 95% of all cases:
- What do you fill - in the forms?
- How do I reaffirm a debt? - such as to keep my car or home
- How do I fill out the means test? - It's worse than doing my taxes
- What do I say and do at my 341 meeting?
- Should I be using a Chapter 13 bankruptcy for my higher income and/or need to save my home?
- What is a motion for relief from stay?
- Why has the trustee filed a motion to dismiss?
Bottom line - filing on your own is a good option when you have a lot of time on your hands and can go to the bankruptcy assistance desk to help along the way to confirm your filings are done right. This is great for people who have racked up alot of debt say $60,000 in credit card debt are now unemployed, getting harassed by creditors and will not likely be re-employed for at least one year. This is true of people in the construction business and other long cycle industries. Another good application for filing on your own is when you have made alot of money in the past, have lots of debt and then suffer a disability which becomes permanent leaving you with an income that is often only 20% of your former income. In this case you won't be taking on more debt in the future and you are really in no danger of a lawsuit or garnishment, but you simply want to clean up and get rid of all of the old debt so that you can focus on your new life. Many times these folks will do best using legal aid associations providing pro-bono - free bankruptcies. One large organization that is used in Cook County is: Legal Assistance Foundation of Metropolitan Chicago
For a free 1/2 hour bankruptcy consultation to learn whether you qualify for debt relief under bankruptcy or should even consider filing on your own, please call 877-GO-GO-NLO (877-464-6656) or Click this link and email your request for a consultation.
Wednesday, September 28, 2011
Monday, September 26, 2011
Can I Skype or Video Conference My 341 Bankruptcy Meeting?
Can I Skype or Video Conference my 341 Bankruptcy Meeting. Yes.
I recently had a client who filed for a Chapter 7 Bankruptcy several days before leaving for a year contract work assignment in a foreign country. The client wished to file bankruptcy before she left to ensure that her creditors were not harrassing her while out of the United States. However, returning to the United States for the 341 Meeting was cost prohibitive at nearly $4000 round trip cost. After speaking with the United States Trustee and reviewing the bankruptcy code, I learned that there is no real law that either prohibits the use of video conferencing for this hearing or supports the use.
In the Northern District of Illinois, it is essentially at the discretion of the U.S. Trustee and Local Chapter 7 Bankruptcy Trustee to allow this meeting if it will meet the requirements of a 341 meeting. Essentially, the trustee needs to ensure that: 1) The debtor is the one present at the 341 meeting 2) That the debtor review the petition prior to filing it and that the debtor did sign the declaration and recognizes her name. 3) Identification can be proven up where the debtor's bankruptcy attorney has seen all identification in his office prior to the meeting and has personally met the debtor and can identify the debtor to the trustee. The trustee must be able to verify the debtors Identification and the picture of the video conferencing match and that a positive identification has been made. Then it is really just a regular meeting except that the debtor is not in the flesh to confront the trustee and creditors if present.
My recommendation if that the court consider establishing bankruptcy rules that allow video conferencing under the following circumstances:
1) It would be an undue hardship for the debtor to attend the meeting in person
2) The debtor found it important to file the bankruptcy realizing that she could not attend the 341 meeting person.
3) The court should adopt a formalized script for identifying the debtor
4) The court should set forth minimum standards of quality
In essence this is an extension of the already commonly used telephone appearance made by out of state attorneys in bankruptcy court where to appear in person would be cost prohibitive and to not appear would against the interests of good justice.
In conclusion, I do not believe that Skype or Video Conferencing should be the norm in our 341 meeting appearances, but do believe in situations where a debtor will have an undue hardship in attending that it be an accepted substitute of in person appearance as a means of furthering good justice.
I recently had a client who filed for a Chapter 7 Bankruptcy several days before leaving for a year contract work assignment in a foreign country. The client wished to file bankruptcy before she left to ensure that her creditors were not harrassing her while out of the United States. However, returning to the United States for the 341 Meeting was cost prohibitive at nearly $4000 round trip cost. After speaking with the United States Trustee and reviewing the bankruptcy code, I learned that there is no real law that either prohibits the use of video conferencing for this hearing or supports the use.
In the Northern District of Illinois, it is essentially at the discretion of the U.S. Trustee and Local Chapter 7 Bankruptcy Trustee to allow this meeting if it will meet the requirements of a 341 meeting. Essentially, the trustee needs to ensure that: 1) The debtor is the one present at the 341 meeting 2) That the debtor review the petition prior to filing it and that the debtor did sign the declaration and recognizes her name. 3) Identification can be proven up where the debtor's bankruptcy attorney has seen all identification in his office prior to the meeting and has personally met the debtor and can identify the debtor to the trustee. The trustee must be able to verify the debtors Identification and the picture of the video conferencing match and that a positive identification has been made. Then it is really just a regular meeting except that the debtor is not in the flesh to confront the trustee and creditors if present.
My recommendation if that the court consider establishing bankruptcy rules that allow video conferencing under the following circumstances:
1) It would be an undue hardship for the debtor to attend the meeting in person
2) The debtor found it important to file the bankruptcy realizing that she could not attend the 341 meeting person.
3) The court should adopt a formalized script for identifying the debtor
4) The court should set forth minimum standards of quality
In essence this is an extension of the already commonly used telephone appearance made by out of state attorneys in bankruptcy court where to appear in person would be cost prohibitive and to not appear would against the interests of good justice.
In conclusion, I do not believe that Skype or Video Conferencing should be the norm in our 341 meeting appearances, but do believe in situations where a debtor will have an undue hardship in attending that it be an accepted substitute of in person appearance as a means of furthering good justice.
Sunday, September 25, 2011
Why Hasn't My Loan Modification Become Permanent - I've made the trial modification payments and now I haven't heard anything from the bank?
Homeowner is a woman whose house is worth approximately $100,000. She has a mortgage loan of approximately $180,000 and a new trial modification payment of $1000 per month. She has made all three trial modification payments of $1000 each on time and in compliance with the lender's demands. At this time, she has now made a total of 6 payments and the lender has still not offered a permanent loan modification. After the third payment was made the lender "asked for more information". She has not been able to get any more updates from the lender.
What should she do?
If she wants to stay in the house for over the next five years regardless of whether the loan modification is made permanent, keep making the trial modification payments until the lender says otherwise.
If she does not want to keep the house unless she get the permanent loan modification, I would recommend walking away from the home. The homeowner should try a short sale, deed in lieu of foreclosure and ultimately bankruptcy to eliminate this debt.
Rationale:
Most residential primary household loan modification are done under the guidelines of the HAMP (Home Affordable Modification Program). This "program" is not a law and is not something that a homeowner can enforce against a lender. Instead, it is a law that provided "incentives" of up to $1000 to a mortgage servicer to keep a borrower from defaulting on their mortgage. The incentives HAVE EXPIRED. Lenders are simply offering modifications under these guidelines to improve their profitability by keeping more borrowers from defaulting. However, where a borrower really can't afford the home long term, it can be surmised that lenders are simply "stringing along" borrowers for several months...without end at trial loan modification payments amounts to get them to pay more towards the lender until they ultimately either give up, default or go back to making their regular mortgage payments.
Therefore, in this case if the borrower simply stopped paying after 6 months of trial modifications, she would be:
- In Default
- Not have a modified mortgage
- Be in arrears immediately because she had been making a lower payment than what was required by the lender
- Lenders DO NOT have to give modifications after the trial period is completed
- Lenders DO NOT have to given modifications even if underwriting says they qualify
- Lenders CAN tell borrowers that they will accept lower payments and accept them and Still then declare a default at anytime and foreclosure AT THEIR LEISURE AND WILL
- Borrower CAN BE SCREWED OVER at anytime in these modifications
- Lenders CAN CHERRY PICK only the best borrowers and use modification processes to hurt borrowers and get the most amount of money from them
YES - in foreclosure, if the borrow hires good legal counsel for usually more than $2500 in legal fees, fraud can be alleged and judicial action can be taken against the lenders including rescinding the loan.
Why don't we here more about loans being rescinded?
Usually borrowers are completely out of money and the will to fight any longer by the time the foreclosure begins and simply walk away. Lenders know this and build their business models to exploit this.
Bottom line - BE AN ACTIVIST! If you don't get your permanent modification in three months as promised, don't wait - take action. Call any attorney immediately to figure out your options:
- Foreclosure Defense
- Bankruptcy
- Non-Bankruptcy Surrender Options
Illinois Hardest Hit Program - Save Your Home - $25K Grant to Pay Mortgage Arrears
For anyone who hasn't heard, here's the news...there's a new program on the block for saving your home. And for some people, it's a hit.
Looking for unbiased help in figuring out how to save your home? Check out the following housing organizations. Click on the Link. I have worked with all of them for years and know of their honesty and fair dealing:
The Illinois Hardest Hit Program essentially gets your home out of foreclosure. Pays all the arrears, court costs, etc. to reinstate your loan fully and then provides up to 18 months of payment assistance. The cap on the assistance is $25,000.
To apply for this program, please go to (click link): Illinois Hardest Hit Program
Pro's:
Looking for unbiased help in figuring out how to save your home? Check out the following housing organizations. Click on the Link. I have worked with all of them for years and know of their honesty and fair dealing:
- Rogers Park Community Housing
- Latin United Community Housing (LUCHA)
- Spanish Coalition for Housing
- Illinois Housing Development Authority
The Illinois Hardest Hit Program essentially gets your home out of foreclosure. Pays all the arrears, court costs, etc. to reinstate your loan fully and then provides up to 18 months of payment assistance. The cap on the assistance is $25,000.
To apply for this program, please go to (click link): Illinois Hardest Hit Program
Pro's:
- No Fees
- Completely Reinstates Your Mortgage
- Up to 18 months assistance
- Increases the mortgage balance on your home by up to $25,000
- Does not reduce the total amount owed on your home
- Does not provide assistance after 18 months which is a problem if a person has not secured employment or their family is only partially employed.
- Homeowners who are only temporarily out of work and can easily return to work in a stable job within 18 month of starting the program.
- Homeowners whose mortgage has less than $15,000 in arrears or is about 6 months or less behind
- Homeowner who want to stay in their house for 10 years or more and does not care about having the flexibilty to move....for say a new job, changed family circumstances (divorce) or any other matter
- Homeowners who haven't made a mortgage payment for over one year
- Homeowners who are in a profession that has been affected by the severe economic downturn such as construction or union jobs and are unlikely to have stable employment for the next five years
- Homeowners who want the ability to be flexible in selling their home in the next 10 years.
- Homeowners who cannot afford their home even when they are fully employed
- Homeowners who are in an employment industry that will not recover soon and may need to relocate for employment
- Homeowners who have so much debt on their home that they will not have equity for ten years or more (typically someone with two or more mortgages including a home equity line of credit)
- Homeowners who have unsecured debt (credit card style debt) that exceeds more than 1/3 of their annual take home pay.
- Homeowners who have not made a mortgage payment in over one year
- Homeowners who have not been able to get a short sale approved by their lender
- Homeowners who want to easily walk away from a home to simply move-on or need to relocate for employment
- Homeowners who are insolvent - that is - no real assets outside of retirement accounts
- When a mortgage debt is more than 6 months in arrears (no payment for at least 6 months or longer
- When the homeowners property has more than one mortgage such as a second mortgage or home equity line of credit
- When the homeowner has equity or something valuable to save in the property but also has a large amount of unsecured debt (credit card style)
- When the total home mortgage debt can be reduced through "stripping off the second and junior mortgages/liens".
Saturday, September 10, 2011
Can I file Bankruptcy if I am not a U.S. Citizen and/or not a legal Resident? Yes
Can I file Bankruptcy if I am not a U.S. Citizen? YES
Can I file Bankruptcy if I am not a Legal Resident of the U.S.? YES
If I am not a legal resident and I file bankruptcy, should I use the Social Security Number that I Purchased years ago? NO
If I am not a legal resident, but I have a TIN (Taxpayer Identification Number) should I use the TIN instead of a Social Security Number: YES
What are the risks of filing bankruptcy if I am not a U.S. Citizen and/or not a legal resident of the U.S.?
Discussion:
The bankruptcy code specifically grants to every occupant of United States Soil the opportunity to avail themselves of the bankruptcy just as any visitor to the United States avails themselves of the laws of the United States. However, filing bankruptcy, means that the Social Security Number, Your Name, Your Address and Taxpayer Identification Number come to surface in a public way. So, if you are someone that Homeland Security wants to deport for a crime, you probably shouldn't file; if you are someone who has never filed taxes, you probably shouldn't file; if you have used a fake social security number for taking out any of the credit listed in your bankruptcy - you probably shouldn't file.
Who files bankruptcy then. The typical non-citizen, non-legal resident filer is someone who is either a migrant laborer or full time year round worker who works at a job where taxes are taken out under a TIN and files taxes every year and may even get a tax refund. This is a person who by law should not be in the country but under our immigration system is "permitted" to remain because they aren't considered much of a problem to our government. Typically, a filer will not have taken any credit out under a fake social security number and if they have a mortgage and own land have either done it with their TIN or purchased long ago and didn't need to provide this information at the time.
While deportation is extremely rare, any filer with a past felony or criminal record should probably avoid a filing until they because a legal resident at least.
This area of the law is not black and white because the bankruptcy code grants to "anyone who avails themselves of United States Laws the privilege of bankruptcy" but does not go on to protect filers from prosecution for being in the country illegally, not filing taxes or other immigration issues.
Therefore, this gray area of the bankruptcy law will continue to be gray and murky with attorneys giving only guidance but not hard advisement on whether a client SHOULD file, but simply whether they CAN file and also what the risks are.
For more information about bankruptcy, call 877-GO-GO-NLO (877-464-6656) or email the office at INFORMATION NLO CHICAGO
Can I file Bankruptcy if I am not a Legal Resident of the U.S.? YES
If I am not a legal resident and I file bankruptcy, should I use the Social Security Number that I Purchased years ago? NO
If I am not a legal resident, but I have a TIN (Taxpayer Identification Number) should I use the TIN instead of a Social Security Number: YES
What are the risks of filing bankruptcy if I am not a U.S. Citizen and/or not a legal resident of the U.S.?
- Deportation
- Charges of Bankruptcy Fraud because of use of Social Security Number owned by someone else or a deceased person.
- Charges of Tax Evasion for non-filing of taxes even though income is known to exist.
Discussion:
The bankruptcy code specifically grants to every occupant of United States Soil the opportunity to avail themselves of the bankruptcy just as any visitor to the United States avails themselves of the laws of the United States. However, filing bankruptcy, means that the Social Security Number, Your Name, Your Address and Taxpayer Identification Number come to surface in a public way. So, if you are someone that Homeland Security wants to deport for a crime, you probably shouldn't file; if you are someone who has never filed taxes, you probably shouldn't file; if you have used a fake social security number for taking out any of the credit listed in your bankruptcy - you probably shouldn't file.
Who files bankruptcy then. The typical non-citizen, non-legal resident filer is someone who is either a migrant laborer or full time year round worker who works at a job where taxes are taken out under a TIN and files taxes every year and may even get a tax refund. This is a person who by law should not be in the country but under our immigration system is "permitted" to remain because they aren't considered much of a problem to our government. Typically, a filer will not have taken any credit out under a fake social security number and if they have a mortgage and own land have either done it with their TIN or purchased long ago and didn't need to provide this information at the time.
While deportation is extremely rare, any filer with a past felony or criminal record should probably avoid a filing until they because a legal resident at least.
This area of the law is not black and white because the bankruptcy code grants to "anyone who avails themselves of United States Laws the privilege of bankruptcy" but does not go on to protect filers from prosecution for being in the country illegally, not filing taxes or other immigration issues.
Therefore, this gray area of the bankruptcy law will continue to be gray and murky with attorneys giving only guidance but not hard advisement on whether a client SHOULD file, but simply whether they CAN file and also what the risks are.
For more information about bankruptcy, call 877-GO-GO-NLO (877-464-6656) or email the office at INFORMATION NLO CHICAGO
Wednesday, September 7, 2011
Should I hire an Attorney to Represent me in a Refinance?
Yes and No.
Yes, it is always good to have attorney counseling you on the meaning of any legal document you are signing. No, it is not always necessary to have an attorney to sign standardized bank documents in a refinance unless you want to fully understand the refinance and make sure that you are getting what you bargained for.
Bottom line - Having an attorney at a refinance closing is a really great way to make sure that the interest rate your thought you were getting is right, that it is either fixed or is adjustable in the way you understood it. It is also important to understand the rather large fees charged (and buried) in a refinance. On average, a refinance costs $5000 in bank fees. Bottom line - $250 for an hour appearance fee is a drop in the bucket compared to these fees and will help you feel comfortable with what you are signing.
Hiring the attorney, the problem is how to hire and attorney who can make these sorts of appearances profitable and desirable to do and also be qualified. Usually an attorney belonging the Illinois Real Estate Lawyers Association (IRELA) www.irela.org will be competent in Illinois to represent you and usually has flat rates that are reasonable.
If you are hiring an attorney generically, try these tried and true questions and technics:
1) Find three attorneys that serve the geographical area you need service in
2) Confirm that the attorneys speak your language
3) Call each attorney and ask three questions:
Based on your discussed with the attorney, you should be looking for the following answers:
For more information about NLO Nelson Law Office, please go to: http://www.nelsonlawoffice.com/contact.html
To see David Nelson's video on YELP go to: http://www.yelp.com and then search for NLO Nelson Law Office.
Yes, it is always good to have attorney counseling you on the meaning of any legal document you are signing. No, it is not always necessary to have an attorney to sign standardized bank documents in a refinance unless you want to fully understand the refinance and make sure that you are getting what you bargained for.
Bottom line - Having an attorney at a refinance closing is a really great way to make sure that the interest rate your thought you were getting is right, that it is either fixed or is adjustable in the way you understood it. It is also important to understand the rather large fees charged (and buried) in a refinance. On average, a refinance costs $5000 in bank fees. Bottom line - $250 for an hour appearance fee is a drop in the bucket compared to these fees and will help you feel comfortable with what you are signing.
Hiring the attorney, the problem is how to hire and attorney who can make these sorts of appearances profitable and desirable to do and also be qualified. Usually an attorney belonging the Illinois Real Estate Lawyers Association (IRELA) www.irela.org will be competent in Illinois to represent you and usually has flat rates that are reasonable.
If you are hiring an attorney generically, try these tried and true questions and technics:
1) Find three attorneys that serve the geographical area you need service in
2) Confirm that the attorneys speak your language
3) Call each attorney and ask three questions:
- How long have you been in practice in Illinois
- How many residential real estate closings have you done on average over the last five years
- What is your flat rate for representation at a refinance including any trip charge
Based on your discussed with the attorney, you should be looking for the following answers:
- I have practiced in Illinois for over 5 years
- I do at least 10 residential real estate closings per year and it is one the core concentration areas of my practice.
- I charge a flat rate fee of $250 per refinance for up to 1 hour of representation. Trip charge is maximum of $100. {This illustrates that the attorney understands how to be profitable and thereby of good service both in the City and Suburbs} Attorneys who charge too little and are unprofitable are not motivated to provide good and competent service and should be avoided. Value is the golden rule in purchasing legal services whereas price is simply irrelevant.
For more information about NLO Nelson Law Office, please go to: http://www.nelsonlawoffice.com/contact.html
To see David Nelson's video on YELP go to: http://www.yelp.com and then search for NLO Nelson Law Office.
Thursday, September 1, 2011
Can I Modify my Home Mortgage in Chapter 13 Bankruptcy?
Yes - you can modify your home mortgage in a Chapter 13 Bankruptcy by Stripping off the second mortgage and other junior liens.
Today, you can modify your home mortgage in two ways: Get a modification from the lender or file a Chapter 13 bankruptcy and attempt to strip off the second mortgage mortgage on your home. Oftentimes, this will reduce the balance on your mortgage by 30%. While this isn't perfect, it is oftentimes, the difference between being able to keep your home or being forced to surrender it in foreclosure.
So how does this work. First it is important to determine whether you should file bankruptcy. Second you need to file a Chapter 13 bankruptcy. Third, your bankruptcy attorney files an adversary procedure with the court to rule that the value of your home is less than the balance on your first mortgage. Fourth get the Chapter 13 plan confirmed by the court whereby the second (third, fourth, fifth and any junior mortgages) are wholly unsecured and will be paid as unsecured creditors. At the end of the plan (60 months), the second mortgage and all other junior mortgages are released by the lender and the debtor/s is left with a home with only one mortgage.
Does this work in real life applications. In the last year over 40% of our firms Chapter 13's had successful plan confirmations with the second mortgage being stripped. On average this reduced the principal by 30% on the home indebtedness.
So what is not so great......the first mortgage still has to be paid off in full with all of the arrearages paid back over 60 months along with the costs of collection plus the first mortgage may still have a balance that is more than the home can be sold for.......so why has the court allowed this to occur - the answer is in the intent of the bankruptcy code, the idea was that if home mortgages could be modified in bankruptcy, why would anybody pay their mortgage? Therefore, to save the ability for consumer to get home mortgages from banks, the bankruptcy code strictly prohibits the modification of a home mortgage this is wholly or even partially secured even if secured by only $1.
Bottom line - Chapter 13 offers a crude type of home mortgage modification by getting rid of unsecured mortgages, however, it does not fix long term problems with a first mortgage. If your first mortgage is OK by itself then this type of modification is for you. If your first mortgage is still a problem, then it may be wise to simply surrender the home in the bankruptcy and let the lender take the loss.
What are we seeing now that is unbelieveable - it never used to happen in the past, but it is happening now. After filing the bankruptcy and after stripping the second mortgage, the lender on the first mortgage voluntarily modifies the first mortgage to make the plan easier.
So what is this all about?
Well.....here's the best way to describe it. Typically, the interest rate is reduced to 2% for the first five years and it increases by 1/2% per year after that until it hits the market rate and then becomes fixed at that rate. The kicker is that the bank will put the arrears on to the balance of the loan. Doesn't seem like a big deal, but it is! If your old mortgage payment was $2400 per month and you were 10 months behind at the time of your bankruptcy filing, then you owe $24,000 in arrears. In a typical 60 month chapter 13 plan, you will pay $24,000/60 per month to pay back these arrears. This is $400 per month. In this case, the bank basically put this into the balance. So basically, you are now paying 2% interest on $24,000 over the next 30 years or so. Around $50 per month. The benefit is theoretically that your home if you keep it for 15 years will finally be worth more than the mortgage, you can sell it, pay off the mortgage and have a happy life. This is all true with one caveat. What if you have to get out of the house one year after your bankruptcy ends and you are still "underwater" Good luck - you just entered another bankruptcy or years of garnishments.
In a nutshell - if you want to live in your house a long time and don't have a big need to move soon and don't believe you will be forced to move, then this is the ticket. Basically, the bank cuts its price on loaning you the money. But if you need to be more flexible and actually have the debt load be less immediately, then you are out of luck and better surrendering the home in bankruptcy.
Examples:
Ron and Karla bought a home in 2006 for $200,000. The first mortgage was $160,000 from Wells Fargo. The Second Mortgage for $40,000 was from Banco Popular. Ron and Karla were doing great until Karla lost her job in 2008. The couple missed 8 payments. The couple was five months into their foreclosure action when they filed a Chapter 13 Bankruptcy.
Ron and Karla hired David Nelson to file their Chapter 13. David suggested that they keep their home, but attempt to strip off the second mortgage. Ron and Karla agreed.
Ron and Karla make approximately $70,000 per year together and have two children. Their budget is tight and the means test says that they need to contribute on 10% of their plan to paying unsecured creditors.
Ron and Karla have no other debts besides the home. Their mortgage payment was $1400 on the first mortgage, $500 on the second and their tax escrow was $300 per month.
Ron and Karla were $11,200 in arrears on their first mortgage when they filed their bankruptcy.
Here is how their plan payment is figured.
$1400 for payment of the first mortgage regular payment
$300 for tax escrow payment on the first mortgage
$67 (10% of $40,000 divided by 60 months) for payment of the unsecured second mortgage
$187 ($11,200 divided by 60 months)
$1954 Subtotal
$195 Trustee Fee (10% of payment)
$2149 total payment
So how does this work out with their budget
$70,000 Gross Income Per Year
$5833 Per Month Gross
($1458) Taxes
$4375 Net Income Per Month
$2149 Plan Payment
$250 Gas & Electric
$800 Food
$194 Clothing
$100 Laundry
$250 Medical
$502 Transportation
$130 Auto Insurance
$4375 Subtotal
Square Budget. Home Saved. Overall home mortgage modified by overall reduction by 20%
Bottom line - this Chapter 13 accomplishes good things. With other applications we might have an auto loan, additional credit card debt or other unsecured debt. For those discussions, please see my other blog postings.
For more information about bankruptcy, mortgage modification or other debt relief options, please call NLO Nelson Law Office at 877-464-6656 or email to: info@nelsonlawoffice.com
Today, you can modify your home mortgage in two ways: Get a modification from the lender or file a Chapter 13 bankruptcy and attempt to strip off the second mortgage mortgage on your home. Oftentimes, this will reduce the balance on your mortgage by 30%. While this isn't perfect, it is oftentimes, the difference between being able to keep your home or being forced to surrender it in foreclosure.
So how does this work. First it is important to determine whether you should file bankruptcy. Second you need to file a Chapter 13 bankruptcy. Third, your bankruptcy attorney files an adversary procedure with the court to rule that the value of your home is less than the balance on your first mortgage. Fourth get the Chapter 13 plan confirmed by the court whereby the second (third, fourth, fifth and any junior mortgages) are wholly unsecured and will be paid as unsecured creditors. At the end of the plan (60 months), the second mortgage and all other junior mortgages are released by the lender and the debtor/s is left with a home with only one mortgage.
Does this work in real life applications. In the last year over 40% of our firms Chapter 13's had successful plan confirmations with the second mortgage being stripped. On average this reduced the principal by 30% on the home indebtedness.
So what is not so great......the first mortgage still has to be paid off in full with all of the arrearages paid back over 60 months along with the costs of collection plus the first mortgage may still have a balance that is more than the home can be sold for.......so why has the court allowed this to occur - the answer is in the intent of the bankruptcy code, the idea was that if home mortgages could be modified in bankruptcy, why would anybody pay their mortgage? Therefore, to save the ability for consumer to get home mortgages from banks, the bankruptcy code strictly prohibits the modification of a home mortgage this is wholly or even partially secured even if secured by only $1.
Bottom line - Chapter 13 offers a crude type of home mortgage modification by getting rid of unsecured mortgages, however, it does not fix long term problems with a first mortgage. If your first mortgage is OK by itself then this type of modification is for you. If your first mortgage is still a problem, then it may be wise to simply surrender the home in the bankruptcy and let the lender take the loss.
What are we seeing now that is unbelieveable - it never used to happen in the past, but it is happening now. After filing the bankruptcy and after stripping the second mortgage, the lender on the first mortgage voluntarily modifies the first mortgage to make the plan easier.
So what is this all about?
Well.....here's the best way to describe it. Typically, the interest rate is reduced to 2% for the first five years and it increases by 1/2% per year after that until it hits the market rate and then becomes fixed at that rate. The kicker is that the bank will put the arrears on to the balance of the loan. Doesn't seem like a big deal, but it is! If your old mortgage payment was $2400 per month and you were 10 months behind at the time of your bankruptcy filing, then you owe $24,000 in arrears. In a typical 60 month chapter 13 plan, you will pay $24,000/60 per month to pay back these arrears. This is $400 per month. In this case, the bank basically put this into the balance. So basically, you are now paying 2% interest on $24,000 over the next 30 years or so. Around $50 per month. The benefit is theoretically that your home if you keep it for 15 years will finally be worth more than the mortgage, you can sell it, pay off the mortgage and have a happy life. This is all true with one caveat. What if you have to get out of the house one year after your bankruptcy ends and you are still "underwater" Good luck - you just entered another bankruptcy or years of garnishments.
In a nutshell - if you want to live in your house a long time and don't have a big need to move soon and don't believe you will be forced to move, then this is the ticket. Basically, the bank cuts its price on loaning you the money. But if you need to be more flexible and actually have the debt load be less immediately, then you are out of luck and better surrendering the home in bankruptcy.
Examples:
Ron and Karla bought a home in 2006 for $200,000. The first mortgage was $160,000 from Wells Fargo. The Second Mortgage for $40,000 was from Banco Popular. Ron and Karla were doing great until Karla lost her job in 2008. The couple missed 8 payments. The couple was five months into their foreclosure action when they filed a Chapter 13 Bankruptcy.
Ron and Karla hired David Nelson to file their Chapter 13. David suggested that they keep their home, but attempt to strip off the second mortgage. Ron and Karla agreed.
Ron and Karla make approximately $70,000 per year together and have two children. Their budget is tight and the means test says that they need to contribute on 10% of their plan to paying unsecured creditors.
Ron and Karla have no other debts besides the home. Their mortgage payment was $1400 on the first mortgage, $500 on the second and their tax escrow was $300 per month.
Ron and Karla were $11,200 in arrears on their first mortgage when they filed their bankruptcy.
Here is how their plan payment is figured.
$1400 for payment of the first mortgage regular payment
$300 for tax escrow payment on the first mortgage
$67 (10% of $40,000 divided by 60 months) for payment of the unsecured second mortgage
$187 ($11,200 divided by 60 months)
$1954 Subtotal
$195 Trustee Fee (10% of payment)
$2149 total payment
So how does this work out with their budget
$70,000 Gross Income Per Year
$5833 Per Month Gross
($1458) Taxes
$4375 Net Income Per Month
$2149 Plan Payment
$250 Gas & Electric
$800 Food
$194 Clothing
$100 Laundry
$250 Medical
$502 Transportation
$130 Auto Insurance
$4375 Subtotal
Square Budget. Home Saved. Overall home mortgage modified by overall reduction by 20%
Bottom line - this Chapter 13 accomplishes good things. With other applications we might have an auto loan, additional credit card debt or other unsecured debt. For those discussions, please see my other blog postings.
For more information about bankruptcy, mortgage modification or other debt relief options, please call NLO Nelson Law Office at 877-464-6656 or email to: info@nelsonlawoffice.com
Thursday, August 25, 2011
How to Compute Tax Prorations & Tax Credits in Cook County Illinois
If you are a young attorney just starting out or just someone interested in the obscure world of tax prorations, this article is for you. Tax Prorations are essentially receiving credit for unpaid taxes either now or later after tax bills come out.
History: In the Great Depression of the 1930's; the State of Illinois granted a one year property tax holiday. This set all tax collections back one year.
Example: Your Tax Bill for the First Half of 2010 (January 1, 2010 to June 30, 2010) is $2000. The tax bill is dated March 15, 2011 and due by June 30, 2011. Since the bill is provided nearly a year after when the tax was incurred, the taxpayer has no idea what his tax bill will be when the tax is actually being incurred....He can only estimate based upon his prior tax bills.
Application. When you purchase a piece of residential real estate in Cook County, clear title is provided and all of the taxes that can be paid are paid up on the day of closing. However, because tax bills come out one year after they are due, there is often an entire year of property tax liability that is unpaid and the actual bill is unknown..
Example: Buyer of Real Estate makes offer to purchase a home in Chicago. The offer is accepted June 1, 2011. The closing is to be September 30, 2011. Full Year Tax Bill for 2009 is $4000.
First: Calculate the estimated tax liability up to the date of closing:
First Half of 2010 Tax Bill $2200 (must be 55% of the full bill from the prior year)
Second Half of 2010 Tax Bill (unknown)
First Half of 2011 Tax Bill (unknown)
Partial Second Half of 2011 Tax Bill (unknown)
The contract should call for a proration premium which is typically 105% or more. In this contract, the amount is 105%.
To figure out estimate full year 2010 bill, simply take the 2009 bill times 105%.
$4000 X 1.05 = $4200.
To figure out Second Half of 2010:
Take $4200 (total estimated 2010 bill) less the $2200 already paid for a credit of $2000 to be given at closing for this half.
To figure out estimated full year 2011 bill, simply take the 2009 bill times 105%
$4000 X 1.05 = $4200.
For 2011 you will be paying 1/2 of the $4200 for the period 1/1/2011 to 6/30/2011 or $2100
For the period or 7/1/2011 to 9/30/2011 you would pay the fraction of ((31+31+30)/365) x $4200
$1058.64.
So our closing statement will show the following credits:
2010 Taxes 1st Paid
2010 Second Half Credit $2000.00
2011 First Half Credit: $2100.00
2011 Second Half Credit to 9/30/2011: $1058.64.
SO WHAT DO YOU DO WHEN YOU DON'T HAVE A FULL YEAR TAX BILL AVAILABLE AND MUST CREATE A BASE TAX AMOUNT FROM SCRATCH?
Answer: Take 2% of the purchase price. This is an approximate annual maximum tax rate for homes in Cook County and specifically applicable to the City of Chicago. This is used often with new homes that do not have any tax record yet.
For more information about tax prorations or to hire David Nelson as your real estate attorney, please call 877-464-6656 (877-GO-GO-NLO) or email David at info@nelsonlawoffice.com
History: In the Great Depression of the 1930's; the State of Illinois granted a one year property tax holiday. This set all tax collections back one year.
Example: Your Tax Bill for the First Half of 2010 (January 1, 2010 to June 30, 2010) is $2000. The tax bill is dated March 15, 2011 and due by June 30, 2011. Since the bill is provided nearly a year after when the tax was incurred, the taxpayer has no idea what his tax bill will be when the tax is actually being incurred....He can only estimate based upon his prior tax bills.
Application. When you purchase a piece of residential real estate in Cook County, clear title is provided and all of the taxes that can be paid are paid up on the day of closing. However, because tax bills come out one year after they are due, there is often an entire year of property tax liability that is unpaid and the actual bill is unknown..
Example: Buyer of Real Estate makes offer to purchase a home in Chicago. The offer is accepted June 1, 2011. The closing is to be September 30, 2011. Full Year Tax Bill for 2009 is $4000.
First: Calculate the estimated tax liability up to the date of closing:
First Half of 2010 Tax Bill $2200 (must be 55% of the full bill from the prior year)
Second Half of 2010 Tax Bill (unknown)
First Half of 2011 Tax Bill (unknown)
Partial Second Half of 2011 Tax Bill (unknown)
The contract should call for a proration premium which is typically 105% or more. In this contract, the amount is 105%.
To figure out estimate full year 2010 bill, simply take the 2009 bill times 105%.
$4000 X 1.05 = $4200.
To figure out Second Half of 2010:
Take $4200 (total estimated 2010 bill) less the $2200 already paid for a credit of $2000 to be given at closing for this half.
To figure out estimated full year 2011 bill, simply take the 2009 bill times 105%
$4000 X 1.05 = $4200.
For 2011 you will be paying 1/2 of the $4200 for the period 1/1/2011 to 6/30/2011 or $2100
For the period or 7/1/2011 to 9/30/2011 you would pay the fraction of ((31+31+30)/365) x $4200
$1058.64.
So our closing statement will show the following credits:
2010 Taxes 1st Paid
2010 Second Half Credit $2000.00
2011 First Half Credit: $2100.00
2011 Second Half Credit to 9/30/2011: $1058.64.
SO WHAT DO YOU DO WHEN YOU DON'T HAVE A FULL YEAR TAX BILL AVAILABLE AND MUST CREATE A BASE TAX AMOUNT FROM SCRATCH?
Answer: Take 2% of the purchase price. This is an approximate annual maximum tax rate for homes in Cook County and specifically applicable to the City of Chicago. This is used often with new homes that do not have any tax record yet.
For more information about tax prorations or to hire David Nelson as your real estate attorney, please call 877-464-6656 (877-GO-GO-NLO) or email David at info@nelsonlawoffice.com
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