Do You Know the Difference Between Bankruptcy Facts and Fictions?

Whenever a consumer is considering the possibility of filing for bankruptcy, there are many misconceptions and myths that are available on the internet and that can, often, seem like truths. Given the complexities of U.S. bankruptcy law, and the difficulty in determining whether or not you are getting the correct and accurate information you need, it is critical to work with an experienced Oak Park bankruptcy attorney who has handled cases similar to your own and can help to ensure that your bankruptcy case goes as smoothly as possible. For now, we want to help dispel some common bankruptcy fictions and to replace those with facts that can help guide you as you plan for personal bankruptcy.

Fiction: You Will Lose Everything You Own if You File for Bankruptcy

Fact: You will not lose everything you own if you file for bankruptcy, and in fact, filing for bankruptcy may not result in any of your assets being liquidated. If you file for Chapter 7 bankruptcy, all non-exempt assets will need to be liquidated, but you might be surprised to learn just how many assets are actually exempt under Illinois law. For example, you will be able to keep up to $15,000 of equity in your home, up to $2,400 in a motor vehicle, insurance benefits, pensions and other retirement benefits, a variety of personal property, government benefits, and 85% of your gross earnings.

If you file for Chapter 13 bankruptcy, you will not need to liquidate any of your property. Instead, the bankruptcy exemptions in Illinois are used to determine which assets will be exempt from your repayment plan that you will develop as part of this reorganization bankruptcy.

Fiction: You Cannot Discharge Student Loans in a Consumer Bankruptcy Case

Fact: Although it may be more difficult to have student loans discharged in a bankruptcy case than other types of debt, you should know that it is indeed possible to discharge student loan debt if you file for personal bankruptcy. You will need to work with a bankruptcy attorney to learn what you must prove in order to have that debt discharged. And you should keep an eye on potential bankruptcy reform plans. The Consumer Bankruptcy Reform Act of 2020, introduced by Senator Elizabeth Warren and Representative Jerrold Nadler, would make discharging student loan debt in a bankruptcy case much easier for struggling debtors.

Fiction: Bankruptcy Will Prevent You From Getting Any Kind of Credit Again

Fact: Consumers can actually begin rebuilding their credit from the moment of a bankruptcy discharge. While it can take a few years before you are eligible for certain types of loans or credit cards again, you can certainly be eligible for credit again, including mortgages, in a much shorter time window after your bankruptcy than you might have been led to believe.

Contact a Bankruptcy Lawyer in Oak Park

Do you have questions about bankruptcy, or do you have concerns about some of the bankruptcy myths you have encountered? Our experienced Oak Park bankruptcy lawyers can make sure you have the facts you need to move forward with your bankruptcy case. Contact the Emerson Law Firm today for assistance.



See Related Blog Posts:

Study Suggests Black Women are Filing for Bankruptcy at Disproportionate Rates in the Pandemic

Can I Lose My Small Business if I File for Personal Bankruptcy?

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