The process of filing for bankruptcy in Illinois courts can be a confusing and intimidating one. There are special rules that may not make sense on their face to average individuals and many procedures which require the guidance of an experience chapter 7 bankruptcy attorney to navigate.
One resident of Illinois found that out in the most inconvenient of circumstances. Penny Hamm’s mother passed away leaving her and her siblings proportioned slices of her IRA. Unfortunately, in addition to dealing with the grief over the loss of a loved one, Hamm also filed for bankruptcy shortly thereafter.
In her pleadings Hamm tried argued that the IRA funds she inherited from her mother were immune to bankruptcy proceedings. However, the court disagreed and stated that under state and federal law, “inherited” retirement funds (IRAs) do not qualify as normal retirement funds, which are exempt in bankruptcy. Therefore, Hamm’s creditors had access to the IRA she inherited, which was undoubtedly devastating for her as the funds exceeded $10,000.
When to File?
For many the mere concept of filing for bankruptcy is filled with dread and hesitancy. Many people view filing for bankruptcy not as a last-minute escape route, or more aptly a lifeboat, but as a failure. This hesitancy, however, can bring even more financial problems. Legal and financial experts do not suggest waiting to file for bankruptcy when one’s financial situation is dire enough to warrant one.
The waiting period is referred to as the “sweat box” by those who are familiar with chapter 7 bankruptcy filings. The aptly coined phrase describes the period of anxious deliberations before one finally decides to go ahead with the filing process. This period of nervous, apprehensive waiting can last anywhere from a few weeks to years. Some people never file. But those wearied individuals should take warning. Waiting too long can be more financially devastating than simply filing. In their publication, the Notre Dame Law Review (2019) listed many negative consequences of waiting too long to file for bankruptcy. These include:
- Constant calls from debtors
- Going without health insurance
- Going without food, and utilities
- Loss of homes and other property
- Crippling shame.
Let Us Help You
One company going under or some other catastrophic event can often lead people into uncertain financial situations. If you are in desperate financial straits with your creditors and are even considering filing for chapter 7 bankruptcy, please contact our law firm. We have bankruptcy experts waiting to help you every step of the way whether it is with filing your initial claim or simply weighing your options. Our team is standing by with valuable information at the ready 24 hours a day, seven days a week. Please do not lose yourself in the dreaded phone calls from debtors or suffer needlessly. Bankruptcy is a safety net, not a failure. We serve clients in the Arlington Heights, Palatine, Rolling Meadows, Libertyville, Mundelein, Buffalo Grove, Schaumburg, Elk Grove, and Itasca areas.
(image courtesy of Madison Kaminski)