What is Bankruptcy?
Bankruptcy is a legal
proceeding in federal court that gives debtors immediate
relief from their creditors. Feel free to call our office at
(312) 422-1130 or contact us by
e-mail.
Chapter 7: Liquidation
Chapter 7 is designed for debtors in
financial difficulty who do not have the ability to pay
their existing debts. Debtors whose debts are primarily
consumer debts are subject to a “means test” designed to
determine whether the case should be permitted to proceed
under chapter 7. If you income is greater than the medium
income for your state of residence and family size, in some
cases, creditors have a right to file a motion requesting
that the court dismiss your case under § 707(b) of the Code.
It is up to the court to decide whether the case should be
dismissed.
Under chapter 7, you may claim certain of your property as
exempt under governing law. A trustee may have the right to
take possession of and sell the remaining property that is
not exempt and use the sale proceeds to pay your creditors.
The purpose of filing a chapter 7 case is to obtain a
discharge of your existing debts. If, however, you are found
to have committed certain kinds of improper conduct
designated in the Bankruptcy Code, the court may deny your
discharge and, if it does, the purpose for which you filed
the bankruptcy petition will be defeated.
Even if you receive a general discharge, some particular
debts are not discharged under the law. Therefore, you may
be responsible for most taxes and student loans; debts
incurred to pay nondischargeable taxes; domestic support and
property settlement obligations; most fines, penalties,
forfeitures, and criminal restitution obligations; certain
debts which are not properly listed in your bankruptcy
petition; and debts for death or personal injury caused by
operating a motor vehicle, vessel, or aircraft while
intoxicated from alcohol or drugs. Also, if a creditor can
prove that a debt arose from fraud, breach of fiduciary
duty, or theft, or from willful and malicious injury, the
bankruptcy court may determine that the debt is not
discharged.
Chapter 13: Repayment plan for individuals with regular
income
Chapter 13 is designed for individuals
with regular income who would like to pay all or part of
their debts in installments over a period of time. You are
only eligible for chapter 13 if your debts do not exceed
certain dollar amounts set forth in the Bankruptcy Code.
Under chapter 13, you must file with the court a plan to
repay your creditors all or part of the money that you owe
them, using your future earnings. The period allowed by the
court to repay your debts may be three years or five years,
depending upon your income and other factors. The court must
approve your plan before it can take effect.
After completing the payments under your plan, your debts
are generally discharged except for domestic support
obligations; most student loans; certain taxes; most
criminal fines and restitution obligations; certain debts
which are not listed properly in your bankruptcy papers;
certain debts for acts that caused death or personal injury;
and certain long term obligations.
More Information
Do you have too many bills?
Are creditors harassing you?
Do you have a Judgment or Garnishment against you?
Are you in Foreclosure?
We are a debt relief agency that
helps people file for bankruptcy relief under the Bankruptcy
Code. STOP Worrying about your debt! Download the document
"How to Become Debt Free" in PDF format.
Disclaimer: The information provided pertains to
Chapter 7 and Chapter 13 consumer bankruptcy as it relates
to this practice in Illinois. Bankruptcy law is generally
federal law. Laws in Illinois are going to be similar (but
not exactly the same) to laws anywhere in the country.
However, this information only applies to Chapter 7 and
Chapter 13 consumer debt and no other type of bankruptcy.
Additionally, this information is not intended as a legal
opinion or legal advice at all. The facts of every case are
different and give rise to issues that may not even be
discussed here. You are urged to consult an attorney who is
licensed to practice in your area before you take any
action.
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