If you are a resident of Joliet or Will County, Illinois and are thinking or declaring chapter 13 bankruptcy, an important question that will weigh heavily on your decision is; do you repay your creditors in a chapter 13 bankruptcy? The answer unfortunately is, maybe. There are several factors that determine how much debt must be repaid when someone files a chapter 13 bankruptcy. The first determination to make when considering how much debt will be re-paid is whether the debt is secured or unsecured.

Secured debts include all property and vehicles. If a person filing for chapter 13 wishes to keep the property or vehicle the secured debt must be paid in full. Tax liens also fall into the category of secured debts and must be re-paid 100% by any person who files for a chapter 13 bankruptcy. Determining how much unsecured debt an Illinois resident in Joliet or Will County will have to re-pay is more difficult to determine. The factors that will decide how much unsecured debt a person must re-pay are: 1.) The total value of your nonexempt property 2.) The amount of disposable income you have each month to put toward your debts and 3.) How long your plan lasts.

Any disposable income of a person filing for chapter 13 bankruptcy in Joliet or Will County must go to the payment of unsecured debt (i.e. credit cards). Disposable income is a person’s income less certain allowed expenses and payments on secured loans. ( i.e a mortgage or car loan). The length of the payment plan is dependent on a person’s average household income. If the income is above the average median income for the average household of the same size it will be a 5 year plan, if it is below, it will be a three year plan. A person below the average median income for a household of the same size is allowed to propose the three year plan even if they will not repay all creditors within that time frame.

Because of these factors it makes it difficult to determine how much debt a person who has filed for chapter 13 must repay. Generally the amount of debt an Illinois resident who files for chapter 13 bankruptcy will have to re-pay will equal the value of that person’s property that isn’t exempt under the bankruptcy exemption laws. If you are considering filing for chapter 13 bankruptcy in Will County, Illinois and need legal advice contact Hamilton & Antonsen at 815.729.9220 and we can set up a complimentary consultation to review your situation.