Declaring Bankruptcy Under Chapter 7 or Chapter 13
Filing bankruptcy is not a simple task. There are multiple steps involved, such as undergoing the required bankruptcy counseling, taking the means test, or preparing a debt repayment plan that will run for three or five years. However, despite the tedious legal process required by the bankruptcy court, a bankrupt individual can benefit a lot by filing Chapter 7 or 13.
If you are currently considering bankruptcy, it is best to consult with a seasoned local attorney who is knowledgeable with all federal and state laws that will come into play. Seek legal advice from competent and compassionate bankruptcy attorneys in Monroe who can answer your legal questions.
What this article will focus on are liquidation and reorganization bankruptcy. It is composed of the following sections:
- The Ins and Outs of Filing Bankruptcy Cases
- Looking into Secured and Unsecured Debts
- Overview of Filing Bankruptcy Under Chapter 7
- Bankruptcy Laws and the Bankruptcy Discharge
- Overview of a Chapter 13 Petition in Bankruptcy
- Deciding to File for Bankruptcy and Choosing the Best Type
- Knowing When It’s Best and How to File for Bankruptcy
- Bankruptcy Laws and the Bankruptcy Discharge
The Ins and Outs of Filing Bankruptcy Cases
A person struggling financially will likely consider working on a bankruptcy case to address his or her financial problems. Depending on the specific circumstance of the bankrupt individual, filing for bankruptcy can help stop foreclosure, stop repossession, and stop wage garnishment. Being in serious debt is a big problem, and filing for bankruptcy may be the best way for you to rebuild your financial future.
In general, a bankruptcy filing could help the filer pay back lenders, wipe out certain debt, and financially have a fresh start at life. For this reason, declaring bankruptcy is generally considered a good debt-relief option. However, there are numerous bankruptcy types. Your goals, resources, and specific circumstances will come into play.
When filing for bankruptcy, debts can be wiped out either after having certain assets liquidated or making payments following an approved debt-repayment plan. It is vital to keep in mind, however, that the specifics of bankruptcy rules could vary from court to court. If you want to learn more about the types of bankruptcy appropriate for specific types of debt, consult with credible Monroe bankruptcy lawyers.
Looking into Secured and Unsecured Debts
From the name itself, secured debts are secured by a collateral. You must pay off what you owe if you intend to keep the said collateral, such as a car. Conversely, a person who files for bankruptcy will often have unsecured debts discharged. Under relevant bankruptcy laws, this could include unpaid medical bills, credit card bills, and utility payments.
A discharge notice from the court will stop creditor or debt collector harassment and even wage garnishment. Such notice is sent to your bankruptcy trustee and your unpaid creditors. (For Chapter 13, your remaining nonpriority unsecured debt balances will be forgiven after you complete your payment plan).
While personal loans and some forms of tax debt are unsecured, they may not always be included in the discharge. The same can be said for student loans that must still be paid off, even after declaring bankruptcy. (A student loan may only be discharged if you can prove in an adversary proceeding that it will cause you undue hardship to pay back the debt).
Regardless of the circumstance, alimony or child support owed, criminal fines or penalties, and specific tax debt are generally not dischargeable.
Overview of Filing Bankruptcy Under Chapter 7
There are different types of bankruptcy, and choosing the best option will depend on specific circumstances. When filing for bankruptcy under Chapter 7, debts can be wiped out after having certain assets liquidated by a trustee in bankruptcy.
While deciding if liquidation bankruptcy is suited for you, your specific financial problems will factor in. If your unsecured debts are generally dischargeable and you do not have a lot of assets, then a Chapter 7 bankruptcy declaration is possibly the best choice. This is in contrast to financial problems that are made up of mostly non-dischargeable debts, where reorganization would likely be a better option.
As mentioned above, a discharge notice from the court will stop creditor or debt collector harassment and even wage garnishment. An experienced bankruptcy lawyer in Monroe, IL can further explain the specifics of a Chapter 7 bankruptcy petition.
Overview of a Chapter 13 Petition in Bankruptcy
Declaring bankruptcy under Chapter 13 will generally allow you to restructure and reorganize your finances. Here, making payments for debts owed is made possible through a debt-repayment plan approved by the bankruptcy court. This would take three to five years.
In general, a Chapter 13 bankruptcy petition will take longer than other forms of consumer bankruptcy. However, filing for bankruptcy and proceeding with restructuring will allow a filer to bring current most monthly payments for secured loans without giving up property.
If you are considering bankruptcy, you will need to discuss your debt reorganization plans with a qualified credit counselor. Additionally, it is very important to first meet with a reliable bankruptcy attorney. Experienced Illinois bankruptcy attorneys can assist you with the forms and supporting documents that must be filled out and submitted to court.
Bankruptcy Laws and the Bankruptcy Discharge
Under the bankruptcy code, a person who is able to declare bankruptcy could possibly discharge debts that he or she owes from certain lenders. Essentially, you no longer have to worry about paying off creditors of loans that were wiped out. If a declaration of bankruptcy leads to a bankruptcy discharge, debt collectors are no longer allowed to ask for repayment for what the debtor owed them.
A person who filed for bankruptcy under Chapter 7 would likely receive a court order on the bankruptcy discharge after non-exempt assets have been sold and priority debts have been paid. On the other hand, under Chapter 13, you will receive a discharge order that will wipe out the remaining balance of all qualifying debts only after you complete your debt repayment plan.
To a certain extent, a Chapter 13 bankruptcy discharge is broader than that of Chapter 7 because it wipes out certain debts that are not covered by the latter. The period of time involved, however, can be a crucial factor to consider.
Deciding to File for Bankruptcy and Choosing the Best Type
When choosing between the two common bankruptcy types mentioned above, your specific financial problems will factor in. If your debts are generally dischargeable, then a Chapter 7 will likely be best. In contrast, if you need to deal with mostly non-dischargeable debts, a bankruptcy Chapter 13 debt repayment plan may be a better option.
There are other factors that must be considered, however. One would be the ability to meet certain bankruptcy qualifications, such as passing the means test or having the minimum required monthly income. Others would be the type of properties that you have, whether or not a joint filing will be made, or the list of exempt assets in your state.
For many people, a bankruptcy petition is the window of opportunity that will allow them to deal best with creditors and debts. Successful bankruptcy proceedings have helped so many individuals dealing with debt. Get in touch with a competent and compassionate bankruptcy attorney in Monroe, Illinois to know how it can help you, too.
Knowing When It’s Best and How to File for Bankruptcy
A person struggling financially will likely consider bankruptcy to address his or her financial problems. In general, a bankruptcy filing could help the filer pay back lenders, wipe out certain types of debt, and financially have a fresh start in life. For this reason, declaring bankruptcy is generally considered a good debt-relief option.
Forgiven or discharged debt is usually associated with a Chapter 7 petition for bankruptcy. Unknown to many, certain debts are also dischargeable through a Chapter 13 bankruptcy petition. However, following the bankruptcy code, a bankrupt individual would have to wait longer because one must first make all monthly payments that were included in the debt payment plan. As such, the process would likely be finished in three or five years, in contrast to just a few months.
Contact us at our Monroe, IL Law Office Today!
If you are presently considering bankruptcy, it is best to consult with a trusted local attorney who is knowledgeable with all federal and state laws that must be taken into account.
Filing bankruptcy requires a bankrupt individual to go through a serious legal process. This generally begins with bankruptcy counseling and taking the means test. Proceedings in the bankruptcy court are not as simple as they may seem, and crucial mistakes must be avoided at all costs.
Get legal advice from a seasoned local attorney from our bankruptcy law firm in Monroe. Contact our Monroe bankruptcy attorneys at E. Orum Young Law and schedule a consultation.