Hamilton & Antonsen
Chapter 13 bankruptcy in illinois
should i file for chapter 13 Bankruptcy?
While a person wipes out debt in Chapter 7 bankruptcy, a person in Chapter 13 bankruptcy attempts to repay creditors. The terms through which creditors are repaid often involve a three-year to a five-year repayment plan. If a person’s monthly income falls below the state median, the repayment plan can last for as little as three years. If a person’s monthly income is greater than the state median, the repayment plan will last for five years. A judge will review a repayment plan and decide about whether to approve it.
The Role of Illinois Chapter 13 Repayment Plans
Provided a plan is approved, payments will be made to a trustee who will then be tasked with paying creditors who file a proof of claim that lists the kind and amount of debt. As part of a Chapter 13 bankruptcy proceeds, parties are often expected to pay creditors in full if at all possible depending on a variety of favtors related to the debtor’s income and expenses.
If it is not possible to pay this amount in entirety, a party must pay all of their disposable income for three to five years. Following the completion of the terms of a repayment plan, a party will receive a discharge of any remaining debt. There are, however, some debts that cannot be erased by Chapter 13 bankruptcy.
Qualifying for Chapter 13 Bankruptcy
- Secured debts are less than $1,257,850
- Unsecured debts are less than $419,275
People in Illinois are also sometimes prohibited from filing for Chapter 13 bankruptcy if, during the 180 days before filing for bankruptcy, their case was dismissed because they failed to follow court orders or requested dismissal. Within 180 days of filing bankruptcy, parties also must receive credit counseling from an approved agency.
Reasons to File for Chapter 13 Bankruptcy
Even though filing for Chapter 13 bankruptcy is not a good idea for everyone, there are some specific reasons why parties pursue this option. Some reasons why you should file for Chapter 13 bankruptcy include:
- Bankruptcy stops creditor actions and wage garnishment
- By pursuing bankruptcy, a person can avoid utility shut-offs
- Debts can be discharged so you can secure a new financial start
- Foreclosures and repossession stop due to bankruptcy
Reasons to Avoid Pursuing Chapter 13 Bankruptcy
While there are many reasons why people end pursuing Chapter 13 bankruptcy, there are other reasons why people avoid this option. Some of the reasons why parties refrain from filing Chapter 13 bankruptcy include:
- Details about bankruptcy remain on a person’s credit report for seven to 10 years
- People are sometimes able to protect income and property without filing bankruptcy
- Pursuing Chapter 13 bankruptcy can strain relationships with creditors and cosigners
- Some debts like students cannot be discharged by Chapter 13 bankruptcy
Bankruptcy Topics of Interest
Speak with a Knowledgeable Illinois Bankruptcy Lawyer Today
If you have questions or concerns about the Chapter 13 bankruptcy process, one of the best steps that you can take is to retain the assistance of an experienced Joliet bankruptcy lawyer. Call Hamilton & Antonsen Ltd. at 815.729.9220 to speak with a knowledgeable attorney or contact us us to schedule a free case evaluation.