Why Do I Need Bankruptcy Exemptions if I am Filing for Chapter 13 Bankruptcy?

If you are planning to file for bankruptcy in Oak Park, you may already know about the importance of bankruptcy exemptions. For debtors who are planning to file for Chapter 7 bankruptcy, the significance of bankruptcy exemptions can be quite obvious: any property that is exempt through Illinois’s bankruptcy exemptions will not be liquidated as part of the bankruptcy case, and the debtor can keep that property while receiving a discharge of eligible debt. To be sure, many people assume that a Chapter 7 bankruptcy results in the loss of all property or assets, but this is a common bankruptcy myth. Bankruptcy exemptions available under Illinois law allow debtors to keep a wide range of assets, from equity in a home or motor vehicle to pensions and retirement accounts.

Yet you might be wondering what role bankruptcy exemptions play in a Chapter 13 bankruptcy case, or if you need to consider the exemptions at all since you did not think Chapter 13 bankruptcy involved the liquidation of any assets. You are correct in thinking that Chapter 13 bankruptcy does not involve the liquidation of any assets, but the bankruptcy exemptions still play an important role. Our Oak Park bankruptcy lawyers can explain, and we can assist you with your Chapter 13 bankruptcy case.

Exemptions Will Determine the Repayment Amount in Your Chapter 13 Bankruptcy Repayment Plan

When you file for Chapter 13 bankruptcy in Illinois or anywhere else in the U.S., you will be able to keep all of your assets. We want to be clear about that up front. However, the bankruptcy exemptions will be important because, as part of your Chapter 13 repayment plan, you will need to repay creditors for any property that you cannot exempt with the Illinois bankruptcy exemptions.

After you take into account the bankruptcy exemptions that apply to your property, you will need to develop a repayment plan that will usually last anywhere from three to five years, over which time you will make regular payments that will go to your creditors. The bankruptcy court will need to approve that repayment plan. At the end of the repayment plan period, if you have met the terms, any remaining debt can be discharged.

Some debts must be paid in full by the end of your repayment plan, and you will be required to pay either the total value of your nonexempt property in addition to debts that must be fully repaid, or the amount of your disposable income during the period of your repayment plan.

Contact Our Oak Park Bankruptcy Attorneys for Help

Whether you have questions about how bankruptcy exemptions will apply to your Chapter 13 case, or you need general assistance with a Chapter 7 or Chapter 13 bankruptcy, one of our experienced consumer bankruptcy attorneys in Oak Park can speak with you today about your circumstances. Do not hesitate to get in touch with our firm to learn more about the services we provide to debtors in Illinois. Contact the Emerson Law Firm for more information about consumer bankruptcy and how we can help.


See Related Blog Posts:

Mistakes to Avoid in Your Consumer Bankruptcy Case

Things to Know About Student Loans and Consumer Bankruptcy

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