Bankruptcy provides meaningful relief to many people who are struggling with debt. At our firms, we believe bankruptcy can be a source of empowerment after people have been beat down by crushing debt. Our goal is give you hope again.
Unfortunately, there is a great deal of misinformation about bankruptcy. The Internet and well-meaning friends and family often relay false information about bankruptcy. We want you to understand the different kinds of bankruptcy and what it can do for you.
We offer a free initial consultation to individuals considering bankruptcy. To schedule yours, please call us at 847-780-2688 to book an appointment at our offices in Elgin and Palatine. We represent clients throughout Elgin and Palatine, Cook, Kane and all Northern Illinois Counties .
In general, there are two kinds of bankruptcy available to most individuals and married couples, Chapter 7 and Chapter 13 bankruptcy. Each offers advantages, which we will discuss below. The information on this page provides information that pertains to both types of bankruptcy.
Understanding The Automatic Stay
One of the chief advantages of bankruptcy is the automatic stay. The automatic stay is an automatic injunction that goes into effect the moment you file for bankruptcy. Creditors are prevented from contacting you once your bankruptcy is filed. This means that any pending lawsuits are stopped. It will also halt foreclosure proceedings if it is filed prior to the sale of your home.
Bankruptcy is the only debt relief solution that prevents you from being sued by a creditor. Many unhappy individuals have reached out to debt consolidation and debt relief companies, only to be sued by a credit card company or other entity whom they owe. Bankruptcy is the only form of debt relief that can guarantee protection once you have filed.
Protecting Your Property In Bankruptcy
It is important to understand that bankruptcy will not require you to sell all of your possessions. Much of your personal property, if not all of it, can be protected in bankruptcy using a system of exemptions. While many states allow people to choose between federal and state exemptions, Illinois only allows exemptions provided under their state laws.
Before giving anything away, you should meet with a bankruptcy lawyer to understand how these exemptions apply to you. While these exemptions will change periodically, the following is a list of the current exemptions available in Illinois:
- Equity in real estate homestead up to $15,000 for individuals and $30,000 for married couples
- Equity in a motor vehicle up to $1,200
- Personal property such as clothing, family photographs, schoolbooks and bibles
- ERISA-qualified retirement accounts and pensions
- Social security, disability benefits and health benefits
- Veterans benefits
- Unemployment money
- Public benefits
- Money owed to you as a result of a personal injury lawsuit up to $7,500. All wrongful death recoveries needed for support of the family.
- Alimony and child support that is needed for support
- Life insurance proceeds that are needed for support
- Tools of the trade valued at up to $750
- There is a $2,000 wild card exemption that may be applied to personal property and wages not covered by these exemptions
If you are concerned about whether your property will be protected or what to do if you believe your property cannot be protected, it is important that you speak with an attorney about your options. You should not give away property, transfer title or attempt to hide any property.
Will I Ever Be Able To Get Credit Again Or Qualify For A Mortgage?
Although bankruptcy is a negative credit event, it is possible to restore your credit after bankruptcy. It may not even take that long to do so depending on how you conduct your finances after the bankruptcy. You should be reassured that you will be extended credit again and should be able to qualify for a mortgage.
Differences Between Chapter 7 And Chapter 13 Bankruptcy
There are two main differences between Chapter 7 bankruptcy and Chapter 13 bankruptcy. Chapter 7 bankruptcy is often desired because it is the faster of the two bankruptcy, often taking around 90 days to receive a discharge from the time of filing. Chapter 13 bankruptcy can take between 3-5 years to complete depending on whether you pass the Means Test.
Chapter 7 bankruptcy is used for individuals who have no disposable income at the end of every month. Chapter 13 bankruptcy is used for individuals who do have disposable income.
People often choose Chapter 13 bankruptcy if they are trying to protect certain assets not covered by exemptions, need protection from garnishment while paying back a non-dischargeable debt such a tax debt, or to catch up on arrears for certain secured property such as a home or car to avoid foreclosure or repossession.
The Importance Of Bankruptcy Planning And Hiring An Attorney
An attorney will help you do much more than file bankruptcy. An attorney will help you time your bankruptcy and take the proper steps in anticipation of bankruptcy to protect your interests. Many people who file bankruptcy without an attorney are unhappy when they find themselves owing money to the bankruptcy court due to misunderstanding the law. A bankruptcy attorney can avoid that.