At Lynch Law LLC, we recognize that struggling with debt is one of the most overwhelming experiences a person can go through. We also recognize that deciding to file for bankruptcy is a tough choice. Our Naperville bankruptcy lawyers are happy to assess your situation and answer all of your questions about the process. Below, we have compiled answers to some of the most commonly asked questions.
Under a Chapter 7 bankruptcy, you ask the bankruptcy court to wipe out (discharge) the debts you owe. Under a Chapter 13 bankruptcy, you file a plan with the bankruptcy court proposing how you will repay your creditors. You must repay some debts in full; others may be repaid only partially or not at all, depending on what you can afford.
When you file either kind of bankruptcy, a court order called an "automatic stay" goes into effect. The automatic stay prevents most creditors from taking any action to collect the debts you owe them unless the bankruptcy court lifts the stay and lets the creditor proceed with collections.
Certain debts cannot be discharged in bankruptcy; you will continue to owe them just as if you had never filed for bankruptcy. These debts include back child support, alimony, and certain kinds of tax debts. Student loans will not be discharged unless you can show that repaying the debt would be an undue burden, which is a very tough standard to meet. Other types of debts might not be discharged if a creditor convinces the court that the debt should survive your bankruptcy.
Under the new bankruptcy law, filers whose incomes are higher than the median income for a family of their size in their state may not be allowed to file for Chapter 7 bankruptcy if their disposable income - after subtracting certain allowed expenses and required debt payments - would allow them to pay back some portion of the unsecured debt over a five-year repayment period.
Additionally, if you have secured debts of more than $1,010,650 and unsecured debts of more than $336,900, for example, then you cannot use Chapter 13 bankruptcy.
Most people who file for bankruptcy choose to use Chapter 7 if they meet the eligibility requirements. Chapter 7 is a popular choice because, unlike Chapter 13, it doesn't require filers to pay back any portion of their debts.
However, Chapter 13 might be a better choice depending on your situation. For example, if you are behind on your mortgage and want to keep your house, you can include your missed payments in your Chapter 13 plan and repay them over time. In Chapter 7, you would have to make up the whole past due amount right away - and you might lose your house if your equity exceeds the exemption amount available to you.
Don't wait around for that lurking repo man to find your car. Instead, take action. First, determine whether your inability to pay your car note is temporary or long-term. If it's temporary, immediately contact your lender, explain your situation and try to work out a short-term solution (maybe adding the missed payment to the end of the loan term). Or, borrow money from friends or family to get current on your car loan.
If you know you will not be able to continue to pay for your vehicle, it is likely that you are having other financial issues and bankruptcy may be able to help. Contact us for a free consultation to learn how our experienced bankruptcy attorneys in Naperville can help protect your vehicle and other assets.
Whether you and your spouse are liable for each other's debts depends mostly on where you live. In the handful of states with "community property" rules, most debts incurred by one spouse during the marriage are owed by both spouses. But in states that follow "common law" property rules (for example, Illinois), debts incurred by one spouse are usually that spouse's debts alone - unless the debt was for a family necessity, such as food or shelter for the family or tuition for the kids.
Your bank's actions at this point are governed by your state's laws, often with the help of the state court system. In most states, it takes somewhere between two and 12 months before you're given a date by which you must leave. That date is usually based on when the property has actually been sold. In fact, you may need to stay in your house until the sale is completed so that you won't have "abandoned" it. Abandonment can bar you from access to local assistance programs.
Some homeowners push matters and don't leave by the date they're supposed to. They wait for the bank to get an eviction order and send a sheriff to enforce the order. We don't, however, recommend that strategy, which is demoralizing and leaves you with very little control over your departure.
Whether you plan to keep your home or would like to walk away from it, the timing of filing for bankruptcy is crucial.
You are typically allowed to keep these types of property in a Chapter 7 bankruptcy:
- Equity in your home, commonly called a homestead exemption. Under the Bankruptcy Code, in Illinois you can exempt up to $15,000 for an individual and $30,000 for a joint filing of your equity.
- Insurance. You can usually keep the cash value of your policies and will not be required to cash in any whole life policies.
- Retirement plans. Most retirement plans are exempt in bankruptcy.
- Personal property. You'll be able to keep most household goods, furniture, furnishings, clothing (other than furs), appliances, books, and musical instruments up to a garage sale value of $4,000 per person.
- Your car. You keep a vehicle as long as your equity doesn't exceed several thousand dollars. Illinois gives you a "wild card" amount of money - $2,400 per vehicle - that you can apply toward any property.
- Public benefits. All public benefits, such as welfare, Social Security, and unemployment insurance, are exempt.
Many larger firms hire recent law school graduates to represent their clients or have attorneys working out-of-area and you will never actually meet your attorney in person. When you choose Lynch Law, LLC., you know who will be going to court with you - and you'll know that that it will be an attorney, not a paralegal.
At Lynch Law, LLC., we offer reasonable flat fees that cover the entire bankruptcy process from the day you retain us until the day you are discharged and beyond.
"Roseanne is the best. My husband and I went with a cheap bankruptcy attorney to save money. BIG mistake. We ended up with an adversary hearing that our bankruptcy attorney couldn't handle. So after ..."
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"I am extremely pleased with the service they provided: from giving me advice on how to prepare, to working with creditors, and finally to handling the legal aspects of the bankruptcy itself. They took ..."