Misconceptions About Consumer Bankruptcy in Chicago

When Chicago residents begin to consider the possibility of filing for personal bankruptcy, many become hindered by or anxious about some common misconceptions about how bankruptcy works and the ways it will affect them after they have filed.  While consumer bankruptcy isn’t a decision that should be entered into without significant thought, bankruptcy protection can be the best option for many debtors who are experiencing overwhelming financial burdens and emotional or psychological distress over their finances.
Bankruptcy law is complicated, but the experienced Oak Park bankruptcy lawyers at the Emerson Law Firm know how to help Chicago area residents when it comes to filing for bankruptcy.  Don’t hesitate to contact our office to learn more about how we can help you today.
Frequent Misconceptions About Consumer Bankruptcy
While it’s always important to discuss bankruptcy with an experienced Illinois bankruptcy lawyer, it’s also a good idea to know that bankruptcy may be a good option given your particular financial situation.  Consumers frequently misunderstand how bankruptcy works or how it will affect their financial and/or personal lives in the future.  We’re here to dispel some common fallacies about personal bankruptcy.
1.  Filing for bankruptcy means you’ll lose your home, your car, and all of your personal property.
In Illinois, there are exemptions that allow you to protect some or all of your personal property.  Under 735 ILCS 5 Section 12-901, those of us in Illinois who own a residence can exempt up to $15,000.  For the purposes of the law, the residence can be a farm, a single-family house, a condominium, and other properties.
Motor vehicles also are also exempt up to a certain amount.  Under 735 ILCS 5 Section 12-1001, Illinois debtors who file for bankruptcy can exempt up to $2,400 in value in a motor vehicle.  In addition, other personal property is completely exempt during a bankruptcy proceeding, including: necessary apparel, school books, Social Security benefits, veteran’s benefits, disability benefits, alimony, child support, life insurance payments, and more.  Exemptions can be complicated, and it’s important to discuss your specific situation with a Chicago bankruptcy attorney.
2.  Filing for bankruptcy means you’ll never be able to buy another house.
As we’ve mentioned in previous posts, Illinois residents who file for bankruptcy can indeed be eligible for a mortgage down the road.  Depending on the type of loan you’re seeking, you’ll need to abide by a waiting period (typically between 2-4 years), but you will be able to apply for a mortgage again.
3.  Filing for bankruptcy means you’ll never be able to have another credit card.
A bankruptcy filing typically only stays on your credit report for seven years, and many Chicago residents who file for consumer bankruptcy are surprised by how fast their credit recovers.  In short, filing for a Chapter 7 bankruptcy or a Chapter 13 bankruptcy will not preclude you from applying and being approved for credit accounts in the future.
4.  You need to be completely broke in order to file for bankruptcy.
In general, you only need to have problems paying your bills in order to be able to file for bankruptcy.  Indeed, many Oak Park residents who file for bankruptcy own homes, cars, and other personal property when they make the decision to file.  An Illinois bankruptcy lawyer at the Emerson Law Firm can take a look at your financial situation today.
Contact a Chicago Bankruptcy Lawyer
Bankruptcy law can be complicated.  However, the experienced Chicago bankruptcy attorneys at the Emerson Law Firm can help.  Contact us today to learn more.
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