Dickson Law Group, LLC

Divorce, Bankruptcy, and General Practice Lawyers

4 East Terra Cotta Avenue
Crystal Lake, Illinois 60014
(815) 317-5193 tel
(815) 317-5194 fax
john@dicksonlawgroup.com

Evictions in the time of COVID-19, an Illinois FAQ

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The purpose of this blog post is to answer the most frequently asked questions that I receive as an Illinois eviction attorney. Because the COVID-19 pandemic and our governments’ responses are changing daily, the information contained in this post is likely to change. This information, however, is current as of July 6, 2019.

I am unable to pay rent. Can my landlord evict me for non-payment of rent?

No, not until late July 2020 at the soonest. For regular tenants of residential property (i.e. you live in the property you rent), two sets of laws govern what your landlord can and cannot do right now if you cannot pay rent.

First, there are Illinois Executive Orders. Governor J.B. Pritzker issued the first statewide disaster proclamation on March 12, 2020. This disaster proclamation was limited by its own terms to only being in effect for 30 days. The disaster proclamation has been continuously renewed every time it has been about to expire, with the most recent proclamation, the Fifth Gubernatorial Disaster Proclamation, being made on June 26, 2020 and being set to expire at the end of the day on July 26, 2020. It may be extended one or more additional times.

While there is a gubernatorial disaster proclamation in effect, Executive Order 2020-30 provides that “A person or entity may not commence a residential eviction action pursuant to or arising under [the Eviction Act], unless a tenant poses a direct threat to the health and safety of other tenants, an immediate and severe risk to property, or a violation of any applicable building code, health ordinance, or similar regulation.”

For eviction cases relating to residential premises that are allowed to be in court, your landlord can proceed in court and obtain an eviction judgment against you. However, that eviction order cannot be executed. Executive Order 2020-10 provides that “all state, county, and local law enforcement officers in the State of Illinois are instructed to cease enforcement of orders of eviction for residential premises for the duration of the Gubernatorial Disaster Proclamation.” Therefore, until the Gubernatorial Disaster Proclamation is allowed to expire by the Governor, even if your landlord has an eviction order against you, the Sheriff cannot execute that order (i.e. show up at the house, force you to leave, and move your stuff to the curb).

So, unless your landlord started his eviction case against you prior to April 23, 2020, it is illegal for your landlord to file an eviction suit against you under state law now, and even if your landlord is allowed to be in court, you cannot be forced to move out of the property until the Governor says so.

Second, in addition to the state executive orders governing evictions in Illinois, there are federal laws at play. On March 27, 2020, the president signed the Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136) (CARES Act) into law. Section 4024 of the CARES Act applies to tenant-occupied residential rental properties with a federally-secured loan (e.g. Fannie Mae, Freddie Mac, FHA, VA) and prohibits landlords from initiating eviction proceedings or “charg[ing] fees, penalties, or other charges” against a tenant for the nonpayment of rent until after August 24, 2020. Section 4024(c) of the CARES Act additionally requires a landlord of a property to which the CARES Act applies to serve a 30-day notice if seeking to evict the tenant for any reason, not just non-payment of rent, and that 30-day notice cannot be served until after August 24, 2020.

How do you know whether your landlord is restricted by the CARES Act? That is a difficult question to answer. Fannie Mae and Freddie Mac have loan look-up tools on their websites that allow you to check to see if the loan is insured by either of those entities, but they require the loan holder’s social security number–good luck getting that. For VA loans, there may be some indication from the mortgage recorded with the county recorder that it is a VA loan.

On May 22, 2020, the Illinois Supreme Court issued a rule requiring landlords to include a certification with their filings stating whether the CARES Act applies to them. If your landlord lies on that form, or if your landlord fills it out without understanding what he’s certifying, it will be very difficult to disprove this statement.

So, the short answer is that if the CARES Act applies, your lanldord will have to serve you with a 30-day notice after August 24, 2020, that notice cannot expire for 30 days after service, and the earliest we will see viable eviction cases filed for properties subject to the CARES Act will be late September 2020.

What about commercial property? Can my landlord evict me from my commercial space for non-payment of rent?

Yes and no. There is nothing prohibiting a commercial landlord from filing an eviction lawsuit right now. However, Executive Order 2020-30 provides that “All state, county, and local law enforcement officers in the State of Illinois are instructed to cease enforcement of orders of eviction for non-residential premises, unless the tenant has been found to pose a direct threat to the health and safety of other tenants, an immediate and severe risk to property, or a violation of any applicable building code, health ordinance, or similar regulation.” So, your landlord can file suit, litigate the case and win an order of eviction against you. However, until the gubernatorial disaster proclamation is lifted the Sheriff will not execute the eviction order. Because the sheriff is the only person entitled to execute eviction orders, you will be stuck in limbo until the disaster proclamations are lifted.

Do I still have to pay rent?

Yes. Both the Illinois executive orders relating to eviction and the federal CARES Act expressly state that nothing in those laws relieves you of the obligation to pay rent. It is just that your landlord cannot use the legal remedy of eviction if you fail to pay rent. It is in your best interest to attempt to pay rent. When the Gubernatorial Disaster Proclamations expire, you do not want to be faced with a bill for several months of rent and no way to pay it. You may be forced into bankruptcy if you are faced with such a large bill at the end of this pandemic.

I haven’t been paid rent in several months. What can I do?

Most mortgage loans are offering the ability to place your mortgage into forbearance–you still owe the money and interest is still accruing, but your obligation to pay right now is suspended. You should immediately investigate whether your lender will grant you a forbearance.

Additionally, it may be in your best interest to work something out with our tenant. I have had success negotiating agreements between tenants and landlords where the tenant agrees to move out in exchange for something. Sometimes the landlord pays the tenant to leave. Sometimes the landlord agrees to waive past-due rent. This type of settlement negotiation will not make you whole, but it will stop the bleeding. As unfortunate and unfair as it sounds, walking away battered, bruised but still alive is better than financially bleeding to death.

One thing you definitely should not do is engage in self-help. I should not have to say this, but changing the locks and throwing all of your tenants’ stuff out on the curb is a bad idea. Threatening them with physical harm is a bad idea. Harassing them constantly is a bad idea. Don’t do it.

I would like to collect an old judgment against a former tenant. Can I do that right now?

No. Executive Order 2020-25 suspends basically all of the ways to collect a judgment for consumer debt, and rent for residential property is a consumer debt. You will have to wait until the gubernatorial disaster proclamations expire.

What late fees can an Illinois landlord charge?

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If you are a landlord of either commercial or residential property in Illinois, you need to know what late fees you can charge your tenants. This blog post will shed some light on late fees in Illinois and helps you understand why you should hire an experienced eviction attorney.

Being a landlord is hard. Most things you need to know are not obvious.

The rule for late fees is not 20% or $20 in Illinois.

I am going to start this post with a cautionary tale. There is a shocking amount of really bad advice floating around the internet about what late fees an Illinois landlord can charge tenants. Landlords giving advice to each other on internet forums commonly cite 770 ILCS 95/7.10 for the proposition that “a late fee of $20 or 20% of the rental fee for each month an occupant does not pay rent, whichever is greater, is deemed reasonable.” Redditors pass around the same bad information. Non-attorney bloggers give the same bad advice. Property managers also seem to think this is the rule.

What all of these non-attorneys don’t get is that the 20% or $20 rule for late fees of 770 ILCS 95/7.10 only applies to self-storage units. That fact should be obvious to anyone who bothered to read the law they cite, which is the “Self-Service Storage Facility Act.” The 20% or $20 rule for late fees does not apply to residential leases. The 20% or $20 rule for late fees does not apply to commercial leases. It only applies to self-storage lockers.

This is why you should hire an experienced eviction attorney. An eviction attorney can help you understand what late fees you can charge your tenants. An eviction attorney can set you up with a solid, enforceable lease. Hiring an eviction attorney during the eviction process will give you the best chance to collect the late fees you’re owed. Doing it yourself and relying on Google to learn how to become a landlord is a bad strategy.

There is not a firm rule for what late fees you can charge your tenant in Illinois.

Illinois considers a lease to be like any other contract. The standard rules for contracts apply to leases. Illinois contract law considers late fees in contracts or leases to be a form of “liquidated damages.” Liquidated damages are disfavored under Illinois law, and our courts will not enforce them if given the chance.

To have a chance of a court awarding a landlord her late fees, the late fees (1) must have been intended to compensate the landlord for damages that might arise from the late payment, (2) the amount of late fees must be reasonable and bear some relationship to the damages incurred by the landlord due to late payment, and (3) the landlord’s actual damages from the late payment must be uncertain in amount and difficult to prove.

What this means is that a court will look at the late fees a landlord attempts to charge the tenant differently than the landlord looks at them. Landlords want to charge late fees to punish tenants for paying late. Courts are not supposed to care about that. Courts only care about whether the landlord was damaged by the late payment.

So, how much is reasonable to charge for a late fee? There is no hard and fast rule other than that smaller late fees are more likely to be enforced by courts than big ones. A 5% late fee charged once for each late payment (i.e. an $80 one-time late fee for a late $1,600 rent payment) is probably reasonable. There is no guarantee, but I have not seen judges balk at that. At the other end of the spectrum, a late fee of $30 per day (about $900 per month) is almost certainly too much and would likely not be enforced by a judge for residential leases.

A judge would be especially likely to enforce your late fee provision if you can link it to actual damages that you incur. If you rely on your tenant to pay her rent on time so that you can pay your mortgage on time, and if you suffer a late fee from your mortgage lender because you could not pay the mortgage for the rental unit, the judge would likely uphold a late fee charged to your tenant approximating your loss.

Do not ask for too much of a late fee. You won’t get it in court.

As I explained above, your late fees have to be reasonable. If they are not reasonable, a judge will not enforce them. If you ask for too high of a late fee, the judge will not do you the favor of reducing it to something the judge deems reasonable. The judge will just decline to give you your late fees in court. It’s all or nothing.

So, in setting late fees, landlords have to walk a fine line between setting late fees too low (which could encourage tenants to pay late) and setting late fees too high (which would not be enforced in court). You should talk to an eviction attorney before you sign a lease with your tenant to talk this issue over.

Chicago and Evanston are different. Talk to a local attorney.

As of the date this was posted, Chicago and Evanston have municipal ordinances that supersede generally applicable Illinois law. For example, in Chicago the maximum late fee for residential property is $10 on the first $500 monthly rent plus 5% an any additional monthly rent (e.g. the maximum late fee in Chicago on $2,000 in monthly rent is a one-time late fee of $85). Evanston has a similar law.

If you are a landlord in Chicago, Evanston, or any other municipality with a residential landlord-tenant ordinance, you really need to talk with an attorney before entering into a lease with a tenant because both ordinances have steep penalties for violating them. I am based out of McHenry County, Illinois. I do not regularly practice in Evanston or Chicago, so I am not the attorney to talk to for that. Talk to somebody who has experience down there.

That said, if you are not in Chicago or Evanston, I am happy to talk to any landlord or tenant for free, before signing your lease or after the lease is ready to end, to discuss your options. Give me a call at 815-317-5193 or drop me an email.

Should you file bankruptcy? How to decide.

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When bills start to pile up, you make think about filing bankruptcy. Should you?

If you’ve arrived at this page, you’re seriously thinking about filing bankruptcy. Bills are piling up, collection agencies are calling, you can’t sleep because you are worried that your car will be repossessed in the middle of the night. It is a stressful time to make one of the most important decisions of your adult life. How do you decide whether to file bankruptcy? Here is the process I work through with my clients.

Step 1: Can filing bankruptcy help you?

I will explain the different types of bankruptcy below, but for now understand that the basic deal with filing bankruptcy is that all of your debts that can be discharged will be eliminated (“discharged” in legal speak) if you do certain things. If your debts are discharged after you file bankruptcy, your creditors can no longer come after you to repay them for the discharged debt.

But not all debts are discharged. For example, filing bankruptcy cannot discharge the following debts (among others, and there is a long list of less-common debts that cannot be discharged by filing bankruptcy):

In addition to debts that cannot be discharged, there is something closely related to debt that typically cannot be eliminated in bankruptcy called a “security instrument.” Some loans–typically mortgages and car loans–have not only a promissory note (your promise to repay the bank) but also a security instrument or mortgage. The security instrument or mortgage allows the bank to take the car or house that secured the loan to recover what it’s owed. While filing bankruptcy prevents the bank from squeezing money out of you personally, it can take and sell your house or car if you pledged it as collateral for the loan.

Step 2: Is filing bankruptcy worth it?

In order to understand whether filing bankruptcy is worth it to you, you have to first understand the different types of bankruptcy and what the trade-offs are when you file bankruptcy.

The bankruptcy code is divided into “chapters.” The bankruptcy law is a long law, and like long books, chapters help the reader navigate the document. Four chapters of the bankruptcy code set forth four types of bankruptcy relief that is available to consumer debtors:

  • Chapter 7: this is what most people think of when they think about filing bankruptcy. This is the liquidation chapter, and is sometimes referred to as “straight bankruptcy.” The deal here is if you you are eligible to file it, you give up all of your “non-exempt assets” (I’ll explain what your exemptions are in a moment) and in exchange all of your debts that can be discharged will be discharged. About 95% of bankruptcies filed by individuals in the Northern District of Illinois (which is the name of the court that presides over the northern third of the state) are what’s known as “no-asset bankruptcies” where the debtor’s exemptions prevent any property from being turned over to creditors. What that means is that most people reading this will not have to give up anything to file Chapter 7 bankruptcy.
  • Chapter 13: this is the primary “repayment” or “wage earner’s” bankruptcy chapter. The deal when you file Chapter 13 bankruptcy is that if you pay all or some (depending on how much you owe to whom) of your “disposable income” over three to five years, all of your remaining debts at the end of your plan will be discharged. Because Chapter 13 requires you to pay money over a long period of time and Chapter 7 doesn’t, Chapter 7 is typically a better option for most debtors and the only people who would prefer Chapter 13 to Chapter 7 are people who need to file bankruptcy to save their house (because you can restructure your mortgage payments in a Chapter 13 plan), people who make too much money to qualify for Chapter 7 bankruptcy, or people who need to do some of the other special things you can do by filing Chapter 13 bankruptcy (like stripping unsecured liens off your house).
  • Chapter 12: this is a chapter that only applies to family farmers and fishermen, so they don’t have to sell the tractor or boat to file bankruptcy.
  • Chapter 11: this chapter is similar to Chapter 13, except that it is less friendly to you than Chapter 13. The only reason why an individual would file Chapter 11 bankruptcy is because they have a ton of unsecured debt (more than $300,000 or so in credit card or medical bills) and/or a ton of secured debt (more than $1 million in mortgage or car loan debt).

Chapter 7 is probably not worth it if your non-exempt property is worth more than your debts. There are lots of exemptions in Illinois for property when you file bankruptcy, but the most common are that you can exempt:

  • $4,000 for any property you want (and it could be a pile of cash up to $4,000–literally any property you want that you own and is not used to secure debts)
  • $2,400 in equity in any one motor vehicle.
  • $1,500 of the tools of your trade.

What this means is that if you own a small business and have lots of expensive tools, equipment, or inventory, you should not file Chapter 7 bankruptcy unless you are willing to give most of it away to your creditors. Similarly, if you have a car or cars that are paid off, you should not file Chapter 7 bankruptcy unless you are willing to lose them in bankruptcy. If you have toys that can easily be sold–guns, artwork, jewelry, boats, ATVs, etc.–you should not file Chapter 7 bankruptcy unless you are willing to lose your toys in bankruptcy.

Step 3: Are there alternatives to filing bankruptcy?

Bankruptcy is not the end of the world, but it should be a last resort. How sure are you that you need to file bankruptcy to deal with your debts? It makes sense to talk to a free consumer credit counseling agency before talking to a bankruptcy attorney like me. If you live in McHenry County, Illinois, or Kane County, Illinois or Lake County, Illinois, you really should talk to Consumer Credit Counseling Service of Northern Illinois before committing to filing bankruptcy. CCCS is free, non-profit, and most importantly, I trust them because they do good work.

Step 4: Make an appointment with me to discuss how to file bankruptcy.

If you still think you should file bankruptcy, and if you live reasonably close to Crystal Lake, Illinois, give me a call at 815-317-5193. I will talk you through your issues over the phone, and we can schedule a free consultation about whether filing bankruptcy is right for you.

How to be skeptical of tax cut claims by politicians

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The Northwest Herald electronically published an article yesterday (presumably running in Monday, December 11th’s print edition), titled “Crystal Lake’s property tax rate to fall, but homeowners still could pay more.”

The opening line after the headline sounds promising:

The city’s property tax rate is expected to decrease 1.28 percent on next year’s tax bill.

Fantastic, no? If the property tax rate is expected to decrease 1.28 percent, that means your taxes for the city will go down by about 1.28%, right? The city’s representative even pretends like this is possible:

It is difficult to estimate how much each homeowner will have to pay the city, Crystal Lake Finance Director George Koczwara said.

 

Whenever a bureaucrat talks about the percentage tax rate, you should assume he’s hiding a tax hike.

Telling homeowners to look at the property tax rate is an easy way to hide tax hikes. Here’s the correct way to look at it, through an analogy.

Imagine a hypothetical city that has 10 houses in it (and no other properties), and each of the houses are worth exactly the same amount. The hypothetical city in 2016 requested a tax levy of $10,000 for that year. No matter what the assessed valuation of the homes are, if they are all worth the same, each homeowner pays $1,000 in taxes. It’s easy to see that a $10,000 tax levy divided by 10 identically assessed houses is going to be $1,000 per house, no matter what.

If the hypothetical city requests a 2017 tax levy of $15,000, again assuming each home has the same assessed valuation, each homeowner is now paying $1,500 in taxes. The takeaway is that if a unit of local government increases its levy, taxes on average must increase in lockstep.

Bringing property valuation (often called “EAV,” or the Equalized Assessed Valuation of your property after the township and county set your assessment, and the county and state equalize those assessments) into the picture only serves to hide the fact that a unit of local government is hiking taxes.

Don’t believe me? Let’s factor EAV into the hypothetical city’s tax hike. Again, in 2016 the hypothetical city requests a $10,000 levy. In 2016, each of the 10 houses in the hypothetical city are worth $100,000. So, the tax rate for 2016 is 1% (the $10,000 levy divided by the total tax base of $1 million (10 houses times $100,000 each). The 2016 per house tax bill is the same $1,000 as before. In 2017, the hypothetical city increases its levy to $15,000, but the EAV for each house is now $200,000. So, the tax rate for 2017 drops to 0.75% ($15,000 levied divided by a total tax base of $2 million), and the politicians and bureaucrats celebrate and pat each other on the back for pretending to cut taxes. Each taxpayer, despite his or her tax rate dropping now is paying $500 more per year.

When talking about tax cuts, the only thing that matters is the levy. If the levy goes up, the average taxpayer in the city, as a matter of simple arithmetic, has to pay more. Talking about tax rates only hides this reality.

 

We can say with absolute certainty that taxes are going up in Crystal Lake.

How do we know? Crystal Lake is in the process of approving its 2017 levy. Because we pay property taxes one year in arrears, it sets its levy for 2017 at the end of 2017. Crystal Lake is requesting a 2017 levy of $17,070,984. In 2016, Crystal Lake levied $16,488,826. Because Crystal Lake wants to hike its levy 3.53% for next year, taxes on average have to go up for Crystal Lake residents by 3.53%. Sure, you might be one of the “winners” whose assessment decreased (which, by the way has nothing to do with your elected Crystal Lake officials), but that does not change the simple fact that Crystal Lake has hiked taxes again.

 

It’s only a tax hike of 3.53%, is that enough to be upset about?

It sure is. In Illinois, we have something known as the Property Tax Extension Law Limit (PTELL). Without getting into too many details, most units of local government have a maximum amount by which they can increase the levy each year. The cap is either the rate of inflation measured as by CPI or 5%, whichever is lesser. For 2017, CPI was 2.1%, so most units of local government can only increase their levy by 2.1% for next year.

Crystal Lake, however, is not constrained by PTELL because it is a “home rule” unit of local government. It is free to hike your taxes however much it wants to.

Despite PTELL not constraining Crystal Lake, you should ask yourself: If almost every other unit of local government in the county can get by with a 2.1% tax hike or less, why does Crystal Lake need more? And why are they so proud of this fact?

Types of bankruptcy relief available

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“Chapter” refers to the different types of relief available.

Crystal Lake bankruptcy attorney Dickson Law Group 815-317-5193

When you open your wallet, are the people on the bills frowning at you? Contact Dickson Law Group for a Crystal Lake bankruptcy attorney who can assist you with changing your financial outlook.

So, you’ve decided to file bankruptcy. You do not technically need a bankruptcy attorney to file bankruptcy. You conceivable could file your own bankruptcy petition, and there is such a thing as a professional bankruptcy petition preparer who can draft the documents for you.

Bankruptcy, however, is complicated and the paperwork is extensive. The most recent bankruptcy petition I filed contained 61 pages of documents for the petition alone, without counting all of the other documents that are filed with a bankruptcy case. A bankruptcy lawyer can also give you legal advice that a professional petition preparer cannot.

There are four types of relief available to consumer debtors under the United States Bankruptcy Code. These types of relief are generally referred to by the “Chapter” in which they are codified in the Bankruptcy Code.

Chapter 7 bankruptcy basics.

Chapter 7 bankruptcy is designed for debtors with limited monthly income who are unable to pay their debts. The basic deal you make when you file a Chapter 7 bankruptcy is that you turnover all of your “non-exempt” property in exchange for a “discharge” of all of your debts and obligations that can be discharged.

Chapter 7 for most debtors is the most desirable type of bankruptcy case because it does not require you to repay your debts. Other types of bankruptcy cases–specifically Chapter 7 and Chapter 13–require you to propose a plan to repay all or part of your debts and to make payments of most of your disposable income over a period of years to obtain the same discharge that you can receive within months under Chapter 7.

Not every debtor, however, qualifies to be granted a Chapter 7 discharge. In 2005, Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA” which is a commonly used acronym and is pronounced BAP-see-puh) which prevents debtors who make too much money from filing Chapter 7. Among other things, BAPCPA imposed the “Means Test” on consumer Chapter 7 filings. While there are a number of ways to pass the Means Test, the most common are (1) if your household income averaged over the past six months falls below the median income in your state for a household of your size, (2) your disposable income is not enough to cover your reasonable living expenses, or (3) most of your debt is not “consumer” debt (e.g. you guaranteed a loan for your business that failed).

Most debtors qualify for Chapter 7, but if you do not pass the household income test it is important to contact a Crystal Lake Bankruptcy Attorney to assist you with your filing. The means test is complicated and will receive scrutiny from both the trustee assigned to your case and by the United States Trustee.

Our team can quickly counsel you about whether you qualify for a Chapter 7 bankruptcy and, more importantly, whether it is right for you. The goal of many bankruptcy attorneys is to get your money and get your case filed, whether or not it’s right for you. That is not how we run our office, and we tell many debtors that the cure of bankruptcy is too strong medicine for the disease of debt.

Chapter 13 basics.

Chapter 13 bankruptcies, occasionally called “wage-earner bankruptcy,” are available to people earning an income that generates disposable income of at least $100 a month. Chapter 13 requires you to propose a plan to repay some or all of your debts over a period of three to five years.

While Chapter 7 is generally better if you can qualify for it, there are some instances where you might choose to file Chapter 13:

  • Mortgage Foreclosure. If your house is in foreclosure and you need to get it current but cannot get it current without an orderly payment plan, Chapter 13 may be right for you. That said, houses invoke all sorts of irrational emotions. We all are generally emotionally attached to our homes. We have the resources to tell you whether reinstating your mortgage through a Chapter 13 is prudent or whether you’re irrationally throwing good money at a bad housing investment.
  • Lien Stripping. If the second or third mortgage on your home is completely underwater (i.e. there is not even one penny of equity after the first mortgage), you can strip those liens off in Chapter 13. You cannot strip second mortgages and HELOCs off in Chapter 7.
  • Co-Signers. If you have co-signers on debt and would feel terrible about leaving those co-signers with sole liability for your loans, Chapter 13 can help.
  • Too Many Assets. If you have too many assets (e.g. a small business with some book value that you do not want liquidated or a sizable collection of guns or art), Chapter 13 can help you retain the business interest that you otherwise would have to liquidate in Chapter 7.

Aside from those four very specific scenarios, we do not recommend Chapter 13 to debtors who otherwise would qualify for Chapter 7.

Chapters 11 and 12 basics.

Chapter 11 is similar to Chapter 13 in that you must propose a plan and make payments toward your debt over time. Chapter 11 is inferior to Chapter 13 in every respect, but if you have too much debt to qualify for a Chapter 13 bankruptcy ($383,175 in unsecured debt and $1,149,515 in secured debt), Chapter 11 may be your only option.

Chapter 12 is a type of bankruptcy relief available to family farmers and commercial fishermen so that they can obtain a discharge similar to Chapter 13 without having to sell their farm or boat.

Crystal Lake Bankruptcy Attorney

Our Crystal Lake bankruptcy attorney has experience counseling individuals, families, recent divorcees, and small businesses about whether bankruptcy relief is right for them. We offer a no-obligation, no-fee initial consultation for bankruptcy clients to discuss and devise solutions for our clients.

Best practices of Illinois residential landlords for eviction

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I went took an eviction case to trial yesterday, and my client, the landlord, got a pretty bum deal from the judge. Although we successfully obtained an eviction order against the tenants, my client took a sizable haircut on the back rent.

The monthly rent for the property was $2,000, and my client let 20 (yes, 20!) months pass without doing anything about it. By the time it went to trial, the judge declined to award the full $42,000 in rent my client was owed, and instead awarded us 12,000.

That isn’t to say that the judge did anything wrong–he didn’t. He awarded my client exactly what he was due under the law. My client’s loss is a direct result of the choice he made to do nothing for almost two years. Don’t be like my client. Be proactive about your late or non-paying tenants. Hopefully, this blog post will give you some tips about how to be proactive. And, as an added bonus, this post includes free Illinois eviction forms that landlords are free to use.

Because I am including free Illinois eviction forms, read the following disclaimer:

This blog post and the forms and advice it contains are published by Dickson Law Group, LLC and Attorney John P. Dickson for educational purposes only and to give you what I believe are the best practices landlords should follow. This blog post does not contain specific legal advice for your situation because I know nothing about your specific situation. By using this blog post you understand that there is no attorney client relationship between you and either Dickson Law Group, LLC or Attorney John P. Dickson. The blog post should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. This blog post describes Illinois law. If your legal issue is based in a different jurisdiction, this blog post will be largely worthless for you. The law constantly changes. I cannot guarantee that the forms I include in this blog post are current and acceptable for your purposes. 

Got it? OK, let’s proceed.

This advice does not apply to properties located in Chicago or Evanston. Check your local jurisdiction to see if they have a similar law.

Chicago and Evanston have residential landlord-tenant ordinances that supersede much of the advice given in this blog post. As of the date of this post (April 2016), Chicago and Evanston are the only locations in Illinois that I know have residential landlord-tenant ordinances. If you stumble across this blog post at a later date, you should determine whether your local jurisdiction has adopted such a law.

How Illinois evictions work.

Evictions are governed by the Forcible Entry and Detainer law, which is codified at 735 ILCS 5/9-101, et seq. Because the law is named this, you may hear eviction cases described as a “Forcible” lawsuit or a “Forcible Entry and Detainer” lawsuit.

All Illinois evictions must be handled through the courts, and for you that almost always means the state courts (as opposed to the federal courts). The trial level courts in Illinois are called “Circuit Courts,” and that is where your Illinois eviction case will be heard.

Before you can file an Illinois eviction lawsuit, you need to have the right to evict. Typically, this means serving a notice to your tenant that you want to evict and waiting for the notice expire. For example, if you serve a Five Day Notice on Wednesday, Thursday is Day 1, Monday is Day 5, and Tuesday is the first day you can file your eviction suit.

There are some limited instances where you can commence an Illinois eviction action without serving an eviction notice. One of those instances is described below in “Scenario 4”

Scenario 1: My tenant owes me rent. What should I do?

If your tenant owes you rent, you need to serve him or her with a Five Day Notice. If your lease says that rent is due on the 1st day of the month and is considered to be late if not received by the 5th day, attempt to serve a Five Day Notice on the 6th day of every month that rent is late. This is an easy process, so I recommend you do this automatically as soon as rent is late, even if only by a day.

How to Serve an Illinois Landlord’s Five Day Notice

Here is a link to a pdf file for the form you need to use: Illinois Self-Help Landlord’s Five Day Notice.

Here’s what it looks like when you fill it out:

Example Illinois Five Day Notice filled out by landlord

This is what the Five-Day Notice should look like when filled out. Don’t include my annotations in the form you use.

Step 1: Fill out the top half of the form. Leave the bottom half blank until you actually have served the tenant. Make a photocopy for every tenant named on the lease (typically, husband and wife). If the tenants’ children are named on the lease but you know that they are under the age of 18, there is no need to name them on the Illinois Landlord’s Five Day Notice.

Step 2: Serve one copy of the Five Day Notice to every single named tenant. That is to say that if there are four people named on your lease residing in the property and you want to evict all of them, you need to serve four copies of the Five Day Notice. How do you serve the Five Day Notice? You have three options:

  • You can physically hand the Five Day Notices to anyone living in the property aged 13 or older. Anyone aged 18 or older can serve the Five Day Notice. You do not have to be a licensed process server to serve this document.
  • You can serve it by certified or registered mail. You must request a return receipt. You must mail the Five Day Notice in a separate envelope to everyone named on the Five Day Notice. And, for service to be complete, your tenants have to actually sign the return receipt confirming delivery (most are smart enough not to do this).
  • If and only if your tenants have completely abandoned the property, you can tape it to the door. If it turns out that your tenants still reside in the property, if you try to evict with a Five Day Notice that was taped to the door, your eviction case will be tossed out of court!

Step 3: Fill out the second half of the Illinois Landlord’s Five Day Notice Form reflecting the date you served the notices on and the manner in which they were served. So, for example, let’s assume you have two tenants whose names are “Husband” and “Wife.” If you served the Five Day Notices by handing them to Wife, you would fill out one copy of the form and select Option (1) on one copy indicating that you personally gave Wife’s Five Day Notice to Wife, and you would fill out a second copy of the form and select Option (2) for Husband, stating that you gave Husband’s copy to Wife.

If you serve your tenants with a Five Day Notice, do you have to evict them?

No, you are under no obligation to evict your tenants even if after five days expire they have not paid their back rent in full. Serving the Five Day Notice merely gives you the option to file an eviction lawsuit after it times out.

My tenant wants to make a payment of less than the full amount of rent due. Can I accept it?

Yes, but you should make it crystal clear to your tenant that you do not agree to waive your rights under the Five Day Notice to evict. If they pay even one cent more than the past-due rent amount, your Five Day Notice will be invalidated and you will have to re-serve a new notice in the future. This is typically a good thing because as a landlord, you want to be paid rent and you do not want to pay an attorney money to evict these people. Just know that once you accept one cent more than the Five Day Notice demands, you’ll have to start the process over again.

What if the tenant mails me a check after I serve the Five Day Notice for the next month’s rent and writes in the memo line of the check that this is for the next month’s rent. Can I cash it?

Probably not if you still want to evict your tenants. Accepting this payment would likely invalidate the Five Day Notice.

What if my tenants give me a check for the full amount demanded before the Five Day Notice expires. Can I refuse to accept it and evict them?

No. You must accept a valid tender of the amount demanded in the Five Day Notice. If you refuse payment and if your tenants can prove that you refused to accept payment, any eviction suit you filed based upon those circumstances will be thrown out of court.

If they have not paid me after the Five Day Notice expires, can I throw the tenants out on the street?

No! A Five Day Notice merely gives you the right to file an eviction lawsuit if your tenants have not paid in full within the time period set forth in the notice. If you attempt to evict your tenants without filing a lawsuit, obtaining an eviction order, and placing the eviction order with the County Sheriff for execution, your tenants will have the right to sue you for a lot of money. When in doubt, don’t do it.

Can I turn off the utilities for the property to try to force the tenants to move?

No. Again, this will give your tenants the right to sue you for a lot of money. Don’t do it.

Can I do something else creative to force them out like removing the front door of their unit?

No. Again, this will give your tenants the right to sue you for a lot of money. Don’t do it.

What can I do to evict my tenants?

Use the courts and County Sheriff. If you want to try to do it yourself, you have every right to file an eviction lawsuit without an attorney. That said, if the landlord is an LLC or Corporation (even if you are the only member of the LLC or shareholder of the Corporation), the judge will make you hire a lawyer. LLCs and Corporations can only prosecute lawsuits with a lawyer. In some instances they can defend lawsuits without a lawyer, but that is a question for a different day.

My lease entitles me to late fees and utility charges. Can I sue for them?

Yes, but not in the eviction case. Evictions are limited to two questions: (1) How much back rent they owe you, and (2) Whether you have a right to evict them. Late fees and utilities are generally not considered to be rent unless your lease specifically states that these items are included as “additional rent” for the month. Even if your lease states that late fees and utility charges are “additional rent,” most eviction judges that I have appeared before decline to award you a judgment for them in the eviction case.

If it makes sense for you to try to recover your late fees and utility charges, you have to file a separate lawsuit, typically in small claims.

Your late fees have to be reasonable. There is no hard and fast rule for how much of a late fee is reasonable, but most judges I have talked to would consider a one-time charge of $75.00 a month to be the upper limit of reasonable late fees. If your lease says that you are entitled to something crazy like $10.00 a day for every day that every payment is late, I can tell you with almost certainty that you will not be awarded those late fees by a judge.

Scenario 2: I do not have a written lease with my tenants, but we have an oral agreement to pay rent every month. They pay their rent in full every month, but I still want to get them out. How can I use an Illinois eviction to accomplish this?

If you do not have a written lease with your tenants that expires on a certain date in the future, you have what’s known as a “month-to-month” lease. Here is how you terminate that lease.

Do you have a proper reason for wanting these tenants to leave?

The first question you should as is whether you have an improper purpose for wanting to evict your tenants. You cannot evict your tenants for an improper purpose, for example, if you dislike the tenant’s sex, gender, age, disability, handicap, ethnicity, race, religion, national origin, familial status, or any other number of protected statuses. You cannot evict your tenant for refusing your sexual advances. You cannot evict your tenants to retaliate against them for reporting you to code enforcement officials for defects in the property.

The laws in this arena are complex, and I will not endeavor to describe who you can discriminate against and who you cannot discriminate against. Other than being mean, you can get sued, again, for a lot of money for doing it.

Two perfectly acceptable reasons for wanting to terminate a month-to-month tenancy are that you believe the property could be rented out to other people for more money or that you do not want the property to be a rental property any longer (e.g., if you want to sell it).

How do you go about getting rid of month-to-month tenants?

Serve your tenants with an Illinois Landlord’s Thirty-Day Notice. Here is a link to a pdf file for the form you need to use: Illinois Self-Help Landlord’s Thirty Day Notice.

The Thirty Day Notice looks a lot like the Five Day Notice discussed in depth above. You should fill out the top half, make a bunch of photocopies of the filled-out form (or scan and electronically save it), and serve it on your tenants in the manner described above. Then fill out the bottom half of the form in the manner described above.

Once the Thirty Day Notice has expired, if your tenants have not turned over possession of the premises, you have to file an eviction lawsuit and have the Sheriff evict them.

Why do I have to give the tenants until the last day of the next calendar month? That’s more than thirty days out.

There is a case out there that has held that Thirty Day Notices that attempt to terminate a month-to-month tenancy at any time other than the last day of a calendar month is defective. The theory behind this is that a month-to-month tenancy creates successive tenancies in the property for entire calendar months. If you have not validly terminated a month-to-month lease before the next month starts, they are entitled to stay for entire month.

To be frankly honest, I have not had to argue this issue in front of a judge because I tend to force my clients to do things correctly. I do not know what a judge would do with a Thirty Day Notice that attempts to terminate a month-to-month tenancy on any day other than the last day of a calendar month. My suspicion is that the judge would do one of three things:

  1. Not understand that this is invalid and let you evict;
  2. Understand that this is invalid, but only let you evict as of the last day of the month; or
  3. Declare that your Thirty Day Notice is invalid, throw your case out, and make you start over again.

To be safe, list the last day of the month as the date the month-to-month tenancy is terminated in the Thirty Day Notice.

Can I still accept rent after being serving a Thirty Day Notice?

Yes, you can accept rent for all months prior to the date set forth in the Thirty Day Notice that the tenancy will terminate. If you accept rent for the month after, your Thirty Day Notice is no longer valid, and you will have to start over again.

Scenario 3: I have terrible tenants that pay their rent in full and on time. Can I evict them?

Let’s suppose that your tenants have breached the terms of your lease with them by doing something they are not allowed to do under the terms of the lease. The most common examples of this are having dogs and cats in the property when the lease prohibits it, having unrelated adults move into the property with them (and be careful about this one–read the section above about discrimination against familial status), selling drugs out of the property, refusing to mow the lawn, or other issues.

Can you evict? Absolutely. You need to serve your tenants with an Illinois Landlord’s Ten Day Notice. Here’s a link to a pdf file of that form: Sample Illinois Landlord’s Ten Day Notice.

What if my tenants cure the issue? Can I still evict?

Yes, technically. There is no general right to cure a Ten Day Notice in Illinois. That said, if the issue causing you to serve the Ten Day Notice is minimal and caused no real harm to you (e.g., unmowed grass), you run the risk that the judge hearing an eviction case based upon the notice will find a reason to throw your case out.

Scenario 4: The lease was set to expire on a certain date, and my tenants are still in possession of the premises. What can I do?

Once a lease expires, you have the right to do one of three things: (1) stick the tenants with a new lease for the original term of the lease, (2) treat the tenants as month-to-month tenants, or (3) immediately evict them.

In scenarios (1) and (2), the monthly rent is what is called for in the lease. You cannot unilaterally decide that they have to pay more. Note well, however, that most well-drafted leases have a “holdover” provision in them calling for double rent if the tenant stays past the date the lease expires.

I want the tenants out. What can I do?

Assuming that you have not accepted rent for any months after the date that the lease expired, you can immediately file an eviction lawsuit without the need to serve a notice.

I made the mistake of accepting rent after the lease expired. What can I do?

By accepting rent after the lease expired, you created a month-to-month tenancy with your tenants on the terms of the original lease (same rent, same conditions, the only thing that changes is that the lease no longer has a set expiration date). If you want your tenants out and they are current with their rent, follow the Thirty Day Notice procedure set forth above in “Scenario 2.” If your tenants are late on their rent, follow the Five Day Notice procedure set forth above in “Scenario 1.” Don’t do both.

Should I hire an attorney?

That depends. A bad analogy I use when asked this question is that prosecuting an Illinois eviction is like trying to fix your car. If you are handy or desperate, you conceivably can do it yourself and save some money. You also could cause more problems and lose valuable time by doing it wrong.

Hiring an Illinois eviction attorney ensures that it gets done right as soon as possible. When a tenant stops paying you rent, you begin hemorrhaging money. Property taxes are insanely expensive, and the mortgage on the property can be sizable. If your combined obligation for taxes and mortgage on the rental unit is $2,000 a month, you are losing $67 dollars every day that you do not have a paying tenant in the property. That quickly adds up.

My office handles evictions primarily in McHenry County, Illinois. We charge a flat fee of $750 plus court costs and service of process costs to get you an eviction order. We also prosecute Illinois eviction cases in Boone County, Lake County, DuPage County, Kane County, and the Rolling Meadows Courthouse in Cook County for $900.00 plus costs to compensate us for the travel time to those locations. There are no hidden attorney fees, and you will never pay more than those flat fees for your Illinois eviction case in those locations.

We file most eviction cases the same day that a client places them with us if the client has properly served the notices described above. If you would rather we handle the notice process process, that service is included in the flat attorney fee.

Traffic Ticket Pitfalls for Drivers Under 18

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Even though drivers can obtain a driver’s license in the State of Illinois at age 16, there are restrictions on this license not present for full driver’s licenses and there are enhanced penalties for specific traffic violations. The purpose of this blog post is to (1) explain the basics of the Illinois Graduated Driver Licensing Program, (2) point out specific offenses that place the young driver at risk of a license suspension, (3) explain the penalties under 18 drivers face, and (4) explain the importance of retaining an attorney for your young driver.

 

Illinois Graduated Driver Licensing Program basics

Illinois drivers can obtain a permit to drive on the roads at age 15. They need parent/guardian consent, have to pass a written and vision test, and must be enrolled in a driver education program if under the age of 17 years and 3 months. Drivers aged 17 years and 3 months or older can obtain a permit without being enrolled in driver education.

The permit is good for two years and authorizes the young driver to practice driving with a driving instructor or an adult aged 21 or older who has had a license for at least one year prior. Any moving violation conviction (court supervision does not count as a conviction for these purposes) while the driver has a permit will result in a mandatory nine-month waiting period after the ticket is resolved until the driver can apply for a driver’s license.

Permit drivers are prohibited from driving between 10:00 p.m. and 6:00 a.m. on school nights (Sunday night through Thursday night) and between 11:00 p.m. and 6:00 a.m. on the weekends. These nighttime driving restrictions apply even if the permit driver has a parent sitting right next to them. 

Drivers operating a vehicle with a permit are limited to one passenger in the front seat (who must be the licensed driver supervising the permit driver) and as many passengers in the back seat as there are seat belts.

Once the young driver reaches the age of 16, has completed a driving education course, and has practiced driving on the permit for at least 50 hours, the driver can apply for a driver’s license.

Driver’s licenses for under 18 drivers are graduated, with the driver being granted increased levels of driving privileges over time. The big restriction that most drivers run afoul of is the limitation on passengers in the car. For the first 12 months of being licensed (or until the driver reaches 18 years old), the driver is limited to one passenger under the age of 20 in the vehicle outside the family. So, the driver can drive his two siblings around town without issue, but the driver cannot drive all of her friends around for a year.

What happens if the young driver receives a traffic ticket?

Relax, it’s not the end of the world. Your biggest concern should be correcting the driver’s bad habits and coaching him to adopt safe driving practices.

There are two big effects: (1) Your already-high insurance rates will go up. If your 16 year old gets a ticket, it’s probably time to tell him to get a part-time job. (2) Setting the financial aspects aside, what happens if the young driver gets a ticket? Well, fortunately for the driver it’s pretty difficult to lose her license.

There are two rough categories of traffic offenses for young drivers: serious traffic violations and everything else. A “serious traffic violation” is:

Sec. 1-187.001. Serious traffic violation.
(a) A conviction when operating a motor vehicle for:

  1. a violation of subsection (a) of Section 11-402, relating to a motor vehicle accident involving damage to a vehicle;
  2. a violation of Section 11-403, relating to failure to stop and exchange information after a motor vehicle collision, property damage only;
  3. a violation of subsection (a) of Section 11-502, relating to illegal transportation, possession, or carrying of alcoholic liquor within the passenger area of any vehicle;
  4. a violation of Section 6-101 relating to operating a motor vehicle without a valid license or permit;
  5. a violation of Section 11-403, relating to failure to stop and exchange information or give aid after a motor vehicle collision involving personal injury or death;
  6. a violation relating to excessive speeding, involving a single speeding charge of 26 miles per hour or more above the legal speed limit;
  7. a violation relating to reckless driving;
  8. a violation of subsection (d) of Section 11-707, relating to passing in a no-passing zone;
  9. a violation of subsection (b) of Section 11-1402, relating to limitations on backing upon a controlled access highway;
  10. a violation of subsection (b) of Section 11-707, relating to driving on the left side of a roadway in a no-passing zone;
  11. a violation of subsection (e) of Section 11-1002, relating to failure to yield the right-of-way to a pedestrian at an intersection;
  12. a violation of Section 11-1008, relating to failure to yield to a pedestrian on a sidewalk; or
  13. violation of Section 11-1201, relating to failure to stop for an approaching railroad train or railroad track equipment or signals; or

(b) Any other similar violation of a law or local ordinance of any state relating to motor vehicle traffic control, other than a parking violation.
(c) A violation of any of these defined serious traffic offenses shall not preclude the defendant from being eligible to receive an order of court supervision under Section 5-6-1 of the Unified Code of Corrections.
(Source: P.A. 98-511, eff. 1-1-14.)

625 ILCS 5/1-187.001. Some of these offenses are more serious than others, but they’re all the same for purposes of a license suspension. Your driver can only receive supervision once for any of these offenses. Any second offense that the prosecutor does not amend to a different supervision-eligible offense will result in a conviction.

Convictions are bad because they extend the passenger limitations of the Graduated Driver’s License by six months. From a parent’s point of view, that may be a good thing, though.

For all other offenses, two convictions in any 24 month period (running from the disposition date of the first conviction to the date the second ticket is written) will result in a one-month license suspension.

And, any violation of the nighttime driving restrictions can result in a license suspension.

License suspensions for drivers are not a lot of fun because the driver must complete remedial driver’s education, fill out obnoxious DMV paperwork, and pay a $70 reinstatement fee to get her license back.

Special quirks with Graduated Driver’s Licenses

Supervision is preferable to receiving a conviction, but it comes at a cost. Young drivers cannot receive supervision with the mail-in option for tickets. That means at least one court appearance is required, and whenever you step foot in a courtroom expect ludicrous court costs tacked on to the fine at the back end (for example, I’ve seen a $25 fine receive $200 in court costs). The driver’s parent or guardian has to come to court for the court to grant supervision. And, any disposition involving court supervision for a driver on a Graduated Driver’s License has mandatory traffic safety school.

Should you get a lawyer?

For any serious traffic violation, absolutely. The driver will have the best chances to keep his license if an attorney is able to successfully resolve the ticket. Moreover, for the types of violations that involve property damage or other, more serious crimes (e.g. transporting alcohol, which can be charged as a misdemeanor and involve jail time), an attorney will help your young driver avoid digging herself into a deeper hole by admitting liability when it should be in doubt or by confessing to a crime. Get a lawyer if you can afford one.

For non-serious violations, probably. An attorney will give your driver the best chance to obtain court supervision for the ticket, minimizing the effect on the driver’s license and for your insurance rates.

If your child has a traffic ticket in McHenry County, Illinois; Kane County, Illinois; or Lake County, Illinois, give me a call at (815) 317-5193. I’m always happy to talk over the phone, and we could probably work something out to protect your kid’s license and your insurance rates.

 

Foreclosure defense tax relief now into 2016

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I’ve just heard some great news for homeowners defending foreclosures and pursuing workout options with their mortgage lender. The Consolidated Appropriations Act of 2016, the behemoth spending bill passed by Congress every year, contained hidden within it an extension of the Mortgage Forgiveness Debt Relief Act. This is great news for my foreclosure defense clients! This blog post outlines (1) what the bill says, (2) why it’s a big deal, and (3) what steps you can take to avoid big income tax liability in the future if you’re facing foreclosure.

Foreclosure defense attorneys should counsel their foreclosure clients about the tax ramifications of foreclosure.

Income tax liability to the IRS is no joke. Homeowners facing foreclosure need to consider the tax liability risk involved with a house in foreclosure

Read it yourself.

Buried on pages 824 and 825 of the PDF file published by the GPO contains the following provision:

SEC. 151. EXTENSION AND MODIFICATION OF EXCLUSION FROM GROSS INCOME OF DISCHARGE OF QUALIFIED PRINCIPAL RESIDENCE INDEBTEDNESS.

(a) EXTENSION.—Section 108(a)(1)(E) is amended by striking “January 1, 2015” and inserting “January 1, 2017”.
(b) MODIFICATION.—Section 108(a)(1)(E), as amended by subsection (a), is amended by striking “discharged before” and all that follows and inserting “discharged—
“(i) before January 1, 2017, or
“(ii) subject to an arrangement that is entered into and evidenced in writing before January 1, 2017.’’.
(c) EFFECTIVE DATES.—
(1) EXTENSION.—The amendment made by subsection (a) shall apply to discharges of indebtedness after December 31, 2014.
(2) MODIFICATION.—The amendment made by subsection (b) shall apply to discharges of indebtedness after December 31, 2015.

Consolidated Appropriations Act, 2016, pp. 824-25.

What does it mean for homeowners defending foreclosures?

The Mortgage Forgiveness Debt Relief Act has been one of the best things ever to happen to homeowners going through foreclosure. Without this law, once your foreclosure case concludes you may be hit with a deficiency judgment. For example, if you owe $250,000 on your mortgage but your house sells at the judicial foreclosure sale for $200,000, the foreclosing lender may (and often does) seek a deficiency judgment against you for the difference.

Because most people going through foreclosure have little money available to pay their creditors, many of these deficiency judgments are written off. When a lender “cancels” debt, they issue you an IRS Form 1099-C, and in most cases, the IRS considers this to be income. So, for a 1099-C in the amount of $50,000, to make your situation worse after losing your house in foreclosure, now you have $50,000 of extra income to report on your tax return, and without an extension of the Mortgage Debt Forgiveness Act, you would have to pay income taxes on the cancelled debt.

The same logic applies when you short-sell or obtain a deed-in-lieu of foreclosure for your house. If the bank is writing off all or part of the loan balance that you owe, accounting practices require that you receive a 1099-C for the canceled debt, and without the Mortgage Debt Forgiveness Act, you would have to pay income tax on the cancelled balance.

This won’t last forever. Don’t rely on this blog post after December 31, 2016.

Foreclosure defense attorneys wait with bated breath every year to see if Congress will extend the Mortgage Debt Forgiveness Act. The Mortgage Debt Forgiveness Act didn’t exist until 2007. Prior to 2007, you did have to pay income tax on the cancellation of debt for your primary residence. It is unlikely that Congress will extend this specific type of tax relief forever. Congress may not extend this form of tax relief into 2017. Do not rely on this blog post to think that you won’t have to pay income taxes on canceled debt for your home after December 31, 2016.

I try to stay on top of this law because it is one of the biggest questions my residential mortgage foreclosure clients have. If you stumble upon this blog post in 2017 or later, you should give me a call to see if I know what the current status is.

What does this mean for your foreclosure defense case?

The answer to that question is, as always, it depends. If you have no where to go at this juncture, your only real choice is to stay in your house for as long as you can. Even if staying in your house past December 31, 2016 results in you owing money to the IRS, owing money to the IRS is better than being homeless.

That said, start making plans now. You have 12 months to plan ahead. If tax liability is a major concern for you, work with your foreclosure defense attorney to structure a plan to finalize the case well in advance of the end of 2016. Mortgage lenders are notoriously slow turning around paperwork. The lender may not generate your 1099-C for months or years after your foreclosure case concludes. While there is no guarantee that your foreclosure defense attorney can structure your case so that you receive a 1099-C while the Mortgage Debt Forgiveness Act is in effect, at least your attorneys can try if they know this is your goal.

The importance of picking the right foreclosure defense attorney.

Just about every attorney in McHenry County, Illinois will defend your foreclosure case if you are willing to pay them money. Rather than picking a random attorney out of the Yellow Pages, you should select an attorney that stays on top of recent legislative developments in the foreclosure defense arena, has knowledge about hidden or not-so-obvious consequences of your foreclosure case, and cares about the practice. I am always happy to talk to homeowners who are facing foreclosure, and even if hiring my office is not the right fit for you, at least you will have a better understanding of the foreclosure process after speaking with me.

Illinois Graduated Driver’s License Basics

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Even though drivers can obtain a driver’s license in the State of Illinois at age 16, there are restrictions on this license not present for full driver’s licenses and there are enhanced penalties for specific traffic violations. The purpose of this blog post is to (1) explain the basics of the Illinois Graduated Driver Licensing Program, (2) point out specific offenses that place the young driver at risk of a license suspension, (3) explain the penalties under 18 drivers face, and (4) explain the importance of retaining an attorney for your young driver.

Young drivers get tickets. Their inexperience causes mistakes. This post explains how to remedy the legal ramifications of those mistakes.

Young drivers get tickets. Their inexperience causes mistakes. This post explains how to remedy the legal ramifications of those mistakes.

Illinois Graduated Driver Licensing Program basics

Illinois drivers can obtain a permit to drive on the roads at age 15. They need parent/guardian consent, have to pass a written and vision test, and must be enrolled in a driver education program if under the age of 17 years and 3 months. Drivers aged 17 years and 3 months or older can obtain a permit without being enrolled in driver education.

The permit is good for two years and authorizes the young driver to practice driving with a driving instructor or an adult aged 21 or older who has had a license for at least one year prior. Any moving violation conviction (court supervision does not count as a conviction for these purposes) while the driver has a permit will result in a mandatory nine-month waiting period after the ticket is resolved until the driver can apply for a driver’s license.

Permit drivers are prohibited from driving between 10:00 p.m. and 6:00 a.m. on school nights (Sunday night through Thursday night) and between 11:00 p.m. and 6:00 a.m. on the weekends. These nighttime driving restrictions apply even if the permit driver has a parent sitting right next to them. 

Drivers operating a vehicle with a permit are limited to one passenger in the front seat (who must be the licensed driver supervising the permit driver) and as many passengers in the back seat as there are seat belts.

Once the young driver reaches the age of 16, has completed a driving education course, and has practiced driving on the permit for at least 50 hours, the driver can apply for a driver’s license.

Driver’s licenses for under 18 drivers are graduated, with the driver being granted increased levels of driving privileges over time. The big restriction that most drivers run afoul of is the limitation on passengers in the car. For the first 12 months of being licensed (or until the driver reaches 18 years old), the driver is limited to one passenger under the age of 20 in the vehicle outside the family. So, the driver can drive his two siblings around town without issue, but the driver cannot drive all of her friends around for a year.

What happens if the young driver receives a traffic ticket?

Relax, it’s not the end of the world. Your biggest concern should be correcting the driver’s bad habits and coaching him to adopt safe driving practices.

There are two big effects: (1) Your already-high insurance rates will go up. If your 16 year old gets a ticket, it’s probably time to tell him to get a part-time job. (2) Setting the financial aspects aside, what happens if the young driver gets a ticket? Well, fortunately for the driver it’s pretty difficult to lose her license.

There are two rough categories of traffic offenses for young drivers: serious traffic violations and everything else. A “serious traffic violation” is:

Sec. 1-187.001. Serious traffic violation.
(a) A conviction when operating a motor vehicle for:

  1. a violation of subsection (a) of Section 11-402, relating to a motor vehicle accident involving damage to a vehicle;
  2. a violation of Section 11-403, relating to failure to stop and exchange information after a motor vehicle collision, property damage only;
  3. a violation of subsection (a) of Section 11-502, relating to illegal transportation, possession, or carrying of alcoholic liquor within the passenger area of any vehicle;
  4. a violation of Section 6-101 relating to operating a motor vehicle without a valid license or permit;
  5. a violation of Section 11-403, relating to failure to stop and exchange information or give aid after a motor vehicle collision involving personal injury or death;
  6. a violation relating to excessive speeding, involving a single speeding charge of 26 miles per hour or more above the legal speed limit;
  7. a violation relating to reckless driving;
  8. a violation of subsection (d) of Section 11-707, relating to passing in a no-passing zone;
  9. a violation of subsection (b) of Section 11-1402, relating to limitations on backing upon a controlled access highway;
  10. a violation of subsection (b) of Section 11-707, relating to driving on the left side of a roadway in a no-passing zone;
  11. a violation of subsection (e) of Section 11-1002, relating to failure to yield the right-of-way to a pedestrian at an intersection;
  12. a violation of Section 11-1008, relating to failure to yield to a pedestrian on a sidewalk; or
  13. violation of Section 11-1201, relating to failure to stop for an approaching railroad train or railroad track equipment or signals; or

(b) Any other similar violation of a law or local ordinance of any state relating to motor vehicle traffic control, other than a parking violation.
(c) A violation of any of these defined serious traffic offenses shall not preclude the defendant from being eligible to receive an order of court supervision under Section 5-6-1 of the Unified Code of Corrections.
(Source: P.A. 98-511, eff. 1-1-14.)

625 ILCS 5/1-187.001. Some of these offenses are more serious than others, but they’re all the same for purposes of a license suspension. Your driver can only receive supervision once for any of these offenses. Any second offense that the prosecutor does not amend to a different supervision-eligible offense will result in a conviction.

Convictions are bad because they extend the passenger limitations of the Graduated Driver’s License by six months. From a parent’s point of view, that may be a good thing, though.

For all other offenses, two convictions in any 24 month period (running from the disposition date of the first conviction to the date the second ticket is written) will result in a one-month license suspension.

And, any violation of the nighttime driving restrictions can result in a license suspension.

License suspensions for drivers are not a lot of fun because the driver must complete remedial driver’s education, fill out obnoxious DMV paperwork, and pay a $70 reinstatement fee to get her license back.

Special quirks with Graduated Driver’s Licenses

Supervision is preferable to receiving a conviction, but it comes at a cost. Young drivers cannot receive supervision with the mail-in option for tickets. That means at least one court appearance is required, and whenever you step foot in a courtroom expect ludicrous court costs tacked on to the fine at the back end (for example, I’ve seen a $25 fine receive $200 in court costs). The driver’s parent or guardian has to come to court for the court to grant supervision. And, any disposition involving court supervision for a driver on a Graduated Driver’s License has mandatory traffic safety school.

Should you get a lawyer?

For any serious traffic violation, absolutely. The driver will have the best chances to keep his license if an attorney is able to successfully resolve the ticket. Moreover, for the types of violations that involve property damage or other, more serious crimes (e.g. transporting alcohol, which can be charged as a misdemeanor and involve jail time), an attorney will help your young driver avoid digging herself into a deeper hole by admitting liability when it should be in doubt or by confessing to a crime. Get a lawyer if you can afford one.

For non-serious violations, probably. An attorney will give your driver the best chance to obtain court supervision for the ticket, minimizing the effect on the driver’s license and for your insurance rates.

If your child has a traffic ticket in McHenry County, Illinois; Kane County, Illinois; or Lake County, Illinois, give me a call at (815) 317-5193. I’m always happy to talk over the phone, and we could probably work something out to protect your kid’s license and your insurance rates.

 

Timeline of an Illinois residential mortgage foreclosure case

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So, you’ve missed some payments on your mortgage and you wonder “Now what?” You know that a foreclosure case is an inevitability, but when will it come. Here’s a brief timeline. Your case may be different.

The uncertainty of foreclosure making you look like this guy? Educating yourself about your options and what to expect is the best way to calm your fears.

The uncertainty of foreclosure making you look like this guy? Educating yourself about your options and what to expect is the best way to calm your fears.

Step 1: You actually miss payments.

After you miss one payment, your mortgage lender will probably send you a couple of notices. One, which is required by the loan you agreed to, is a “Notice of Acceleration.” Acceleration is the process by which the entire amount of the loan becomes due and payable immediately, and the bank no longer has to accept monthly payments. In order to accelerate your loan, the bank has to send you a notice telling you that they are going to do it unless you act to stop them (typically, by getting your payments current within 30 days).

Another notice your bank will send you is your Illinois Grace Period Notice. This notice is required by the law codified at 735 ILCS 5/15-1502.5. Under the Grace Period Notice law, your bank must inform you that housing counseling is available to you, and the bank can take no steps to foreclose within 30 days of the date they send the notice. If you take them up on the offer for housing counseling, the bank cannot foreclose for an additional 30 days.

Step 2: The lender files its foreclosure suit.

In about 90-120 days after you miss your first payment, the bank contacts its foreclosure attorneys and they file a lawsuit to foreclose. The foreclosure attorneys cannot file a foreclosure immediately because they must review title to the property to determine who they have to sue. Typically, they name everyone with an interest in the property–your condo association or HOA, the lenders for other mortgages, your spouse, anyone who has liened your house, etc. The big foreclosure law firms run these title reports in house, and they typically have results within a week or sooner.

Once the foreclosure attorneys know who they have to sue, they assemble and file a simplified foreclosure complaint in the form proscribed by Illinois law.

Step 3: You get served with the lawsuit.

Before any lawsuit can proceed, the court has to obtain “personal jurisdiction” over all of the named defendants. The typical way for this to happen is they send a process server of sheriff’s deputy to physically hand you or a resident of your house a copy of the lawsuit and a summons to come to court. If the process server has a difficult time serving you, the bank request that the court permit them to serve you by publishing a notice in the newspaper. While this is embarrassing, not to worry because another notice will be published in the newspaper down the line.

95% of foreclosure defendants are served within a month of the lawsuit being filed.

Step 4: Your first court date.

Most counties stamp a notice of the first court date in the case. Don’t think that you have nothing to do until that date. The summons the process server gave you probably commands you to file your appearance and answer with the Clerk of Courts within 30 days of being served. The foreclosure attorneys can technically ask for the court to enter a default judgment against you if you have not appeared and answered by day 31, but I have never seen this happen in routine foreclosure cases. However, if the person or company that filed the foreclosure complaint has an ax to grind against you, be aware that this is a possibility.

If you ever think it would be worthwhile to hire an attorney to help you defend your foreclosure case, talk with that attorney before filing your answer to the complaint. You probably don’t know what you’re doing, and if you answer the complaint wrong it will be used against you later in the case.

Assuming you have not answered by the first court date, if you show up most foreclosure judges are kind enough to grant you a 30 day extension to file your appearance and answer. They don’t have to, and if it appears that you’re only asking for more time to drag the case out they won’t, but this extension is routinely granted. Be polite in court, don’t anger the judge or give him/her a reason to think you have improper motives, and don’t disregard court orders. If you are ordered to answer in 30 days, you had better file an answer or other pleading directed to the complaint within 30 days.

Step 5: Judgment.

Foreclosure cases aren’t difficult to prove. The loan documents and mortgage speak for themselves. That said, it takes some time for national banks to mobilize their bureaucracy to assemble evidence sufficient to prove that your house should be foreclosed. This can take months, or it could happen very quickly. In my experience, the bank will move for summary judgment within 30 days of the filing of your answer. If you show up to court to ask for time to respond to the motion for summary judgment, you customarily will get 30 days to file a written response, the bank will get 14 days to file a reply to your response, and the court will set the motion for hearing at the next available date (typically 2 months after the motion for summary judgment is presented to the court).

Step 6: Redemption.

After judgment is entered, the case is not over. Under Illinois law, you have the right to “redeem” your property. You have 3 months where the bank cannot auction your house and if you come up with the money the bank is owed, you can keep your house. Although this option is nice, if you had enough money to pay off the loan in full, you wouldn’t be late on your mortgage payments. The bank will publish notice of the judicial sale of your property during this time in a local newspaper.

Step 7: Judicial sale.

Your house will be auctioned shortly after the period of redemption expires. The auction will take place in an office conference room, and typically the only people who attend are representatives of the banks themselves. Third-party buyers typically avoid these auctions because you have to put 25% of your bid down on the spot and have to pay the rest of the money within 24 hours. The bank will probably purchase your house and use the judgment it obtained against you at summary judgment to “credit bid” for the house. Money rarely changes hands.

Step 8: Approval of sale.

About a month after the auction, the bank will file a motion with the court seeking approval of the judicial sale. These motions are routinely granted, but the court will give you time to file a written response if you ask for time to file one. Unless the bank bought your house for a laughably small sum or there was a technical defect in the way the sale was conducted or published, the court will probably approve the sale. In the order approving sale, the court will give you 30 days (60 if you ask for it nicely) to move out.

Step 9: Eviction.

Some foreclosure attorneys will file a separate eviction suit to physically remove you from the property. Other foreclosure attorneys will deliver the order approving sale to the Sheriff and evict you with that order. In any event, if you are not completely moved out by the day the 30-60 day stay in the order approving sale expires, you should be very concerned that a sheriff deputy could show up any morning with movers to remove you from the house and move your possessions to the curb. Once you are evicted, if you re-enter the property you will be arrested for trespassing.

Total timeline: 12-18 months.

What can you do to delay your foreclosure?

You can do a number of things to delay your foreclosure. If you need time to pursue a loan modification, short sale or other form of loss mitigation, you can buy yourself some more time to accomplish these tasks. You have other options as well. The value of a foreclosure attorney is to sit down with you, review your options, and develop a strategy for you to accomplish your goals. There are no one-size-fits-all strategies or options.

Firm Profile

Dickson Law Group, LLC is a McHenry County, Illinois law firm authorized to practice in the courts of Illinois and Wisconsin. We provide legal services for individuals and small businesses in the areas of bankruptcy, business law, criminal defense, divorce, family law, personal injury, probate law, real estate law, traffic tickets and DUI defense, estate planning, and litigation.

If you are looking for a McHenry County lawyer or attorney serving Crystal Lake, Lake in the Hills, Cary, Algonquin, Carpentersville, Barrington Hills, Barrington, Lake Barrington, Lakewood, Huntley, Gilberts, Woodstock, Dundee, Island Lake, and McHenry, please contact us to arrange a free, no-obligation consultation.

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4 East Terra Cotta Avenue
Crystal Lake, IL 60014
Phone: (815) 317-5193
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