Are you struggling to pay off the debt that seems insurmountable? Are the monthly payments more than what you bring home in a month? If so, don’t panic; bankruptcy may be an option to help you get back on track. But before filing, it’s vital to know that there are different types of consumer bankruptcy: Chapter 7 and Chapter 13. Your particular circumstances will determine which is the best choice for you.
What Can You Expect When You File for Chapter 7 Bankruptcy in Chicago?
Chapter 7 bankruptcy is primarily for people who do not have many assets, such as a house and have a difficult time paying both their debts and living expenses. If you are interested in filing a Chapter 7 bankruptcy claim, you may have to pass a “means test” to determine if your income is too high. If your income is too high to file under Chapter 7, you may have to file for Chapter 13 bankruptcy instead.
If your claim is successful, a Chapter 7 bankruptcy will wipe out most of your unsecured debts without requiring you to pay back any of the balances through a repayment plan. Unsecured debts include:
- medical debts
- credit card debts
- automobile repossessions
- a deficiency judgment from a home foreclosure
- most lawsuit judgments
Additionally, when you file for bankruptcy under Chapter 7, an order known as an “automatic stay” will take effect. This automatic stay will stop creditors from contacting you about the debt.
If you’re considering filing for Chapter 7 bankruptcy, contact the Chicago Consumer Law Center today. Our excellent bankruptcy attorneys can help you through every step of the process.
What Can You Expect When You File for Chapter 13 Bankruptcy in Chicago?
If your monthly income is too high for Chapter 7 bankruptcy, you are not out of options. You may still be eligible for Chapter 13 bankruptcy.
When you file for bankruptcy under Chapter 13, an automatic stay will be issued to stop creditors from contacting you about your debt. Additionally, Chapter 13 bankruptcy allows you to develop a plan to pay back all or part of your debt. Depending on your level of income and amount of debt, payment plans under Chapter 13 bankruptcy last anywhere from three to five years. During this time, creditors are not allowed to contact you or harass you in any way, letting you go through your payment plan without the stress and hassle of dealing with creditors.
Are your monthly expenses wiping out all or most of your monthly income? If so, Chapter 13 bankruptcy might be a good option for you. Contact the Chicago Consumer Law Center for help, and one of our bankruptcy attorneys will handle your case personally.
How to Determine If Chapter 7 Is Your Best Option
Before filing for bankruptcy under Chapter 7 or Chapter 13, you should determine if bankruptcy is the right choice for you. If your debt is getting out of control, your bills are piling up, and creditors call you every day, bankruptcy can help you start over and get back on track.
Chapter 7 bankruptcy is generally a quicker process and is less costly than filing for Chapter 13. And under Chapter 7, you will avoid paying back all or most of your debts in a payment plan. But to qualify under Chapter 7, you will have to pass the means test.
First, is your monthly income less than the median income of a household your size in your state? If so, you will qualify for bankruptcy under Chapter 7. If your income is more than the median, the means test will determine how much monthly disposable income you have. If your disposable income is too high, you will not qualify for Chapter 7 bankruptcy.
Is Chapter 13 Your Best Option?
If you fail the means test, don’t worry, Chapter 13 bankruptcy is still available. It also provides benefits that Chapter 7 cannot offer. Suppose you are currently facing a foreclosure or are worried that the bank may foreclose upon your home. In that case, Chapter 13 bankruptcy can halt the foreclosure process and allow you to get up to date on past due mortgage payments. A Chapter 13 bankruptcy may also allow you to keep some assets that you could lose in a Chapter 7 bankruptcy.
Deciding whether Chapter 7 or Chapter 13 is the right option can be difficult, But you don’t have to make this decision alone. At the Chicago Consumer Law Center, our bankruptcy attorneys can help you decide if bankruptcy is the right choice and, if so, which bankruptcy option is best for you.
Why Choose Chicago Consumer Law Center?
At Chicago Consumer Law Center, our experienced bankruptcy attorneys will work with you to determine if Chapter 7 or Chapter 13 bankruptcy is your best option. We can help you through the means test or help you set up a payment plan that works for you. But most importantly, we will treat you with the dignity and respect that you deserve.
If you’re wondering if bankruptcy might prove to be the way forward for you in resolving debt and creating a brighter future, our bankruptcy attorneys at Chicago Consumer Law Center can help. Call us at (312) 858-3240 or fill out the form to schedule your Free Strategy Session.
Disclaimer: The information in this blog post (“post”) is provided for general informational purposes only, and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from the individual author or the law firm, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.
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