utilities and bankruptcy

A bankruptcy can prevent utilities being turned off although a security deposit of generally one month of service needs to be paid within 20 days of the bankruptcy filing.

assigned credit card debt

Defense counsel should send a certified or faxed letter requesting assignment or assignments necessary to show title in the plaintiff under UCC §9-406, 810 ILCS 5/9-406. Under §9-406, the debt buyer is not entitled to payment unless it provides a copy of the assignment(s). After waiting about ten days after receipt, counsel should then move to dismiss on the ground that there is no obligation to pay.

Illinois bankruptcy exemptions

Alimony, support, and separate maintenance. 735 ILCS 5/12-1001(g)(4). 100-percent exempt to the extent reasonably necessary for support.




Cemeteries and burial funds. 225 ILCS 45/4a; 760 ILCS 100/4; 815 ILCS 390/16.



Claims for negligence or tortious conduct. 735 ILCS 5/12-1001. A debtor may exempt a payment on account of the wrongful death of an individual of whom the debtor was a dependent and up to $15,000 compensation for personal bodily injury of the debtor or of a person on whom the debtor was dependent; the right to receive such an award is exempt for up to two years after it accrues; funds traceable to such an award are exempt for five years after accrual.



Crime victim’s compensation. 735 ILCS 5/12-1001(h); 740 ILCS 45/18. The right to receive such an award is exempt for two years after it accrues; proceeds traceable to such an award are exempt for up to five years after accrual.



Disability or illness benefit. 735 ILCS 5/12-1001(g)(3). 100-percent exempt.



Franchise, permit, and license interests. 235 ILCS 5/6-1. Liquor permits are exempt.



Fraternal benefit society benefits. 215 ILCS 5/299.1a. All exempt.



Homeless person’s savings account. 310 ILCS 80/5. 100-percent exempt.



Homestead on residential property. 735 ILCS 5/12-901. A debtor may exempt up to $15,000 in a residence consisting of a farm, a lot of land and buildings thereon, a condominium or a cooperative, or personal property such as a mobile home used as a homestead. The proceeds from sale of the homestead are also exempt. In a joint bankruptcy case, the maximum is $30,000.



Illinois College Savings Pool funds. 735 ILCS 5/12-1001(j). Most moneys held in an account invested in the Illinois College Savings Pool of which the debtor is a participant or donor are exempt. The statute provides exceptions for (1) contributions made with the actual intent to hinder, delay, or defraud any creditor of the debtor; (2) contributions made within a year prior to the date of filing that, in the aggregate, exceed the amount of the annual gift tax exclusion under Internal Revenue Code §2503(b); and (3) contributions made during the period commencing 730 days prior to and ending 366 days prior to the date of filing of the debtor’s petition that, in the aggregate, exceed the amount of the annual gift tax exclusion under Internal Revenue Code §2503(b).



Insurance benefits. 215 ILCS 5/238; 735 ILCS 5/12-1001(f). Proceeds payable because of the death of the insured and the aggregate net cash value of life or endowment policies and annuities payable to a spouse or dependent of the insured are exempt.



Motor vehicles. 735 ILCS 5/12-1001(c). $2,400 in one motor vehicle.



Partnership property. 805 ILCS 206/203. Under the Uniform Partnership Act (1997), 805 ILCS 206/100, et seq., property acquired by a partnership is property of the partnership and not of the partners individually.



Pensions and retirement benefits. 40 ILCS 5/7-217; 735 ILCS 5/12-1006. A debtor’s right to receive pensions, annuities, benefits, distributions, refunds of contributions, or other payments is exempt in certain circumstances. Pension plans include stock bonus, pension, profit-sharing, annuity, or similar plans or arrangements, including a 401(k) retirement plan for self-employed individuals or a simplified employee pension plan, a government or church retirement plan or contract, an individual retirement annuity or individual retirement account, and a public employee pension plan created under the Illinois Pension Code, 40 ILCS 5/1‑101, et seq.



Personal property. 625 ILCS 45/3A-7; 735 ILCS 5/12-1001(a) through 5/12-1001(e). 100-percent necessary wearing apparel, family Bible, school books, professionally prescribed health aids, and family pictures of the debtor and the debtor’s family, and $4,000 in any other property. Certificates of title in watercraft of more than 12 feet in length are also exempt.



Public assistance. 305 ILCS 5/11-3; 735 ILCS 5/12-1001(g)(1). 100-percent exempt. Some Illinois bankruptcy courts have held that the portion of a debtor’s income tax refund attributable to the earned income credit is a public assistance payment. This issue is not settled.



Social security. 735 ILCS 5/12-1001(g)(1). 100-percent exempt.



Spendthrift trusts. 205 ILCS 665/14.



Tenancy by the entireties. 735 ILCS 5/12-112; 750 ILCS 65/22; 765 ILCS 1005/1c. 100-percent exempt unless a joint creditor.



Trade implements. 735 ILCS 5/12-1001(d). $1,500 in trade implements, including professional books.



Unemployment compensation. 735 ILCS 5/12-1001(g)(3); 820 ILCS 405/1300. 100-percent, subject to certain child support claims.



Wages. 735 ILCS 5/12-803; 740 ILCS 170/4. Exempt, except for the lesser of 15 percent of weekly disposable earnings or the amount by which such earnings exceed 45 times minimum wage.



Workers’ compensation. 820 ILCS 305/21, 310/21. 100-percent exempt.



Veterans’ benefits. 735 ILCS 5/12-1001(g)(2). 100-percent exempt.



Certain of the exemptions listed above are limited in time pursuant to 735 ILCS 5/12-1001(h).

business bankruptcy

An attorney representing individuals, partnerships, limited liability companies (LLCs), or corporations facing financial difficulty must decide which chapter of the Bankruptcy Code best suits the needs of the client or whether the attorney should attempt to help solve the client’s financial problems outside bankruptcy. There are four primary chapters under the Bankruptcy Code, 11 U.S.C. §101, et seq., that a practitioner has available to assist the client. These are Chapters 7, 11, 12, and 13.

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Fair Debt Collection violations

•False statements in the complaint, affidavits, etc., e.g., that the affiant has personal knowledge of records establishing debt, that the plaintiff is holder in due course, etc., are violations. A debt collector’s misrepresentation in a pleading that it is a subrogee was held to be actionable in Gearing v. Check Brokerage Corp., 233 F.3d 469 (7th Cir. 2000). See also Sayyed v. Wolpoff & Abramson, 485 F.3d 226 (4th Cir. 2007). Filing false affidavits in state court collection litigation is actionable. Todd v. Weltman, Weinberg & Reis Co., 434 F.3d 432 (6th Cir. 2006); Delawder v. Platinum Financial Services Corp., 443 F.Supp.2d 942 (2005), reconsideration denied in part, 2007 WL 1245848 (S.D. Ohio Apr. 27, 2007); Griffith v. Javitch, Block & Rathbone, LLP, No. 1:04cv238 (S.D. Ohio July 8, 2004); Hartman v. Asset Acceptance Corp., 467 F.Supp.2d 769 (S.D. Ohio 2004); Gionis v. Javitch, Block & Rathbone, 405 F.Supp.2d 856 (S.D. Ohio 2005); Blevins v. Hudson & Keyse, Inc., 395 F.Supp.2d 655, motion denied, 395 F.Supp.2d 662 (S.D. Ohio 2004); Stolicker v. Muller, Muller, Richmond, Harms, Meyers & Sgroi, P.C., No. 1:04-CV-733, 2005 WL 2180481 (W.D.Mich. Sept. 9, 2005); Eads v. Wolpoff & Abramson, LLP, 538 F.Supp.2d 981 (W.D.Tex. 2008).

•Filing a single lawsuit without having in hand the means of proving it is not a violation (Harvey v. Great Seneca Financial Corp., 453 F.3d 324, 330 (6th Cir. 2006)), but a practice of filing lawsuits with the intent of dismissing them if they are contested may be a violation (Mello v. Great Seneca Financial Corp., 526 F.Supp.2d 1020 (C.D.Cal. 2007)).

•Suing or threatening to sue on time-barred debts is a violation. Kimber v. Federal Financial Corp., 668 F.Supp. 1480 (M.D.Ala. 1987); Goins v. JBC & Associates, P.C., 352 F.Supp.2d 262 (D.Conn. 2005); Parkis v. Arrow Financial Services, LLS, No. 07 C 410, 2008 WL 94798 (N.D.Ill. Jan. 8, 2008); Ramirez v. Palisades Collection LLC, No. 07 C 3840, 2008 WL 2512679 (N.D.Ill. June 23, 2008); Schutz v. Arrow Financial Services, LLC, 465 F.Supp.2d 872 (N.D.Ill. 2006). “A threat to sue a consumer on a claim that the debt collector knows is barred by the statute of limitations violates section 1692e(2)(A) of the FDCPA.” Aronson v. Commercial Financial Services, Inc., No. Civ. A. 96-2113, 1997 WL 1038818 at *2 (W.D.Pa. Dec. 22, 1997). It should be noted that a February 2009 FTC report states: “It thus is a violation of the FDCPA to sue or threaten to sue consumers to recover on time-barred debt.” Collecting Consumer Debts: The Challenges of Change: A Workshop Report, p. 63 (Feb. 2009), www.ftc.gov/bcp/workshops/debtcollection/dcwr.pdf.

•Failure to provide validation notice is a violation. 15 U.S.C. §1692g.

•Adding unauthorized amounts to debts, e.g., attorneys’ fees, is a violation. Shula v. Lawent, 359 F.3d 489 (7th Cir. 2004), aff’g 2002 WL 31870157 (N.D.Ill. Dec. 23, 2002).

•Misrepresentation of components of debts is a violation. Fields v. Wilber Law Firm, P.C., 383 F.3d 562 (7th Cir. 2004).

•Proceeding with collection attempts after verification is demanded, but not provided, is a violation.

•Threatening to enforce creditor remedies that cannot be enforced at the time stated or to the extent stated is a violation. For example, a debt collector may threaten to obtain a wage garnishment or execution without disclosing that this can be done only after notice, hearing, and judgment or may threaten to garnish “all” of a consumer’s wages when the law clearly imposes limitations on the amount that may be garnished. Oglesby v. Rotche, No. 93 C 4183, 1993 WL 460841 (N.D.Ill. 1993) (threat to garnish all wages and attach all property); Woolfolk v. Van Ru Credit Corp., 783 F.Supp. 724 (D.Conn. 1990) (oppressive list of postjudgment remedies); Seabrook v. Onondaga Bureau of Medical Economics, Inc., 705 F.Supp. 81 (N.D.N.Y. 1989) (threat to garnish wages in excess of amounts permitted under federal law); Cacace v. Lucas, 775 F.Supp. 502 (D.Conn. 1990) (letter stating that litigation could result in seizure of real estate and bank account deceptive; mere filing of litigation could not have any of stated effects); Holt v. Wexler, No. 98 C 7285, 1999 U.S.Dist. LEXIS 8785 at *1 (N.D.Ill. May 28, 1999) (“Additional legal proceedings will be implemented to enforce collection; credit bureaus have recorded the fact in your credit report that you are a judgment debtor and skip tracers may contact your references, your former employers, your relatives and your neighbors in an effort to gain information about your assets.”).

collection defense

Absent an account stated, it is difficult for the collection plaintiff, particularly a bad debt buyer, to prove anything is due. Debt buyers rarely possess the basic legal documentation required to make out a prima facie case. See, e.g., PRA III, LLC v. Gonzalez, 54 A.D.3d 917, 864 N.Y.S.2d 140 (2008); Palisades Collection Co. v. Velazquez, 27 Misc.3d 132(A), 910 N.Y.S.2d 406 (Sup.App. Term 2010) (text available in Westlaw); Portfolio Recovery Associates, LLC v. Ginn, 24 Misc.3d 137(A), 897 N.Y.S.2d 672 (Sup.App. Term 2009) (text available in Westlaw); Colorado Capital Investments, Inc. v. Villar, 241 N.Y.L.J. 116, 2009 N.Y.Misc. LEXIS 2693 (N.Y. City Civ. June 4, 2009); Rushmore Recoveries X, LLC v. Skolnick, 15 Misc.3d 1139(A), 841 N.Y.S.2d 823 (Nassau Cty.Dist. 2007) (text available in Westlaw); DNS Equity Group Inc. v. Lavallee, 26 Misc.3d 1228(A), 907 N.Y.S.2d 436 (Nassau Cty.Dist. 2010) (text available in Westlaw); Palisades Collection LLC v. Haque, 235 N.Y.L.J., No. 71, 20, col. 3 (N.Y. City Civ. Apr. 13, 2006); Palisades Collection, LLC v. Gonzalez, 10 Misc.3d 1058(A), 809 N.Y.S.2d 482 (N.Y. City Civ. 2005) (text available in Westlaw); Palisades Collection LLC v. Kalal, 324 Wis.2d 180, 781 N.W.2d 503 (App. 2010). This is acknowledged by the collection industry itself. James M. McNeile, Challenges for Collecting Purchased Debt, NARCA Newsl. (First Quarter 2003).

bankruptcy and judgments

It is not too late to file a bankruptcy even if a judgment has been rendered.