When someone finds themselves with too much debt making it difficult to meet their financial obligations, they may consider bankruptcy protection. Bankruptcy is a court process that can provide protection from creditors. The two main types of bankruptcy a debtor can consider are Chapter 7 and Chapter 13.
Illinois Chapter 7 Bankruptcy Protection
Chapter 7 Bankruptcy, sometimes referred to as a debt liquidation bankruptcy, can help debtors to discharge or cancel debt such as medical bills or credit card debt. Chapter 7 is a good option for people with low income and assets and works by selling off property to pay off debt. Chapter 7 filers will not lose all of their property, however, as Illinois allows people to use bankruptcy exemptions to protect assets needed to work and live such as a vehicle, home, and personal items up to certain limits. Retirement accounts may also be protected.
Common Illinois bankruptcy exemptions are the Illinois homestead exemption up to $15,000: the Illinois motor vehicle exemption which exempts equity on a car up to $2,400, an Illinois wild card exemption up to $4,000, miscellaneous personal property, tools of the trade up to $,1500, public benefits and more. Generally speaking, if spouses file together in Illinois, each spouse can claim the full amount of the exemption, sometimes referred to as doubling.
Illinois Chapter 13 Bankruptcy Protection
To file for a Chapter 13 Bankruptcy, you must have enough income to make payments on your debt. Chapter 13 will allow you to keep most of your property by setting up a repayment plan to repay your creditors. Repayment plans span 3 to 5 years with the goal of paying creditors off in full with disposable income. After the repayment plan is complete any remaining debt will be discharged, with a few notable exceptions such as student loan debt, tax debt or other nonexempt debt.
Contact an Experienced Illinois Bankruptcy Lawyer for Help
Bankruptcy is a complex process so it is very helpful to discuss your circumstances with a knowledgeable bankruptcy protection attorney to decide if bankruptcy is a good strategy for your difficult financial situation. Contact the Peoria bankruptcy law offices of Charles E. Covey for a free consultation at 309-674-8125.