10 Things You Should Know About Consumer Bankruptcy
If you are thinking about filing for consumer bankruptcy, you probably have a lot of questions. Even if a friend or family member has filed for bankruptcy in the past and you have some knowledge of how the process works as a result, it is still important to learn as much as you can before you file. Regardless of how much you read about personal bankruptcy, you should always work with an Oak Park bankruptcy lawyer to ensure that you meet all requirements and that you remain eligible for a bankruptcy discharge at the end of your case. In the meantime, however, we want to provide you with some information. Here are 10 things you should know about consumer bankruptcy before you file.
There are Different Types of Consumer Bankruptcy
Different types of consumer bankruptcy exist under the U.S. Bankruptcy Code. Most often, consumers will file for either Chapter 7 or Chapter 13 bankruptcy, but in some cases, consumers also may file for Chapter 11 bankruptcy.
Not Everyone is Eligible for All Types of Consumer Bankruptcy
You must be eligible for each type of bankruptcy to file. Chapter 7 has income and asset requirements, while Chapter 13 has employment requirements and debt limits.
You Must Pass the Means Test to Qualify for Chapter 7 Bankruptcy
To qualify for Chapter 7 bankruptcy, you need to pass something known as the “means test,” which proves you have few enough assets and a low enough income to make Chapter 7 bankruptcy appropriate.
Chapter 7 Bankruptcy is a Liquidation Bankruptcy
Chapter 7 bankruptcy is a liquidation bankruptcy, which means all non-exempt assets will be liquidated to repay creditors. Do not worry: Not everything you own is liquidated. Illinois has specific exemptions, allowing you to retain a wide variety of assets, including retirement accounts and equity in a home.
Chapter 13 Bankruptcy Does Not Immediately Lead to a Discharge
Chapter 13 bankruptcy requires a repayment plan that typically lasts anywhere from two to five years, and debt is not discharged until after the terms of the repayment plan are fulfilled.
Chapter 13 Bankruptcy May be Able to Stop Foreclosure
A major benefit of Chapter 13 bankruptcy is that the automatic stay can stop a foreclosure and allow a debtor to get back on track with mortgage payments in order to stay in the home.
All Types of Consumer Bankruptcy Have the Benefit of the Automatic Stay
The automatic stay—which prevents creditors from continuing attempts to collect on debt—applies to all types of consumer bankruptcy.
Not All Types of Debt are Dischargeable in a Personal Bankruptcy Filing
There are several kinds of debt that are not dischargeable in a bankruptcy case, including, for example, debt from family support and particular kinds of tax debt.
Spouses can File for Bankruptcy Together but They do Not Have to do So
Spouses can file together as a married couple for either Chapter 7 or Chapter 13 bankruptcy, but they do not have to—only one spouse in a marriage can file for bankruptcy, too.
Bankruptcy Cases are Extremely Complicated
Bankruptcy cases are extremely complex, and the U.S. Bankruptcy Code is very difficult to navigate. Do not attempt to handle your bankruptcy case on your own when a lawyer can help.
Contact a Bankruptcy Attorney in Oak Park for More Information
Do you have questions about filing for consumer bankruptcy? Whether you are considering Chapter 7 or Chapter 13 bankruptcy, a dedicated Oak Park bankruptcy attorney at our firm can assist you. Contact the Emerson Law Firm to learn more about how we can help consumers in the Chicago area with personal bankruptcy cases.
See Related Blog Posts:
Recent Student Loan Bankruptcy Case Could Be Good News for Debtors
Do I Need to Tell My Creditors When I File for Bankruptcy?
There are Different Types of Consumer Bankruptcy
Different types of consumer bankruptcy exist under the U.S. Bankruptcy Code. Most often, consumers will file for either Chapter 7 or Chapter 13 bankruptcy, but in some cases, consumers also may file for Chapter 11 bankruptcy.
Not Everyone is Eligible for All Types of Consumer Bankruptcy
You must be eligible for each type of bankruptcy to file. Chapter 7 has income and asset requirements, while Chapter 13 has employment requirements and debt limits.
You Must Pass the Means Test to Qualify for Chapter 7 Bankruptcy
To qualify for Chapter 7 bankruptcy, you need to pass something known as the “means test,” which proves you have few enough assets and a low enough income to make Chapter 7 bankruptcy appropriate.
Chapter 7 Bankruptcy is a Liquidation Bankruptcy
Chapter 7 bankruptcy is a liquidation bankruptcy, which means all non-exempt assets will be liquidated to repay creditors. Do not worry: Not everything you own is liquidated. Illinois has specific exemptions, allowing you to retain a wide variety of assets, including retirement accounts and equity in a home.
Chapter 13 Bankruptcy Does Not Immediately Lead to a Discharge
Chapter 13 bankruptcy requires a repayment plan that typically lasts anywhere from two to five years, and debt is not discharged until after the terms of the repayment plan are fulfilled.
Chapter 13 Bankruptcy May be Able to Stop Foreclosure
A major benefit of Chapter 13 bankruptcy is that the automatic stay can stop a foreclosure and allow a debtor to get back on track with mortgage payments in order to stay in the home.
All Types of Consumer Bankruptcy Have the Benefit of the Automatic Stay
The automatic stay—which prevents creditors from continuing attempts to collect on debt—applies to all types of consumer bankruptcy.
Not All Types of Debt are Dischargeable in a Personal Bankruptcy Filing
There are several kinds of debt that are not dischargeable in a bankruptcy case, including, for example, debt from family support and particular kinds of tax debt.
Spouses can File for Bankruptcy Together but They do Not Have to do So
Spouses can file together as a married couple for either Chapter 7 or Chapter 13 bankruptcy, but they do not have to—only one spouse in a marriage can file for bankruptcy, too.
Bankruptcy Cases are Extremely Complicated
Bankruptcy cases are extremely complex, and the U.S. Bankruptcy Code is very difficult to navigate. Do not attempt to handle your bankruptcy case on your own when a lawyer can help.
Contact a Bankruptcy Attorney in Oak Park for More Information
Do you have questions about filing for consumer bankruptcy? Whether you are considering Chapter 7 or Chapter 13 bankruptcy, a dedicated Oak Park bankruptcy attorney at our firm can assist you. Contact the Emerson Law Firm to learn more about how we can help consumers in the Chicago area with personal bankruptcy cases.
See Related Blog Posts:
Recent Student Loan Bankruptcy Case Could Be Good News for Debtors
Do I Need to Tell My Creditors When I File for Bankruptcy?
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