» For Creditors

Pocket Dialers Beware

A cellphone user who unknowingly places a call doesn’t have a reasonable expectation of privacy in conversations exposed to the person on the other end of the line, a federal appeals court said on Tuesday.  In this case, a senior executive of a business inadvertently pocket dialed his administrative assistant who then over him speaking with a co-worker and his wife about personnel matters. The administrative assistant wrote down some of the conversation and prepares a typewritten summary of the call and have it, along with a recording of some of the call, to other senior executives.  The cellphone user then sued under a federal law that bars the interception of communications and appealed a lower court decision tossing the suit. The appeals court affirmed the lower court, reasoning that a person who operates a device capable of exposing conversations to third parties has no reasonable expectation of privacy when he or she fails to take precautions that would prevent such exposure. Pocket dials can be prevented by locking the phone, setting up a passcode, or using an app that prevents pocket dials.  According to the court, the cell phone user was “no different from the person who exposes in-home activities by leaving drapes open or a webcam on and therefore has not exhibited an expectation of privacy.” (BERTHA MAE HUFF; JAMES HAROLD HUFF, Plaintiffs-Appellants, v. CAROL SPAW). Read More
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Glossary of Bankruptcy Terms

Glossary of Bankruptcy Terms 363 Case – A term that has come to describe a chapter 11 case that is filed largely to facilitate the sale of the debtor’s assets pursuant to the protections of §363 of the Bankruptcy Code, as compared to a case filed to restructure the debtor’s business operations or capital structure.  The process to sell the debtor’s assets usually commences shortly after the case is filed. 363 Sale – A sale of assets from a bankruptcy estate pursuant to § 363 of the Bankruptcy Code.  This provision generally allows the sale of assets free and clear of liens and claims and gives a purchaser protections that are otherwise not available outside of bankruptcy. 503(b)(9) Claim – Under the BAPCPA Amendments of 2005, § 503(b)(9) was added to the Bankruptcy Code.  It provides creditors with a priority claim for goods delivered to the debtor within 20 days of the petition date. Abandonment – A disclaimer of any interest by the trustee or debtor in property that is burdensome or of inconsequential value. Absolute Priority Rule  –  The order of payment to the different classes of creditors mandated by the Bankruptcy Code. In theory, claims with higher priority are paid in full before other claims receive anything. Junior creditors and shareholders are paid after senior creditors. Specifically, the usual order is: first, administrative claims; second, statutory priority claims such as tax claims, rent claims, consumer deposits, and unpaid wages and benefits from before the filing; third, secured creditors’ claims; fourth, unsecured creditors’ claims; and fifth, equity claims. Actual Test – A construction of §365(c) of the Bankruptcy Code which limits it to situations in which the DIP is actually trying to assign the agreement to a third-party, as compared to assume the agreement as part of a plan of reorganization.  See Hypothetical Test. Adequate Protection – The right of a party with an interest in the debtor’s property (such as a secured creditor) to assurance that its interest will not be diminished during the bankruptcy proceedings.  Section 361 of the Bankruptcy Code addresses adequate protection issues.  Adequate protection may consist of replacement liens on collateral or periodic payments for the use of collateral. Administrative Claim (Or Administrative Expense Claim) – A claim asserted against the bankruptcy estate for the actual, necessary costs and expenses of preserving the estate. This type of claim is entitled to be paid before payment to any other creditors of the bankruptcy estate except secured creditors. Often these claims are asserted by professional persons employed by the bankruptcy estate (e.g., attorneys and accountants) for fees and costs incurred in the estate administration. Adversary Proceeding – A lawsuit arising in or related to a bankruptcy case that is commenced by filing a complaint with the court. A nonexclusive list of adversary proceedings is set forth in Fed. R. Bankr. P. 7001.  Examples are complaints to determine the dischargeability of a debt and complaints to determine the extent and validity of liens. Allowed Claim (or Allowed Interest) –  a claim of a creditor (or an equity interest) that is  approved for satisfaction in the bankruptcy case. Arrangement – Arrangement  may refer to a variety of formal or informal agreements concerning the conditions under which a bankrupt company may operate; often, it refers to an extension of time in which debt can be paid off. This was the term used under the old Chapter XI. Arrears  The amount that is unpaid and overdue as of the date the bankruptcy case is filed. The word “arrears” is usually used when referring to back child support, back alimony owed, or the amount that is past due on mortgage payments (including interest and penalties). Assets   Assets are every form of property that the debtor owns.  They include such intangible things as business goodwill; the right to sue someone; or stock options.  The debtor must disclose all of his assets in the bankruptcy schedules; exemptions emove the exempt assets from property of the estate. Assignment for the Benefit of Creditors – A common law or state statutory method of liquidating a debtor’s assets without commencing a bankruptcy case. Typically, an independent third party is employed as the assignee who is responsible for liquidating the debtor’s assets, pursuing any litigation and disbursing monies to creditors. This common law or state statutory liquidation vehicle is not available in all states. Assume  a Contract –  The decision by a debtor, which must then be affirmed by the bankruptcy court, after notice and hearing, that the debtor-in-possession will be fully liable for the obligations under the lease. Typically requires the curing of most monetary defaults. Attachment – A prejudgment remedy where a court orders seizure of a… Read More
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Seventh Circuit issues new ruling on chapter 11 bankruptcy standing

The Court of Appeals in Chicago held on April 23, 2014, that an insurance company did not have standing to object to a chapter 11 debtor’s settlement with another insurance company because the objecting insurer did not suffer a direct pecuniary loss as a result of the settlement.  The case involved the C.P. Hall Company, which FactorLaw represented when it was in chapter 11. C.P. Hall was subject to millions in claims related to exposure to asbestos. While in chapter 11, C.P. Hall entered into a settlement with the Liquidator for Integrity Insurance in New Jersey, and another one of C.P. Hall’s insurer objected to the settlement on the grounds that the settlement was too low and could potentially expose the other objecting insurer to more claims. The bankruptcy court held the objecting insurer did not have standing to object to the settlement between C.P. Hall and Integrity, in essence because it did not have a “dog in the fight;” any impact upon the objecting insurer was too remote and speculative.   The Seventh Circuit affirmed the bankruptcy court reasoning that a party that did not suffer a direct loss as a result of the bankruptcy court’s actions did not have the right to object to the propriety of the action. Read More
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Categories: For Creditors

Life After Bankruptcy: Getting Back On Your Feet

Filing Bankruptcy and going through the discharge process can be an exhausting process. What can be even more daunting is thinking about life after Bankruptcy. Contrary to popular belief, filing Bankruptcy is not a one-way ticket to financial ruin for the rest of your life. Instead, life after Bankruptcy can be extremely rewarding – but only for those who plan properly and commit themselves to not wasting the “fresh start” that Bankruptcy offers. Below are a few steps you can take to speed up your recovery after filing Bankruptcy in Illinois. Save Money Seems like an obvious choice, but it cannot be reiterated enough how important this step is. While planning out a budget you will stick to, make sure to factor in savings. Make sure you have a set amount of money put aside each month for your savings account. This is also a nice way to build up a nice nest egg, which can be used for retirement or to cover unforeseeable financial expenditures in the future. Finally, this will show lenders that you have become more financially responsible by being capable of saving money, and not just spending it. Pay Your Bills On Time In order to show future lenders that you are becoming more responsible in your financial matters, you will need to pay your bills on time. Falling back to old habits is easy, but you must overcome those old ways in order to get new credit down the road. Future Creditors want to see that you have learned from your past mistakes. Paying your bills on time, demonstrates that you’re in control of your financial life and are able to spend within your means. Paying your bills on time, will eventually have Creditors consider you as a desirable credit risk worth taking. Choose The Right Credit Card To Rebuild Your Credit It’s unlikely that you will be able to obtain an unsecured credit card right after bankruptcy. Experts agree that another way to rebuild your credit is by obtaining a secured credit card. A secured credit card, unlike an unsecured credit card, requires you to make a deposit up front before you are issued the card. The great benefit of this is that your new credit activity will be reported to the credit bureaus and your new credit history will start building up. Eventually, as long as you pay your bills on time and show the bank you are no longer a credit risk, your secured credit card can be converted into an unsecured one. **A few warnings and things to keep in mind about secured credit cards: Always inquire if they report your payment history to the credit bureaus Stay away from those that charge high fees Don’t call those that ask you to call a 900 number (you’ll be charged for the call) Schedule a Free Consultation with our Cook County Bankruptcy Attorneys Rebuilding your credit after Bankruptcy will take some work. There are more ways to rebuild your credit after Bankruptcy. Call our Chicagoland Bankruptcy attorneys for a free consultation. Read More
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The Keep Chicago Renting Ordinance Is In Full Effect – What It Means For Creditors

The Keep Chicago Renting Ordinance is in full effect today. The ordinance was passed by the Chicago City Council on June 5, 2013. The effective date of the ordinance was September 24, 2013. The law applies to certain foreclosed rental properties within the City of Chicago. Below is a brief description of the pertinent sections of the ordinance for the creditors acquiring foreclosed properties. Registration of Foreclosed Rental Property The creditor (the new owner) of the foreclosed property must register the property with the commissioner after acquiring the property . The ordinance lists the information that must be contained in the registration, part of which, is the designation of an authorized agent.  The creditor  receives all notices through the authorized agent. The City of Chicago is then allowed to serve the authorized agent with any legal action initiated by the City of Chicago and in regards to the property. The registration fee is $250 and any changes to the information contained within the registration must be submitted to the commissioner within 10 days of the changes taking place. If the property is sold to a third party purchaser, you must also notify the commissioner within 10 days of the sale. Notice To Tenants Within 21 days after becoming the owner of the foreclosed rental property, the creditor must make a good faith effort to identify all tenants in the building. The owner must send all of the identified tenants a notice in English, Spanish, Polish and Chinese detailing the tenants’ possible rights to a renewal of their lease or the possible right to relocation assistance. The ordinance  itself provides the language/disclosures that must be contained in the notice. A general notice must also be posted on the general entrance to the property within 21 days. Any additional tenant after the 21 day period,  must have a notice sent within 7 days of the discovery of his/her identity. Tenant Relocation Assistance The creditor of a foreclosed rental property must offer a qualified tenant a one-time relocation assistance fee of $10,600.  The other option is to offer the option to renew or extend the tenant’s current rental agreement with an annual rental rate that: (i) for the first 12 months of the renewed or extended lease, does not exceed 102 percent of the qualified tenant’s current annual rental rate; and (ii) for any 12 month period thereafter, does not exceed 102 percent of the immediate prior year’s annual rental rate. The relocation fee must be paid within seven days of the qualified tenant vacating the property and must be in the form of a certified or cashier’s check. The owner may deduct past due rent from the relocation fee. The owner may not deduct money from the relocation fee for any other reason other than past due rent, including damage to the property. There are severe consequences for not abiding by the ordinance. If the owner does not comply with the requirements in the Ordinance, the qualified tenant is entitled to damages in an amount equal to two times the relocation assistance fee. Read More
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