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Turn, Cough, and File For Bankruptcy

Many people think they are immune from bankruptcy. They believe it won't or can't happen to them, because they are prudent, frugal, careful and exercise good judgment.

What they don't understand is that the majority of bankruptcy cases are necessitated by circumstances beyond one's control. Specifically, medical debt. Even those with medical insurance can easily incur medical debt in excess of their policy coverage.

As reported on CNN, in a study conducted in 2009, Steffie Woodhandler, M.D. of the Harvard Medical School (yes, that Harvard), and her colleagues found that over 60% of bankruptcies were caused either directly or indirectly by medical expenses. Some were the result of people taking out second mortgages to pay the medical bills, or running up credit cards, while others were simply already in bad shape and the sudden additional medical debt pushed them over the financial cliff.

For those who attempt valiantly to deal with medical and other debts before filing bankruptcy by mortgaging their properties and maxing out their credit cards, here's a suggestion: consult with a qualified bankruptcy attorney in your area first.

Most attorneys offer no-obligation, free initial consults to help you determine your bankruptcy options. In many cases, it is much easier and more effective to file bankruptcy sooner, rather than later (for example, after you've spent 4 turmoil-ridden years attempting to make payments that you simply cannot afford to make, only to realize then that you need bankruptcy).

It never hurts to learn about your options and bankruptcy, whether under Chapter 7 or Chapter 13 , it should be on everyone's checklist as soon as they think it might eventually become necessary in their life. It can save you literally thousands of dollars, not to mention years or unneeded aggravation and stress.

This Guest Blog Post is Authored by: Mark J. Markus, a bankruptcy attorney practicing in Los Angeles, California. He is AV-rated by martindale.com and has handled exclusively bankruptcy cases throughout California since 1991. See his blog page at http://www.bklaw.com/bankruptcy-blog/

A Letter from the IRS: Dealing with a Personal Property Lien

Receiving that dreaded letter from the IRS regarding a personal property lien can be very nerve-wracking and confusing. Many people will wonder ‘What does a lien mean for me?’ Well, a tax lien can be put on your home or other assets and can make things very complicated for you. A lien is not issued to immediately take over your property. However, if the tax is not paid or if the lien is not otherwise dealt with, it can impede your ability to deal with your personal property.

There are a few things you should understand about a tax lien right off the bat:

• A tax lien can be put against your motor vehicle, home or rental property, bank account or your earnings.
• Once there is a tax lien against your asset it makes it impossible for you to refinance your car or home.
• You cannot sell or transfer a piece of property as long as there is a tax lien on it.
• A tax lien will prevent you from borrowing any equity from your home.

Anyone can receive a letter from the IRS stating that a personal property lien has been issued against their assets. According to CNN.com the IRS just issued a tax lien against singer Lionel Richie for unpaid taxes. If it can happen to Lionel, it can happen to you! However, there are a number of things you can do to avoid the situation, or get rid of a personal property lien.

Avoiding a Lien:

Paying all your taxes in full and on time is the number one way to avoid a personal property lien. However, if your financial situation is such that you can’t file or pay on time, don’t ignore correspondence or letters from the IRS. If you can’t pay the full amount you owe, payment options are available to help you settle your tax debt over time:

• Installment Agreement: Allows you to pay your taxes over time, if you qualify.
• Offer in Compromise: Allows you to settle for less than you actually owe, if you meet certain requirements.

You will receive a letter from the IRS releasing your lien within 30 days after you have paid your tax debt.

Get Rid of a Lien:

If conditions are in the best interest of both the government and the taxpayer, these other options may be possible for reducing the impact of a personal property lien.

• Discharge of property: This allows property to be sold free of the lien. A discharge of a tax lien removes the lien from a specific property, but the lien remains in place on any other property.
• Subordination: This allows other creditors to move ahead of the IRS, which may make it easier to get a loan or mortgage. However, it does not remove the lien.
• Withdrawal: This removes the public notice and assures that the IRS is not competing with other creditors for your property. Liens will now be withdrawn once full payment of taxes is made if the taxpayer requests it. Additionally, the IRS has indicated that the following withdrawal scenarios are not available:

1. Lien withdrawals for taxpayers entering into a Direct Debit Installment Agreement.
2. The IRS will withdraw a lien if a taxpayer on a regular Installment Agreement converts to a Direct Debit Installment Agreement.
3. The IRS will also withdraw liens on existing Direct Debit Installment Agreements upon taxpayer request.

If you have received a letter from the IRS regarding a personal property lien, Chang & Carlin can help you deal with the situation. Request a Free Consultation today to learn more about our real estate legal services. Real estate transactions can be extremely complex, and having a lawyer to help you through the process can make life a lot easier and protect you and your family.

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Bankruptcy in America: The Road to Recovery

Bankruptcy in America has been on the rise since the financial crisis upended so many individuals and businesses. Taking on a significant amount of debt was common during the days of the early 2000’s and people felt justified in banking that their job, business, and other investments would remain secure enough to allow a certain level of expenditures. When the bubble burst, those mortgages, student loans, long-term leases, and credit card debt became extraordinarily difficult to pay off. For those who lost a job, switched to a job with lesser pay, had their hours reduced, had a business fail, or have been unable to find work out of school bankruptcy has been an option that offers a fresh beginning.

The challenges on the road to recovery may seem daunting, but there are many things you can do to get your financial status back on track. The following tips can help if you are currently recovering from bankruptcy:

Don’t try to do everything yourself: Seek help! There are many for-profit and non-profit local financial counseling organizations all over the country that can provide support and strategic advice. Additionally, online and local communities of people going through the same thing can be a useful outlet.

Examine what caused the bankruptcy and address any issues: It is crucial to develop a plan to both recover from bankruptcy and stay out of trouble in the future. Make sure you tailor any plan to fit your situation. Creating a new budget, starting a career development plan, and looking for different types of employment may put you in a better position to avoid future financial turbulence.

Set goals: The road to recovery might mean striving to establish a solid credit score, reducing spending, or paying off all debts. Setting goals give you something to work towards, and can help you stay motivated, giving you a sense of accomplishment when you achieve your goals.

Pay your bills on time: Improving credit is a big part of recovering from bankruptcy. Your bill-paying habits account for approximately 35% of your credit score, which is the single biggest factor in what determines a score. This means that making on-time payments is an effective way to improve your score over time.

Watch out for predatory lenders: Bankruptcy in America sometimes means that certain lenders will specifically target you, as a bankruptcy filer. This is why recent filers should be wary of deals that sound too good to be true and/or carry high interest rates. You may be so eager for credit approval that you agree to contracts with high interest rates, but this is risky and may lead toward the same situation you went through bankruptcy to escape.

Keep an eye on your credit score: Recovery from bankruptcy definitely does require some initiative on your part. Be aware that your credit score may contain old or inaccurate information, which can affect everything from job applications to car loan rates. Removing incorrect information could improve your score in surprisingly significant leaps and bounds.

Re-establish credit: A strategic move, such as taking out two credit cards, buying a limited amount of items with them, and paying them off fully each month will improve your credit score.

Stay positive: This is a fresh start. You have escaped that cloud hanging over you and you now have an opportunity to start over. The good news is, once debts are cleared, most people's credit improves after filing for bankruptcy. Bankruptcy can affect lenders view of you as a risk, but they will also note your lack of debts, and many will give you a chance. Stay focused and stay positive, you are on the road to recovery!

Recovering from bankruptcy in America is a process. Don’t get discouraged- there are plenty of good people in the same boat, and the bankruptcy system is there to help people get out of tricky financial situations. Chang & Carlin, LLP can assist you with your bankruptcy legal services, and work with you on the road to recovery from financial turmoil. We offer reasonable fees to meet your legal needs while filing for bankruptcy. Our goal is to improve your financial outlook. Request a Free Bankruptcy Filing Consultation today.

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Real Estate Property Rights

Real estate property rights may seem straightforward enough to most of us -  “I own this land, therefore I can do what I like on it and with it.” Regardless if this should be true or not, a deeper look into real estate property rights reveals a complex and shifting array of laws and precedents. As an asset, real estate is unique in several ways, which is a characteristic that has led it to be treated very differently than any other asset in law. For example:

1. No parcel is exactly like another
2. It is fixed in place
3. It is finite in quantity
4. It can outlast any of its owners
5. It is necessary for almost every activity humans do

Real estate is treated differently for economic reasons as well. For instance, land use can have a huge impact surrounding property values and the conversely, the primary source of value in real estate is largely external to the property lines. Just as a dilapidated home can drive down the value of neighboring property, a terrific home can be worthless in a destitute area.

An interesting note, according to real estate author Donovan D. Rypkema, “Probably no one influenced the drafters of the U.S. Constitution more than the English political philosopher John Locke - especially on property rights. If there is a single individual who has most affected American political traditions on property rights it is Locke. He was a vociferous property rights advocate. It is Locke that is usually cited in the more historical of the property rights arguments.”

Therefore, most laws in the U.S. are built upon Locke’s philosophy, in fact, Mr. Rypkema writes that, “...for Locke the reason societies are created in the first place is for the protection of property. What is the reason land use controls are created in the first place? For the protection of property.”

However, while we have many real estate property rights that exist to benefit the owner of the property (within reasonable limits), there are many laws which restrict individuals property rights. The following are a few examples:

• Condemnation: If the government condemns your land for public use, such as for a highway extension, you have a right to fair compensation for your property. However, the government has a long history of forcing individual property owners off their land.
• Homeowners' Associations: Over 50 million Americans currently live in communities run by Homeowners' Associations. As Homeowners' Associations manage common areas in a housing development, you may find you don't have the freedom to do everything you like on your property. Many have very strict rules and regulations.
• Re-zoning Disputes: According to author James Bovard, “Modern zoning laws presume that no citizen has a right to control his own land — and that every citizen has a right to control his neighbor’s land. In zoning disputes, property rights, like some type of mysterious vapor, reside any place except with the property owner.”
• Easements, Restrictive Covenants and Rights of Way: Neighbors may be encroaching on your land. These cases can be very complex due to variations to boundaries and property ownership confusion.
• Partitioning or Dividing Property: If you own land with another person as a tenant in common, you have the right to partition the land so you can own a piece of it individually. However these divisions must occur on a case-by-case basis due to the variations in property size.

Real estate transactions are governed by a wide body of federal statutes, a combination of state statutes and common law. The requirements established by state law often differ significantly from one state to the next, so if you are in the middle of a real estate dispute, hiring representation is essential. Chang & Carlin, LLP have built excellent relationships with clients over the years and we would appreciate the opportunity to serve you and your family in times of economic stress.

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Who Can Garnish Your Wages?

The question, “Who can garnish your wages?” might as well be, “Who can’t garnish your wages?”. This is only a joke of course, but the truth is that your wages may be garnished in several scenarios, including the following: if you owe child support, student loans, back taxes, or if a court judgment has been entered against you.

Technically, a wage garnishment is a legal procedure which requires an employer to withhold some portion of a person's earnings for the payment of a debt. This is how it works - once state and federal taxes are withdrawn from your paycheck you are left with disposable earnings, which are up for grabs if you are in debt to a creditor. In general, the creditor may garnish a certain percentage of these disposable earnings, depending upon what you owe. This amount is withheld by your employer rather than your creditor.

The following is a more in-depth look at who can garnish your wages:

Child Support and Alimony

According to the Institute for Research on Poverty, in October of 1988 a welfare reform act became law. The act had the following objectives:

“The stated purpose of the act is to revise the AFDC (Aid to Families with Dependent Children) program to emphasize work, child support, and family benefits, to amend title IV of the Social Security Act to encourage and assist needy children and parents under the new program to obtain the education, training, and employment needed to avoid long-term welfare dependence, and to make other necessary improvements to assure that the new program will be more effective in achieving its objectives.”

One of the program’s objectives was creating more stringent child support collection laws. Thus, child support orders have included an automatic wage withholding order since the law’s inception.

Wage garnishment for child support can take a greater portion than other forms, in fact, up to 50% of your disposable earnings can be garnished to pay child support if you are currently supporting a spouse or a child who isn't the subject of the order. Additionally, up to 60% of your earnings may be taken if you aren't supporting a spouse or child.

Student Loans

In 2006, Congress passed a law that allows the U.S. Department of Education to garnish - “the amount deducted for any pay period may not exceed 15 percent of disposable pay, except that a greater percentage may be deducted with the written consent of the individual involved”. In addition, no lawsuit or court order is required for this type of garnishment.

At least 30 days before the garnishment is set to begin, you must be notified in writing of all the procedure involved with the process. Finally, according to the law you may be able to suspend garnishment if you returned to work within the past 12 months after being laid off or fired.

Back Taxes

Owing money to the IRS puts you in a tight spot. They will take a big chunk of change and can do so at any time. The percentage depends on how many dependents you have, along with your standard deduction amount. To start the process, the IRS sends a wage levy notice to your employer, who is required to give you a copy of the notice.

According to the IRS, “A levy is a legal seizure of your property to satisfy a tax debt. Levies are different from liens. A lien is a claim used as security for the tax debt, while a levy actually takes the property to satisfy the tax debt. If you do not pay your taxes (or make arrangements to settle your debt), the IRS may seize and sell any type of real or personal property that you own or have an interest in. For instance, we could seize and sell property that you hold (such as your car, boat, or house), or we could levy property that is yours but is held by someone else (such as your wages, retirement accounts, dividends, bank accounts, licenses, rental income, accounts receivables, the cash loan value of your life insurance, or commissions).”

State tax collectors may also be able to grab some wages as well, but in many states the law limits how much the state taxing authority can take.

Court Judgments

The winner of a lawsuit, be it a person or entity, is a party who can garnish your wages pretty easily by simply providing a copy of the court order to local authorities. The authorities will then forward it to your employer. Although some states may set a lower percentage limit for how much of your wages can be garnished, the federally required amount that can be garnished is anywhere up to 25% of your disposable earnings.

Furthermore, your employer is required to notify you of the following:

• Initiation of garnishment.
• The withholding part of your wages.
• The sending of garnished money to your creditor.
• Providing information on how you can protest garnishment of your wages.

Creditors must sue you and win, then get a court order requiring you to pay what you owe. They cannot just begin garnishing your wages whenever they like.

What can you do to avoid wage garnishment?

1. Stop borrowing money immediately. As your debt-to-income ratio increases, the ability to enjoy ‘normal’ rights on the loan decreases. Which can lead a creditor to decide to force wage garnishment upon the debtor that is already super late on monthly payments.
2. Determine which debt sources are most at risk for garnishment. Late payments, multiple attempts from the creditor to collect the debt, and multiple payments with insufficient funds in the bank are all clear red flags. Prioritizing these debts and addressing them can curtail later wage garnishment.
3. Work to negotiate a deal with creditors who can garnish your wages. There have been cases where debts have been settled for a fraction of the total debt.
4. One of the most crucial things you can do is to attempt to set up a payment plan as soon as you possibly can if you owe money to a creditor, who has received a judgment against you. The longer you ignore the debt or judgment, the more likely it is that a creditor will seek a garnishment order against you. But if you wait until the garnishment has already been ordered, chances are good that you won’t be able to stop it.

Going up against creditors, the IRS and dealing with complicated tax issues can be a daunting and scary process. You don't have to deal with these issues alone. A tax and IRS lawyer at Chang & Carlin can help you get the legal representation you need. We can help with IRS Audits, IRS Appeals, Federal Refund Litigation, Tax Court Petitions, Tax Liens, and more. Request a Free Consultation today.

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Chapter Seven Bankruptcy: What is it?

Facing Chapter Seven Bankruptcy is a daunting prospect for those who do not understand the process. Most people live in fear of bankruptcy and may be afraid to consider going to bankruptcy court. However, despite the presence of that dreaded “B” word, opportunity is the light at the end of the tunnel. Understanding Chapter Seven bankruptcy laws and how they can benefit you is a big step on the journey to financial recovery and future success. One of the biggest advantages to declaring Chapter Seven is that you can put an immediate stop to the creditor threats and harassment.

So what exactly is Chapter Seven Bankruptcy, and how can it help you? Sometimes referred to as liquidation, this form of bankruptcy can be a way for individuals (and some businesses) to eliminate unsecured debt when they are in over their heads with monthly payments.

Discharges A discharge can take care of money owed on credit cards, medical bills, personal unsecured loans and many other types of unsecured debt. According to the US Federal Court’s website, a discharge “...releases individual debtors from personal liability for most debts and prevents the creditors owed those debts from taking any collection actions against the debtor. Because a discharge is subject to many exceptions, debtors should consult competent legal counsel before filing to discuss the scope of the discharge.”

Automatic Stay Additionally, an automatic stay will stop most collection actions against you or your property. As long as the stay is in effect, creditors may not initiate or continue lawsuits, wage garnishments, or those harassing telephone calls demanding payments.

Potential Loss of Property However, potential debtors should understand that filing a petition under Chapter Seven may result in the loss of property. In the ensuing case, the bankruptcy trustee will gather and sell the debtor's nonexempt assets to pay creditors. Additionally, some of the debtor's property may be subject to liens and mortgages which pledge the property to other creditors. Moreover, the trustee will liquidate the debtor's remaining assets. The news is not all bad though, as bankruptcy court allows certain property to be exempt from liquidation.

What is Exempt From Chapter Seven Bankruptcy? There is a category of debt classified as “non-dischargeable debts”, which include child support, student loans and most types of tax related debt. Additionally, whether certain property is exempt and may be kept by the debtor is often determined by state law. Consulting an attorney is important in order to determine the exemptions available in the state where the debtor lives.

Secured vs. Unsecured Debt Bankruptcy court will not automatically discharge liens such as your mortgage. If you want to continue to own your home or car, you will need to continue making payments. It is possible, under Chapter Seven to give the “security” back and discharge the remaining debt along with the rest of your unsecured debt. You will need to negotiate a reaffirmation agreement with your lien holders where you continue to make payments in exchange for keeping your property. A reaffirmation is an agreement you make with a creditor that you will remain liable and will pay all or a portion of the money owed, even though the debt would otherwise be discharged in the bankruptcy.

The process may be daunting to think about, but it does not actually take very long to complete; typically, cases only lasts three to four months from the time your Chapter Seven attorney files a case in bankruptcy court on your behalf. After that you will have a fresh start and a plan to stay debt-free. Let Chang & Carlin, LLP help you determine what your options are and create a road map to help you get out of debt; request a Free Consultation today.

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Development of Property: Background for Condominium Developers

The development of property for a condominium project requires entirely different legal documentation than other type of real estate. The reason for this seems to be that while condominium development is in the real estate field, it has a distinct set of laws. While the traditional form of home-ownership encompasses the house and the land upon which the house stands, the purchaser of a condominium acquires exclusive ownership in the unit, along with a shared interest with other unit owners in the common areas of the structure the unit is a part of. The condominium owner has individually responsibility for the interior of their unit, which is the space enclosed by legally pre-determined boundaries. These boundaries are the interior surfaces of the perimeter walls, floor, and ceiling of the living space.

The owners' stake in the common (or common elements) is unique and a collaborative practice. Expenses such as the maintenance of grounds and buildings, swimming pools, clubhouses, and other amenities, are shared for these common areas and facilities. This shared responsibility for some of the more costly parts of home ownership has made the condominium lifestyle very popular.

This popular practice itself actually goes back a millennia. Donna Bennet of the Salmon P. Chase College of Law provides an interesting overview of the history of condominium use: “According to many scholars, the concept of condominium is quite old. Albert Ferrer states that “there is at least one record of the sale of part of a building, in ancient Babylon (modern Iraq), during the First Dynasty, nearly two centuries before the birth of Christ”, and that there is evidence of the use of the system among the Greeks, Egyptians, and others. It was during the Middle Ages, when walls were constructed to enclose cities in order to provide security, that building space became even scarcer in many European cities. This lack of space led to individual ownership of parts of a building, sometimes even individual ownership of single rooms, in cities such as Orleans and Paris. J. Leyser states that this “ownership of floors of houses, and even rooms, in the hand of different persons was common in various parts of Europe”. The condominium concept of home ownership became especially widespread in the French cities of Nantes, Saint Malo, Caen, Rouen, Rennes, and Grenoble. “In Rennes a catastrophic fire in 1720, which destroyed most of the city, forced inhabitants to build under a new system of wider streets and taller, multi-family buildings. The experiment was so successful that the system was firmly adopted.”

How to initiate a condominium development: Condominium developers who wish to create a condominium must declare their intent with the recording of the declaration, as well as the bylaws and floor plans. With these documents the project has its legal inception. The development of property requires that these documents be filed with the recording officer within your jurisdiction.

What properties can be a condominium? According to author Ernest Henry Breuer, a condominium could be any of the following: a high-rise apartment building, a housing development, an office building, a shopping center of an industrial complex where each apartment, attached or semi-detached unit, office space unit is individually owned, with shared ownership and control of common areas and facilities. In each of these scenarios, the unit owner has a fee interest which may be sold, exchanged, mortgaged, and separately assessed for tax purposes. The development of property from existing structures is also possible.

So what should condominium developers know before creating more condominiums? Today’s condominium development practices are common, but require significant legal skills to traverse. Each type of condominium requires a specific legal framework encompassing every aspect of construction and sale. For simple "exclusive" private ownership condos, undivided “shared ownership” condos, or more complex arrangements, our real estate development attorneys work closely with developers every step of the way to produce optimal results.

When considering the development of property, hiring an attorney is advisable for individuals and condominium developers alike.

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What Property Exemptions Can I Claim During Bankruptcy?

Property exemptions are a way to help you get a fresh start during bankruptcy proceedings. Bankruptcy offers you a new beginning if you've been overwhelmed by debt. It can be very useful, as your debts are discharged, wiped out, or you can have a chance to pay them off over time. A major downside is that some of your property may be sold to pay your creditors. Despite this risk, bankruptcy proceedings are not in place to strip you of everything. The laws were designed to leave you with enough assets and possessions to make a new start.

One of these laws allows a number of property exemptions, which won't be used to pay your creditors' claims. These exemptions are tools which help you to start fresh on the path to a clean slate. The following is a list of a few types of property exemptions that protect you from creditors:

• The Homestead Exemption: This exemption refers to the house that you live in. You can use this exemption if you are filing for bankruptcy to protect equity in your house as long as you live in the house in question. While state homestead exemptions vary quite a bit, the federal homestead exemption was $21,165 as of 2011.
• Motor Vehicle Exemption: Bankruptcy filing law protects a certain amount of value of any one motor vehicle listed in your U.S. federal bankruptcy. Additionally, if you file bankruptcy with a spouse it is possible to combine vehicle exemptions to protect double in vehicle equity, as long as both parties are on the title to the car. As of 2011, the federal exemption for an automobile was $3,450. The equity in your car is based on the car's market value, minus any loans against it.
• Life Insurance Proceeds Exemptions: The federal exemption protects any payment under a life insurance contract that insured the life of an individual of whom you were a dependent, to the extent reasonably necessary for your support or the support of your dependents. The federal exemption of life insurance is a $10,775 of life insurance policy with loan value in accrued dividends or interest along with disability, illness or unemployment benefits, life insurance payments from policy for person filer depended on, and matured life insurance contracts.
• Retirement Assets: The federal exemption (and most states) applies to pension, profit sharing and stock bonus plans, Individual Retirement Accounts (IRAs), and deferred compensation plans such as your 401(k) account and other funds.
• Personal Property: These exemptions are allowed under federal and state bankruptcy laws. As of 2011 the total federal exemption was $11,525, although no one item can be worth more than $550. As items in this category usually have little resale value, this type of property is usually safe from trustees attempting to sell it to repay your creditors. Animals, appliances, books, crops, clothing, furnishings, household goods, and musical instruments are included in this category.

Bankruptcy proceedings differ from state to state, as do the types and amounts of property exemptions. Even though bankruptcy is federal law, and many states have similar procedures on handling Chapter 7 and Chapter 13 bankruptcy, you want to make sure you fully understand any state specific laws. An experienced bankruptcy lawyer like those at Chang & Carlin can help you navigate the complex world of bankruptcy proceedings. At Chang & Carlin, LLP, we work to represent individuals and families going through difficult economic times.

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Closing a Business: Going Bankrupt

If you are closing a business due to bankruptcy, it is important to know your options. Eight out of every ten business owners will face serious financial problems at some point. Financial issues can occur for many reasons, whether it is the overall economy or a poorly conceived business strategy, there are really only 3 viable choices for a business when facing the financial crunch:

• Find a way to secure more financing
• Default on your loan
• File for a business bankruptcy

Going bankrupt is the simplest way to escape those relentless creditors, but it creates a red flag for your future financial endeavors and hurts your credibility as a business owner. Unfortunately this can lead to both business and personal issues down the road.

If you are closing a business and going bankrupt, you can file under one of three chapters of bankruptcy - Chapter 7, Chapter 11, or Chapter 13. In some cases your business must shut down during bankruptcy, while in other cases your business may remain open. Bankruptcy may be a way to get out of an oppressive lease and provides an orderly way for closing a business. While it can create a black mark on your credit score, filing for bankruptcy does not stop you from trying again and starting a new business in the future.

The following are the different types of bankruptcy and how they could apply to you if you are closing a business:

Chapter 7 This chapter is available for those businesses that are closing permanently. Although valuable assets may be liquidated and used to pay off the debt, this chapter of bankruptcy releases the filers from any obligation to pay. Chapter 7 is available to any type of business.

Chapter 11 Since corporations do not qualify for a Chapter 13, Chapter 11 is available, allowing businesses to reorganize debts and gradually pay them off. Businesses can even remain open during the bankruptcy process while they pay off their debts, and have 6 years to do so. Chapter 11 is available to any business, including corporations.

Chapter 13 Sole proprietors can file for Chapter 13, although they must file as individuals with business debts for which they are personally liable. Upon filing, an automatic stay is initiated, which prohibits the creditors from making any attempt to collect their debt, including starting foreclosure and repossession. Corporations may not file for Chapter 13.

You may have to close your business down if you file for Chapter 7 personal bankruptcy. However, you may be able to keep your doors open if you own an LLC or corporation with the other Chapters, even if you’re liable for a significant portion of its debt.

Even though bankruptcy is federal law, and most states have similar procedures on handling bankruptcy, bankruptcy filing law differs from state to state.This is why it is a good idea to always consult with a bankruptcy attorney from the state where your case is taking place.

The lawyers at Chang & Carlin, LLP are sensitive to the difficult decision you may be facing and are here to help you through this tough financial and personal time in your life. If you are considering closing a business and going bankrupt, let us help you determine what your options are and create a road map to guide you through the process of getting the best results possible for you and your business.

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How to Keep Your Home: Avoiding Foreclosure

Want to know how to keep your home when it seems like a foreclosure is bearing down on you? The good news is that there are a number of strategies which may help you keep your home. The bad news is that it will not be quick and simple.

If you cannot pay your mortgage on your home in a timely fashion, your bank or other secured creditor will start foreclosure proceedings. Foreclosure occurs when a mortgagor sells your property in order to receive the money that is owed to them. If you are having trouble paying your mortgage, you should first contact a foreclosure attorney immediately to advise you on all your options.

What Does Home Foreclosure Mean for Me?

• You will most likely be unable to keep your home: If you fail to pay your mortgage for long enough and do not look for solutions, it will happen.
• You will most likely lose all the equity in your home: The bank is not required to sell your home for fair market value. Their primary goal is to cover the mortgage payment arrears, taxes, liens, attorney fees and auction fees. It is unlikely that there will be any additional funds remaining from the sale after these fees are paid.
• Your credit score will suffer:  A foreclosure will remain on your credit report for 7 years, making you a higher credit risk. You will not qualify for loans or credit cards easily, and your interest rates will most likely be much higher if you do qualify.

How Can You Keep Your Home?

• Prioritize your spending: After healthcare, keeping your home should be the first priority. Look over your finances to determine if you can make some significant cuts in spending in order to make your mortgage payment. If there are any optional items like cable TV, memberships, entertainment, or even a 2nd or 3rd car, eliminate them. Delay payments on credit cards and other "unsecured" debt until you have paid your mortgage.
• Federal Assistance Programs: Mortgage assistance is available from the federal government for homeowners who qualify; look into the Making Home Affordable Program. There are several excellent programs which are tailored to help homeowners just like you, who are struggling with payments and need guidance on how to keep your home.
• Make a Full Payment: If you are able to pay the amount owed in arrears, plus all fees and penalties incurred, the foreclosure process will be stopped.
• Try for a Mortgage Modification: You may be able to extend your repayment term or modify your interest rate to lower your monthly payment to a manageable amount, if you can get your lender to work with you. This is often possible to do.
• Chapter 13 Bankruptcy: This stops foreclosure proceedings. Additionally, the arrearages owed will be paid back through a court appointed official while you continue to pay your mortgage.
• Contact a foreclosure attorney who can guide you through your options when facing foreclosure.

One of the most important things you can do if you want to keep your home, is to be proactive. The problem will not take care of itself; you need to stay on top of things and start working on solutions. However, you do not have to do this on your own! Foreclosure is a complicated process, and it does not happen overnight. The best way to keep your home is to keep the lines of communication open with your lender and to contact a foreclosure attorney right away. Chang and Carlin LLP has extensive experience with forclosure law and can help you successfully come up with a plan to manage the foreclosure process.

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What is Chapter 11 Bankruptcy?

What is Chapter 11 Bankruptcy and how does it compare to other forms of bankruptcy? To begin, Chapter 11 tends to be targeted to larger businesses, but individuals may also use this reorganization plan. Under Chapter 11, businesses and individuals may restructure their debt without liquidating their assets. So who typically uses Chapter 11?

• Small businesses
• Individuals
• Partnerships
• Corporations
• Other business entities

This plan allows these parties to reorganize operations and continue running through the whole bankruptcy process. Individuals with high levels of debt may use this process, but it can be very complex and costly. Most individuals seeking bankruptcy without liquidation prefer to file under Chapter 13.

What is Chapter 11 for Individuals?

• Chapter 11 is often the only option available to an individual debtor with income greater than that allowed by Chapter 7, and has secured debt greater than that allowed by Chapter 13.
• For example, an individual may own a large section of real estate property, but does not have sufficient liquidity to pay debts as they occur.
• Chapter 11 benefits individuals by allowing them to keep assets beyond the exemptions available under Chapter 7 and Chapter 13.
• Chapter 11 cases for individuals are infrequent, so if you are an individual considering filing Chapter 11 the guidance of a bankruptcy attorney could be very beneficial.

To initiate a Chapter 11 Bankruptcy case, a voluntary petition is filed with the bankruptcy court. Once the initial filings have commenced, all assets, liabilities, and a statement of financial affairs also must be filed.

Automatic Stay: Once the Chapter 11 process has begun, creditors must cease all actions to collect money owed to them from you or your business immediately. This allows an individual or business to begin negotiations with creditors, granting you some time to work through financial difficulties.

Chapter 11 also grants the exclusive right to file a plan of reorganization for a period of 120 days and to solicit a plan of reorganization for a 180 day period.

To better understand what Chapter 11 bankruptcy is, knowing the basics of other common types of bankruptcy is also useful:

Chapter 7 Bankruptcy: Probably the most common form of bankruptcy used by individuals, although businesses also may file under Chapter 7.  

• A court-appointed trustee assesses and gathers the individual’s assets.
• The assets are sold by the trustee for cash which pays off creditors.
• Some assets may be exempt, and these will not be liquidated.
• Chapter 7 filing cannot be repeated for six years.

Chapter 12 Bankruptcy: This voluntary bankruptcy is tailored specifically for farmers and fishermen who have a steady income.

• The debtor establishes a plan to pay off all or part of their debts over a certain period of time.
• Chapter 12 is a much less daunting and expensive procedure than Chapter 11.

Chapter 13 Bankruptcy: Works for individual debtors with a steady income and small businesses.

• During “individual reorganization,” debts are paid over a 3 to 5 year period and the debtor may keep their property.
• Chapter 13 stops foreclosures and repossessions.
• Once a plan is confirmed, creditors will be required to accept payments according to the terms of the plan or not get paid at all.

Hopefully this overview has been useful for those wondering, ‘What is Chapter 11 Bankruptcy?’.

Even though bankruptcy is federal law, and most states have similar procedures on handling bankruptcy, bankruptcy filing law in Illinois differs from laws in other states.That is why it is a good idea to always consult with an Illinois bankruptcy attorney.

The lawyers at Chang & Carlin, LLP are sensitive to the difficult time you may be facing and are here to help you through this tough financial and personal time in your life. If you are considering filing bankruptcy, let us help you determine what your options are and create a road map to help you get out of debt.

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Where Is My IRS Refund?: 10 Key Points About Tax Returns

IRS refund season is upon us and you might be asking yourself "Where is my IRS refund?". If you have already completed your tax returns and are expecting to receive any refund amount, great or small, there are several key points to be aware of regardless of the complexity of your IRS return.

1. IRS Refund Options: There are now three options you can choose from when receiving your individual federal income tax refund - direct deposit, U.S. Savings Bonds, or a paper check.
2. Split Refunds: This allows you to divide your refund in any way you want, and direct deposit your refund into three separate accounts within the U.S. People choose to do this for a couple reasons; you can easily deposit into a checking account for more immediate needs, while concurrently bolstering your savings account. Additionally, it allows for a quicker refund than by using paper checks.
3. Processing Time: Your IRS refund will usually be issued within six to eight weeks from the date it is received, so long as your paper tax return is complete and has no errors. For electronic filings, the refund should be issued approximately three weeks after it was received.
4. The Effect of Payment Plans:  If you are currently making payments under a payment plan for a prior year's federal taxes, your federal tax refund will be automatically applied against the amount that you owe. Additionally, if you owe anything on federal tax, state tax, a student loan, or child support, these debts can affect your refund totals.
5. Filing a Joint Return:  The IRS can direct deposit a refund on a joint IRS return into your account, your spouse's account, or a joint account.  Additionally, Illinois couples who have entered into civil unions will be able to jointly file their 2011 state tax returns, according to the Chicago Tribune.
6. Paying a Loan: The IRS will not allow a direct deposit to be applied to a loan account.
7. Delayed IRS Refund: There are a number of different reasons for delayed refunds, including:
   • Incorrect or missing social security numbers
   • Incorrect tax entered based on taxable income and filing status
   • Computation errors in figuring the taxable income, with-holdings, credits and deductions
   • Withholding and estimated tax payments entered on the wrong line, and general math errors
8. Larger or Smaller Refund than Expected: If you receive a check for more than you expected or an unexpected check, do not cash it until you receive a notice from the IRS explaining the discrepancy. If you receive a refund for a smaller amount than you expected, you may cash the check. Notify the IRS of any discrepancy. The IRS will send out a check for the difference if it determines that you should have been refunded more.
9. Refund penalties: If you fail to file an IRS return by April 15, but are due a tax refund from the IRS, there is no penalty for failing to file your tax return. The failure to file penalty applies only to those individuals who owe tax and do not file a tax return.
10. Lost Refund Checks: If your check is lost or missing, the IRS will send a replacement. In the event that your refund check has been stolen and cashed, the Financial Management Service will assist into initiate a claim. They will review the signature on the cancelled check to determining whether another refund can be issued.

Understanding your options can help you avoid confusion about where your IRS refund is, direct your IRS refund to the proper location (hopefully your bank account!), and make tax season less stressful.

However, problems with the IRS or the Illinois Department of Revenue can run deeper than these issues and be very frustrating to deal with. If you are dealing with complex problems such as IRS audits, appeals, federal refund litigation, tax court petitions, tax liens, issues with your IRS return, withholding tax litigation, or civil tax litigation, if may be advisable to contact a lawyer who has significant experience dealing with the IRS.

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Boundary Disputes: Property Law in Action

Boundary line issues or boundary line disputes can be large or small in scope. Most of us are familiar with the common arguments that often arise between neighbors, but there are many different forms of boundary disputes.

For example, in 1991 Illinois and Kentucky took a boundary dispute to the supreme court. The dispute centered around the drawing of a boundary line on the northern side of the Ohio River. Kentucky argued that the boundary should be the 1991 low-water mark near the river's northern shore, a border that Illinois officials had agreed to in practice for more than 150 years. A Chicago Tribune report noted that the dispute, “...dates back at least to Illinois` incorporation as a state in 1818, but it has been most vigorously waged for the last five years, largely because of angry anglers forced to buy licenses from both states to fish the river.” According to the U.S. Supreme Court Center, the Supreme Court considered the history and geography of the Ohio River valley, and the location of the boundary of the Commonwealth of Kentucky with the State of Illinois. They held that the boundary line was to be the line of the low water mark along the river's northerly shore as it was in 1792.

This case is a high profile example of the boundary line disputes which happen every day across the United States. Most boundary disputes arise between neighboring property owners and many can be solved simply through open communication.

The following are examples of common border disputes:

• Accessing neighbor’s land for your own property repairs: Property owners sometimes may need to have access to neighboring property in order to carry out repairs to their own property or land. This can cause conflict if there is any hesitance to grant access.
• Shared repairs: With a shared fence or other common border in need of repairs, the first issue is to find out who is responsible for the cost of repairs. State property law and legal documents may not always provide conclusive guidance about who is responsible.
• Establishing the boundaries and ownership: These types of boundary disputes between neighbors are very common, as there is often ambiguity to border ownership rights. The best chance for obtaining evidence should be available in the property’s legal documents.
• Shared walls: If you are planning to work on walls which stand across the boundary of land belonging to different owners, you may need to consult a legal expert, as there may be special rules which apply. The owner must always notify neighbors about any work they intend to carry out.
• Parking spaces: If there is a shared drive, then each person has a right of access and neither should block the drive. In a shared driveway situation, it is best to consult property law and legally establish parking rights to avoid any disputes in the future.
• Overhanging branches: If a neighbor’s tree hangs over a neighboring property, the tree owner should be asked to trim back the tree. If this is not done, the right exists to trim the tree back to the boundary line.
• Roots: If the roots of a neighboring tree spread onto your property, you may remove them in the least damaging method possible if there is no standing tree preservation order. If you have to enter the tree owner’s property to do this, you must give reasonable notice.

Many of these types of common boundary disputes are settled through informal agreements between both property owners. However, tensions often do run high when it comes to personal property, and thus it is good to know how a resolution may be reached in a number of different scenarios.

Knowing your options can make boundary dispute resolution a less daunting task.

• Amicable Agreements: Probably the least costly and time-consuming method, coming to an informal agreement between you and your neighbor may be a best case scenario for the moment. However, without legally validated documents, issues could return in the future. A better form of this method would be taking the advice of a jointly instructed expert in boundary disputes.
• Alternative Disputes Resolution: This is a catch-all title used to describe a group of formal methods for resolving disputes to avoid taking the issue to court. However, should a party insist on taking the matter to court, the court could be inclined to uphold the results of a dispute resolution agreement.
• Legal Action: This type of action is used when other avenues of property dispute resolution have been exhausted, so the parties are looking to settle their dispute by means of the decision of a judge handed down in a court of law. Once initiated, the courts are normally only interested in resolving the disputed boundary line on the basis of the property law, evidence, and legal arguments. The behavior of either of the parties during the course of the dispute is not typically a deciding factor in establishing the position of the boundary.

If you are currently dealing with or want to avoid a boundary dispute in the future in Chicago, you might want to consider consulting with a real estate attorney. They can help you understand how the law applies to your property and boundary line disputes.

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Bankruptcy or Not? This Decision Can Change Your Life!

Do financial woes have you weighing the options of, bankruptcy or not? The decision to file for chapter 7 or chapter 13 bankruptcy is a big one.

There are several benefits to filing for bankruptcy:

• Fresh start - You will no longer be drowning in debt, you can take this opportunity to build a new financial future for yourself.
• Keep your assets - If you file chapter 13 bankruptcy you should be able to keep your assets after the bankruptcy is complete.
• Stop creditors - As soon as you file for bankruptcy the harassing creditor calls to your home will stop. 
• Rebuild your credit score - Once bankruptcy is complete you can start rebuilding your credit score. 
• Get your confidence back - Debt takes a toll on a person. It's stressful and overwhelming. Releasing yourself of that debt takes away the burden and allows you to return to your normal life.

Recently it has become very common to file for bankruptcy. So common in fact, that some people do not try every alternative before filing.

The ramifications for filing bankruptcy can be serious. You may lose your assets, tarnish your record and credit score and make it hard to get a car or home loan for a long time. Many people feel strongly that they want to avoid bankruptcy if at all possible.

There are solutions available to you if you decide to avoid bankruptcy.

Step 1 - Speak with a credit counselor -

This option needs to be explored early on in your financial troubles. Speaking with a credit counselor is a great opportunity to look at your finances and evaluate what you are doing right and where you can save money and spend more wisely. Everyone can benefit from speaking with a credit counselor.

Step 2 - Consolidate -

When you consolidate your existing debt you take everything you owe and put it together into one new loan. The interest rate on debt consolidation loans is often very good and ultimately will make your monthly payments smaller and more manageable. This could make a big difference in your monthly finances.

Step 3 - Debt Settlement

For those that want nothing else but to avoid bankruptcy, a debt settlement company may be the answer. If your debt is greater than $10,000 than you can reach out to a debt settlement company and hire them to negotiate your debt. Potentially they can convince creditors to accept a payment as low as 50% of what you owe. They will accept this partial payment and wash you of your debt. The benefit for them is that if you file for bankruptcy they may not even get 50% so it's a last ditch effort for them to reclaim some of what is owed to them.

Ultimately, when you are deciding between bankruptcy or not you need to think of your personal situation and how you will be affected in the long run. Set up a meeting with bankruptcy lawyers to discuss your options and let them educate you about bankruptcy law during a free legal consultation.

Remember, wherever you are in deciding between bankruptcy or not, one of these options may give you new hope, or help you realize bankruptcy is the best choice for you. 

Going To College May Be The Worst Financial Decision You'll Ever Make

Americans today assume that going to college is the best way to educate themselves and prepare for a career. Unfortunately, for many the student loan debt associated with college can be crippling. The worst part is you cannot discharge student loan debt through any type of bankruptcy. It's here to stay.

According to an article in The Bottom Line on MSNBC.com, student loan debt in the United States totals more than $1 trillion. This number is higher than the unsecured credit card debt in the country.

Students, (and their parents) are graduating with more student loan debt then they can afford. In a challenging job market these graduates are faced with difficulty finding work and this has made it challenging to repay the loans.

There has been a significant increase in the number of people who are trying to get help with their student loan debt. Unfortunately at this time there is nothing that can be done with this type of loan debt by filing chapter 7 or chapter 13 bankruptcy in Chicago.

However, there is currently a push for Congress to pass a bill that would allow individuals filing for chapter 7 or chapter 13 bankruptcy to receive a discharge from their student loan debts as well.

There is a lot of support for this bill including many educational associations. However those who were in favor of the 2005 bankruptcy reforms are unlikely to support a change to the system.

There is bankruptcy help for people who open a business that fails. So, it only makes sense that investing in education for a future career should be protected if the graduate cannot find employment.

If you are struggling with student loan debt, look into options to defer those loans and buy yourself some extra time. Also, it is wise to talk to a Chicago bankruptcy lawyer about your situation, as they can advise on the best solution for you.