Bolingbrook Bankruptcy Attorneys

Understanding Bankruptcy Law Options: Chapters 7, 11, and 13

Bankruptcy is a legal process designed to help individuals and businesses address overwhelming debt. Depending on your situation, you may be eligible for different types of bankruptcy under bankruptcy law, each with its ow benefits and requirements. Our bankruptcy attorneys in Bolingbrook specialize in Chapter 7 bankruptcy, but we’re here to explain the differences between Chapter 7, 11, and 13 so you can make an informed decision.

Chapter 7 Bankruptcy: A Fresh Start

Chapter 7 bankruptcy, often referred to as “liquidation bankruptcy,” is the most common option for individuals who are unable to repay their debts. It allows you to discharge most unsecured debts, such as credit card balances, medical bills, and personal loans. In return, your non-exempt assets may be sold to pay creditors, although many people can keep their essential property.

Chapter 7 is typically best for those who have little income and few assets, as it provides a clean financial slate without the burden of long-term repayment plans.

How Chapter 7 Bankruptcy Works:

• Eligibility: To qualify for Chapter 7, you must pass the “means test,” which compares your income to the state median. If your income is below the median, you are likely eligible.
• Filing the Petition: Once you file for Chapter 7, an automatic stay goes into effect, halting most collection activities, such as wage garnishments, foreclosures, and creditor harassment.
• Liquidation of Assets: A bankruptcy trustee is appointed to oversee your case. They will determine which assets can be sold to repay creditors, but many essential items, like your home or car, may be exempt under Illinois law. Understanding bankruptcy exemptions is crucial, especially for protecting certain types of pensions for public sector employees in Bolingbrook, Illinois.
• Discharge of Debts: After the liquidation process is complete, your remaining qualifying debts are discharged, meaning you are no longer legally obligated to pay them.

A Client Story: Finding Relief Through Chapter 7

We recently helped a Bolingbrook resident, Mary, who was facing significant financial hardship due to mounting medical bills and credit card debt. Mary had lost her job during the pandemic, and despite her best efforts, she was unable to make ends meet. The constant calls from creditors and the looming threat of foreclosure made her feel trapped and hopeless.

Mary came to our office feeling anxious but determined to find a solution. After reviewing her financial situation, our bankruptcy lawyer determined that Chapter 7 bankruptcy was her best option for a fresh start. We walked her through the entire process, from bankruptcy filings to attending the mandatory meetings with the bankruptcy trustee.

Within a few months, Mary’s debts were discharged, and she was able to keep her home and car. She told us that the relief she felt after her bankruptcy was life-changing, as it allowed her to focus on rebuilding her life without the overwhelming burden of debt. Her story is a reminder that bankruptcy, while often seen as a last resort, can provide a necessary lifeline for those in financial distress.

Chapter 13 Bankruptcy: A Debt Repayment Plan

For individuals who don’t qualify for Chapter 7 or prefer to keep more of their assets, Chapter 13 bankruptcy offers an alternative. Unlike Chapter 7, which discharges debts through asset liquidation, Chapter 13 allows you to create a repayment plan to pay off your financial obligations over three to five years.

Chapter 13 is ideal for people with a steady income who want to protect their property, such as a home facing foreclosure or a car at risk of repossession. At the end of the repayment period, any remaining qualifying debts may be discharged.

How Chapter 13 Bankruptcy Works:

• Eligibility: To file for Chapter 13, you must have regular income, and your secured and unsecured debts must fall below certain limits.
• Repayment Plan: A key component of Chapter 13 is creating a repayment plan based on your disposable income. You will make monthly payments to a bankruptcy trustee, who will distribute the funds to your creditors.
• Asset Protection: Chapter 13 allows you to keep your assets while paying off your debts, making it an attractive option for those with valuable property.
• Discharge of Debts: After completing the repayment plan, any remaining unsecured debts may be discharged, giving you a fresh financial start.

Chapter 11 Bankruptcy: Business Reorganization

While less common for individuals, Chapter 11 bankruptcy is often used by businesses to restructure their debts and continue operations, often with the assistance of a law firm specializing in bankruptcy cases. Chapter 11 allows a company to reorganize its finances, renegotiate contracts, and develop a plan to pay off creditors while maintaining control of its assets.

How Chapter 11 Bankruptcy Works:

• Eligibility: Both individuals and businesses can file for Chapter 11, but it is most commonly used by corporations and partnerships.
• Reorganization Plan: The business (or individual) submits a reorganization plan that outlines how debts will be repaid over time, often through renegotiating terms with creditors.
• Continued Operations: Unlike Chapter 7, which involves liquidation, Chapter 11 allows the business to continue operating while working through the financial restructuring process.

Common Bankruptcy Myths

Bankruptcy can be intimidating, and many people are hesitant to consider it due to common misconceptions about the bankruptcy process. Let’s clear up a few myths:

• Myth 1: Bankruptcy ruins your financial future. While bankruptcy may have a temporary impact on your credit, it allows you to rebuild your finances without the burden of overwhelming debt.
• Myth 2: You’ll lose everything in bankruptcy. In reality, many assets are protected during bankruptcy, especially under Chapter 13 and Illinois exemption laws.
• Myth 3: Bankruptcy is only for the financially irresponsible. Financial hardship can happen to anyone, whether due to job loss, medical bills, or unexpected expenses. Bankruptcy is a legal tool to help people get back on their feet.

How Bankruptcy Lawyers Can Help

Filing for bankruptcy is a complex legal process that requires careful attention to detail. As a debt relief agency, a bankruptcy attorney can help ensure that all paperwork is filed correctly, represent you in meetings with creditors, and protect your rights throughout the process.

Here’s what our bankruptcy attorneys offer:

• Guidance through the filing process: We help you determine which type of bankruptcy is best for your situation and guide you through each step.
• Protection from creditors: Once you file, we ensure that creditors cease their collection activities, including wage garnishments and harassing phone calls.
• Long-term financial planning: We don’t just help you through bankruptcy; we help you rebuild your financial future, offering advice on budgeting, credit repair, and more.

If you’re struggling with overwhelming debt, our Bolingbrook bankruptcy attorneys are here to help. Contact us today to schedule a consultation and take the first step toward financial freedom. Whether you’re considering Chapter 7, 11, or 13, we can provide the guidance you need to make the right decision for your financial future.

Directions to our Bolingbrook, IL location:

• From Naperville (via IL-59 South): Take IL-59 S and turn left onto Hassert Blvd/111th St. Continue on Hassert Blvd, then turn right onto Schmidt Rd. The destination will be on your right.
• From Plainfield (via US-30 North): Take US-30 N to IL-126 E. Continue on IL-126 E, turn left onto Hassert Blvd/111th St, then right onto Schmidt Rd. The destination will be on your right.
• From Romeoville (via Weber Rd): Head north on Weber Rd, turn right onto Hassert Blvd/111th St, then left onto Schmidt Rd. The destination will be on your right.

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