Is There More Than One Type of Consumer Bankruptcy?

If you are struggling with debt in Oak Park and you are weighing your options, you might be considering personal bankruptcy. Yet if you do not have any experience with the consumer bankruptcy process, and you do not have any friends or family members who have filed for bankruptcy, it can be difficult to understand how the process works. In particular, you might be wondering, “Is there more than one type of consumer bankruptcy?” If you have done a quick internet search for bankruptcy, you have probably discovered that there are many different chapters under which a bankruptcy case can be filed, and it can be extremely confusing to navigate the U.S. Bankruptcy Code. You may notice that some types of bankruptcy can be used for individuals and businesses alike, while others are limited to individuals and others still are limited only to businesses. All of that is a lot of information to parse.

Generally speaking, there are two major types of consumer bankruptcy, but sometimes consumers will file for bankruptcy under a third type depending upon the circumstances. Here is some more information to help you plan ahead.

Chapter 7 Bankruptcy for Consumers

Chapter 7 bankruptcy is a common type of bankruptcy for consumers. Do not get confused if you see that a business has filed for Chapter 7 bankruptcy and think that this type of bankruptcy is just for businesses. Both consumers and businesses can file for Chapter 7 bankruptcy (although determining eligibility for a consumer Chapter 7 bankruptcy is much different than determining eligibility for a business Chapter 7 bankruptcy).

This particular type of bankruptcy is a liquidation bankruptcy. Accordingly, all of your non-exempt assets will be liquidated to repay your creditors and to make you eligible for a bankruptcy discharge. In order for a consumer to be eligible for Chapter 7 bankruptcy, she or he (or a married couple) must be able to pass the “means test.” A consumer bankruptcy lawyer in Oak Park can provide you with more information.

Chapter 13 Bankruptcy for Consumers

Chapter 13 bankruptcy is another common type of bankruptcy for individuals and married couples. This type of bankruptcy is only for consumers—business entities cannot file for Chapter 13 bankruptcy. This is a reorganization bankruptcy in which a consumer debtor makes a debt repayment plan to cover a period of three to five years. During that time, the debtor will make regular payments that will go to repay creditors, and at the end of the period, remaining debts can be discharged.

To qualify, you must be able to show that you are a wage earner (i.e., that you have a steady job and can make the payments in your repayment plan), and you cannot have too much debt. The Chapter 13 debt limits currently are $394,725 in unsecured debt and $1,184,200 in secured debt.

Occasional Chapter 11 Bankruptcy for Consumers

Chapter 11 bankruptcy is a reorganization bankruptcy (similar to Chapter 13) that is usually for businesses. However, when consumers have too much debt to file for Chapter 13 bankruptcy, Chapter 11 bankruptcy may be an option.

Contact an Oak Park Consumer Bankruptcy Lawyer

Do you have questions about filing for consumer bankruptcy, or do you need assistance with your case? One of our experienced Oak Park consumer bankruptcy lawyers can speak with you today. We can help you to determine the best type of bankruptcy for your needs and situation, and we can advocate for you throughout the bankruptcy process. Contact the Emerson Law Firm today for more information.


See Related Blog Posts:
What is Chapter 13 Bankruptcy Good For?
New Study Addresses Racial Disparities and Consumer Bankruptcy

Comments

Post a Comment

Popular posts from this blog

Phantom Debt Collection Scams on the Rise in Illinois

Have you been contacted by a person claiming to be a debt collector who is seeking to recover a debt you allegedly owe? If so, you are not alone. According to a recent report from CBS Chicago , such parties claiming to be debt collectors are on the rise, and they are scamming Chicago-area residents. These alleged debt collectors are part of schemes known as “phantom debt collection scams,” since they involve the attempt to collect on a debt that the consumer does not actually owe. How can you avoid becoming a victim in a debt-collection scam ? What should you do if you have been targeted by a fake debt collector? How Do Phantom Debt Collection Scams Work? Now, you might be thinking to yourself: I would never agree to make payment on a debt that I did not owe. But the scam is not always that simple. Parties at the center of debt-collection scams often target consumers who do actually owe debts (to someone or to some entity), and they prey on the fact that these c...
Read more

Payday Lending and Predatory Lenders in Illinois

If you are in substantial debt in the Chicago area and are living in a paycheck-to-paycheck cycle, you may have taken out a payday loan to make ends meet. While payday lending is illegal in a number of states due to the predatory nature of these loans, it remains legal in Illinois. As a result, many debtors in the state have used payday lenders, and far too many of those borrowers cannot repay what they owe. According to a recent article from Progress Illinois , consumers have filed complaints about payday lenders in the state, illuminating a need for federal rules that address harmful lending practices . Predatory Payday Lenders and Protections for Consumers Due to the perceived predatory nature of payday loans, twelve states in the country have banned these lenders from operating completely, according to a fact sheet from loans.org . The states that currently have laws prohibiting payday lenders from operating include Arkansas, Arizona, Connecticut, Georgia, Mary...
Read more

New Information on Debts That Bankruptcy Cannot Discharge

If you are thinking about filing for bankruptcy in the Oak Park area, it is important to know that certain kinds of debts cannot be discharged in a bankruptcy case. Under U.S. bankruptcy law, these are known as non-dischargeable debts, or exceptions to discharge. There are certain types of debts that have long been identified clearly as non-dischargeable debts, while there are misconceptions about other types of debts that may or may not be dischargeable. As an article in CNBC discusses, the U.S. Supreme Court recently issued a ruling in the case of Bartenwerfer v. Buckley , which clarifies that debts incurred due to another party’s fraud cannot be discharged in an individual’s bankruptcy case. Our Oak Park bankruptcy attorneys can explain the Court’s recent ruling and provide you with additional information on dischargeable and non-dischargeable debts. Supreme Court Says Debt Incurred Due to Another’s Fraud is Non-Dischargeable The recent Bartenwerfer case involved a debtor attempti...
Read more