Bankruptcy can adversely affect your credit record, but it can be a good solution if you are experiencing unmanageable levels of debt. Once you file for bankruptcy, an automatic stay will go into effect. This means that all creditor collection efforts must cease. Details that may seem minor can impede your ability to get all your dischargeable debts discharged through bankruptcy; for instance, if you fail to list a debt in your paperwork, it will not be discharged. If you want to file for bankruptcy, it is important to do it correctly. You should consult the DuPage County bankruptcy lawyers at the Bankruptcy Center of Illinois about your situation.Chapter 7 Bankruptcy
You may be able to file for Chapter 7 bankruptcy if your income is low enough for you to pass the means test. Once you file a petition with the bankruptcy court, a trustee will be appointed. The trustee will be empowered to liquidate your non-exempt assets and use the proceeds of the sale to pay your creditors back to the extent possible. Most Chapter 7 cases take 4-6 months to complete.
Small businesses that are structured as sole proprietorships can benefit from Chapter 7 bankruptcy. As a sole proprietor, you can discharge both business and personal debts. You might be able to keep operating the business, particularly if the business is service-oriented rather than a restaurant or bar or other business that requires the maintenance of equipment and goods. Businesses that are structured as partnerships, limited liability companies, or corporations can file for Chapter 7 bankruptcy, but they will not receive a discharge of business debts.Chapter 13 Bankruptcy
Chapter 13 bankruptcy involves a reorganization of your debts. With the assistance of a bankruptcy attorney in DuPage County, debtors can propose a repayment plan to make installment payments to creditors over a period of 3-5 years. During that period, creditors cannot start or continue their debt collection efforts. Chapter 13 allows debtors to use various tools to improve their financial situation. For instance, it allows for lien stripping when the value of the home has fallen, such that junior mortgages are no longer secured. Similarly, if your car loan is worth more than your car, you may be able to reduce the amount that you owe so that you only owe the lender the actual value of the car. The remainder of the loan becomes unsecured debt and is handled in the same way as other unsecured debts.
Generally, Chapter 13 bankruptcy is for individuals, rather than businesses. However, a sole proprietor may be able to obtain relief by filing for Chapter 13 bankruptcy. All of the sole proprietor’s property and income can be used to pay off debts in Chapter 13 bankruptcy, whether these debts are business debts or consumer debts.Foreclosures
Sometimes bankruptcy is used to stall or stop foreclosure. Foreclosure is usually initiated by a lender when a homeowner has fallen into arrears on multiple mortgage payments. Whether you file for Chapter 7 or Chapter 13 bankruptcy, an automatic stay will go into effect. Creditors need to stop any collection efforts right away. If a lender already scheduled a foreclosure sale, the sale will be postponed while the foreclosure is pending unless the lender moves to lift the automatic stay. If you are filing for Chapter 13 bankruptcy, a DuPage County bankruptcy attorney can help you try to pay off your arrearage over 3-5 years. You will need to earn enough money to keep paying your current mortgage payments as well. If you can make all the requisite payments on your plan and keep current on your mortgage payments, you can avoid foreclosure.Asset Protection
Many people assume that they will lose all their property in filing for bankruptcy. However, you may be able to protect some of your assets or the equity in them during bankruptcy.
Generally, if you file for Chapter 7 bankruptcy, you can protect only those assets that fall within the state exemptions or that are abandoned by the trustee. Abandonment of an asset may occur if selling the asset would not yield enough money to justify the cost of conducting the sale.
Chapter 13 bankruptcy involves repaying creditors over 3-5 years, according to a debt repayment plan. If you file under Chapter 13, you can keep your assets while making payments through a repayment plan; the exemptions will affect your monthly payments.Consult a Knowledgeable Bankruptcy Attorney
Bankruptcy has the potential to bring significant relief to debtors. However, receiving a discharge under Chapter 7 or Chapter 13 requires careful attention to many details, and it is important to seek the help of an experienced bankruptcy lawyer in DuPage County. If you wish to file for bankruptcy relief, you should consult the Bankruptcy Center of Illinois. Call us at (773) 993-0024 or contact us via our online form.