- What is Bankruptcy?
Bankruptcy is a proceeding offered to assist people who cannot meet their financial obligations. It is governed by federal law set forth in a set of laws and rules known as the Bankruptcy Code. It is a privilege granted to you as a citizen of the United States under the Constitution. It can permanently wipe out all of your debts, or it can give you time to pay back some portion of your debts. Most individuals file for Chapter 7 or Chapter 13 under the Bankruptcy Code. In Chapter 7 your non-exempt property is used to pay back your debts and, with some exceptions, all of your debts are wiped out. In Chapter 13 you keep most (and sometimes all) of your property and a portion of your future earnings is used to pay back a portion of your debts under a plan for not less than three years and up to five years.
- Will I lose all of my property?
No, you will not lose all of your property. The law allows you to keep some of your property (your exempt property) even if you wipe out all of your debts. In some instances, you will be able to retain all or most of your property if you chose to pay your creditors back over time.
See your ILLINOIS EXEMPTIONS
- Can filing bankruptcy stop the foreclosure on my home?
Yes, the filing of a bankruptcy case will automatically stop the foreclosure of your home to give you time to consider your options (for example, sell your home, cure your defaults through a bankruptcy plan or possibly refinance).
See our Blog on Stopping Foreclosures
- Can filing bankruptcy prevent the repossession of my car?
- Should I file Chapter 7 or Chapter 13?
That’s a complicated question. The primary reason for you to choose to file Chapter 13 instead of Chapter 7 is to keep your home or your car or some other non-exempt property. Chapter 13 provides you with the ability to either pay creditors back in full or, at least, get current on the home mortgage loan or car loan payments. In some instances, depending on your current income, you will not be eligible to file Chapter 7 and Chapter 13 will be your only viable option.
- How long does the bankruptcy process take?
Chapter 7 bankruptcy typically lasts about 4 months. Chapter 13 bankruptcy lasts between 3 to 5 years.
- Can I Change to Chapter 7 if my Chapter 13 is still pending?
Yes, if your Chapter 13 plan becomes too burdensome or undesirable, you can convert it to a Chapter 7 or you can, in some instances, attempt to amend your chapter 13 plan.
See our Blog on Converting to Chapter 7
- Does my spouse have to file too?
No, the law does not require that you both file, but – to the extent your spouse is jointly liable for some of your debts – your bankruptcy will not keep creditors from pursuing their claims against your spouse. If you are married, the Bankruptcy Code allows you and your spouse to file a bankruptcy case together (jointly) as a couple.
- Do I have to have a certain amount of debt to file Chapter 7?
No, there is no minimum amount of debt requirement to file Chapter 7. There are practical limits however.
See our Blog on Chapter 13 Debt Limits
- Do I have to list all of my creditors?
Yes. You are required to list all of your creditors.
- Can I just keep one credit card?
If you have a credit card with no balance you might be able to keep it. But don’t. Pay in cash or with a debit card instead. Credit card debt is often the reason an individual needs bankruptcy relief.
See our Blog on Rebuilding Your Credit After Bankruptcy
- Will bankruptcy stop people from harassing me to collect debts?
Yes. Under the Bankruptcy Code, once a creditor learns of your bankruptcy filing that creditor must cease all collection activities against you or your property.
Read about the Automatic Stay
- Will I ever be able to obtain credit again after I file bankruptcy?
Believe it or not, most debtors get numerous credit card offers after they file for bankruptcy. Filing bankruptcy will have a serious effect on your credit score. There is no way around that fact. However, through responsible financial management you can rebuild your credit by paying your post bankruptcy bills on time.
- Do you charge for an initial consultation?
No. Your initial consultation with an experienced bankruptcy attorney at Midwest Bankruptcy Attorneys is free.
- I previously filed bankruptcy. When can I file again?
See our blog on filing bankruptcy again
In a nutshell:
Chapter 7 to Chapter 7
If you previously filed Chapter 7 bankruptcy, you can file again for Chapter 7 after eight years have passed. If you attempt to file another Chapter 7 before eight years have passed, you will be denied a discharge.
Chapter 7 to Chapter 13
If you previously filed Chapter 7 bankruptcy, you can file for Chapter 13 bankruptcy at any time. However, if you file for Chapter 13 within four years of your Chapter 7 filing, you will not receive a discharge of your unsecured debt (including personal loans, medical bills, or credit card debt). Those who file for Chapter 13 before the four year waiting period often do so in order to determine a low monthly payment plan to pay second mortgages, car loans, taxes or other debts that have arisen since their Chapter 7 filing.
Chapter 13 to Chapter 7
If you previously filed Chapter 13 bankruptcy and received a discharge, you can file for Chapter 7 and receive a discharge after six years have passed. If you file for Chapter 7 within six years of filing Chapter 13, your unsecured debts will not be discharged unless you pay at least 70% of your unsecured claims under the Chapter 7.
Chapter 13 to Chapter 13
If you previously filed for Chapter 13 bankruptcy, you can file again for Chapter 13 after two years have passed. However if your prior Chapter 13 was dismissed before you received a discharge (and not for bad faith), you can file again immediately.