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How Can Bankruptcy Help Me?

• Government Backed Loan modifications take between 30


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