Northwest Chicago Bankruptcy Attorney
Debt can get out of control fast. Job loss, illness, divorce, or other unexpected life events can make it hard to pay the bills, which could leave you under a crushing mountain of debt. If this situation sounds familiar to you, it may be time to consider filing for bankruptcy.
Bankruptcy can give you the fresh financial start you need. But is bankruptcy the best option for your situation? And if it is, should you file for Chapter 7 or Chapter 13? While both bankruptcy options can help you eliminate your debt, each is suited towards different end goals. To truly understand whether bankruptcy is right for you as well as which type you should file, consult with an experienced Northwest Chicago bankruptcy attorney at Lorraine M. Greenberg & Associates today.
How Can Bankruptcy Help Eliminate Your Debt?
When an individual or business accrues more debt than they can afford to pay off, they may turn to bankruptcy for help. Bankruptcy is a legal process aimed towards helping you get a fresh financial start by eliminating or restructuring your debt.
Two of the most common types of bankruptcies for individuals are as follows:
- Chapter 7 Bankruptcy: This is the more common of the two forms of bankruptcy for individuals. It is also without a doubt the quickest form as well, usually completing in four and six months. With Chapter 7, you can effectively eliminate your eligible debt by selling off your assets and property to repay your creditors. Eligible debt includes credit cards, personal loans, and medical debt.
- Chapter 13 Bankruptcy: If you do not qualify for Chapter 7, you more than likely can still qualify for Chapter 13. However, keep in mind that Chapter 13 will take much longer than Chapter 7. With Chapter 13, you can restructure your debt into an affordable payment plan that spans three to five years. At the end of your plan, any remaining debt can be eliminated.
Is Bankruptcy Your Best Option?
Bankruptcy is one of several options you can use to tackle overwhelming debt. Though it can provide you with the opportunity to obtain a fresh financial start, it’s important to fully understand exactly what it entails. So what are the cons of filing for bankruptcy?
For instance, planning on buying a house or car soon? Or starting a business in the present future? Filing for bankruptcy often results in a significant hit on your credit score. This could make it harder for you to borrow money. In addition, Chapter 7 stays on your credit report for ten years, and Chapter 13 stays for seven.
Furthermore, if you have debt that bankruptcy cannot address, filing for bankruptcy will not benefit you. Bankruptcy does not discharge all types of debt. For example, debts that cannot be eliminate through bankruptcy may include student loans, child support, alimony, or criminal fines.
Do you have any non-exempt property that you wish to keep? Unfortunately, filing for Chapter 7 requires that you sell off your non-exempt property in order to pay back your creditors. Property of this type includes assets that are not protected from liquidation, such as cars, homes, and investments.
Chapter 7 Bankruptcy
If most of your property is exempt and most of your debt is dischargeable, then Chapter 7 bankruptcy is most likely your best option. To qualify for Chapter 7, you must pass the Means Test. This test requires that you do not have more income than is enough to pay off your debt.
Chapter 13 Bankruptcy
In contrast to Chapter 7, if you hold mostly non-exempt property and non-dishargeable debt, then Chapter 13 may be your best option. To qualify for Chapter 13, you must receive enough reliable income to repay your debts in plan that spans three to five years. After restructuring your debt, you must continue to make your payments throughout the plan schedule, or you will need to go back to court to find a new solution.
Can Bankruptcy Halt Foreclosure?
Simply put, yes – temporarily. In most cases, once you file for bankruptcy, the court will issue an automatic stay that prevents your creditors from collecting on your assets. The automatic stay also has the added benefit of preventing creditors from contacting or harassing you as well. They will need to attend a creditors’ meeting or contact your attorney instead.
Contact a Northwest Chicago Bankruptcy Attorney Today
If you’re struggling under mounting debt, bankruptcy can help you wipe the slate clean and start over. At Lorraine M. Greenberg & Associates, we’ve helped many clients regain control of their finances and recover from bad financial situations. Contact us today to speak to a Northwest Chicago bankruptcy attorney.
