Author Archives: Jay Butchko
Bankruptcy and Past-Due State Taxes
Mostly because of its recent and well-chronicled budget problems, the Prairie State has one of the highest state income tax burdens in the country. Most of that burden falls on self-employed people. When their incomes drop, they often suspend estimated tax payments. That suspension comes back to haunt them in the spring, when they… Read More »
Is It Better to File Chapter 7 or 13?
The answer to this question normally depends on the type of debt. If you have an issue with unsecured debt, it’s better to file Chapter 7. Many people are in this boat. The average credit card holder owes about $4,000. If you have an issue with secured debt, it’s better to file Chapter 13…. Read More »
Special Issues in an Over-55 Chapter 7 Bankruptcy
The overall consumer bankruptcy filing rate has declined significantly since 2005, when the law changed dramatically. But the over-55 bankruptcy filing rate has increased over 60 percent over roughly that same period. The combination of several recessions, or mini-recessions, a shrinking social safety net, and a few other factors have prompted many people in… Read More »
Is It Hard to Get Chapter 7?
We wouldn’t say it’s “hard,” but we would say it’s “harder” now than it was twenty years ago. In 2005, Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). Creditor lobbyists convinced many lawmakers that Chapter 7 filing abuse was serious and widespread. The evidence clearly shows that circumstances beyond the debtor’s… Read More »
Is an EIDL Loan Discharged in Bankruptcy?
During and after the COVID-19 pandemic, the Small Business Administration loaned over $600 billion to small businesses. This money mostly included PPPs (paycheck protection program) loans and EIDLs (economic injury disaster loan). These financial lifelines allowed many businesses to stay afloat during the lockdowns. But as the lockdowns dragged on, and after a labor… Read More »
Will the IRS Accept My Offer in Compromise?
The gig economy has grown significantly since 2018. Today, over seventy-three million Americans freelance full or part time. Freelance income is feast or famine. Two or three months of lucrative earnings might be followed by two or three months of basically zero income. These fluctuations often make consistent estimated tax payments impossible. Furthermore, during… Read More »
Top Five Property Exemptions in Illinois
Many states have limited bankruptcy property exemptions. In these states, since the trustee (person who oversees a bankruptcy for a judge) has broad powers to liquidate assets, debtors must think twice before they file bankruptcy. Illinois is different. The Prairie State has extremely broad property exemptions. In fact, for most purposes, most Chicagoland residents… Read More »
When Does Bankruptcy Stop Foreclosure?
In most cases, bankruptcy’s Automatic Stay stops foreclosure and most other creditor adverse actions, such as repossession and wage garnishment. The serial filer rule is the primary exception. If the debtor filed bankruptcy within the last six months, even under another name, Section 362 of the Bankruptcy Code has a more limited effect. This… Read More »
Student Loan Repayment and Your Bank Account
When the three-year student loan repayment pause ends in October 2023, American consumers stand to lose over $8 billion per month. The payment restart will reduce consumer spending by 0.8 percent in the first quarter of 2024 and by 3 percent in the second quarter, reversing from the estimated growth of 3 percent and… Read More »
How Long Does Chapter 13 Bankruptcy Affect My Credit Score?
By the book, a Chapter 13 filing falls off a credit report seven years after discharge (not seven years after filing), at least in most cases. The waiting period for Chapter 7 is a little longer, usually ten years. However, the judge usually discharges (closes) a Chapter 7 within months, and a Chapter 13… Read More »