Those considering bankruptcy protection often wonder what happens to property that is subject to a lien. In some cases, a bankruptcy court may set aside or reduce the lien on the property, allowing more flexibility in bankruptcy process. If individuals (or spouse's filing jointly) wish to keep the property secured by a lien, they can also agree to a reaffirmation plan with secured creditors. A reaffirmation agreement is a promise to continue to pay the amount owed despite the bankruptcy, … [Read more...]
HELOC and Bankruptcy Protection
Bankruptcy debt can be secured or unsecured, each subject to different treatment under the Bankruptcy Code. Debt that is secured with collateral of the ‘right to setoff’ or a ‘lien on property’ ensures the repayment of the obligation if a borrower declares bankruptcy. Can an automatic stay protect a home used as collateral for a loan? Many who are considering bankruptcy want to know if they can protect property used as collateral, such as their home (think HELOC) or automobile. Although a … [Read more...]
Should I Take an HELOC to Pay for Repairs to My Home?
Although many Americans look to home equity lines of credit to finance a needed repair such as a new roof or tackle other expenses, it is important to see an HELOC for what it is - a second mortgage resulting in a lien against your home. A home equity line of credit is a home's market value minus any outstanding loan balance giving homeowners access to cash using their home as collateral. Of course, when homeowners take out an HELOC, they increase the risk of losing their home if they are … [Read more...]
Drawbacks of Taking Out a Home Equity Line of Credit
With many Americans shouldering more debt and wages stagnating, home equity is being used as a lifeline to make ends meet. In fact, a recent survey reveals that 1 in 3 homeowners earning less than $30,000 a year and 22 percent of millennials agreed that tapping into home equity is okay to cover their everyday bills. Because many Americans have little savings, home equity often is also used to cover gaps when costly home maintenance is needed or when funds run short for other unexpected … [Read more...]
How to Protect Lawsuit Proceeds in Chapter 7 Bankruptcy
In a Chapter 7 bankruptcy, you can discharge many or all of your debts. As part of the process, the trustee may take your property, which he or she will sell in order to pay debts owed to your creditors. Proceeds from a Lawsuit and Bankruptcy There are some state and federal laws that exempt some property from the bankruptcy estate. However, in the state of Illinois, proceeds from a lawsuit may not be exempt. Money that you have received from a lawsuit prior to filing bankruptcy, money you … [Read more...]
Debts You Cannot Liquidate in an Illinois Bankruptcy
If you are struggling with debt challenges, bankruptcy can be a positive step in order to get a fresh start. While many debts are dischargeable in bankruptcy, some are not. The following debts typically cannot be discharged in either a Chapter 7 or Chapter 13 bankruptcy: Child Support and alimony arrears Many fines, penalties and judgements for violating the law Student loans in most cases Various tax debts Debts you neglected to include in your … [Read more...]