General Right To Redeem In Illinois
In Illinois, the borrower can redeem the home until the later of:
- seven months after receiving the summons of the foreclosure action , or
- three months after the date that the court enters the foreclosure judgment. .
To redeem before the sale, you’ll have to pay off the full amount of the loan plus costs.
Will Filing For Bankruptcy Stop A Civil Lawsuit Or Get Rid Of A Court Judgment
Filing for bankruptcy will stop some civil lawsuits in their tracks, which can be great if youre facing uncomfortable discovery, like testifying at a deposition. But filing earlier rather than later has other benefits, too. Its much easier to take care of a debt in bankruptcy before you lose a lawsuit and receive a money judgment.
Even so, if you already have a judgment against you, filing for bankruptcy can still help. In this article, youll learn what bankruptcy can do to help with civil lawsuits and judgments.
Trump Castle And Trump Plaza Casinos
Before he opened the Taj Mahal, Trump owned two other Atlantic City casino resorts: the Trump Castle Hotel & Casino and the Trump Plaza Casino. When the Taj Mahal opened, it became a competitor for Trump Castle and Trump Plaza. Income dropped at the older casinos. As a result, both properties filed for Chapter 11 bankruptcy in March 1992, shortly after the Taj Mahal filing.
Trumpâs three Atlantic City casinos had many of the same creditors. In some cases, two or all three properties served as collateral for the same loan. Even though each property had a separate bankruptcy case, Trumpâs negotiations with the creditors generally involved all three casinos at the same time. Trump still refers to these three cases as one combined bankruptcy. This confusion is probably why sources sometimes refer to Trumpâs four bankruptcies, instead of six.
Together, the three casinos were tied to around $3.4 billion of debt. Trump was personally responsible for about $900 million of that amount. As part of the Chapter 11 restructuring, Trumpâs creditors agreed to lower his interest rates and give him additional time to repay his debts. In exchange, Trump agreed to give up 50% of his ownership in all three casinos to his creditors. He also agreed to sell a significant chunk of his assets and turn the sale proceeds over to the creditors, including:
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Trump Plaza Hotel In Manhattan
At the same time that Trump was struggling financially with casinos in Atlantic City, he was also facing challenges in New York City. His Trump Plaza Hotel on Fifth Avenue was $550 million in debt and behind on its payments. The hotel filed Chapter 11 bankruptcy in November 1992.
As part of the Chapter 11 plan, Trump lost his 49% stake in the hotel. He was still allowed to call himself CEO, but he didnât have any say in the hotelâs business operations and didnât get paid. In return, Trumpâs creditors agreed to more favorable terms for the hotelâs debts.
What Is A Discharge In Bankruptcy
A bankruptcy discharge releases the debtor from personal liability for certain specified types of debts. In other words, the debtor is no longer legally required to pay any debts that are discharged. The discharge is a permanent order prohibiting the creditors of the debtor from taking any form of collection action on discharged debts, including legal action and communications with the debtor, such as telephone calls, letters, and personal contacts.
Although a debtor is not personally liable for discharged debts, a valid lien that has not been avoided in the bankruptcy case will remain after the bankruptcy case. Therefore, a secured creditor may enforce the lien to recover the property secured by the lien.
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Can I File For Bankruptcy After A Lawsuit In 2021
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In a Nutshell
Absolutely. Whether youâve just been served with a lawsuit or already had a judgment entered against you, filing for bankruptcy protection can bring relief.
Written byAttorney Jonathan Petts.
Once a debt collection lawsuit is filed, itâs almost impossible to stop it. Your options are pretty much limited to:
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fighting the lawsuit ,
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settling or paying off the debt,
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filing a bankruptcy petition
Pending Lawsuits A Bankruptcy Filing Wont Stop
The Bankruptcy Code does put certain limitations on the automatic stay protections. The types of civil lawsuits that continue even after a bankruptcy proceeding is filed include:
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proceedings to establish paternity,
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proceedings to establish or modify child support or alimony,
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child custody and visitation matters.
A bankruptcy filing also doesnât stop criminal cases from moving forward.
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Alternatives To Chapter 7
Debtors should be aware that there are several alternatives to chapter 7 relief. For example, debtors who are engaged in business, including corporations, partnerships, and sole proprietorships, may prefer to remain in business and avoid liquidation. Such debtors should consider filing a petition under chapter 11 of the Bankruptcy Code. Under chapter 11, the debtor may seek an adjustment of debts, either by reducing the debt or by extending the time for repayment, or may seek a more comprehensive reorganization. Sole proprietorships may also be eligible for relief under chapter 13 of the Bankruptcy Code.
In addition, individual debtors who have regular income may seek an adjustment of debts under chapter 13 of the Bankruptcy Code. A particular advantage of chapter 13 is that it provides individual debtors with an opportunity to save their homes from foreclosure by allowing them to “catch up” past due payments through a payment plan. Moreover, the court may dismiss a chapter 7 case filed by an individual whose debts are primarily consumer rather than business debts if the court finds that the granting of relief would be an abuse of chapter 7. 11 U.S.C. § 707.
Debtors should also be aware that out-of-court agreements with creditors or debt counseling services may provide an alternative to a bankruptcy filing.
How Does Bankruptcy Stop A Lawsuit
When a debtor files a case, an order called the automatic stay prevents creditors from continuing any collection activity, including attempting to win a money judgment in a lawsuit. The stay ensures that one creditor doesn’t get a disproportionate share of the debtor’s available funds. Freezing the collection action gives the court time to sort out the available assets and divide them appropriately among the creditors.
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Filing Bankruptcy To Avoid Lawsuit
A person shouldnt file bankruptcy simply because they want to avoid a lawsuit. It should only occur when the debtor who has a suit brought against them genuinely cannot afford to pay off their creditors. If your situation is applicable, then filing bankruptcy might be your best bet to avoid a lawsuit and get your assets in order.
Of course, there is always the option to fight the lawsuit instead of filing bankruptcy to avoid it. You should only ever attempt this if you truly believe the creditors have no merit for bringing legal action against you and you think you can prove the invalidity of their claim. Unfortunately, though, if the creditors can prove you owe them money, there arent many legal defenses available to you at that point. In the case that there is no reason to believe that the lawsuit is invalid, fighting it may end up costing you more in the long run. If that isnt something you can afford, your best bet might be to file a petition for bankruptcy.
Once your bankruptcy claim files within the court, an injunction will go into effect. This means that creditors must stop all phone calls and demand letters effective immediately. In addition, any foreclosure or repossession actions must also cease. This injunction essentially makes it either impossible or extremely difficult for the lawsuit to continue.
Personal Vs Business Bankruptcy
One major difference between personal and business bankruptcies is motivation â why a person or business might decide to file for bankruptcy. Many people view personal bankruptcy as an option of last resort. They may only consider filing bankruptcy after first trying to tackle their debts in other ways. For businesses, though, filing bankruptcy is often seen as a proactive, strategic way to improve the companyâs financial position. Bankruptcy can be a smart business decision even when a company isnât on the verge of collapse.
Unlike personal bankruptcies, which mostly only affect the people who file them, a business bankruptcy usually affects all the people who are part of the business. Employees, for example, could lose their jobs. Management might be removed or replaced. Investors could lose some or all their stakes in the business.
Most business bankruptcies are filed under Chapter 11 of the Bankruptcy Code, while most personal cases are filed under Chapter 7 or Chapter 13. In a Chapter 11 case, the business can continue to operate while it negotiates with its creditors to reorganize its finances. The goal is to reach a deal that puts the company in a stronger financial position. The rules for Chapter 11 reorganization cases are seemingly more flexible as creditors play a big part in negotiating the businessâs reorganization plan. In Chapter 13 case, on the other hand, creditors donât have much say in creating the repayment plan.
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Trump Hotels And Casino Resorts
Trump Hotels and Casino Resorts was a holding company that Trump created in June 1995. A holding company is a business that owns some or all of another businessâs shares and assets. THCR took over ownership of all three of Trumpâs Atlantic City casinos, along with most of their debts. In November 2004, THCR filed Chapter 11 bankruptcy to address $1.8 billion worth of debt.
In this Chapter 11 plan, the creditors agreed to forgive about $600 million of THCRâs debts and reduce its interest payments by roughly $102 million per year. In exchange, Trump:
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Gave up his CEO title.
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Surrendered some of his shares of the company to bondholders, reducing his stake in THCR from 47% to 27%.
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Agreed to invest $55 million of his personal funds in the company.
After filing for bankruptcy, the holding company changed its name to Trump Entertainment Resorts. Trump remained chair of the board, but the companyâs bondholders selected the other board members.
Your Wages Are Garnished
But just like each scenario weve discussed here, a garnishment can be stopped by filing bankruptcy and getting the automatic stay in place.
Your creditor may be entitled to what ever wages you have earned between the time the garnishment was served on your employer and the day you file bankruptcy. But gong forward, your wages are yours.
Bankruptcy law also lets you recover amounts your creditor got in the 90 days before you filed bankruptcy. Wait longer than 90 days, and you lose the right to reclaim the garnished funds.
Bankruptcy stops garnishments.
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Lying About Your Assets
Chapter 7 bankruptcy includes a means test, a requirement that you disclose all of your assets and income, which determines your capacity to pay off creditors. If you purposely leave out assets or income, trying to help your qualification, your case could be dismissed. You could also be banned from filing on those debts ever again. Eventually, a bankruptcy trustee will have access to your financial records, so its unlikely your deception will go unnoticed. You shouldnt try to hide any creditors, either, because credit-card companies have centralized and computerized information. They will all know you have filed for bankruptcy protection. Bottom line: Tell the truth.
Filing Bankruptcy After Being Sued Before Or After Receiving Judgment
There are few things in life scarier than being served with a lawsuit. Whether you run a business or youve made some mistake in your personal life, dealing with a lawsuit can put a strain on your finances and cause you to consider your options. If you are close to insolvent when youre sued, then you may be thinking about declaring bankruptcy. This brings to bear some practical questions. Namely, can you file for bankruptcy after you have been sued or after a judgment has been issued against you? The short answer is yes, but you need to think more about your individual situation to be totally sure.
General bankruptcy rulesIn bankruptcy proceedings, there are some debts that are dischargeable and some that are not. For instance, you can discharge credit card debt in bankruptcy, but you cannot discharge most student loan debt. Youll need to check to see whether your debt is dischargeable in your bankruptcy. Youll get relief from most debt when you go through bankruptcy, and if yours applies, then there are no restrictions on filing even when youre facing a lawsuit.
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Learn About Illinois Foreclosure Laws And Procedures
If you default on your mortgage payments in Illinois, the servicer will eventually begin a foreclosure. Approximately half of the states, including Illinois, require the lender to file a lawsuit in court to foreclose. State law specifies how foreclosures work, and both federal and state laws give you rights and protections throughout the process.
If I Can Fight The Lawsuit Why Wouldnt I Do That Instead Of Filing Bankruptcy
If youâre sued for an unpaid debt, whether thatâs a credit card or a car loan, fighting the lawsuit typically just delays the inevitable. If you borrow $2,000 and then donât pay it back, you donât have much in the way of defenses. If you donât think the debt collector is owed the money, definitely make them show their proof.
Keep in mind that as long as the debt collector can show that you incurred the debt thatâs owed to them, there arenât many legal defenses to non-payment. If thereâs no reason to believe that the debt youâre being sued for is invalid, itâs probably more effort than itâs worth.
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Different Ways To Settle A Debt After Being Served
The rule is not to immediately pay the debt after receiving your court summons. But, you can settle your debt as you face the case head-on. There are two ways to settle a debt while the case is going on.
You can settle it extrajudicially or judicially, depending on the facts and circumstances surrounding the case. Here are the ways to pay your debt:
Bankruptcy And Liens On Real Property
The complication of filing bankruptcy after a judgment is that a judgment may become a lien on your real estate. Creditors can put a judgment in the land records and it can attach to real property in that county. Liens typically will not go away with bankruptcy, it depends on the equity in your home and what exemptions apply to your situation. There are certain other exceptions for assets owned by a married couple with non-joint debts, but this does not always apply.
As a result, you are considering as bankruptcy as a possibility when you get a warrant in debt, its best to set up an appointment immediately. One thing to note is that judgments no longer show up on credit reports. The underlying debt may still be on your credit report as a delinquent account, but the fact there is a judgment will not. This means that if you own no real estate, but need a little more time to get everything together after the judgment, it is not the end of the world. But, we do not recommend waiting too long because a garnishment may happen.
Note: If you file bankruptcy before the judgment is entered, it would stop the process of the judgment being obtained.
Attorney Ashley F. Morgan is a Virginia licensed attorney. She has been helping clients deal with debts and Warrants in Debt for most of her career. She helps clients settle or negotiate debts, along with defending against certain lawsuits, and discharging debts through bankruptcy.
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How Bankruptcy Stops Civil Lawsuits
Filing for bankruptcy can halt most civil lawsuits because of an automatic stay, which is issued the moment you file for bankruptcy. This injunction prevents your creditors from continuing their collection activities, including their attempts to obtain a money judgment in a lawsuit.
The automatic stay also gives the court time to evaluate your assets and ensure that they are adequately divided among each creditor, rather than one creditor receiving a disproportionate share. The latter scenario, of course, would mean that you would have no funds to repay your other creditors.
Why Might A Creditor Serve An Unfiled Complaint
A plaintiff does not need to pay a filing fee if a case is not filed with the court. So, a creditor can serve a Complaint and see if the Defendant responds. If there is no response, then they can spend the money for the filing fee and know they will get a judgment. If the defendant responds, they may be able to work out a settlement deal without having to spend the filing fee. Also, some defendants do not know that if they do not timely respond a judgment can be entered.
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How Does A Pending Lawsuit Affect A Bankruptcy Filing
If someone believes you owe them money, they may file a lawsuit against you. Unfortunately, you cant control the timing of a lawsuit. You might have already been considering filing for bankruptcy when you are served with legal papers. Heres the good news a pending lawsuit shouldnt deter you from filing for bankruptcy. You can still file. As a result, filing will almost always halt the lawsuit and prevent further action against you.
