Chicago Bankruptcy Lawyers Providing Protection When Debts Overwhelm You
Helping Illinois business owners and residents understand the benefits of bankruptcy
When collectors won’t stop calling and the lawsuits start, it’s time to review your finances with an experienced debtor’s lawyer. Most people who get behind on their bills are honest, hard-working people who have experienced some misfortune. Many people who file for bankruptcy do so because they lost a job or needed surgery and the medical costs were just too much. Some people are going through a divorce and suddenly find that living alone is much more expensive than living together.
At Gainsberg Law, we understand how anxious and upsetting it can be to not be able to make your payments. Our Chicago bankruptcy lawyers review your finances and explain your options. There are two types of bankruptcies for the average individual. Chapter 7 is mainly for those who do not have many assets and who do not have secured debts. Debtors in Chapter 7 liquidate most of their debts. Chapter 13 is for debtors who want to save their assets, in particular – their home. We can help you determine which type is right for your situation. Bankruptcy is nothing to be ashamed of — it is specifically mentioned in the US Constitution as a form of financial relief. Bankruptcy is a way to get a fresh start.
Chapter 7 bankruptcy
To qualify for Chapter 7, debtors must pass a means test. The purpose of the test is to determine whether the debtor has enough money to pay off some of their bills. The test looks at the size of the debtor’s family and the average income for debtors from that family size in the geographical region where they live. Debtors whose income is below the median can file for Chapter 7 bankruptcy. Debtors, with some exceptions, who have income above the median, must file Chapter 13 bankruptcy. Most debtors pass the test.
In Chapter 7, the debtor lists of all his/her assets and debts, then attends a meeting before the trustee who verifies the debtor’s financial situation. The benefits of filing for Chapter 7 bankruptcy are:
- Automatic stay. As soon as the debtor files for Chapter 7, all collection actions and harassment must stop.
- Debt liquidation. The debtor can generally eliminate the duty to pay most unsecured debts, such as credit cards and hospital bills. Some debts, such as school loans and child support, cannot be eliminated.
- Personal exemptions. Federal and state exemption laws allow the debtor to protect some of his/her property from debtors as long as their value isn’t too high.
- Reaffirmation agreement. Debtors can reaffirm some debts — especially if the debt is secured. A common example is an automobile. Many debtors finance their car by agreeing the finance company can repossess their car if they don’t pay the monthly payment. A reaffirmation allows the debtor the right to get rid of the other debts but keep the car, provided the car payments are made.
Chapter 7, from start to finish, takes about six months.
Chapter 13 bankruptcy
Chapter 13 is for people who do not pass the means test or who have secured assets. Secured assets means that the debtor gave some collateral to secure the monthly payments. The most common example is a mortgage.
In a Chapter 13 bankruptcy, the debtor agrees to:
- Pay the arrears on the secured debts by making monthly payments. The debtor agrees to pay the amount he/she is behind by spreading the arrears over a three- to five-year period.
- Pay the current monthly, secured payments. The debtor who owns a home, for example, still pays the monthly payments during the three- to five-year period he/she is catching up on the arrears.
- Pay a small portion of the unsecured debts. During the three- to five-year period, the debtor pays a small percentage of what’s due on the unsecured debts.
Like Chapter 7 bankruptcy, the filing of a Chapter 13 bankruptcy creates an automatic stay. The stay stops all credit activity.
Speak with a compassionate Chicago bankruptcy lawyer for answers and help
The Chicago bankruptcy lawyers at Gainsberg Law understand how upsetting it can be to deal with the daily stress of financial pressure. Sometimes we can help you avoid bankruptcy by renegotiating some of your debt. When you have to file bankruptcy, we guide you through the process. Most debtors who file bankruptcy do not go to a formal court hearing and many do not have to see their creditors — just a court-appointed trustee. Get that fresh start the law does provide you. Please call us at 312-313-1621 or complete our contact form to discuss your finances with an experienced attorney.