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Illinois debt collection attorney judgment enforcement

Whether you are from a bank, a credit union, an auto lender, an equipment lender, a truck lender, or another financial institution that might be involved in bankruptcies or other debt collection activities, you might find that sometimes you need more assistance with judgment enforcement. Simply having a judge declare that money or other assets are owed to you or whoever you represent might not be enough to repossess or recover the assets from the debtor. For instance, the debtor might be ignoring your phone calls and letters or the debtor might be hiding the assets you are trying to repossess. Whatever the case may be, using the full power of the law at your disposal is a good idea to recover what the courts determine is yours. That is when you should call upon a professional judgment enforcement attorney to learn what they can do for you. 

4 Ways a Judgment Enforcement Attorney Can Assist You

Among the many ways a judgment enforcement attorney can help you with your court-enforced debt collection case are:

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Illinois creditor and lender bankruptcy attorney

You might not be aware of it, but one of President Biden’s campaign promises was to make credit reporting fairer and more accurate so that everyone across the country, no matter their race or socioeconomic status, can have more equal and much better opportunities to access credit cards, loans, mortgages, and other financial offerings. As a representative from an auto lender, equipment lender, truck lender, credit union, bank, or other financial institution, you might want to learn more about the possibilities that the Biden Administration is open to with regards to credit reporting reform. Here are some new ideas that you might see over the next four years. Keep them in mind during your dealings with debt collection activities, including bankruptcies

3 Potential Changes to Credit Reporting That You Should Know About

While there are many reforms the Biden Administration might consider in the future for credit scoring and reporting, these are some of the more substantial changes currently under consideration:

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Illinois debt collection attorney

As a financial professional, be it as a representative from a credit union, bankauto lendertruck lenderequipment lender, or other financial institution, it is important to work with an attorney who acts as an official litigator. Together, you might think you have everything taken care of when it comes time to investigate the finances of a debtor you suspect might be committing fraud or other wrongdoing. However, with regards to any number of debt collection activities, including such complicated legal processes as bankruptcy, you could also benefit from the assistance of a forensic accountant. 

What Does a Forensic Accountant Do?

Most of the time people assume an accountant does your taxes and that is about it, but as with most fields, there are plenty of subsets. Forensic accountants study the numbers and figures in financial and legal documents, intensively reviewing them to find discrepancies within the recordkeeping as to draw conclusions about potential wrongdoing. They can also confirm if certain errors were made, or support arguments to the contrary. 

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Chicago bankruptcy attorney credit union

Bankruptcy is a complex process for any financial institution, but for credit unions, in particular, there are some special issues to take into consideration when proceeding with your debt collection efforts. Unlike many banks, auto lenders, truck lenders, equipment lenders, or other financial institutions, credit unions face additional challenges in their recovery efforts due to the nature of their organizations. Here are some tips for how to manage member bankruptcies or other debt collection needs if you work for a credit union.

3 Keys to Successful Credit Union Debt Collection 

While there are many ways you can pursue debt collection successfully, recouping as much of the lost funds as possible, that are similar to banks and other related institutions, there are certain approaches that credit unions should keep in mind when pursuing collection efforts against one of their members, such as the following:

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Chicago debt collection attorney

It is common during the holidays, especially during Black Friday, for consumers to purchase more than they can actually afford; in fact, some of these shoppers are already struggling financially but believe the holiday gives them a great opportunity to max out their credit cards and take out loans for exorbitant holiday gift-giving before they eventually file for bankruptcy. There are ways to contest such holiday bankruptcy fraud, but this year might not be the same due to the pandemic. 

How COVID-19 Will Change Black Friday 

Numerous retailers are struggling financially as a result of the pandemic due in large part to early stay-at-home orders for all non-essential workers and businesses as well as the economic recession itself. Fortunately, those companies with strong e-commerce skills have been able to offer their products online. The pandemic will change Black Friday in this way—it will further accelerate the trend of people avoiding the in-store rush and simply shopping online instead. 

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Chicago creditors rights attorneyIn general, bankruptcy is an outcome that most creditors want to avoid when dealing with a debtor. If you are an unsecured creditor, the debtor may use bankruptcy discharge to clear their debt while paying you little or none of what they owe. Most consumer debtors file for either Chapter 7 or Chapter 13 bankruptcy, and the chapter they choose may depend on what they qualify for.

A debtor cannot use Chapter 7 bankruptcy if the bankruptcy court deems that they are capable of repaying their debts. One way that a potential bankruptcy filer can determine whether they qualify for Chapter 7 bankruptcy is through the Chapter 7 Bankruptcy Means Test. If the debtor does not pass the test, then Chapter 13 bankruptcy may be their only option.

Chapter 7 vs. Chapter 13

Before explaining the Chapter 7 Means Test, it is helpful to understand the difference between the forms of bankruptcy from a creditor’s perspective:

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Four Steps Creditors Must Take in Response to BankruptcyThe number of people who have recently become jobless in the U.S. may cause an increase in people who default on their debts. Creditors have several methods of handling a defaulted debt, such as debt collection practices, modifying the debt agreement, or taking the debtor to court. A debtor may try to clear their debts by filing for bankruptcy. Bankruptcy can prevent unsecured creditors from collecting their remaining debt if the bankruptcy filer is allowed to discharge their debts. If your debtor has filed for bankruptcy, there are several steps you must take to have a chance at still receiving the money you are owed:

  1. Honor the Automatic Stay for Now: A bankruptcy notice includes an automatic stay on all debt collection activity. You may have a reason to contest the stay or the bankruptcy, but your immediate reaction should be to stop communicating with the debtor or trying to repossess properties. You can be penalized for knowingly violating the automatic stay.
  2. Promptly File Your Proof of Claim: In order to receive a portion of the bankruptcy assets, you must file a proof of claim that states what the debtor owes you. The bankruptcy notice should give a deadline by which you need to file your proof of claim. It is imperative that you do not miss that deadline.
  3. Take a Closer Look at the Bankruptcy Case: You need to study the details in the bankruptcy claim before the first meeting of creditors. The debtor could be trying to abuse the bankruptcy process by underreporting their debt to you or hiding assets that could be used to repay creditors. You will have the chance to bring up any discrepancies to the bankruptcy trustee during the meeting.
  4. Consider a Request to Lift the Automatic Stay: You can continue debt collection efforts during the bankruptcy by petitioning to lift the automatic stay, but the bankruptcy court is unlikely to grant your request if the debt does not involve a secured property. You can argue that you should be allowed to continue foreclosure on a home or repossession of a vehicle if the debtor does not have enough equity in the property to cover the remaining value of the loan.

Contact a Chicago Creditor’s Rights Lawyer

Whether you are repaid at the end of bankruptcy depends on the type of bankruptcy being filed and your priority as a creditor. In Chapter 7 bankruptcy liquidation, secured creditors and priority unsecured creditors are paid before general unsecured creditors. In Chapter 13 bankruptcy, unsecured creditors have a better chance of receiving some money during the repayment plan. An Illinois creditor’s rights attorney at Walinski & Associates, P.C., can explain what you are likely to receive from a bankruptcy case. To schedule a consultation, call 312-704-0771.

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Consequences of Violating an Automatic Stay During BankruptcyWhen a debtor files for bankruptcy protection, the court will put an automatic stay on collecting the debt. This means that creditors must stop contacting the debtor with collection notices or attempting to repossess collateral properties until the bankruptcy is completed or the stay is otherwise lifted. Violating the stay is a serious offense that may result in court fines or the debtor filing a lawsuit against you. The severity of the penalty depends on whether you knowingly violated the stay and whether you continued to violate it after being told to stop.

Violation Examples

Once it is confirmed that you received notice of the debtor’s bankruptcy filing, you are expected to comply with the automatic stay. This means you are not allowed to:

  • Send letters to the debtor demanding repayment
  • Call the debtor about the debt
  • Garnish their wages or other monetary assets
  • Repossess properties without the permission of the court

Intentionally ignoring the automatic stay is a violation of the Fair Debt Collection Practices Act and may lead to sanctions that cost you thousands of dollars. The bankruptcy trustee will be your contact during the process.

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What Are a Creditor’s Rights When Collecting from Cosigners?A person looking to create a loan agreement may need a cosigner if the creditor is uncertain whether the borrower will be able to continue making payments until the loan is repaid. As a creditor, a cosigner may allow you to take a chance on a potential client by mitigating some of the risks. If the borrower defaults on their debt, you have another party that you can order to repay the loan. However, the cosigner will want to avoid paying you if they can get out of it. You must understand the rights of creditors and cosigners and the circumstances under which the cosigner is liable for the debt.

When Can You Collect from a Cosigner?

According to Illinois law, creditors are not allowed to take collection action against a cosigner until:

  • The primary debtor has defaulted on or is delinquent on the debt;
  • The creditor has notified the cosigner of this via first-class mail; and
  • The cosigner has had 15 days to repay the debt in full or make arrangements for repayment.

The cosigner may try to delay full repayment by asking for forbearance to catch up on payments or to refinance the loan for the primary debtor. You must assess whether it is worthwhile to delay the collection process or allow the debtor to modify the repayment plan. The debtor may lack the financial resources to continue the loan payments on their own, making collection from the cosigner inevitable.

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Collecting Workers' Compensation Claims After BankruptcyWhen can a creditor claim a workers’ compensation award from a debtor who has filed for bankruptcy in Illinois? That question is at the heart of a recent case that is heading to the Illinois Supreme Court. In the case of In re Elena Hernandez, the debtor filed for Chapter 7 bankruptcy. Among her debts were more than $100,000 that she owed to healthcare providers for treating a work-related injury. She claimed a bankruptcy exemption for her $31,000 workers’ compensation settlement. The healthcare creditors contested the exemption, stating that it unreasonably undermines their ability to collect on the debt. Both the bankruptcy court and a circuit court agreed with the creditors, but the appellate court saw enough evidence on both sides of the argument to ask Illinois’ highest court to make a definitive ruling.

Workers’ Compensation and Debt

A workers’ compensation claim is meant to cover the actual cost of an employee’s work-related injury, including:

  • Healthcare provider expenses;
  • Missed pay from time off work; and
  • The loss of earning potential due to disability.

Thus, one of the primary purposes of workers’ compensation is to ensure that healthcare providers are paid for their services. Illinois law requires employers to directly pay providers for all undisputed healthcare bills. Employers may dispute whether an employee’s injury qualifies for workers’ compensation or whether a certain treatment was a necessary expense. Creditors can hold a patient liable for payment when the employer disputes a bill.

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Confusion When Collecting from Divorced CouplesA couple going through a divorce must divide their debts as well as their assets. Each spouse takes responsibility for paying off a portion of the marital debt, such as a:

  • Mortgage;
  • Credit card balance;
  • Personal loan; or
  • Medical bill.

Divorcees may mistakenly believe that they are not liable for the debts that their former spouse assumed. As a creditor, you are not bound by the terms of a divorce agreement and have the right to pursue repayment of the debt from either spouse after the divorce.

Loan Contract vs. Divorce Agreement

You can give a clear explanation to a debtor who argues that the debt belongs to his or her former spouse:

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Banker's Options When Debtor Files for BankruptcyA bank must pause its efforts to collect a debt or foreclose on a property if the debtor files for bankruptcy. The automatic stay is one of the most powerful tools that a debtor has during bankruptcy. The stay expires after 30 days, but the debtor can file for an extension. As a bank, your priority when a client files for bankruptcy is to protect yourself and try to recuperate the debts owed to you. There are several actions you should consider.

Freezing Account

The automatic stay prevents you from withdrawing money from a bankruptcy filer’s account in order to offset debt. However, you can freeze your client's bank account in order to:

  • Protect the money from a bankruptcy trustee; or
  • Hold onto the money until you are able to offset it.

The trustee may order you to release the portion of the bank account that will be exempt from the bankruptcy. It may take weeks for the trustee to make this determination, which buys you time to pursue legal action.

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Bankruptcy Law Allows Debtors to Continue Retirement ContributionsA Chapter 13 bankruptcy trustee in Illinois recently objected to a debtor’s request to exclude $200 per month from his disposable income in order to contribute to his 401K retirement plan. The trustee questioned the motivation of the decision because the debtor had not made any contributions to the plan in the six months prior to filing for bankruptcy. However, an Illinois bankruptcy court denied the objection, stating that the debtor was within his rights. The ruling shows how bankruptcy courts treat retirement plan contributions as a protected expenditure.

Chapter 13 Plans

As opposed to Chapter 7 bankruptcy, Chapter 13 bankruptcy involves creating a repayment plan instead of liquidating assets. Qualified debtors must submit documents that detail their:

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Involuntary Bankruptcy Useful in the Right SituationsDebtors who lack the means to repay creditors protect themselves by filing for bankruptcy. They can liquidate assets or create reorganization plans, after which their remaining debts may be discharged. Though creditors may be unable to retrieve their full debts, they are often forced to cooperate with the debtor in the bankruptcy to retrieve what they can. However, creditors have the ability to initiate bankruptcy with uncooperative debtors. Involuntary bankruptcy is a lesser-used debt retrieval method because it only benefits creditors in certain situations.

Filing for Involuntary Bankruptcy

There are several requirements when using involuntary bankruptcy against a debtor:

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U.S. Supreme Court Rules in Favor of Creditors Making Stale ClaimsThe creditor industry scored a victory in May when the U.S. Supreme Court ruled that creditors are not violating the Fair Debt Collection Practices Act when they file a stale claim during a debtor’s chapter 13 bankruptcy proceedings. The 5-3 decision overturned a lower court ruling that such claims were unfair and deceptive. The decision removes some of the burden on creditors for determining when the statute of limitations for claiming a debt has expired, and protects them from debtor lawsuits that claim they violated the FDCPA.

Stale Claims

Creditors may have an unlimited time to attempt to collect a debt, but there is a limited time period during which they can use court action. When a creditor attempts to use legal action to collect on a debt that has passed that deadline, it is known as a stale claim. The statute of limitations varies by state, and creditors with debtors in multiple states may find it difficult to keep track of the different deadlines. In Illinois, the deadlines for court action are:

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How Bankruptcy Affects Debt CollectionBankruptcy is one of a debtor’s most powerful tools to avoid paying off debt owed to a creditor. If granted bankruptcy, debtors may be able to absolve themselves from responsibility for some of their debts. When a debtor files for bankruptcy, the court can place an automatic stay on the creditor’s debt collection efforts until it decides on the bankruptcy case. Creditors can object to the automatic stay or the bankruptcy claim. Creditors have two types of bankruptcy they most often deal with, each having a different effect on their ability to collect debts.

Chapter 7

Chapter 7 bankruptcy is considered favorable for debtors who do not own many high-value assets. In order to qualify for this form of bankruptcy, the debtor:

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