If you are facing insurmountable debt, turn to Chicago Bankruptcy Clinic. Our legal team can help you explore all your legal options, including filing for Chapter 7 bankruptcy protection. This form of bankruptcy allows you to eliminate your unsecured debt, but it takes a skilled bankruptcy lawyer to guide you through the process.
When you consult with us, we will listen to your concerns and determine whether Chapter 7 bankruptcy is the best option for you. Well-versed in the applicable provisions of the U.S. Bankruptcy Code and the required “means test” for Chapter 7 filings, we will provide you with informed representation when you need it most.
Because we understand your financial burdens, your initial consultation will be free, and we offer flexible payment plans. If your financial future is in jeopardy, the debt relief team at Chicago Bankruptcy Clinic will be your attorneys and allies. Above all, we will work to protect your rights and help you make a fresh start. Contact our office today so we can get to work on your case.
What Is Chapter 7 Bankruptcy?
Chapter 7 is known as liquidation bankruptcy because some of your property may be sold to pay off as much of your unsecured debt as possible; any remaining debt will be eliminated or discharged. Unsecured debts are those without property as collateral, such as:
- Credit cards
- Personal loans
- Medical bills
- Debts arising from lawsuits/civil judgments
Other debts, such as student loans, spousal maintenance (alimony), child support, and criminal fines cannot be discharged under Chapter 7.
Will I Lose All My Property if I Go Bankrupt in Illinois?
You should know that certain types of property are exempt from being sold under Illinois law, including:
- Homestead — Individuals are allowed to exempt up to $15,000 of equity in a primary residence, married couples filing bankruptcy jointly can claim up to $30,000.
- Personal property — Furniture, clothing, jewelry and other types of personal property are exempt.
- Vehicle — You can exempt up to $4,000 in equity in one motor vehicle.
- Pension/retirement plans –Under federal rules, tax exempt retirement accounts and pension plans for certain employees are exempt.
- Wildcard exemption — you are allowed to claim an additional $4,000 in exemptions
On the other hand, property that is not exempt includes cash, bank accounts, stocks, bonds and vacation homes. In addition, if you intend to keep your home or car, you are required to reaffirm that debt with the lender, which means you are obligated to pay your mortgage or auto loan.
Am I Eligible for Chapter 7 Bankruptcy in Chicago, Illinois?
To qualify for Chapter 7 bankruptcy, your income must be lower than the median income in Illinois. If your income is above the median, you must pass the so-called “means test” to show that your disposable monthly income will not cover your debts. Disposable income is the remaining income after you pay your monthly expenses (e.g. housing costs, utilities, child care, taxes, insurance).
If you pass the means test, you qualify for Chapter 7 bankruptcy, otherwise you will be required to seek protection under Chapter 13. In rare circumstances, however, you may still be eligible for Chapter 7 bankruptcy if you make over the median income, but it takes a bankruptcy attorney with dedication and determination to help you qualify.
Finally, you are not eligible for Chapter 7 bankruptcy if (1) debt was previously discharged under Chapter 7 within the last 8 years or (2) debt was previously discharged under Chapter 13 within the last 6 years. You will also be disqualified if you defrauded, or attempted to defraud, your creditors or the bankruptcy court.
Given the challenges of qualifying for Chapter 7 bankruptcy, it is crucial to work with an experienced bankruptcy lawyer. At Chicago Bankruptcy Clinic, our legal team can help you complete the required forms for the means test, calculate your gross annual and monthly income, and arrive at a disposable income amount that qualifies you for a liquidation bankruptcy.
Are There Other Requirements for Filing Chapter 7 Bankruptcy in Illinois?
Before you can file for Chapter 7 bankruptcy, you must participate in mandatory credit counseling with a state-approved agency. After you have completed the course, you are permitted to file a petition with the bankruptcy court.
In addition, the trustee will conduct a meeting of your creditors (a “341 Meeting) that you must attend. The trustee will question you about the petition and ensure the accuracy of the information provided. Although creditors are permitted to attend the 341 meeting, most do not unless they believe you are hiding income or assets.
What is the “Automatic Stay?”
Once your petition is filed, a court order known as an automatic stay immediately goes into effect, which stops all debt collection activities, including repossessions, foreclosures, garnishments, and civil lawsuits. The stay remains in effect until the bankruptcy is either dismissed or discharged.
Contact Our Experienced Chicago Bankruptcy Attorneys
At Chicago Bankruptcy Clinic, we will handle all the details of your bankruptcy filing with precision and professionalism. We are familiar with the rules and procedures of the local bankruptcy courts and have developed working relationships with bankruptcy trustees in jurisdictions throughout Chicago. Our legal team has a well-earned reputation not only as dedicated advocates of our clients, but as honest brokers as well.
If you are considering filing for Chapter 7 bankruptcy, don’t go it alone. When you work with our experienced bankruptcy lawyers, you will have peace of mind knowing that debt relief is on the way. Please contact our office today for a free consultation.