Recent Blog Posts
Does Bankruptcy Stop Foreclosure?
Yes. As soon as debtors file their voluntary petitions, Section 362 of the Bankruptcy Code stops most creditor adverse actions. Additionally, consumer bankruptcy exempts home equity, making it almost impossible for the trustee (person who manages a bankruptcy for a judge) to liquidate a home. Some informal exemptions are available that extend this protection… Read More »
Does Bankruptcy Adversely Affect Government Benefits?
No. Many people are surprised to learn that government benefits are exempt assets in Illinois. Furthermore, the exemption isn’t value-based, like the home equity or motor vehicle exemption. Social Security Insurance benefits, SSD benefits, workers’ compensation benefits, VA disability benefits, and all other such benefits are 100 percent exempt. Federal or state pension plan… Read More »
Does Bankruptcy Affect My Security Clearance?
Yes, but in most cases, bankruptcy has a positive effect, not a negative effect, on your security clearance. In fact, Guideline F of DoD Directive 5220.06, the controlling rule in this area, basically encourages people with financial problems to file bankruptcy in order to protect their security clearances. Filing bankruptcy to cure financial problems… Read More »
Appeals Court Green-Lights Student Loan Forgiveness Program
A federal appeals court has upheld the dismissal of a legal challenge to a key Biden administration student loan forgiveness initiative. The decision leaves intact more than $51 billion in debt relief already granted, and paves the way for more after the Biden administration recently extended a key deadline associated with the program. The… Read More »
How Long Does Bankruptcy Affect Your Life?
When actor and Celebrity Wife Swap TV star Gary Busey filed bankruptcy in 2012, he said it was a wake-up call and an opportunity to create better money management habits. Unfortunately, many bankruptcy debtors don’t answer the phone and don’t make necessary lifestyle changes. These debtors often anxiously watch the calendar until the seven… Read More »
Can You File Bankruptcy on Medical Bills?
Yes. Medical bills, like credit card debts, are unsecured debts. Usually, such debts are dischargeable in both a Chapter 7 and Chapter 13. That’s good news for families. High medical bills are, by far, the leading cause of consumer bankruptcy filings in the United States. Bankruptcy offers relief in other areas as well, mostly… Read More »
Can a Retiree File for Bankruptcy?
Yes, a retiree can file for bankruptcy, but these cases involve some special issues, which we examine below. As late as the 1990s, “gray” bankruptcies were almost unheard of. These filings have increased almost 70 percent since then, even though overall bankruptcy filings have dropped by almost as much. A combination of a longer… Read More »
What is the Downside of Chapter 7?
Credit score effect and social stigma are the two biggest downsides of Chapter 7 bankruptcy. Banks overstate the effects of these downsides, and unfortunately, many people believe bank propaganda. Filing bankruptcy lowers, but doesn’t “ruin,” a credit score. Usually, repeated late payments, chargeoffs, and other negative information have already ruined it. Additionally, while bankruptcy… Read More »
Is it Possible to Negotiate Credit Card Debt?
Yes, it’s possible to negotiate credit card debt without going to court and without filing bankruptcy. That’s good news for many Americans. In 2023, Americans used credit cards for nearly a third of their purchases. With interest rates exceeding 20 percent, at least in most cases, this strategy isn’t sustainable for long. Options are… Read More »
Knowledge and the Innocent Spouse Rule
The IRS recently reworked the innocent spouse rule as part of the fresh start program. This initiative waived some requirements for some payment plans and other programs. IRS bureaucrats didn’t make these changes out of the goodness of their hearts. The fresh start program was designed to increase voluntary compliance at a time when… Read More »
