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What You Need to Know Before Filing for Bankruptcy

Posted on in Bankruptcy

Winfield bankruptcy lawyerWhile many people have debts that they owe, some people end up in a difficult financial situation and become unable to pay back their debts while meeting their ongoing needs. Bankruptcy laws are intended to give individuals a second chance to get their finances in order. By filing for bankruptcy, you are signaling to the court that you cannot pay off your debts. When filing for bankruptcy, you will need to describe all your property and assets. You will also disclose your financial situation, including all your debts. There are multiple different types of bankruptcy to file depending on what fits the needs of an individual or business.

Types of Bankruptcy 

The most common types of bankruptcy for individuals are Chapter 7 and Chapter 13. 

  • Filing for Chapter 7 bankruptcy will lead to all of the individual’s non-exempt property being liquidated in order to cover as much of their debt as possible. Illinois law provides exemptions for some types of property, including vehicles under a certain value, tools of the trade, and some personal belongings. Chapter 7 bankruptcy will result in the debt being discharged after all non-exempt property is sold.
  • Chapter 13 bankruptcy can be filed when an individual wishes to keep their property and use their income to pay off their debts. With Chapter 13, a payment plan for a period of three to five years will be put in place by the court, after which any outstanding debts will be discharged.  

Businesses will most commonly file Chapter 11 bankruptcy:

  • Chapter 11 focuses on reorganization. It allows the business to keep their assets while working on a plan to pay off their debt. The business has to submit a reorganization plan, which the court must approve before it can be put in place. Once approved, the business may have all their pre-reorganization debts discharged except for the debts they will have to pay that are included in the reorganization plan.  

What Is Needed to File for Bankruptcy

If you decide to file for bankruptcy, you will need to check if you meet the criteria. Most individuals must take a “means test” to determine their income level and see if they qualify for Chapter 7 or for Chapter 13 bankruptcy. Once this step is done, you will need to gather up all information regarding your finances and property and fill out bankruptcy forms, which are then filed in court.

Contact a Wheaton Bankruptcy Attorney

Gathering all the necessary information for your bankruptcy can be a long and painstaking process. At Anderson & Associates, P.C., our DuPage County bankruptcy lawyers can help you navigate the complexities of filing for bankruptcy and work to help you achieve a fresh financial start. Contact us today at 630-653-9400 for a free consultation.

Sources: 

http://www.illinoisattorneygeneral.gov/consumers/bankruptcy.html

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