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Question:
What kind of bankruptcy can I file and which of my debts are dischargeable
in bankruptcy?
Individuals
have two bankruptcy options to choose from: Chapter 7 and Chapter
13. In a Chapter 13 bankruptcy or "Wage-Earners Plan",
an individual retains most of their property and proposes a bankruptcy
plan to the bankruptcy trustee, where the individual repays some
or all of their debts through the plan over a designated time period,
usually 3 years. You make a regular monthly payment to the bankruptcy
trustee, who in turn pays your creditors according to the "plan",
which has been approved by the bankruptcy court. Generally, you
retain all of your assets, while repaying the majority of your debts.
In order to be eligible for a Chapter 13 plan, you need a regular,
steady income, unsecured debts of less than $100,000.00, and secured
debts of less than $350,000.00.
Most
people who file bankruptcy file a Chapter 7, or "fresh Start"
bankruptcy.In a Chapter 7, most of your unsecured debts are "discharged"
in the bankruptcy proceeding, meaning you are no longer legally
responsible for them. Certain debts, such as student loans, taxes,
alimony, and child support are not dischargeable. For secured debts
(i.e. mortgage or auto loan), the debtor must decide whether to
discharge the debt and surrender the security, or "reaffirm"
the debt and keep the security with loan terms intact. In general,
when you file a Chapter 7 bankruptcy, you turn over all of your
assets to the bankruptcy trustee, who may use them to satisfy part
of your creditor's debts. However, Illinois law allows individuals
limited "exemptions" of property from the bankruptcy proceeding.
In many "no asset" cases, people are able to file Chapter
7 and still keep their home, automobiles, retirement savings, and
all their personal property.
In
order to determine which bankruptcy, if any, is the best alternative
for you, you should consult with an experienced bankruptcy attorney.
Many attorneys offer a free initial consultation to discuss your
financial situation, the bankruptcy procedures in your county, and
the advantages and disadvantages of filing for bankruptcy.
Other
Questions and Answers:
Why do I need a Will?
Why do I need an attorney to represent
me in a residential real estate transaction?
Bankruptcy
services offered:
•
Solution to credit problems
• Chapter 7
• Relief from foreclosure
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