Are you struggling to pay your bills? Have you considered filing for bankruptcy?
If so, you’re not alone. In 2020, 8,526 Illinoisans filed for Chapter 13 bankruptcy. Your first step is to speak with a Chapter 13 bankruptcy attorney.
Keep reading to learn more about bankruptcy and how an expert attorney can help you.
What Is Chapter 13 Bankruptcy?
Most people don’t understand the different types of bankruptcy. Chapter 13 bankruptcy established a pay-off plan. With your attorney’s help, you propose a three to five-year plan to pay off all or part of your debt.
It’s vital to adhere to the agreed terms for repaying your debt. If you do, the court will release the rest of your dischargeable debt at the end of the plan.
The total amount you must repay depends on several factors. They look at your disposable income and complete the Illinois Means Test (IMT). This tests if your income is above the Illinois median income level for households of your size.
There are several exemptions to the IMT including:
- Most of the debt isn’t consumer debt
- Disabled veterans
- Debt accrued while serving on active duty or for homeland defense.
You must have a “regular source of income” to file Chapter 13 Bankruptcy. Second, you need the disposable income for the payment plan.
So, why file a Chapter 13 plan? This can prevent home foreclosure and paying back taxes. You may also qualify to keep valuable property that’s non-exempt.
It can help you pay off back payments for cars or mortgages. Filing Chapter 13 may stop the accrual of interest on local, Illinois state, or federal tax debt.
Steps to Take When Considering Filing Chapter 13
First, make a list of your monthly bills and which ones you haven’t paid. How many credit cards do you have and are they at their limit?
Are you only able to make the minimum payment on these credit cards? Do you use one card to pay the lowest required amount on another card? Do you have to borrow money to meet daily expenses?
Do you have a debt consolidation loan? Have you bounced checks or had creditors close accounts?
If you answered, “yes” to many of these questions, you’ve probably reach overwhelming debt. This may be the time to think about making a petition for bankruptcy.
It’s better to get help early before your debt load gets larger. Filing sooner will also help your credit score improve quicker. Now is when you need to speak with a bankruptcy attorney.
Why You Need a Chapter 13 Bankruptcy Attorney
When working with a bankruptcy attorney, you’ll access their knowledge and experience. They will help you make the best choices for your individual situation. The following summarizes how these experts achieve the best outcome for you.
What Is Your Best Course of Action?
When working to get out of debt, bankruptcy is just one option. The lawyer will help you explore all alternatives. With their advice, you can make the best decision for your situation.
Explain the Types of Bankruptcy
Chapter 7 and Chapter 13 bankruptcy have different goals and purposes. Your attorney will discuss the pros and cons of each option so you can choose what’s right for you.
Guide You in Preparing to File Bankruptcy
They’ll assess whether your case is subject to the IMT. Your attorney will tell you if your financial status can support a payment plan. This will help you also determine if Chapter 13 bankruptcy is the best option for you.
When filing for bankruptcy, you must provide an account of your property value. This includes items such as your television, furniture, and more. Your attorney will assist you in completing this step and ensure an accurate report.
Some individuals may qualify for property exemption rules. Your attorney will ensure that you receive the full protection you’re entitled to.
Various factors determine if your debts meet the criteria to be discharged or “wiped out”. The attorney will explain which debts are eligible for elimination and which are not.
Manage the Bankruptcy Process
The attorney prepares and files all financial data and tax returns with the court. This includes income, assets, expenses, debts, and recent financial transactions.
They also know how to assign values to your assets and what’s considered income. The court also asks which expenses meet the criteria as “reasonable and necessary”. Your attorney will manage this information as well.
The lawyer explains and prepares you for the assignment of a bankruptcy trustee. This is a person who’s appointed by the United States Trustee. They’re an officer of the Department of Justice.
The trustee serves on behalf of the debtor’s estate during the proceedings. Their job is to examine and give recommendations concerning debtor demands. They must follow the U.S. Bankruptcy Code at all times.
Yet, the bankruptcy judge remains the ultimate authority regarding the dispersal of assets. Thus, the trustee isn’t able to take action without court approval.
Having an attorney gives you peace of mind that everything is handled correctly. They’ll help protect you against creditors who violate automatic stays. This means that creditors can’t continue collection activities during that time.
They’ll negotiate payment terms on your behalf with creditors. This includes the valuation of collateral and interest rates on the payment plan. If your situation changes during the case, they’ll make requests and file motions for changes.
Are You Ready to Consider Bankruptcy?
As you learned in this article, the first step is to speak to a Chapter 13 bankruptcy attorney. Lorraine M. Greenberg & Associates has served the Chicago area since 1981. Each client receives individual attention to find the best option for their case.
With an average lawyer turnover rate of 85 percent at large firms, you often see different attorneys. Our firm offers boutique services with a lawyer you’ll come to know personally. They’ll be there for you during your case and after if needed.
Talk to us today to get the help you need.