Answering Your Frequently Asked Bankruptcy Questions
If you are considering filing for bankruptcy in Illinois, it’s natural to feel overwhelmed by your options and the process. At NextStep Bankruptcy Law, our attorneys want to lessen your stress before you take this important step.
Please read the answers to questions we frequently hear during our bankruptcy consultations with Chicagoland residents. Then, contact us to set up a meeting with a skilled bankruptcy attorney at our firm.
What is the difference between Chapter 7 bankruptcy and Chapter 13 bankruptcy?
Although individuals can file for either Chapter 7 bankruptcy or Chapter 13 bankruptcy, it is critical to understand the differences between these debt relief programs before you take action. Chapter 7 bankruptcy allows applicants to liquidate their debt, leaving credit card debt and other qualifying debt behind. Not all individuals qualify to file Chapter 7 bankruptcy, however. Our attorneys can review your financial statements to determine whether this is the right approach for you.
Individuals who do not qualify for Chapter 7 bankruptcy may seek out relief through Chapter 13 bankruptcy. This type of bankruptcy is known as “the wage earner’s plan.” It has traditionally been offered to individuals with a steady income who can pay off their debt obligations through a payment plan. If you qualify for this program, Chapter 13 offers many benefits that Chapter 7 does not. This process is more complex than is the Chapter 7 bankruptcy process, so it’s critical to work with a qualified attorney.
Will I lose my house or car?
At NextStep Bankruptcy Law, we hear this question a lot. But, because each debt situation is different, it’s dishonest to provide a blanket answer without reviewing each client’s financial circumstances.
In Illinois, if you are current on your mortgage and car payments, it is likely that you will be able to keep your home and your car after you exit bankruptcy. Bankruptcy may allow you to discharge the unsecured debt, like medical bills, that puts a strain on your finances. Leaving unsecured debt behind may free up your financial reserves so that you can continue to meet the terms of your secured debt.
What kind of debt cannot be discharged in bankruptcy?
Bankruptcy will not remove all your debt obligations. The following are the most common types of debt that cannot be discharged through Chapter 7 or Chapter 13 proceedings:
- Child support and spousal support payments
- Certain types of back taxes, which include tax liens
- Student loans in most situations
Student debt obligations and back income taxes are very difficult to discharge. Our attorneys are familiar with other strategies that you may use to lessen these types of debt.
How will bankruptcy affect my credit?
Filing bankruptcy will have a negative effect on your credit score, but it is possible to rebuild your credit. Paying your bills on time and in full will help you improve your score after you exit bankruptcy. Bankruptcy applicants can qualify for a home loan or a car loan in the future, but it takes time and effort.
Do You Have Other Questions? Contact Us Today.
Our lawyers are ready to help you take the first step toward eliminating your debt legally. Contact us via our online form or by calling our Chicago office at 312-667-7717 to arrange your free consultation.