New Member - question about IL exemptions

[drowningNIL]

Hi, everybody. I am so grateful to have found this forum. I have been pouring over this section, exemptions, and also Chapter 13, and more for the past week.

Met with first lawyer about 2 mo ago, he went right away to 13 based on our income & was very rushed and fast with us. Things did not come together and he actually wound up dumping us. Maybe the better for us as we met with a 2nd lawyer last week that wants to put us through as a 7 and said he would fight it if they challenged it. He also said only 1 out of 10 gets challenged. Well that would be our luck the way things roll here. Anybody have any thoughts on that? The odds of it being challenged? The worry is making me sick. The more I read about a 13 the more I feel doomed if that would wind up bieng the case for us.

Our income, although several 10s of thousands over median has dropped 10s of thousands over the past 2 years due to the economy. The only reason we are doing the BK is that when the income startd dwindling, we stopped paying and using the CCs (about 15 months ago totally stopped) and now have a couple summons. We thought we had more time than this, honestly, and could rebound and settle with them, but they have kind of pushed our hand.

We are thinking also that if it comes down to it, we may just go the wage garnishing route vs chapt 13. At least we woould have our financial freedom and not a trustee breathing down our backs for 60 months. Apparently the Ch 13 trustee for our area is relentless.

ok sorry for that long winded history - but my question is this...our house lost about $100K value since 2007 and we are now owing $10K more on 2 mortgages than it's worth - I just looked on zillow for the current value and was shocked. Can we use the Illinois homestead exemptions to protect our stuff or cars? They only allow $2400 each person for cars. We would fall a few thousand short - we have 2 cars, one paid for and the other I put $6K down on and financed. We have our $8000 combined "wild card" but have to use that for our furniture and household stuff. In IL we cannot use the federal exemptions.

Any help? thoughts? Suggestions? Thank you all. I am so sick with worry bout the mess we are in now, but in reading everything here I realize we are not alone and that people get through this. Thanks for the help.

[drowningNIL]

i wanted to edit the post but don't know how. The first chap 13 lawyer didn't dump us due to anything we did, but we had some red flags with him and we were thinking of getting a 2nd opinion but then he said something about due to the complexities of our case he couldn't take us on.

Anyway - I hope somebody can answer my question about the Illinois homestead exemption

Thank you

[Maine]

Maine has the same "no federal exemption" rule as IL. I wish all the states had the same rule, it would be a lot easier to help each other if we had a standard set of rules to follow.

Have you checked kbb.com or edmunds.com for the value of your cars? You want to use the trade-in value, or wholesale (which ever they show as a choice.)

No other ideas except make sure you use every possible expense that you can justify, that may get you under the "disposable monthly income."

Good luck!
A friend in Maine

[drowningNIL]

Maine has the same "no federal exemption" rule as IL. I wish all the states had the same rule, it would be a lot easier to help each other if we had a standard set of rules to follow.

Have you checked kbb.com or edmunds.com for the value of your cars? You want to use the trade-in value, or wholesale (which ever they show as a choice.)

No other ideas except make sure you use every possible expense that you can justify, that may get you under the "disposable monthly income."

Good luck!
A friend in Maine

Hi, friend in Maine...so do you think the state homestead exemption cannot be used as a wild card like the federal one can?

ugh. I think we are going to have to see about using the wild card $8K more frugally haha. I told DH they can come to my house and take whatever they want. I want my cars. We need them both....my 10 year old furniture eh not so much.

Good luck to you, too!

A friend in IL

[Maine]

I don't know your situation but these are things my lawyer told me" My dh travels for work? Traveling may make the car a "tool-of-the trade" and not just a personal vehicle. For us it doesn't make much of a difference because we have no equity, but I thought it might help someone to have this info.

[tcreegan]

Homestead vs wildcard

Hello drowningNIL,

Your wildcard can be used to exempt vehicles, but you cannot use the homestead exemption for anything except the house.

For vehicles you and DH are limited to $2400 x 2 = $4800 + whatever wildcard you want to apply. Wildcard in Ill is $4000, which I assume is doubled in a joint filing. So max on cars = $12,800 for Ill.

BUT....if you are "10's of thousands over median" I can't see any way possible to do a Chap 7. I think the 2nd lawyer is feeding you a line of .....
You need to pass the means test to do a chapter 7, this is filed with the bankruptcy petition. The only "challenge" would be for the expenses you claim. No matter what, I think being 10K+ over median would raise flags with the US Trustee and they would look into your case.

Chap 13 is probably where you need to be, despite the relentless trustee. Get a third opinion from a lawyer that is not committed to either 7 or 13 but will reasonably evaluate your case. Ask what exactly the trustee can do, I think the main fight will be between the trustee and your lawyer getting a plan approved, and then it is just a matter of you sticking to the plan. BUT....I may be wrong about this.....I am not a Ch 13....

Tom in Colo

[drowningNIL]

thanks for the replies. i am obsessed on this whole forum now. I can't pull myself away.

in reading Tom in CO's reply I have a queasy stomach. I got a much better feeling about the 2nd lawyer though and his confidence for a 7. We went in there thinking 13 was our only option. He's been doing only BKs for 30 years. The first one was a mill I think but had about 10 yrs experience. Things just did not add up with the first, and he made many mistakes on our deductions (even off DH's paycheck) and then when we called him about it he never returned the call. We emailed him a list of the errors and a week later he emailed his reply that he didn't feel he could take us on due to the complexities. If we don't like what this 2nd one says in the next few days we will move on. I have another name. I was just so stnned he would attempt the 7 I was literally numb and don't remember a lot of what was said except he scared the sh*t out of us with the 13 info he gave. The first lawyer was not in our area - and he recommended we go to one in our area- he mentioned the 13trustee, too.

DH"s salary dropped so much and we have our tax returns as proof...our life before this loss of income supported our debts. now the reality is we cannot.

guess what came to my door just a bit ago? another summons. So we have to make a move asap I am feeling pressure.

I think instead of a 13 we would go wage garnishing. It would probably be about the same amount and we would have the opportunity to take on more income from 2nd jobs vs having a ch13 trustee keep us smacked down & poor.

Our lives have changed so much over the past couple years. I don't want my kids to suffer and with a 13 I believe they will from what I have read here & what I was told.

This make me sick.... That should be my user name.

[drowningNIL]

Tom...we did the means test at legal consumer. We have either $6 DMI or almost $200 depending on if I include some things or not. (recreation, library card, kid activities, and a copule other things)

[CreditCretin]

We are filing in Illinois as well. As another person said, the homestead exemption will only cover the house. To save the vehicles you'd have to have enough left from your wildcard exemption to cover it. Keep in mind when you are valuating your furniture and clothes, that you need to 'value' them at what you'd get if you sold them in a garage sale, not what they are 'worth' to you. So that five year old 1000.00 leather sofa is probably only worth 75.00, maybe less in this economy, if you put it in your yard and tried to sell it. As for your median income you can be over it, and still qualify for a Chapter 7. It depends on your means test AND your schedule J (I think it's the J). If your mortgage payments/property taxes are high (which if you're in northeastern Illinois they probably are) then those are valid expenses that lower your DMI.

We interviewed four attorneys, and two wanted us in a 13 right away, just because of our income. They didn't even look closely at our circumstances. The other two said, that while our income was a little higher than medium, we had a fighting chance for a 7 as we had valid expenses and also some special circumstances. I have found, at least here in Illinois, that some attorneys just seem to like to push you into a 13. Not sure if it's easier for them, or less playing with the numbers, because it costs more, or what..... Go with your gut instinct when picking your attorney. It doesn't hurt to interview a few, however. Good luck.

[drowningNIL]

thanks for the replies!

ok so we have a total of $12800 we can expense. Our cars will probably suck most if not all of that out of us. So dumb question....we WANT those cars. NEED them actually for work etc. Can we say OK take our house stuff? Or will they automatically take a car then if we have say... $15K in stuff totals once we exempt? How does that work if you are cutting it close? Doesn't it have to be worth their time to collect the stuff and sell it? Would it be worth it to them for $2K? We owe a lot.

I have nice things but haven't bought furniture in 10 years. They can have it but we need our cars to start over fresh.

I am not sure why we got such varying info from the 2 lawyers. That does make me uneasy. The 2nd has much more experience (30 yrs) and in our district vs the first who was not. I know a 13 costs a lot more money. But then I am such a skeptic wondering if this Ch 7 attempt is just BS to get us to use him and then we'll wind up converting to a 13 anyway once we're sucked in. We felt numb when he told us how a 13 would really work in our district and the details & description of the trustee....and then so hopeful when he said we should go for a 7. It all hinges on what they will allow as expenses I guess where we are at on DMI.

Thanks for the help. I appreciate it so much.

Sick & nervous in IL

[anonemoose]

Did you talk to the attorney in depth about your cars? The court/trustee doesn't automatically make you sell them, especially if you need them for your livelihood. You may have to reaffirm the loan with the bank to tell them that you will make the payments.

As far as your home possessions go, do not put a purchase value on them. Period. They are not worth what you paid for them. Instead, you take everything you own and give it a garage sale value. How much will your pots and pans fetch you? $20? There's your value.

Call either a wrecking company aka car buyer to find out what they would pay for your car if the cars are older. Or go to a Carmax to get a purchase price. Carmax will give you the valuation on paper. I used a wrecker valuation on my car because it's 11 years old, the body's seen better days and it has high mileage. The trustee was fine with it.

If you're in the NE section of Illinois, there are plenty of bankruptcy assistance places that you can find via the Northern District's website. Go to "filing without a lawyer" on http://www.ilnb.uscourts.gov/ If you're really concerned about the lawyer, go to a legal aid office and offer a donation for their time.

[drowningNIL]

thnk you for the replies. this is a great forum full of helpful people & i appreciate is so much. no judging one another.

i am not concerned about the lawyer. it's taken care of. we are lucky that way

my problem would be the cars mostly. they are both under 5 yrs old. we had leased our cars forever, but when we saw the writing on the wall for us, we had a plan for when the leases ended we would buy vehicles so not to worry abou our credit being trashed and not able to buy anything. one car is financed and the other owned outright. when we financed we put $6K down to make the payments reasonable...well now they fall below what's "allowed" and we have the equity in it and the owned car that will suck up our exemptions. We emailed our questions to the lawyer's office. He is experienced so hopefully he can work the numbers out. yes we do need the cars for work so that is a good point.

if some trustee wants to hold a garage sale of my pots and pans and odds and ends, he/she is welcome to it, but we need our vehicles.

thank so much for all the help and suggestions.

[SMinGA]

If you want to list it here perhaps people can offer feedback on your budget. If you don't want to list it, that's fine but these are things for you to assess.

What is your net income monthly? Mortgage, car payments, insurance, utilities, groceries, gas/vehicle maintenance, clothing, personal care, household needs, medical, daycare, etc.? How many in your family? Are your withholdings accurate, meaning do you normally owe taxes or get a big refund at tax time? If yes to either - you may need to adjust withholding.

Do you have any 401k loans being repaid now thru payroll deduction? How much & how long remaining? These will NOT be counted as expenses in ch. 7, but will in ch. 13. 401k contributions might not be counted as an expense in a 7 either.

Ch. 13 is not a death sentence. It can be used to keep your creditors at bay in a way where you are in control. Yes, the trustee is involved. But its a question of what DMI you have, based on your real and reasonable expenses. Some cutting back may be necessary, but if you work with a good attorney to account for your necessary expenses, you'll be fine.

If you are over median income - ch.7 is not out of the question but it really depends on your expenses. If you claim $1500/mo in groceries & eating out - unless its a huge family you are going to have to buckle down and live on less. (Just an example, was not trying to say your expenses are out of line.)

[drowningNIL]

Thanks for the info.

I keep going over my numbers and expenses. Trying to thnk if there is anything I left off, but I don't think so.

I am just a little too paranoid to post my facts here. But I appreciate your suggestions for expenses.

[SMinGA]

Not a problem.

Actual expenses go on schedule J. You can compare your #s to the IRS figures used in the means test. It has amounts based on your family size for food, clothing, etc. And it has #s based on your state/county of residence for housing, utilities, etc. But if your mortgage, utilities are higher - you can still use them. Some things are not covered in IRS guidelines. Child care, for example, I don't believe has a standard. Telecommunications does not have its own category - I think most put them in the 'misc' category for the IRS standards, or perhaps some things like basic cable/basic phone go into utilities. I imagine this can be an area where if you are high in expenses, it depends on the district & trustee.

You can look for any areas where you are over. Some people 'hide' questionable expenses in areas where you're under. For example, cigarettes might be included in groceries. That really only works if you're under in groceries of course.

There may be reasons why you are over in some. Such as if you may have someone w/ food allergies that increases the grocery expense, or someone in your family may have a medical condition that requires special shoes. (That would increase clothing costs.) For those sort of situations, discuss w/ your atty and document. They may be questioned - but you'll be prepared.

One area that makes it very difficult for 7 is if you have 401k loans you're repaying. Those do not get counted as expenses in a 7, yet you probably can't just stop paying them. They get counted in a 13. It can put someone in a position of having too much dmi for a 7, but not enough for a 13.

Thanks for the info.
...
I am just a little too paranoid to post my facts here. But I appreciate your suggestions for expenses.