Who Should File for Chapter 7 Bankruptcy?

According to a recent news release from Illinois Legal Aid, it’s important to understand bankruptcy basics that can help you to decide whether personal bankruptcy is the right option for your.  Filing for chapter 7 bankruptcy can be a solution for many Chicago-area residents, but as the press release notes, it’s not necessarily a solution for everyone.
What is Chapter 7 Bankruptcy?
Different types of bankruptcy are available to individuals and businesses alike.  Chicago residents might have heard about consumer bankruptcy options and filing for Chapter 7 bankruptcy, but how is this type of bankruptcy defined?
In short, Chapter 7 bankruptcy allows a consumer to erase all—or mostly all—of his or her debts.  According to the Federal Bankruptcy Code, it’s also known as a liquidation bankruptcy, which means that the debtor’s property will be sold, or liquidated, in order to pay back the creditors to whom the debtor owes money.
A Chapter 7 bankruptcy begins when a debtor files a petition with the bankruptcy court.  You should keep in mind, however, that bankruptcy laws are very complicated.  Before filing, you should seek the advice of an experienced Oak Park bankruptcy attorney.
Why Should I Consider Filing?
Many reasons for filing for Chapter 7 bankruptcy exist.  Some of those reasons include the following:
·      You can get a fresh start financially, and most of your debts will be erased (or “discharged”);
·      When you file for bankruptcy, collection agencies and creditors won’t be able to continue seeking payments from you or to garnish your wages (known as an “automatic stay”);
·      You can avoid home foreclosure or property repossession (or at least halt them for now), as these legal actions can’t continue without the court’s approval once you’ve filed for bankruptcy;
·      Neither your employee not a public agency can retaliate or take any action against you because you’ve decided to file;
·      You can get your driver’s license reinstated if it was suspended because of your failure to pay a debt that you can discharge in bankruptcy;
·      You’ll be able to prevent utility shutoffs or restore your utility services; and
·      You’ll be able to keep certain exempt property.
Yet while there are significant pros in terms of filing for consumer bankruptcy, it’s important to understand some of the reasons that filing for bankruptcy may not be the best option for you.  For example:
·      After filing, it can be difficult or expensive to get credit as bankruptcy will remain on your credit report for ten years;
·      Bankruptcy can lead to an acrimonious relationship with a former creditor who won’t be paid;
·      Cosigners may still be held liable for debts that you discharged in your bankruptcy, which can result in a bad relationship with a friend or relative who cosigned on a loan for you;
·      In some cases, you’ll have to return property that you haven’t paid for;
·      Chapter 7 bankruptcy filings are only available to Illinois residents once every eight years; and
·      Bankruptcy doesn’t wipe out all forms of debt.
If you’re not sure whether consumer bankruptcy is right for you, it’s important to speak to an experienced Chicago bankruptcy lawyer.  In particular, if you’re filing for bankruptcy in order to prevent foreclosure, the legal professionals at the Emerson Law Firm can speak with you about other ways to protect your home.  Contact us today to learn more about how we can help you.
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