When facing dire financial straits, bankruptcy can sometimes be your only relief from crushing debt, but where do you even begin? If you’re considering filing Chapter 7 bankruptcy in Illinois, our team at the Law Offices of Glenn & West is here to help. Read on for a few tips to ensure that your filing avoids some of the most common pitfalls. Or, if you are an Illinois resident searching for assistance, contact us today to schedule a free one-on-one consultation with a member of our legal team. You deserve relief, and we’re here to help guide you back to the path to financial freedom.
What Is Chapter 7 Bankruptcy?
Bankruptcy is a legal process that helps folks carrying too much debt compared to their current income; it can also provide recourse for businesses to collect their debts from the person filing bankruptcy. Chapter 7 bankruptcy is one of two forms of bankruptcy that individuals may file (the other is Chapter 13). In a bankruptcy filing, the person filing for bankruptcy is the “debtor,” and the party the debtor owes money to is called the “creditor.”
The bankruptcy filing protects the debtor from collections through an automatic stay and may be able to remove all or some of the debts owed. The name Chapter 7 Bankruptcy comes from the bankruptcy law rules for each type of bankruptcy. In this form of bankruptcy, many of your debts may be canceled, or discharged, meaning you no longer owe those monies.
In most Chapter 7 Bankruptcy cases, debtors can keep their personal property. There is always the possibility of private property being sold to pay debts through the case or debtors having to come up with the money to keep that property. Still, we are often successful at protecting assets by having them considered “exempt property.” To qualify for filing Chapter 7 Bankruptcy, you must have a low income and few assets.
Why Would You File for Chapter 7 Bankruptcy?
When you look at everything you have to give up in a Chapter 7 bankruptcy filing, you may wonder if it is worth it. Remember, though, you may still be able to keep your car, home, or valuable items of sentimental value. In addition, your bankruptcy lawyer may be able to negotiate on your behalf to make as much of your property as exempt as possible.
Some advantages of Chapter 7 bankruptcy include the following:
- Most of your debts are discharged
- Collection agencies cannot contact you or collect debts
- Wage garnishment ceases, meaning you can get back on your feet faster
- Repossessions, including foreclosures, cannot proceed unless an Illinois bankruptcy court approves
- You can restore utility service or stop utility shut-offs
- Your driver’s license may be reinstated if it was suspended for a debt
Bankruptcy also protects you from retaliation from an employer, creditor, or other parties. Remember: If you are experiencing retaliatory behavior after a bankruptcy, contact your bankruptcy attorney immediately.
The Disadvantages of Filing Chapter 7 Bankruptcy
Although many people benefit from bankruptcy filing, there are a few drawbacks that you should understand. Before proceeding, be aware of the following:
- It remains on your credit report for seven years and affects your credit rating
- You may have difficulty finding new lines of credit, including a loan
- Property that isn’t paid for in full may be relinquished
- You may have trouble securing a mortgage or leased home
Furthermore, you can only file a Chapter 7 bankruptcy in Illinois once every eight years, so be prudent about your filing. You may also have other options to protect your income and property, which a bankruptcy lawyer can explain in more detail during a free one-on-one consultation.
Undischarged Debts in Chapter 7 Bankruptcy
Chapter 7 bankruptcy will not discharge all debt. If you owe one of the following, then your obligations remain, and you may have to make payment arrangements on your own:
- Child support payments or alimony and spousal maintenance payments
- Fines, including criminal restitution (such as for fraud or embezzlement)
- Divorce property settlement payments
- Student loans
- Federal and state income taxes
Bankruptcy cannot relieve a security interest, such as a car payment or mortgage, or stop an eviction once an eviction order is in place. Your individual bankruptcy cannot protect anyone who co-signed a loan for you, either, unless they also file for bankruptcy.
Some credit card debt may not be discharged, either, if it happened too close to the bankruptcy filing. Finally, no debts you incur after filing Chapter 7 bankruptcy are covered by the filing. Sometimes, the bankruptcy court may decide that you have to pay some of your debts if it determines you have enough disposable income.
How Can You Begin the Bankruptcy Process?
If you are an Illinois resident and think Chapter 7 bankruptcy is right for you, contact our knowledgeable bankruptcy attorneys and staff at the Law Offices of Glenn & West, LLC. We can help you explore all your debt relief options so you can make an informed decision that works for your budget and your lifestyle. Remember, bankruptcy is nothing to feel ashamed about. It happens to more people than anyone knows.
If you are over your head with debt and want a fresh start, our legal team is here to help. Contact us today to schedule a free one-on-one consultation. Thank you for visiting our blog, and we hope to help you soon!