Oak Brook Bankruptcy Attorney
Debt can quickly get out of control when unexpected crises arise. An illness, accident, or divorce comes up, and all of a sudden you’re crushed under a mountain of debt. With bankruptcy, you can get a fresh financial start. But is it the right option for you? And should you file Chapter 7 or Chapter 13? The decision to file bankruptcy is a serious one that requires careful thought. It’s best to consult an experienced Oak Brook bankruptcy attorney to make sure you’re fully aware of your options.
What Is Bankruptcy?
Bankruptcy is legal process that allows you to regain control of your finances. If individuals or businesses accrue more debt than they can pay back, then bankruptcy may be their best option.
Individuals filing for bankruptcy typically use one of two methods:
- Chapter 7 Bankruptcy: This is the most common type of bankruptcy for individuals and is also the fastest, usually completing in about four to six months. Chapter 7 allows individuals to eliminate their debt by selling off assets and property in order to repay creditors. Qualifying debt for Chapter 7 bankruptcy includes medical and credit card debt, and personal loans.
- Chapter 13 Bankruptcy: If you do not qualify for Chapter 7, or if you hold non-exempt assets you wish to keep, then filing for Chapter 13 may be right for you. However, keep in mind that Chapter 13 bankruptcy takes much longer than Chapter 7. This is because Chapter 13 allows you to restructure debt into a reasonable three to five year repayment plan. Once the plan ends, any remaining debt is eliminated.
Should You File for Bankruptcy?
Though bankruptcy can give you the fresh financial start you seek, it’s vital that you understand what exactly you’re getting into first.
What Is the Effect on Your Credit?
The most obvious downside to bankruptcy is the hit it takes on your credit score, which can make it harder to borrow money in the future or buy a house. Chapter 7 stays on your credit report for up to 10 years, and for up to seven years for Chapter 13. Chances are, however, that your credit score is already low, if you’ve been struggling with debt for a while. And bankruptcy allows you the opportunity to begin rebuilding your credit after discharging or reorganizing your debts.
What Type of Debt Do You Have?
In addition, some types of debt cannot be eliminated in bankruptcy. Nondischargeable debt includes child support, alimony, taxes, student loans, and criminal fines.
Another thing to consider before filing for bankruptcy is whether you possess non-exempt property that you wish to keep. While Chapter 7 requires selling non-exempt property to repay creditors, Chapter 13 may also result in a loss of non-exempt property as well. Non-exempt property may include such things as homes, cars, and investments.
A knowledgeable Oak Brook bankruptcy attorney can help you determine whether bankruptcy is right for you, as well as which chapter best suits your needs.
Because Chapter 7 relies on selling off non-exempt property, this type of bankruptcy is your best option if you possess mostly exempt property and dischargeable debt. In addition, you should only file for Chapter 7 if you strongly feel you won’t be back in debt anytime soon. This is because you can only discharge debt through Chapter 7 every eight years.
In order to qualify for Chapter 7, you will be required to take and pass the Means Test. This test will examine your income and figure out if it’s enough to repay your debt or not. If your income amount is lower than your debt, then you may qualify for Chapter 7.
You should file for Chapter 13 if you possess a lot of non-exempt property and nondischargeable debt. However, in order to qualify for Chapter 13, you must receive a steady income that could repay you debts through a three to five year plan. If you do not maintain the payments in your plan, then you will need to go back to court to find a different debt relief solution.
Can Bankruptcy Halt Foreclosure?
When you file for bankruptcy, whether Chapter 7 or 13, the court will issue an “automatic stay” that prevents any creditors from collecting on your assets. Additionally, this stay will also prevent creditors from speaking to you directly. Instead, your creditors will need to consult with your attorney.
Consult a Oak Brook Bankruptcy Attorney Today to Learn More
Nobody understands the stress of mounting debt more than an Oak Brook bankruptcy attorney. At Lorraine M. Greenberg & Associates, we know that good people can get into bad debt, and we know how to help them. Contact us today to learn more about our services.