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Considering bankruptcy? Get real information about your options.
Americans are facing a lot of hardship right now. The pandemic spurred a recession which may hamper the U.S. economy for years. If you've lost a job, seen a reduction in hours, accrued steep medical bills or suffered any other pandemic-related misfortune, you may be wondering if bankruptcy is something you can even consider, much less take advantage of.
Before you decide, though, why not discuss your case with an experienced bankruptcy attorney? You may be surprised by what you learn when you hear the facts and receive case-specific advice.
Are you making decisions based on facts of fiction?
Unless you've really done your research, chances are good that what you know about bankruptcy was probably pieced together by things you've heard or overheard throughout your lifetime. As such, the assumptions you make about bankruptcy may be partially or completely false. That's not a very effective way to make such an important decision. Here are some of the myths about bankruptcy you may have heard or may assume are true:
Tips on how not to mess up a solid estate plan
We are in a historic time of uncertainty and death. Every day, we are faced with news reports of the national crises and accompanying death toll that seems to never stop increasing. Naturally, as a result, many of us are now looking to create or update our estate plans to ensure that, if the unthinkable happens, our families are protected. This may be one of the only bright sides of 2020, though, we must be mindful of the estate planning process to ensure that we do not cause more harm than good.
Tip 1: retitle trust assets immediately
Estate plans often include revocable living trusts. These are used because they avoid probate and some taxes, which ensures that one's beneficiaries have less burdens after one's death and the estate value is maximized. However, this also means that title to one's assets must be put into the name of trust. If one forgets to do this, and they subsequently die or become incapacitated, all the assets not in the trust (i.e., all the assets not retitled into the trust's name) will likely need to go through probate. This, of course, defeated the entire point of the estate plan.
A reaffirmation agreement can help you keep assets
A lot of people who struggle with debt are worried that personal bankruptcy will leave them in a worse position. They oftentimes believe that a Chapter 7 bankruptcy will strip them of all of their assets, making it nearly impossible for them to get back on their feet again. Fortunately, this simply isn't the case. There are a number of bankruptcy exemptions that allow you to keep some assets, and a limited amount of value in other assets, so that you have the financial stability you need to start your life post-bankruptcy.
What if I want to keep certain assets that aren't fully exempt?
Even in these instances you have options. Let's say that you have an expensive vehicle. When pursuing Chapter 7 bankruptcy you can either liquidate the asset and free yourself of any debt attached to it, or you can reaffirm the debt. Reaffirmation is simply the process where you agree to retain the asset post-bankruptcy along with the debt that is tied to it. This can allow you to have a little more flexibility so that you can keep the assets that are important to you.
What happens if you don't pay your credit card bill?
Almost every Geneva area resident has at least one credit card. In fact, the average American has four credit cards. Credit cards are used for every day purchases as well as any emergency that may crop up such as medical expenses, car repairs, etc. Although most people understand the importance of paying their credit card bill each month, sometimes it is not that easy. A job loss, accident, divorce, or other major life event. There are serious things that can happen if a person does not pay their credit card bill.
When a Geneva area resident is unable to pay their credit card bill there are certain things that happen. The following is the basic process that credit card companies follow when their customer does not pay their credit card bill.
Just how important is a power of attorney for healthcare?
When considering all that is entailed in planning your estate, one of the most important decisions you may make is whether or not to include a power of attorney for healthcare. Choosing a spouse, family member or close friend to be your advocate when it comes to your care, the choice of medications, or end-of-life decisions should you become incapacitated, is arguably one of the most important part of your estate planning.
It is important to note two different estate planning tools that involve healthcare. Where a living will is an advance directive that spells out your preferences for end-of-life treatments and the kind of care you do or do not agree to, a power of attorney entrusts a loved one with responsibilities to ensure that your wishes are honored.
Power of attorney under Illinois law
In Illinois, a statutory short form power of attorney for health care empowers the health care agent with decisions concerning health care of the principal. Should your physician determine that you are incapacitated, your health care agent will talk with your caregivers about your condition or treatment, will have access to your medical records and can grant permission to others to see them.
Things nobody warns you about being the executor of someone's estate
When someone trusts you to handle their estate, you may feel both completely honored to be chosen — but watch out. While the process of handling an estate from start to finish usually goes smoothly, the job can be somewhat overwhelming if you aren't prepared.
Here are the problems nobody realizes that an executor can face (unless they've been down that road before):
- Heirs with sticky fingers: Part of the executor's job is making sure that the deceased's assets are all collected and secured before they're disbursed. If you're too trusting, however, one or more of the heirs may decide to help themselves to mom's jewelry or dad's antique watches. If valuables go missing, you may be held to account for them.
- Heirs that are disagreeable: You're only doing whatever the deceased wished, so you might believe that the heirs will respond accordingly. Most will — but some may accuse you of playing favorites or something equally unpleasant. Others may demand that you fork over their inheritance right away, and get angry when you say that you can't.
Are credit cards a scam?
When you start having issues with credit card debt, they can start to feel like a scam. Say you can't afford to pay off the entire balance. The fees are large enough that just paying them off is all you can manage the next month. This process repeats itself over and over until you realize that you've been paying for months without actually making any headway.
Certainly, there are credit card scams. People may try to give you fraudulent cards, they may steal your identity, or they may sign up for cards in your name. These scams do exist and you need to know what to watch out for.
On the whole, though, the idea of credit cards is not a scam in and of itself. In the example above, you're just experiencing the strict penalties that go along with failing to pay the minimum balance. That's not a scam, as you were told how it worked at the beginning.
What it is, though, is a financial situation that is designed to make money for the credit card companies. They charge you hefty fees and interest rates because it's profitable. It's not set up to make it easy to get out of debt. If you're just treading water, that's good for the credit card company. They're making money off of all those fees and interest payments, even if you're not actively using the card anymore because you can't afford it.
Is an irrevocable trust the right choice for you?
When you're considering setting up trusts, something you may want to consider is an irrevocable trust. Irrevocable trusts have a few benefits that you may not see with others.
Why? When you create an irrevocable trust, you're taking assets out of your hands. That means that you can:
- Protect your assets against creditors if you die with debt
- Assign assets to specific children, family members or friends
- Save money on your tax bill by limiting the value of your estate
There are many different kinds of irrevocable trusts, which is why it's a good idea to talk to your attorney about creating one if you're interested. Some possible kinds of irrevocable trusts to consider include:
- Irrevocable marital trusts
- Irrevocable life insurance trusts
Claim back your life with a Chapter 7 bankruptcy
When you realized that you weren't going to be able to catch up on your bills, it upset you a lot. You felt like you were a failure and that you would always be struggling with debt.
You should know that most people go through a situation like yours at one time or another. Whether it's because of a medical emergency, a lost job or another problem, financial issues can be a result. There is no shame in needing help, and bankruptcy is one option that you can pursue.
Chapter 7 bankruptcy is a type of bankruptcy that allows you to eliminate the majority of unsecured debts, like credit card debts or medical bills. In exchange, you may need to give up (or liquidate) some of your assets. You won't always have to give up items in your possession, however, depending on the exemptions you can use and what you own.
Asking ‘what if' when writing a trust
One of the most important things you can do while setting up a trust as part of your estate plan is to ask “what if” questions about the future. These questions can help you plan accurately for your children.
For instance, you may be considering an incentive trust on the grounds that you want your children to keep working. You know that you can leave them enough money that they could quit their jobs. An incentive trust can incentivize them to work by stating that they have to be employed to get a yearly payout from the trust, rather than just leaving them the money.
This all sounds good, but what if the country goes into an economic depression? This is not your children's fault, but they could get fired. Since they're unemployed, they won't qualify for the payout. This leaves them with nothing. Wouldn't you rather set the trust up to help them out at a time like this, when they need it most?
From our office in Geneva, Illinois, we serve clients throughout the region, including the communities of St. Charles, Batavia, Aurora, Elgin, Elburn, Sugar Grove, North Aurora, South Elgin, West Chicago, Fox Valley, Winfield, Wayne, Big Rock, Naperville, Wheaton, and Downers Grove, as well as other municipalities in Kane County and DuPage County.
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