How Can Bankruptcy Help Me?
• Government Backed Loan modifications take between 30
Upon filing for bankruptcy the court
puts in place what is called the
automatic stay. The automatic stay
prevents ALL creditors from
collecting on any debts without
going through the bankruptcy court.
This means that all collection calls
will cease.
Also:
• You can recover your car or
other property that has been
repossessed.
• Wage garnishments will be
stopped.
• You may have your driver’s
license reinstated.
• You can have your utilities
turned back on.
• Foreclosure Proceedings
Must Cease
What Debts Are Discharged?
Most debts issued by a private, non-
government entities are
dischargeable.
Debts that can be eliminated:
Credit Card Debts
Medical Bills
Debts in Collection
Some Lawsuit Judgments
Debts that are NOT:
• Federal, State and Local
Taxes. (i.e. IRS debt)
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Student Loans.
• Court Ordered Child
Support
• Court Ordered Alimony
What Is Loan Modification?
A loan modification is a change in
mortgage terms, making the
monthly payment more affordable. It
may change interest rates, term
length, loan balances, or other parts
of the loan agreement.
Because of Government programs
like President Obama's Making Home
Affordable Plan, banks have a
financial incentive to lower your
monthly payments. In many cases
loan modifications can be offered in
addition to bankruptcy, giving you
personalized financial assistance.
Do I Qualify?
You must be experiencing a financial
hardship in order to modify loan
terms.
A hardship can be:
Reduced income
Divorce or Separation
Excessive Medical Bills
Loss of Employment
This hardship must be fairly
permanent so that the lender has
reason to modify the loan.
How Long Does It Take?
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and 90 days. The process consists of
submission of the modification
package, review by the lender and
final negotiations. Upon completion,
a final agreement will be sent out,
which needs to signed, notarized and
sent back to the lender.
Bankruptcy Terms
Automatic Stay – After a case is
filed, creditors cannot take actions to
collect on a debt that is subject to
the bankruptcy. If they have a basis
to proceed with collection they must
first obtain permission from the
bankruptcy court by "modifying the
stay".
Creditor - The person or company
that the debt is owed to.
Discharge - Refers to the
elimination of debt in a bankruptcy.
In a typical chapter 7 case, the
debtor will receive a discharge about
3 months after filing. A discharge
would mean that all unsecured
debts, not otherwise objected to,
would be wiped out and creditors
would not be able to attempt to
collect on those debts.
Non-dischargeable Debt - Certain
debts are of a type that are NOT
subject to the bankruptcy discharge.
Examples include: student loans,
certain taxes, fines, and penalties.
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Reaffirmation - The act of filing a
bankruptcy results in the termination
of certain loan agreements. The act
of reaffirming a loan agreement,
such as for an automobile loan, has
the effect of removing the asset and
the debt from the protection of the
bankruptcy law. Debtors who wish to
keep their car and continue to pay
outside of bankruptcy often sign
reaffirmation agreements.
There is hope.
Financial solutions
for the recession.
Presented By:
Steven J. Grace
Attorney at Law
From
The Law Offices of Steven J.
Grace
6150 N. Milwaukee Ave
Chicago, IL 60646
P: (312) 493-6912
F: (888) 462-6649
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Satellite Offices in: Deerfield,
Oak Brook, Northbrook,
Schaumburg, St. Charles,
Downtown Chicago and Other
Cities.*
www.stevengracelaw.com
www.chicagoaccidentattorney
andcounsel.com
*By Appointment Only
In December of 2009, an estimated
6,000 people in Illinois filed
bankruptcy. That is almost 2X more
than in 2006. In this economy, many
people are realizing bankruptcy is a
smart financial decision. It frees you
of your debts, and lets you get on
with life.
What Is Bankruptcy?
Bankruptcy is a legal method by
which the Federal Government
deems an individual's debt as too
burdensome and grants a discharge
of much of the debts owed.
Common Causes
Medical Bills
Loss of Employment
Disability
Divorce
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Credit Card Debt
Chapter 7 Bankruptcy
This is sometimes called a
“liquidation bankruptcy” because in
theory, a person agrees to surrender
all of their assets in exchange for
being relieved of their debts. In
reality, the majority of people keep
their property, possibly at reduced
payments.
Chapter 13 Bankruptcy
Described as a “Reorganization
Bankruptcy”. Many of your
outstanding secured debts are to be
paid in full throughout a repayment
plan which can last anywhere from 3
to 5 years. Typically, unsecured
debts (such as credit cards) are paid
back at 10%.
Why File For Bankruptcy?
Let’s say you have $10,000 of credit
card debt and you can only afford
minimum payments.
Interest Rate: 18.90%
Minimum Payment: $200
Time to Pay Back: 50.08 years
Total Payments: 601
Total Interest Paid: $34,193
Total Paid: $44,193
For many people, payment plans like
these are very unrealistic and
burdensome.
How Does It Affect My Credit?
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Bankruptcy can stay on your credit
report for up to 10 years. Chances
are if you are considering
bankruptcy, your credit score is
already suffering. Your credit score
is based on your FICO rating, which
is calculated by:

On Time Payments
Amount of Credit Used
Length of Credit History
Types of Credit Used
Past Credit Applications

If you have a large amount of debt,

the ratio of the amount of credit
used compared to that available is
very high. This lowers your credit
score. Through bankruptcy, the
court will discharge all of your debts
and your FICO score will increase. In
some cases, people will receive
credit applications in the mail shortly
after receiving their discharge.

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