BANKRUPTCY: UNDERSTAND YOUR OPTIONS FIRST

SERVICE: The Law Offices of Sulaiman & Associates will conduct an in-depth study of all the documents and the specific narrative of the Client/Borrower to discover what is the best course of action to be taken in regards to a Loss Mitigation Strategy for the Client/Borrower. Bankruptcy is only one of many options and an untimely filing may actually do more harm to the borrower than good. The Firm’s goal is to educate our Clients and with our advice and counsel guide our Clients through the potentially treacherous waters of Bankruptcy. We are committed to researching, formulating and finally executing the best strategy for our Clients. This is our Commitment to all our Clients.

QUESTION: When should I file Bankruptcy?

ANSWER: Every situation is different. The fact of the matter is that this is not the only option. In fact if used improperly, or at the wrong time, it will likely do more harm than good. For those who want a loan modification because they want to keep their home, bankruptcy, in its current form will not help. If a borrower is currently unable to pay their mortgage payments then you could be forced to begin making your mortgage payments once the bankruptcy has been initiated (see poorly timed Bankruptcy). A new law is progressing through the United States Congress that will allow for judicial loan modifications. If passed it may be more helpful to assist homeowners who want to stay in their homes. Be sure that if your in foreclosure or unable to pay your mortgage that the Attorney you choose to file your bankruptcy is actively versed in foreclosure laws and procedures.

QUESTION: What is a Chapter 13 Bankruptcy?

ANSWER: Chapter 13 Bankruptcy is a debt consolidation that is supervised by the Federal Bankruptcy Courts. You would have to qualify for a Chapter 13 Bankruptcy. Chapter 13 Bankruptcy is designed to stop foreclosures and repossessions and put you in a repayment plan. It allows for the consolidation of all of your other debts as well, as well as the compromise (partial repayment) of most unsecured debts such as credit cards, medical bills and payday loans to name only a few. Once you file a Chapter 13 Bankruptcy;

• You make your regular monthly mortgage payment as if you never fell behind typically within one month after you file;
• You make one fixed monthly payment to a Bankruptcy Trustee that catches up your past due mortgage payments, pays off you vehicles and pays as much as possible on you other debts, i.e. your payments are likely going to be higher than they were before you fell behind;
• You make this payment for between three to five years;
• At the end of the Chapter 13 Bankruptcy Plan, your mortgage is current, your vehicles are paid in full and most remaining balances due are discharged;
• A full review of your file will determine if this is good option for you. If you were having difficulty keeping up before, beware that the potentially increased payments may put you in a worse situation then before you filed your bankruptcy.

QUESTION: What is a Chapter 7 Bankruptcy?

ANSWER: Chapter 7 Bankruptcy is liquidation, also known as “straight bankruptcy.” The law allows you to keep your property such as a home, cars, household goods, clothing etc. within certain limits, called exemptions, and the Bankruptcy Trustee may sell any assets above those limits to pay your debt. Most people file Chapter 7 Bankruptcy because they don’t have any assets above those limits, so there is no actual liquidation in such “no-asset” cases. The Bankruptcy court typically will issue an order, called a discharge, a couple of months after you filed your petition, legally forgiving you of any debt that can be forgiven. Chapter 7 is ideal for people who owe a large amount of unsecured debt such as credit cards, medical bills, utility bills and unsecured loans without a lot of assets. If you have a car loan or mortgage that you feel you cannot afford to pay, you can also give up the car or house without owing anything, but you may lose ownership of the house or car. As said earlier, filing Chapter 7 doesn’t necessarily mean that people will lose their homes or cars. Any individual is eligible for Chapter 7 as long as he or she is not barred by law from doing so. Under certain circumstances, however, some debts may not be discharged, and some people may not be able to receive a general discharge. A full review of your file will determine if this is good option for you.

QUESTION: Can A Poorly Timed Bankruptcy Really Hurt Me?

ANSWER: YES. If your payment was $2,500, and you are 5 months behind, you would have back payments of at least $12,500, likely more due to late fees and other costs. Before the Bankruptcy you were having trouble making the payment. After the Bankruptcy you would have to within a short amount of time (30 – 60 Days After Filing) have to continue to make the monthly payment of $2,500 in this example and a portion of the $12,500 in back payments, and other cost associated with a Bankruptcy such as Trustees Fees and other amounts for other debts. Please examine all options available before condemning yourself and your Family to the constraints of Bankruptcy.

QUESTION: What Can I do if I do not want to file Bankruptcy?

ANSWER: A Bankruptcy can be filed anytime before a Foreclosure Sale. For most people, this should be the last option, not the first! It is the policy of our Firm and the professional practice of all of our Attorneys to examine all options in addressing a Foreclosure Complaint, and present and explain all the options available to our Clients. Bankruptcy is an option, it is not the only option, and in fact, in our professional opinion, more often than not, used alone, not the best option for our Clients under the current law; especially for those Clients who were victims of Predatory Lending practices. The first line and only line of defense presented by many Attorneys is immediately advising their Clients to file for Bankruptcy never affirmatively addressing any potential claims or solutions the Client may have. If you have valid claims against the Lender, we may be able to pursue the claims for you as a part of a strategy that may include a Bankruptcy. This could result in a vast improvement in your financial situation as opposed to implementing a strategy based solely on Bankruptcy. If you are not a good candidate for Bankruptcy, you run the risk of falling behind again and being left with fewer options than before the Bankruptcy filing.

QUESTION: What changes are coming in the Law of Bankruptcy that I can benefit from? What is Judicial Loan Modification?

ANSWER: In late 2008, and early 2009 there was a lot of talk and debate in Congress and the White House about changes to the Bankruptcy laws. Unfortunately the anticipated changes that would have rebalanced the positions of the borrowers against the banks were ultimately quashed in Congress. Congress was considering implementing Judicial Loan Modification in Bankruptcy. This new law would have allowed Bankruptcy Judges to adjust the terms of your mortgage within certain guidelines.

Current Bankruptcy Laws do not give this much power to Judges. A Judicial Modification forces the Lender to accept a plan that would keep the Borrower in the property at a payment plan the Borrower could afford. Judicial Modifications allowed the Bankruptcy Judges to change the terms of the mortgage in favor of the Borrower.

The Lenders and their army of Lobbyists have successfully defeated Congresses attempts to help the borrower. Before you file for Bankruptcy now, research all your options, and the impacts a bankruptcy will have on your home and on your future. Do yourself and your Family a favor by learning as much as you can about the process.

Most Attorneys incorrectly believe foreclosure defense is paying your mortgage. Other Attorneys reduce foreclosure defense to only Bankruptcy as the only option. Both of these options could hurt you, and not be helpful in the long term, nor would they satisfy your end goal objectives. There are so many more options available if properly executed. Foreclosure Defense is a very unique field and requires Attorneys and a law firm that is versed in foreclosure defense.

It is in your best interest to find and hire competent Attorneys who are versed in both bankruptcy law and foreclosure law to conduct a proper Bankruptcy Proceeding on your behalf and you can contact and speak to whenever there is an issue. Whoever you hire to assist you, check their credentials, their experience and expertise in the fields that affect you. Ask up front how a Bankruptcy filing may affect you and your home.

Feel free to contact us today at (630) 575 – 8181 for an initial consultation with an Illinois Licensed Attorney.

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THE LAW OFFICES OF SULAIMAN & ASSOCIATES, L.L.C. PROVIDES CONSUMER INFORMATION ABOUT THE LAW DESIGNED TO HELP CONSUMERS SAFELY INFORM THEMSELVES OF THEIR OWN LEGAL NEEDS. BUT LEGAL INFORMATION IS NOT THE SAME AS LEGAL ADVICE, WHICH IS THE APPLICATION OF LAW TO AN INDIVIDUAL'S SPECIFIC CIRCUMSTANCES. ALTHOUGH WE GO TO GREAT LENGTHS TO MAKE SURE OUR INFORMATION IS ACCURATE AND USEFUL, WE RECOMMEND YOU CONSULT A LAWYER TO ADDRESS THE NEEDS OF YOUR PARTICULAR SITUATION. PLEASE CONTACT OUR OFFICE AT (630) 575-8181 OR EMAIL US AT INQUIRY@SULAIMANLAW.COM FOR COPIES OF THE INFORMATION FOUND HEREIN OR TO SCHEDULE A CONSULTATION WITH A LICENSED ILLINOIS ATTORNEY. THANK YOU FOR YOUR KIND COOPERATION AND UNDERSTANDING.