Five Factors to Consider if You are Thinking About Bankruptcy

Making the decision to file for consumer bankruptcy is never a decision that someone makes lightly. However, when a consumer is struggling with debt, filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy can help that consumer to deal with debt and, in some cases, to get a fresh start financially. If you are considering whether personal bankruptcy might be right for you, it is important to think carefully about the process before you file. An experienced Oak Park consumer bankruptcy lawyer can speak with you about your options, but in the meantime, the following are five important facts to consider if you are thinking about bankruptcy.

1. You may not be eligible to file for Chapter 7 bankruptcy.
Not everyone is eligible for Chapter 7 bankruptcy. Under the U.S. Bankruptcy Code, in order to be eligible to file for Chapter 7 bankruptcy—which is a liquidation bankruptcy—a consumer needs to be able to pass the “means test.” The means test is designed to show that the consumer’s income is low enough that a liquidation bankruptcy would not be abusive. To pass the means test, a consumer’s disposable income must be sufficiently low after taking into account income, family size, and expenses.

Even if you are not eligible to file for Chapter 7 bankruptcy, you likely will be able to file for Chapter 13 bankruptcy.

2. If you file for Chapter 7 bankruptcy, you will be able to keep some of your property.
Even though Chapter 7 bankruptcy is a liquidation bankruptcy, Illinois law has “exemptions” for various forms of personal property. Any exempt property is not liquidation, and consumers are allowed to keep the exempt property even once debts are discharged.

3. Chapter 13 bankruptcy may be able to stop a foreclosure on your home.
Chapter 13 bankruptcy is beneficial for consumers in many different ways since it allows consumers to reorganize debts. One of the most notable benefits of Chapter 13 bankruptcy is that it may be able to stop a foreclosure on your house and allow you to keep the property. The automatic stay in bankruptcy will prevent foreclosure proceedings from moving forward, and it can allow the debtor to reorganize mortgage payments to get back on track.

4. Consumers must pay bankruptcy fees when they file.
Consumers have to pay certain fees when they file for bankruptcy. The fee for Chapter 7 is $335, and the fee for Chapter 13 is $310. If you do not qualify for Chapter 13 because your debts are too high, you may need to consider filing for Chapter 11 bankruptcy, which has a much higher fee of $1,717.

5. Co-signers will still be responsible for any debts that are discharged.
If you had a co-signer for any loans that you planned to have discharged in a Chapter 7 bankruptcy, the co-signer will still be responsible for those loans. A bankruptcy lawyer can speak with you about options for handling debt with a co-signer.

Contact an Oak Park Consumer Bankruptcy Attorney
Do you have questions about bankruptcy or whether it is right for you? A dedicated bankruptcy lawyer in Oak Park can answer your questions today and can provide you with more information about bankruptcy options available to consumers in Chicagoland. Contact the Emerson Law Firm to learn more about the consumer protection services we provide.


See Related Blog Posts:

U.S. Supreme Court Hears Arguments About Debt Collection After Consumer Bankruptcy Discharge

Dealing with Tax Debt Collection

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