Get an Overview of Consumer Bankruptcy

What is consumer bankruptcy, and how does it work? How does consumer bankruptcy differ from other types of bankruptcy? And is consumer bankruptcy right for you if you are struggling with debt? In order to gain a clearer understanding of the overall consumer bankruptcy process and whether you should consider filing, it is important to learn more about the different aspects of consumer bankruptcy and the U.S. Bankruptcy Code. Our experienced Oak Park bankruptcy attorneys are here to provide you with more information, and we can speak with you today about your circumstances if you are considering the possibility of filing for bankruptcy.

Consumer Bankruptcy is a Term Referring to Bankruptcy for Individuals

The term “consumer bankruptcy” is used to refer to bankruptcy cases that are filed by individuals as opposed to businesses. Consumer bankruptcy can go by various terms, including “personal bankruptcy” and “individual bankruptcy.” While consumer bankruptcy is sometimes known as individual bankruptcy, it is important for you to know that married couples can also be eligible to file for consumer bankruptcy together (meaning that, in some cases, “individual” bankruptcy involves two married people).

Different Types of Consumer Bankruptcy Exist

There are different types of consumer bankruptcy for individuals to file. Some types of consumer bankruptcy can also be used by businesses. At the same time, there are types of consumer bankruptcy that are only for consumers or individuals (and not for businesses). Generally speaking, consumers can file for Chapter 7 bankruptcy, Chapter 11 bankruptcy, or Chapter 13 bankruptcy.

Most commonly, consumers will file for either Chapter 7 bankruptcy or Chapter 13 bankruptcy. Chapter 7 bankruptcy is a type of liquidation bankruptcy, whereas Chapter 13 bankruptcy is a type of reorganization bankruptcy. A consumer who wants to file for either type of bankruptcy will need to prove their eligibility. To be eligible for Chapter 7 bankruptcy, you must pass the “means test” to show that your resources are limited and that a liquidation bankruptcy would not be unfair or abusive. To be eligible for Chapter 13 bankruptcy, also known as a “wage earner’s plan,” you must have proof that you earn a regular wage and will be able to make payments over time on a repayment plan. Chapter 11 is also a type of reorganization bankruptcy, but it is typically used by individuals only when they cannot qualify for Chapter 13 because of a high debt load.

Chapter 7 and Chapter 11 are also types of business bankruptcy (and Chapter 11 is much more commonly filed by businesses than by individuals). A business can only file for Chapter 13 bankruptcy if it is structured as a sole proprietorship since that means the business and the owner are the same legal entity.

Duration of a Consumer Bankruptcy Will Vary Before Discharge

The length of time of a consumer bankruptcy case from start to finish will depend on the type of bankruptcy. Chapter 7 cases can typically be completed for individuals, with a discharge at the end of four to six months. Chapter 13 cases usually take between three and five years.

Contact a Bankruptcy Lawyer in Oak Park

Do you have questions about consumer bankruptcy in general, or do you want assistance filing? An experienced Oak Park bankruptcy lawyer can help. Contact the Emerson Law Firm to learn more.



See Related Blog Posts:

CFPB Addresses Debt Collection Mill Lawsuits

How to Keep Your Property in a Consumer Bankruptcy Case

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