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An Overview of Filing for Bankruptcy in Illinois
Bankruptcy is a legal process that assists people who carry too many debts. The person who files for bankruptcy is known as the debtor. The businesses or other people to whom they owe the debts are known as creditors. Filing for bankruptcy serves to protect the debtor against collection activities. This is known as an automatic stay. Depending upon which kind of bankruptcy for which the debtor files, it also can help them eliminate some debts.
There are multiple rules and filing for bankruptcy can be complex and very difficult to do on your own. Call ASM Law and speak to a bankruptcy lawyer to learn if the process is right for you.
Chapter 7 Bankruptcy
A Chapter 7 filing can cancel a lot of your debts. It involves selling much of your property and assets in order to pay them. However, there are some assets that are exempt that you’ll be able to keep. To be eligible for a Chapter 7 filing, you’ll need to have a low income and minimal assets.
Chapter 13 Bankruptcy
In this type of filing the debtor agrees to repay their debts according to a payment plan. Like with a Chapter 7 filing, the debtor may keep some of their property. To be eligible for Chapter 13, you’ll need to make enough income to cover repayments on your debts.
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A judge reviews the debtor’s payment plan and determines whether or not to grant approval. If the judge does approve the plan, the debtor can begin making repayments to a trustee. In turn, the trustee forwards the payments to creditors. With a Chapter 13 filing, the debtor must repay creditors fully if he or she is able to. If full repayment is not possible, the debtor must pay all of their disposable income for three to five years. Disposable income is what remains after paying for the debtor’s living expenses.
After completing a payment plan, the debtor receives a discharge of remaining debts. He or she has to pay some back taxes and any responsibilities in child support and spousal maintenance in full. In addition, there are other kinds of debt that do not receive discharge. It is advisable to hire a bankruptcy lawyer for assistance because developing a realistic payment plan can be difficult.
Reasons to File Bankruptcy Elgin IL
Here is a summary of the advantages to filing for bankruptcy in the state of Illinois:
- -A Chapter 7 bankruptcy discharges most debts, providing debtors with a change to start over financially.
- -A Chapter 13 bankruptcy allows debtors to keep some of their assets such as a house or a vehicle.
- -Bankruptcy ceases wage garnishment as well as harassment by debt collectors.
- -It also stops repossessions and foreclosures. These can only proceed if the court grants permission.
- -The filer can keep exempt properties.
- -The debtor may stop utility shut-downs or restore services after repaying a deposit. Going forward, the debtor can pay for current services only.
- -The state cannot suspend the debtor’s driver’s license for not paying debts that are dischargeable.
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While bankruptcy does provide these protections, there are still situations when it is not advisable. Here are a few reasons why filing for bankruptcy may not be in your best interest:
- -Bankruptcy remains on the filer’s credit rating for a time span of seven to ten years.
- -It may make it more difficult or more costly to get credit.
- -Bankruptcy status can put strain upon relationships with creditors and loan cosigners.
- -The filer might need to return properties for which they have not yet paid.
- -Filers are only eligible for a Chapter 7 debt once per eight years. You might be able to protect some of property and income without a bankruptcy filing.
Also, even after filing for Bankruptcy Elgin IL, you will still be responsible for paying the following debts:
- -Overdue child or spousal support.
- -Student loans. (With some exceptions.)
- -Unpaid fines.
- -Most unpaid taxes.
- -Orders to pay criminal restitution.
- -Debts owed on account of theft, fraud or embezzlement.
- -Damages to another individual resulting from drunk driving.
- -Debts resulting from a property settlement as part of a divorce.
What Bankruptcy Elgin IL does not do:
- -Eliminate a security interest. For example, security in a vehicle or a mortgage.
- -Prevent an eviction. If a court orders an eviction before the debtor files for bankruptcy, the eviction can proceed.
- -Protect you against credit card debts that exist before the bankruptcy filing.
- -Wipe away debts that accumulate after filing for bankruptcy.
- -Discharge debts which the court determines you must pay if you have adequate income.
- -Bankruptcy will not enable you to retain properties like a vacation home, a recreational vehicle or expensive jewelry.
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Bankruptcy Elgin IL and Marriage
If you are a married person, you do not have to file for joint bankruptcy along with your spouse. Certainly, may can decide to file alone. However, you will still need to provide information like your spouse’s income upon some Bankruptcy Elgin IL paperwork.
Repaying Debts
In contrast to Chapter 7, in a Chapter 13 Bankruptcy Elgin IL filing you’ll have to pay back your creditors. Although, you may be able to retain properties that are secure through a lien. Additionally, this can protect a residence against a foreclosure or prevent repossession of a vehicle.
A Chapter 13 plan, in addition, can halt an eviction in the event you file before the five day notice. The eviction will stop only if you’re able to repay the rent owed according to the Chapter 13 payment plan.
As part of a Chapter 13 filing for Bankruptcy Elgin IL, you’ll propose a repayment plan in court. Payments according to the plan will be made by a trustee. The trustee typically will charge a fee of ten percent of all collected funds. The trustee then pays the funds to creditors.
Before presenting a payment schedule, you must demonstrate that you are able pay your standard living expenses. Generally, this includes food, clothing, rent, transportation and utilities.
The type of income does not matter. It must simply be consistent. You need to have enough remain after expenses to provide payments according to the plan. The payments sent to the trustee in compliance with the repayment plan are to pay down the remaining debts.
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In some situations you may not be able to pay all your debts via the repayment plan. If this occurs, the balance remaining on the debt may be dischargeable. However, you may only receive a debt discharge if you make your best possible effort to repay. In this situation, liens are not dischargeable. They must be paid through the bankruptcy payment plan
A Chapter 13 filing for bankruptcy lasts for three to five years. The duration of time is dependent upon your income. In the event your income is higher than the state’s median income, Bankruptcy Elgin IL lasts for five years. Also, if your income is lower that the median Illinois income, it lasts for three years.
The Chapter 13 plan only concludes before the required time limit if all they debts are paid. – Bankruptcy Elgin IL