Episode Transcript
[00:00:00] Speaker A: Welcome to Financial cures. Hi, I'm Dr. Wendy Labotte. And today we begin with Mindset Transformation. Wayne Dyer says, when you change the way you look at things, the things you look at change.
You're watching now Media Television.
Welcome to financial cures. I'm Dr. Wendy LaBotte, the financial healer. On this show, we look at money problems the way we look at any serious condition.
First you identify the symptoms, then understand what's causing them, and only then decide what treatment makes sense. For many people, debt becomes a private source of stress long before they ask for help.
They may be juggling credit cards, falling behind on payments, facing collection calls, or using one obligation to cover another.
The pressure grows quietly until every financial decision feels urgent.
My guest today is Kevin Benjamin, a bankruptcy attorney with more than 35 years of experience and the CEO of Benjamin Legal Services in Chicago. Kevin helps people understand their options when the financial problems have become difficult to solve on their own.
Kevin, welcome to the Financial Cures.
[00:01:23] Speaker B: Well, thank you. Thanks for having me.
[00:01:26] Speaker A: Well, you're, you know, it's a timely interview today.
So when someone first calls you about overwhelming debt, what tells you that they're dealing with more than just temporary cash flow problems?
[00:01:42] Speaker B: Their voice, usually the stress.
You can tell right away how panicked they are or what's going on because everyone's got a different situation. Some people could be being garnished right away or there's a lawsuit, or maybe they're losing their house, like tomorrow.
They kind of waited till the last minute.
So usually the voice tells me the first thing. After that, I start getting into the questions and calming them down and give them solutions.
[00:02:13] Speaker A: So what are some of the warning signs that they commonly ignore when they get to that point because they're embarrassed or in hope the problem would disappear or, you know, bury their head in the sand like there is no problem or afraid to speak with an attorney?
[00:02:30] Speaker B: Well, you just answered your question.
All of those. That's exactly what it is. Buried head in the sand, hoping it's just gonna go away, thinking it's a joke. Oh, they were serious. Well, you called me two months ago. You have a court date and you're being garnished. And if you're not, you know, because we're gonna get a judgment, what things are gonna happen. You know what I'm saying?
[00:02:51] Speaker A: Yeah.
[00:02:52] Speaker B: So.
Right. I mean, it's just people are overwhelmed is really what it is. So.
And they had so much stress because, you know, financial issues cause family problems, divorces, you know, depression, business issues. I mean, it's. It's a hard thing. So all the stress and the weight on people's shoulders makes them just shut down and maybe go up in the mail. I'll do it next week. I'll call somebody, maybe go away, bury their head in the sand. Even though they don't think they're doing that. But eventually it comes to a point where they have to deal with it. Now some people actually call it early, you know, a lot easier to handle things. But most people are last minute and panicking. In my business, everyone is stressed out. I do bankruptcy, people in foreclosure, I do IRS estate, you know, tax resolution. You know, IRS people get really afraid of because they could be aggressive and people losing homes, businesses, and, you know, it's very, very stressful.
[00:04:01] Speaker A: So what are the biggest misconceptions that people have about bankruptcy before they learn how the process actually works?
[00:04:13] Speaker B: Everything that happens before they call me or someone like me.
Talking to your friends, right? My friend said, I hate that.
[00:04:20] Speaker A: Right?
[00:04:21] Speaker B: Or my teach, my kindergarten teacher's brother did a case 20 years ago.
Okay. They must know how to do it or they go on Google or chat, you know, the, the AI and that's fine.
People looking for information. You know, before I got on this podcast, I had a client consultation and she actually lives in Texas, just moved, was asking, you know, where to file, that kind of stuff and what we got to do and. But she was very nice. Like, you know, I was on Google trying to get some information, but now I need to talk to somebody. Which is exactly how you do it, because you can get different answers on Google and how you do a prompt.
So people sometimes just think that's the answer. They could just Google something or they're talking to their friends and their friends are kind of wannabe lawyers who think they know something, but they actually don't. And that really hurts. Another misconception is it ruins your life. It doesn't.
There's different kinds of bankruptcy. You know, there's like chapter nine is for governments. Chapter 12 is for farmers.
Chapter 11 is usually a corporate restructuring, though. An individual person can file chapter 11 and sometimes has to, but that's more complicated. Personal restructuring. Chapter 15 is like cross borders, stuff like that. Generally speaking, a person does a chapter 7 or 13 and some people don't know the difference in chapters. Chapter seven is like a straight bankruptcy. Getting out of debt, but there's exceptions. What kind of debt? There's secured debt, there's unsecured debt.
Sometimes unsecured debt is what's called unsecured priority debt. And you have a car, you have a house. What's your equity? Cash flow? Liquidation analysis. There's what's called a means test income qualification for bankruptcy. But there's exceptions to it. There's also ways we could be exempt from it.
So there's a lot of information you actually need an experienced attorney to handle. But a misconception is you can't get credit for 10 years.
Ridiculous. You can't get a house. You can't rent a place. Ridiculous. You can't get a car. Absurd. I mean, you can.
I have car. People, they love you. You know, if you file chapter seven, you can't file. You can't get discharged again for like eight years. The car payment's not going eight years. You have no other debt. You know, it's secured by the car. And they're, you know, they love you. And you'll be getting credit card.
Yeah, you'll be getting credit card offers in the mail probably before you're even discharged. They want you back.
And then there's ways to reestablish a credit faster than people think.
But credit is like twofold. It's like part of, it's like your debt to income ratio. Part is your credit utilization ratio.
Then it's also, there's different credit scores if you're applying for a loan for a mortgage or a car. Because the deck is stacked against you, right?
The system, the banks, they want you financeable, but not a credit. You know, they want to be able to give you a loan, but they want to charge you a little higher rate. So they try to keep it down.
Ways to, you know, claim your credit is something different. But a lot of times people's credit goes up immediately when you file bankruptcy. So you'd be surprised.
Another common question I get is, you know, like, what about my credit? You know, or the guy someone called yesterday, okay, well, you're losing your house in a week, so that's not a straight bank. It's a 13 reorganization.
But if you worry about your credit so much, how's the foreclosure look? And how's the losing your house? Or just, you know, lose your house. So you want to file or not? I mean, I can't work miracles.
You know, the credits aren't just going to go away. But the main misconception is my credit.
[00:08:14] Speaker A: I can't.
[00:08:15] Speaker B: I barred from credit for 10 years. Absurd.
All that kind of stuff. And talking to your friends or neighbors about advice, talk to someone else. The consultation is free. And almost most attorneys in My field, give a free consultation.
[00:08:29] Speaker A: So, you know, ask, ask and find out the real facts and make an informed decision versus just googling and guessing.
Now with the chapter, I always tell
[00:08:44] Speaker B: clients, my job is to give your option or opt, help you make an informed decision and give you the pros and cons and quote your fee. That's exactly what we do.
[00:08:52] Speaker A: Yeah, yeah. Now with the chapter 13, is that like a repayment plan? You know, because you know, chapter 11 is, is like liquidation and chapter 13 is repayment. How did the, how do those work? And what's the distinguishing factor between the two?
[00:09:10] Speaker B: Chapter seven is liquidation, but in chapter seven, you hardly liquidate. See, it's federal law, state exemptions, so it's not like in the movies or tv, which is another misconception people have. I'm wiped out. I'm in the street, penniless. You can have a job, assets, money, you know, it's just a matter of a fresh start. Right. You can, a lot of people have jobs and money.
They can make their current bills, but you can't pay the, you know, 20, 34,000 credit card at 30% interest and all the compound interest and how things just snowball on you. You just need some relief. So seven is a liquidation. But people don't lose anything in there unless they really want to. Okay? Because that's, that's part of the consultation. We advise you of that. Like sometimes maybe you could risk a couple assets, 10, 20,000, but you're getting rid of 100 or $200,000 in debt. Maybe you want to do it. I'm saying otherwise. There's ways to do it in 13. A 13. The way I talk about it, English to people, is think of it as a court ordered bill consolidation. A chapter 11 is not a liquidation.
It's usually a corporate restructuring. A corporation can file a liquidating plan, but a chapter 11 is usually a corporate restructuring.
So a chapter 13 is like a consumer version of that. It's more streamlined, easier, more affordable for an individual. And they have what's called debt limits on this stuff. But most people are. That's not really an issue.
So on a court order of bill consolidation, you're paying back your bills up to five years.
So let's say you have credit card debt, you're paying that at zero interest.
However, sometimes In a chapter 13, you pay some bills in full. Maybe some taxes aren't as chargeable, sometimes they are, or maybe they're not. You're paying that in full or some other priority ones or secured debts and then maybe you're paying the unsecured creditors $0.10 on the dollar, $0.02 on the dollar, 27 on the dollar. And that's what you have a lawyer for to figure that out. There's no such thing as doing both a chapter 7 and a 13, except that there is. It's a chapter 13. We pay some creditors in full and some creditors pennies on the dollar. So and then.
[00:11:26] Speaker A: I would say let's get into that, you know, where time is running a little short before the break. So we'll talk about that on the other side of the break. Because financial crisis become more dangerous when fear replaces information.
The first cure is clarity, understanding the real size of the problem and knowing which options are actually available.
After the break, we will talk more about bankruptcy itself in that chapter 20 that he started to allude on and what it can do, what it cannot do and what people should understand before deciding whether it belongs in their financial recovery plan. We'll see you at the after the break.
We'll be right back with more financial cures to help heal your financial ills so you can become financially free. So so stay tuned. And we're back. I'm Dr. Wendy Labotte, the financial healer, and this is the Financial Cures on NOW Media Television. Let's continue your financial healing experience.
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So welcome back to financial cures. I'm Dr. Wendy Labotte, the financial healer and I'm here with bankruptcy attorney Kevin Benjamin of Benjamin Legal Services.
Now the before the break, we talked about, you know, recognizing when debt has moved from stressful to unsustainable.
Now I want to expound on that chapter 20 before the break. So tell us a little bit about that.
[00:13:34] Speaker B: First of all, there is no such thing as chapter 20, but it's a term of art that used in the industry. So it's a 7, 7 plus 13.
So what it is is you file chapter 7, get rid of your remember before we're talking about maybe paying some bills in full and some dependence on the dollar. Another way, depending on your situation is maybe you want to do like I have a client right now about the File has a tax issue, different options. File, pay the taxes in the 13 and pay the unsecured debt that pays on the dollar. Or I could just follow chapter seven, get rid of the unsecured debt because she qualifies, the tax debt in her case will not be dischargeable, but the IRS will honor the automatic stay. You know, the case goes about four to five months and we could try to resolve it with the IRS outside bankruptcy. Or if there's an issue, she can file a chapter 13 afterwards and then just pay the IRS. So 7 plus 13 is.
[00:14:33] Speaker A: All right. I'm glad you clarified that because I said I've never heard of chapter 20 before, but you know, I'm not that familiar with all the bankruptcy chapters either. So that was good. But I like that analogy. You know, 7 to 13, chapter 20. I understand now.
Okay, so now I want to remove some of the mystery about bankruptcy because many people hear the word and immediately imagine that they will lose everything or that their financial life is over. Now you kind of expounded on that.
But what. And I'm sure even though you tell people that they still like what you know so and so said, or I know people that file bankruptcy and they couldn't do this, couldn't do that.
When does bankruptcy become an option worth discussing instead of simply continuing to negotiate or make minimum payments
[00:15:24] Speaker B: right away before you start making all these minimum payments or doing the scam, Debt consolidation companies or debt settlement companies, those are all scams. Not, I should say all, but pretty much so. So what happens is it's not going to work.
If you could afford to settle your debt, it takes money. If you had money to settle with, that's an option. Okay, if it's worthwhile to you, depending settle. Right. But people don't have money. That's why, that's why they're in debt. Debt consolidation doesn't work, it just keeps your credit bad. See on bankruptcy, if you file today, today you're out of debt, moving down the line, your case is a month behind you, six months behind you, a year behind you and you can get re established and go forward. The first step to getting your credit fixed is to get out of debt. Debt consolidation just keeps you in debt. You pay these debt consolidation companies money and they're going to settle later with.
They're taking fees out of that money the whole time. Meanwhile, they can't stop the creditors from suing you, which they're going to do eventually. And then they may tell you, oh, they have local counsel or team of lawyers all BS. These are all just 800 numbers, you know, nationwide. Whatever BS name they use on there, you're just wasting your money.
So if you can't afford it, get rid of it and move on.
That's my speech.
[00:16:52] Speaker A: Now what about student loans?
Is that something that's dischargeable or no?
[00:17:00] Speaker B: Yes and no. Does that answer your question?
So that is a great question. And a lot's been happening with that the last couple years because student loans generally speaking are not dischargeable right now back in the day they were dischargeable then they were dischargeable. If you, you filed bankruptcy, if it's more than five years old, then it was seven years old, then 10, I think it was 10. Then it was federal loans, but not private loans. Then they had this big 2005 Bankruptcy Reform act called the Bankruptcy Abuse Prevention and Consumer Protection act. Aba, what a joke, right? It's just a name. Consumer protection Act. It's a Banking Protection Act. $100 million or the Banking lobby to push through this ridiculous bill. Right. There's no, first of all, there's no reason to even ever get a private student loan. Those are the worst ones to have because they just hard to deal with. Right.
But under the bankruptcy code certain student loans can be discharged. And not every student loan is actually what you call a student loan. A qualified student loan student loan under the bankruptcy code. So then it becomes if it is a qualified student loan, you need a hardship. Right.
So there's this famous case called Brun is Bruner test which is ridiculous. Nobody ever gets discharged on it. Right. Well the last couple of years from the mid to end Biden, now the current administration, they were trying to address some student loan issues.
So the Department of Justice a few years ago had instructions to not contest certain things. So it's a little easier to get a hardship dischargeability.
So it's not automatic. Right. And some loans aren't qualified and some maybe, maybe tuition and not a student loan. And a student loan may have went for different things. There's all kinds of sub issues. You have a whole podcast on that as well. But it is possible to discharge them. But if you most people will come, they may have student loans, but they're filing for a different reason. You must list all your assets and liabilities. So you got to put it down. Right. And if it could be discharged, you can, you gotta file in Havesy proceedings, try to get a hardship discharge. Otherwise maybe it's non qualified.
There are ways to do it. Yes.
[00:19:23] Speaker A: So what are some of the conditions that would qualify you for hardship, they
[00:19:30] Speaker B: have a, basically an application that you fill out and you know, it's a whole take an hour to go, everything. But you know, can you meet, can you meet your expenses? See, everyone thinks they have a hardship, but they don't necessarily have a hardship. See, in the federal loans, you could resolve things outside bankruptcy. Sometimes even if you don't discharge it, you kind of are because they have different programs like income based repayments, public service forgiveness.
Sometimes your payment could be a dollar a month. Well, maybe not discharging it, but a buck a month, that's not so bad, 10 bucks a month, you know, so sometimes you don't even need a discharge, you don't need to file a bankruptcy. That's why you trust filing bankruptcy. Because you could resolve things a lot easier if it's a federal loan than that. But for the hardship, it's not just a matter of, hey, I can't pay it because people, what's your budget? What are you spending money on? Right. So I have to go through the whole, the whole application filling out what would qualify as an expense, what wouldn't qualify as an expense. You may have some medical reasons, maybe your age also, and health issues.
So there's, there are hardships. Right. But everyone has the hardship, they think because they can't afford to pay it, but sometimes you actually can't.
[00:20:54] Speaker A: It's not really a hardship. You make it a hardship.
Now what about, speaking of medical conditions, what about medical expenses, medical bills? I know at one time didn't they pass a law that they couldn't put your medical bills on your credit report or something like that? I'm not really sure.
[00:21:13] Speaker B: Yeah, that, that was, which is good. And then the Trump administration was trying to take that back.
So, you know, and it makes sense because medical, it's not credit, right?
[00:21:23] Speaker A: Yeah.
[00:21:24] Speaker B: You know, I mean a credit report is like, I mean, in my opinion, if someone's looking for you, are you credit worthy? If you borrow money, are you paying it back?
[00:21:31] Speaker A: Right.
[00:21:32] Speaker B: Not if you sometimes have some health issue you got a hundred thousand dollar bill from, you know, you have insurance or even with your copay, whatever, that's out of the blue that you can't afford to pay.
That's not a credit thing. You didn't take credit out for that. So why should it be knocking your score down?
That is a debt, you know, but you know, it's causing people problems on getting houses and cars and it's just ridiculous.
[00:21:59] Speaker A: So what about with bankruptcy?
How does, how do medical bills play into that? Are they dischargeable or not?
[00:22:09] Speaker B: We talked about security.
Huh? What?
[00:22:13] Speaker A: Well, say if you have, you know, $200,000 medical bill that you owe a hospital and you want to file bankruptcy, can you put that on there? Is that something that, you know, you could have discharged or is that some one of those, like a tax or student loan situation where you still have
[00:22:32] Speaker B: to pay it, no less dischargeable. And again, whether deaths are dischargeable or not, yet to list all your debts, whether dischargeable or not. Remember we talked about secured debt and unsecured and unsecured are priority or unsecured priority. And some debts aren't dischargeable by statute, but medical bills are dischargeable, unsecured debt.
[00:22:52] Speaker A: Okay, good. That's good to know because someone asked me that recently. Like, I don't know. I'm, you know, my insurance paid all my million and a half dollars worth of medical bills when I had cancer. So I don't know, I can't relate. But, you know, you know, well, sometimes
[00:23:05] Speaker B: people have that or they have the deductibles or something's uncovered. And one thing we talk about, people with medical debt is, is it resolved now? Because once you file, that's your filing date.
Then moving forward, if you incur other debts like, you know, medical bills or whatever, that's not dischargeable unless that's post petitions, it's not part of the discharge. So let's say you're having treatment. Still, someone comes to me, all this debt, and you're still maybe have a few more months of treatment. I would say wait until you finish because then you put all your medical debt on there and, and file rather than filing now, then getting back and you know, owing 10 or $20,000 in three or four months. And that doesn't help you. So there's a timing concept when you talk to a lawyer. Bankruptcy planning, exemption, planning, timing. That's part of the consultation.
[00:23:58] Speaker A: So bankruptcy is not a decision to make casually, but neither should it be treated as a word so frightening that you're afraid to seek counsel.
So good financial decisions begin with accurate information.
Next, we'll talk about the moments when pressure is highest. Collection calls, legal deadlines, threats to income or property, and the costly mistakes people can make when they panic and don't do anything. So we'll be right back.
We'll be right back with more financial cures to help heal your financial ills so you can become financially free. So stay tuned. And we're back. I'm Dr. Wendy Labotte, the financial healer, and this is the financial cures on NOW Media Television.
Let's continue your financial healing experience.
We're continuing our conversation with Kevin Benjamin, bankruptcy attorney. This has been some good stuff you've been providing. How can people get in touch with you if they want to find out more or utilize your services?
[00:25:11] Speaker B: Aw.com.
[00:25:15] Speaker A: can you say that again?
It kind of went out for me on my end. Can you repeat that again?
[00:25:21] Speaker B: Sure.
Benjamin Law.com is the website or 312-853-3100 is the office number. But Benjamin Law.com. there it is.
And you could even have a contact thing on there. All the phone numbers are there and. Oh, they're right there. You can you fill in the. A contact thing and I'll receive it and I'll call you. I can send you my, my calendly link and get the free consultation.
[00:25:53] Speaker A: Okay.
So far we've talked about identifying serious debt problems and understanding bankruptcy as one of the possible legal tools. Now I want to focus on what happens when the situation feels urgent and people are worried about their home, their paycheck, transportation business, or ability to provide for their family. Now, those are moments when emotions can become expensive.
Fear, shame, and urgency can push people into discussions they may not make if they had the clear information and time to think.
So what kind of decisions have you seen that people have made before consulting you? When they get to that point where they got a foreclosure notice and you know, they, the bank is saying you're going on the auction block, you know what, what have you seen people do beside ignore the situation?
Do they try to do it themselves or what, before they call you?
[00:26:58] Speaker B: They ignore it. That is the answer.
What else they do is they talk to different people or there's a lot of. See, when you're in foreclosure, it's a public record.
So there's a list.
So they get all these letters. Bankruptcy lawyers may be saying 13, 7, get out of debt, short sell investors trying to buy the property, Realtors trying to get you to list the property.
People calling themselves foreclosure rescue consultants. Yes. You know, contacting you and, or, or other lawyers.
[00:27:38] Speaker A: Right.
[00:27:39] Speaker B: So there's a thing, a term called foreclosure defense, which, you know, I've done stuff in different states and that term is used improperly sometimes.
Most states are a judicial foreclosure state where you got to file a lawsuit, summons a complaint and go through a process. So it's a court proceeding. Right. But you know, people call me for defense. Okay, what's your defense? You know, so oftentimes they don't have one. They just can't pay it back because the bank says to reinstate. You owe $40,000. You got to pay me the money. Well, they may have solved the problem that caused the arrearage. And they could pay the current mortgage payment, but the bank won't take it.
And they can pay the arrears over time, but not in a month or two. Right? That's what chapter 13 comes in. You do what's called a personal restructuring, a cure and maintain plan, which is more like a maintain and care plan. The foreclosure stops immediately, automatic stay, foreclosure. Court loses jurisdiction.
You pay your current mortgage. A month later, the bank will take it. They have to. And you pay the arrearage no interest over up to 60 months. And most people could afford that.
And they want to keep their house. They want to pay. They think they need a defense to keep their house because the bank's not telling them this stuff. So then some other lawyers get in to try to buy in time and stuff. And you're just spending money on legal fees if you have no defense because you don't want to be in a judgment. And now you're worse off because you're out money for attorney fees. Plus your, your arrears has now increased and you're going to wind up filing 13, you know, to keep your house.
[00:29:13] Speaker A: So what about a garnishment? Say if someone's paycheck is getting garnished and they file a bankruptcy and you know, before I guess, the paperwork is submitted to their employer, the money is taken out. Is there any way they get that money back if the dates line up where they shouldn't have taken it out because they did file it, or is it just when they receive the actual court order?
I don't know if I asked that. Right.
[00:29:45] Speaker B: Your answer is yes.
Here's how that works. Oftentimes like someone would call me, I saw the case two days ago, guy was being garnished, right. And, but let's say your paycheck is Friday and today's, you know, Wednesday or Thursday. Right.
Depending on your size of your company and your payroll department, the money may have been out of your, on your check stub last week.
[00:30:08] Speaker A: Right.
[00:30:09] Speaker B: So even if I file today on your stub, it's gone. But it doesn't mean your employer gave the money to the creditor yet. So there's a couple of things we got to do. First of all, we stop it, right? Contact payroll. If they have the money still they turn it over. If they won't do it, I get a court order turnover and they won't give this credit. If it went to the creditor.
Money paid to the creditor within 90 days of filing, not just, you know, last paycheck. Right.
That is called a preference, a preferential transfer that could be subject to being received back, depending on the amount and how much we could exempt. Right, because let's say you got a thousand dollars, was taken over the last month or so. Right. And turned over the creditor last 90 days. Well, that's $1,000 could be an asset on your bankruptcy petition. I have a thousand dollars preference if I could exempt that. There's different exemptions you could use. That's your money and the creditor has to turn it over. If they won't, I get a court order and they will.
[00:31:15] Speaker A: That's interesting. That's something in, in the person's favor. I didn't realize that, but this is some good information.
Now, is there anything in particular that you want to highlight that we haven't discussed? Some scenarios that you'd like to share with us, you know, confidential information put aside?
[00:31:38] Speaker B: In what kind of case? Or I don't understand.
[00:31:41] Speaker A: Well, well, for one, like someone that comes in for a bankruptcy where they're saying, okay, my house is being foreclosed, my car is being repo, I got all these, My wages are being garnered, say the worst case scenario, you know. Have you had one of those? Okay, go ahead.
[00:32:01] Speaker B: Yeah, they're all resolved in a restructuring case or bankruptcy,
[00:32:07] Speaker A: more so a chapter 13.
Now, do you recommend, I guess, counseling, financial counseling, you know, to these folks, because a lot of people, you know, they do the same thing expecting a different result. And even though they file a bankruptcy and have a clean slate, they still have the same habits that they had in the past. So how do you advise them once you file, you know, the paperwork and get them kind of out of that mess?
[00:32:35] Speaker B: I never advise counseling because it's a joke. However, the government from 2005, when the banking lobbies, paid $100 million, they decided to file bankruptcy. Someone like myself with, you know, 37, 38 years of experience can't advise you on bankruptcy. But some schmuck out of college in a consolidation or a credit counseling company online camp.
So to file bankruptcy, I need a credit counseling certificate. So you are doing a credit counseling class online. It's worthless.
You learn nothing.
They won't even give it to you unless you're on the clock for an hour.
It's a Joke. But it costs you 20 bucks, whatever, 10, 20, 25 bucks, and no one's ever turned down.
And then after you file bankruptcy, do what's called a debt of education class. Again, you learn nothing. Maybe they'll tell you how to balance the checkbook. People don't file bankruptcy because they didn't balance the checkbook or they needed some online ridiculous consumer counseling class that you push some buttons on. They filed bankruptcy because they got in debt because of the interest rates and compound interest, fell behind, health issue, whatever. Life happens, kids, you know, health, loss of a job, all that kind of stuff. No one files a bankruptcy for fun. And it's not because they didn't know. Consumer credit counseling, no one ever learns anything from that. It's a joke.
[00:34:03] Speaker A: Now, what should people know before they start trying to move money? Say they're going to file bankruptcy, but they got an IRA or 401k or C savings, a hefty savings and or property that they want to sell that's free and clear.
So what do you recommend? Or how do you advise them before coming to you? Or if they come to you and say, well, look, I got this 401k and I got about 50,000 in there, should I, you know, take it out and put it somewhere? Or you know what, what do you say to someone like that?
[00:34:39] Speaker B: 1k. And qualified retirement accounts are exempt, so don't touch it. And you could have 100 grand there. It's going nowhere. It's exempt, so you don't need to do that.
Social Security money can be exempt. You have to put that in a separate account and not commingle it. And that money is also protected.
If they have a house free and clear, they're probably not looking to file bankruptcy. They can just refinance it or something so they have money.
If you don't file bankruptcy, it's your house, you can sell it.
Transferring it is a different story than selling it. When people are like, no, I don't have a house. Well, I, I do my homework. Or do you do.
Oh, no, no, I gave it to my son, you know, last week.
No, now it's gone. Because you can't just give it away and then think it's, you know, oh, who knew, you know, it was given away and file bankruptcy? No, that's a preference coming back. Trustees take it and selling it, and you may even get a bankruptcy fraud on it so you don't transfer things. Now there's again, bankruptcy planning and exemption planning and stuff. And there are some times where I would Tell a client either see an estate planning lawyer also, but after we file, maybe the transfer with disclosure to the court for estate planning purposes later on. Because suppose you're doing a chapter 13, for example, you know, you can't transfer right now and claim a certain exemption on the way you transfer it, whether it's a different tenancy by entirety instead of joint tenancy or adding somebody on there. So you're still paying it as how it was when you filed the case. But moving forward, you want to do things the right way in case five, ten years later you get in trouble again, you want it handled the right way. So you never transfer assets out of your name without talking to a lawyer especially. See a lot of misconceptions we talked about before or issues or problems aren't really problems.
That's why you have a lawyer. That's why we talk about things before you file. And because oftentimes what people think are a big problem, it's maybe a problem, but it's easy to resolve.
That's why you talk to something like me, you know, you know, you just, you owe money, right? So if you don't have things, you don't have things. But don't, don't commit fraud, don't talk to your neighbor and don't hide things. No.
[00:37:05] Speaker A: Okay. Well. Financial pressure can make every problem feel like an emergency, but the strongest response is often to slow the situation down long enough to understand the choices, protect what can be legally protected, and avoid creating a second problem like fraud while trying to solve the first one. After the break, we will focus on what comes next, including credit, restoring financial confidence, and creating habits that reduce the chance of returning to the same cycle. We'll be right back.
We'll be right back with more financial cures to help heal your financial ills so you can become financially free. So stay tuned. And we're back. I'm Dr. Wendy Labotte, the financial healer, and this is the Financial Cures on NOW Media Television. Let's continue your financial healing experience.
Welcome back to financial cures. I'm Dr. Wendy Labad, and we are closing today's conversation with Kevin Benjamin of Benjamin Legal Services.
Now, we've talked about financial warning signs, bankruptcy, urgent debt pressure, and the importance of getting informed advice before making irreversible decisions. In this final segment, I want to move from crisis to recovery. For many people, the fear that bankruptcy would define them forever.
But financial recovery is a process.
It's built through better habits, realistic planning, and the willingness to learn from the system that broke down in the first place. So Kevin, before we get into the questions, tell us a little how the the artist audience can get in touch with you.
[00:38:57] Speaker B: Well, you can just go to my website, benjamin law.com the number is 312-853-3100. But benjamin law.com the website has a lot of information. And if you scroll down on the webpage, there's also an area you can actually put your contact information in and we'll contact you. And there is right there.
And also you can go through the various tabs.
Bankruptcy, foreclosure, tax resolution, redo, litigation.
There's information on subparts of bankruptcy and different issues.
So there's a, there's a question and answer common questions area as well. So you can get some good information and then you could either call or fill in your information through a contact and we'll contact you.
[00:39:50] Speaker A: Sounds good.
All right, he's got some, a wealth of information here. 35 years experience. You better check it out.
So once a bankruptcy case is completed, what should someone focus on first to begin rebuilding their financial stability?
[00:40:07] Speaker B: Well, there's different kinds of cases, obviously, but basically like if you do a chapter seven, say you get this charge, it goes about four to five months.
What I tell people is first of all, you may have a car when you file bankruptcy and you may be keeping that car.
And depending on what you do, it's called a reaffirmation or not, it will report to the credit bureau still.
Otherwise you could obtain another car and a car loan will report to your credit union. If you save some money, go get a CD in the bank, borrow money from the bank, put a thousand dollars in the cd, borrow against it and pay it back. You know, get a six month loan, pay it back in four and do it again. Now you have that credit reporting on there. The car loan is a good credit thing because you want revolving credit, you want installment credit, you want different kinds of credit credit.
[00:40:59] Speaker A: Right.
[00:40:59] Speaker B: And then there are places that you could buy things from and they report to the credit bureaus.
I'm not saying to get into debt to do things like that.
There's credit cards you can get, even secure card if you have to. 500 hour, 500 line of credit, easy to get, use it, keep paying it and they reports to the credit bureau. So you start building up your credit.
[00:41:24] Speaker A: So with I hear some companies talk about your utility bills can be reported on your credit report. And your rent if you're a renter versus owning a home, do you recommend those types of situations
[00:41:41] Speaker B: to report on the credit report, you have to be a subscriber to the consumer reporting agencies.
Landlords are not.
Now the last couple years, there are. Some of the larger ones are getting subscribers or they're having a way to report that on there. Or you could self report your. There's a way to do that as well. Self report your rent because you want to try to get credit for it. Because people on mortgages, you know, if you're paying current mortgage, it's counting, but your rent's not right. So. But normally the rent doesn't report, so that's a problem. But there are some times that you can get it reported.
The utility bills, maybe if you're, if it goes to collection or a judgment, but just being laid on a utility bill, they're not reporting on your credit report.
[00:42:28] Speaker A: Okay. So they're not reporting the payment history on your credit report, just if you're a delinquent or if it's a negative situation.
Okay.
So you talked about how they can responsibly rebuild their credit by getting secured things, you know, like credit card, getting a CD and that kind of thing. But how, how do the financial institutions look at the fact that they filed bankruptcy even with a secured asset, like, you know, a secured credit card, did they grant them usually? Or is it another issue about you. Them looking at your credit and say, well, you filed a bankruptcy and you know, we're not going to give you a secure credit card, or is that kind of a guaranteed way to get back in?
[00:43:22] Speaker B: What you said is a complete myth.
They, there's no, they don't do that. First of all, financial institutions, there's various ones. And what kind of loan are you getting? They, they look at numbers, right? You, you are not disqualified from getting a loan because you filed bankruptcy by itself. There's no law on that. Now, any creditor could do whatever they want, right? But lenders want to lend you money, so they look at your credit score. Now, you know, reestablishing your credit helps your credit score and a bankruptcy on there is part of your credit score. So in that respect, you know, it's all calculated in there. But there is, I don't know any financial institution is to say, jesus, you know, you look pretty good, but you know, you filed bankruptcy a year ago, you know, we're going to punish you. That's not ever going to happen. That's ridiculous. So, no, don't worry about that at all.
Now people on, like getting rent, stuff like that, sometimes your credit score, you go to rent like a big Commercial place, they have a credit score they look at. Again, your filing is part of your credit score. But in reality, the fact that you filed bankruptcy helps you get the loan.
Who's going to give you a loan? No one's giving you brownie points for not filing bankruptcy. Good luck trying to get a bank loan, a mortgage or a car loan or anything when you're $40,000 in debt, making 40,000 a year with 100 debt to income ratio and you got a foreclosure or judgments on your credit. But hey, you didn't file bankruptcy, so we're going to give you a loan. No chance, right? So, you know, brownie points for not filing. But when you file, hey, guess what? You have no more debt. You can't file again for eight years. You have no more debt. You got a job. What's your, you know. Now you're, you may get turned down because your loan amount and your income isn't going to match for other, other things. But the bankruptcy is going to help you get a loan, not, not hinder you. Because the bankruptcy is not something that's fun. It solves a problem. Whether you were in foreclosure, you were getting garnished, or you get all that other debt, that's all gone. Most people's credit scores, we file Chapter 7 bankruptcy increase right away. Okay, so no, no one's turning it down just because you filed bankruptcy. They're probably turning down if you don't.
[00:45:38] Speaker A: Now what if someone gets a judgment ruled against them and then they file the bankruptcy after the fact, say a year later they decide to file bankruptcy. Does that judgment stay on their record?
Can it be? I mean, if you include it in the bankruptcy, say you get a judgment, somebody trying to, you know, garnish your wages and you know it's going to take a couple years for it to get paid off and say six months have passed since the judgment was issued and they filed bankruptcy. Does that judgment go away or is it considered satisfied if it's included in the bankruptcy? How does that work?
[00:46:18] Speaker B: The different kind of judgments, you know, was it a credit card company got it? So most judgments are unsecured debt. You just owe the money, right? It's like maybe you're in collections, right? Dischargeable debt. The fact that you have a judgment doesn't stop it from, not from being discharged. Now when you file bankruptcy, creditors have like about roughly 90 days of the time you file to file an objection to you being discharged, like fraud, deceit, stuff like that. Hey, maybe you got a personal loan or even from a company. But you gave false financials or wrong tax return or fraudulently induced them, they could contest their debt because not because it's non dischargeable because you committed, you know, fraud.
Otherwise people could contest the entire case. You don't missed all your assets or your liabilities. You're a bad faith follower. You were transferring things, hiding things. You'd be barred from discharge. Or if you were discharged within a year, you get it revoked.
So you got to be careful on stuff. But just regularly a judgment could be discharged anytime, you know. So unless you know, someone wants to claim fraud, a different issue, but most people don't. It's just maybe it's a personal loan, payday loan, credit card, debt buyer. These ridiculous debt buyers come in there with, with no standing and they get default judgments all day long and they start garnishing people and those debts, if you would fight them, they would never even get a judgment. But no one knows that. So that's a whole industry, which is another. It pays on the dollar. They sue you for the full amount. They don't even have the debt. And then they get a judgment. But now they have a judgment. So the fact that they really couldn't do it is now resolved because they got a default judgment because no one appeared. So those could be wiped out as well at any time. So judgments are not a problem at all.
[00:48:12] Speaker A: Okay, that sounds good. I mean, more information is valuable.
Financial healing is not about pretending the crisis never happened. It's about understanding what happened, using the right tools and building a stronger system for the decisions that come next.
Now, Kevin, I want to thank you for being a guest today. You provided some awesome information and I hope my viewers will watch and take notes and give you a call, especially if they're in the Illinois area. I'm not going to just say Chicago, you know, but definitely the Illinois because it's a state thing.
And just thank you for joining us and enlightening us and for everyone watching, financial difficulty is a problem to diagnose, not an identity to carry.
If the numbers are no longer working, get the facts before the crisis makes the decision for you more difficult.
Understand your options, protect what matters, and build the next chapter with greater clarity and control.
I'm Dr. Wendy LaBotte and thank you for watching Financial Cures on Now Media TV. And remember, when you think right, speak right and do right, things will flow right to optimize your financial health. See you next time.
