Recently, the district court for the Northern District of Illinois ruled on one of the important unresolved issues in chapter 13 bankruptcy: If a chapter 13 bankruptcy is dismissed, what happens to money that the chapter 13 trustee is holding when the case is dismissed? The district court decided that the funds held by the trustee belong to the debtor, and the trustee needs to return the money to the debtor. I had the privilege of representing the debtors before the bankruptcy court. They had fallen behind in their payment obligations to the chapter 13 trustee, and then came current. They decided, thereafter, not to pursue their bankruptcy case any further. But the trustee had the money they’d paid to catch up. At the time of dismissal, the trustee was holding over $16,000. As their counsel, I wanted my clients to get their money back. The trustee, diligently endeavoring to maximize the creditors’ return, wanted to disburse the funds to their unsecured creditors. My firm and I undertook this endeavor on their behalf for free. Seeking to advance the law – and help our clients retain a ton of dough – we chose to pursue this litigation against the trustee entirely pro bono. This is a close legal question, but at the end of the day, the bankruptcy court – and now the district court – reached the right result, and ordered that the trustee should return the funds held at the time the case was dismissed. Technically speaking, under section 349(b)(3) of the bankruptcy code, a dismissal order revests property of the bankruptcy estate in the entity in which such property was vested before the commencement or filing of the case. Here, since the Trustee hadn’t yet paid to creditors the funds that my clients had paid to her, the funds belonged, post-dismissal, to my clients. This is an important unresolved issue in chapter 13 debtor practice. The bankruptcy court opinion has already been cited in several other cases and jurisdictions – in the Middle District of Tennessee and the Eastern District of Pennsylvania, for example. The crux of chapter 13 is a repayment plan that can last up to five years. It’s messy enough merely in theory, before one ever gets to the practice. (Imagine all the things that can happen to someone’s life and finances over the course of five years!) Once one gets to the practice, one quickly learns how often very smart people can disagree. So it’s always nice when, in some small way, I might be helping my colleagues and my clients get a little more clarity, not to mention helping my clients keep a lot more of their money.

April 15th is the deadline to file 2013 tax returns with the IRS and your state taxing authority unless you’ve received an extension to file.  But you may notice we ask for several years of tax returns (if you were required to file) before we can file your bankruptcy. Why? Well, let’s say you have regular income and want to do a Chapter 13 filing to make a payment plan for your debts over 3 years.  One of the requirements in the bankruptcy code says you have to file all tax returns for all taxable periods ending during the 4-year period ending on the date of the filing of the petition?  Huh? Basically you have to have filed your last 4 years of tax returns before filing the bankruptcy.  What happens if you don’t?  Well, your Chapter 13 trustee can hold open the meeting of creditors to file those returns.  If they aren’t filed, the case can be dismissed and your bankruptcy will tank.  That would be bad. The code also says all debtors have to provide certain tax returns to the trustee before the meeting of creditors.  If you don’t do that, the trustee can’t do their job and conduct the meeting.  Your case could be dismissed and you won’t get the benefit of the hard work, fees, and other documents you’ve already invested in the case. Not only that, but if you never file your tax returns, the debt you might owe from those past returns can’t be discharged.  Think about that – you might owe tax debt from 2007 or 2008 that could be discharged this year if the taxes were filed in a certain time frame.  By not filing, you’re denying yourself a chance to eliminate that debt! Tax returns are important pieces of information that lets your attorneys do their job of asking questions and let the trustees do their job in administering cases.  Unless you have a good excuse for not filing (such as only having social security income or not having any job in the year that the returns would have been filed), you should always file those returns.  If you owe the money, we can talk about how you might be able to pay it back or eliminate it.  But until that’s done, you’re only hurting yourself by refusing to file. If you have questions about discharging or repaying taxes in bankruptcy, reach out to us.  Lakelaw will help go over your paperwork with you to make the most of your bankruptcy debt elimination or repayment plan.   Call 847-249-9100 or 262-694-7300 in Wisconsin, or e-mail us , but most of all, get those taxes filed and copies to us!

The typical debts that are eliminated with Chapter 7 bankruptcy include credit cards, medical bills, personal loans and more.  The transcription and video below explain what is eliminated in greater detail. Jesse Barrientes:   What debts are typically eliminated with the Chapter 7? David Siegel: Well, a Chapter 7 is going to eliminate typical unsecured debt such+ Read MoreThe post What Debts Are Eliminated With Chapter 7 Bankruptcy? appeared first on David M. Siegel.

The automatic stay in the most powerful tool when filing bankruptcy. The automatic stay provides a shield of protection against most collection efforts. In the video below, we discuss just how powerful the stay is when filing a bankruptcy case. David Siegel: Let’s talk about what’s created the minute a bankruptcy case under Chapter 7+ Read MoreThe post Filing Bankruptcy And The Creation Of The Automatic Stay appeared first on David M. Siegel.

In previous blogs, I have written introductory information about the basic process in chapter 13 bankruptcy. In this next series of articles, I will discuss some of the issues surrounding chapter 13. In order to file chapter 13, you must be an individual with regular income. There are limits to the amount of debt you can have and still be eligible to file chapter 13. As of April 1, 2013 the limits are now $1,149,525.00 for secured debt and $383,175.00 for unsecured debt. These numbers are adjusted every three years. If you are close to these numbers, be sure and contact our office to get the current applicable limitations.The post Chapter 13 Bankruptcy appeared first on Tucson Bankruptcy Attorney.

There are income qualifications for filing Chapter 7 bankruptcy.  If you are over the median for your state then you are subject to a means test.  If it is determined that you have the ability to pay back at least 25% over the next three to five years, then you will not qualify for Chapter+ Read MoreThe post Your Monthly Income Is A Factor In Qualifying For A Chapter 7 Bankruptcy appeared first on David M. Siegel.

File Chapter 7 Bankruptcy To Protect Property The first reason why somebody would want to file Chapter 7 bankruptcy is if they have something they want to protect. What I’m talking about here is something of value that is subject to a taking if a bankruptcy case is not file. This could be wages. If someone is+ Read MoreThe post There Are Three Main Reasons Why Somebody Would Want To File Chapter 7 Bankruptcy appeared first on David M. Siegel.

In order to file for Chapter 7 bankruptcy, you must provide a copy of your most recent Federal tax return.  If you are going to be receiving a sizable refund, then you want to time your bankruptcy filing so that you do not have the refund forthcoming after your filing date.  This way, you are+ Read MoreThe post Tax Return & The Importance Of Timely Filing – Bankruptcy appeared first on David M. Siegel.

With the help of Lakelaw’s foreclosure defense attorneys, the answer could be yes.  Just a few days ago, our client was within days of eviction. Her foreclosure case had been pending for almost three years. When her husband became terminally ill, he couldn’t work and he fell behind on the mortgage. Our client’s husband died.  Our newly widowed client couldn’t focus a foreclosure – she was distraught. Eventually, the lender was granted a judgment and held a “sale” of the property.  There were no outside bidders so the property went “back” to the lender.  The lender then moved to evict our widow. Our client tried to get money to buy the home from the lender so she and her children wouldn’t have to move. But she never did anything to try to stop the eviction.  She finally came to Lakelaw on a Tuesday afternoon and said she was to be out of the house by Thursday. The Sheriff was coming to move the client and her family if they were not out by mid-morning. In a whirlwind of activity, we prepared an appearance in her eviction case, had a motion to stay the eviction presented to the court, and scheduled an emergency hearing for Wednesday afternoon. We explained to the court that the eviction should be stayed to allow the bank to review her loan application. The judge was reluctant, but gave us time to confer with the lender for the status of the application. We got the lender to agree to agree to halt the proceedings against our client. The Court ordered that the eviction be stayed. We later checked with the Sheriff who understood that our client was not be forcibly removed from the property. Happily, we helped our client get a positive outcome. She would not have been able to prevent the forced eviction without getting legal help. It is rare for such a positive outcome to in such a short period of time; having less than 40 hours to prevent an eviction is a less than ideal situation. One moral of this story should be that a potential client should seek legal assistance as early as possible when seeking a resolution to a problem. Another is to not give up hope even in a precarious situation. When all hope is lost, call us at Lakelaw.  We’re at 847 249 9100 and will take calls 24/7.  We frequently can help you when nobody else will even try.

Chicago Bankruptcy Lawyer Explains According to Chicago bankruptcy lawyer David Siegel, some property should be reaffirmed.  With secured property such as a vehicle, furniture, jewelry, electronics, those are secured items. Therefore, when you file a chapter 7 bankruptcy you have effectively eliminated the debt on those items if you want to give up the property. + Read MoreThe post Chicago Bankruptcy Lawyer David Siegel Explains Reaffirming A Debt In A Chapter 7 Bankruptcy Case appeared first on David M. Siegel.