Chicago Bankruptcy Lawyer
Facing financial difficulties can be overwhelming and stressful. Filing for bankruptcy is an option for you to get back on your feet and eliminate your debt. Not only does filing bankruptcy help eliminate your debt, but it also gives you much-needed breathing room from your creditors. Consumers can either file a Chapter 13 or Chapter 7 bankruptcy. To determine which bankruptcy is right for you, call us now for a free consultation with one of our experienced bankruptcy lawyers in Chicago. This blog will discuss the benefits of filing for Chapter 7 bankruptcy and the eligibility requirements.
What are the Benefits of Chapter 7?
There are many advantages to filing a Chapter 7 bankruptcy, including the automatic stay, discharging unsecured debt, and protecting your assets.
First, the automatic stay under Section 362 of the Bankruptcy Code provides an immediate stay upon filing that stops creditors from:
- Calling/harassing you,
- Filing a lawsuit against you,
- Repossessing your vehicle,
- Foreclosing on your home, and
- Garnishing your wages
This stay not only gives you breathing room from your creditors but also allows you to recoup and manage your finances. The goal of bankruptcy is to get you back on your feet and debt free.
Second, Chapter 7 eliminates eligible unsecured debt without requiring you to pay them anything. The most common dischargeable debts include:
- Credit cards,
- Medical bills,
- Payday or personal loans, and
- Utility bills
Unlike unsecured debt, secured debt cannot be discharged in Chapter 7 bankruptcy but you still have options. If you would like to keep a car for instance that you are paying for, you can keep the car and sign a reaffirmation agreement. On the other hand, if you want to get rid of your car loan in bankruptcy, you can surrender the car to the creditor.
Lastly, filing for bankruptcy protects your assets. Once a case is filed, your property becomes property of the estate. This prevents creditors from seizing your assets or freezing your bank accounts.
What are the Eligibility Requirements for Chapter 7?
One of the primary requirements to file a Chapter 7 is passing the “means test.” This test calculates whether your income is below the median income of a household of your size in Illinois. If you are below this median income, you pass the means test and can likely qualify for Chapter 7. However, even if you are above that threshold, there are certain unique circumstances that can be used to “rebut the presumption.” To determine whether you pass the means test, contact us to speak with a bankruptcy lawyer.
Another requirement hinges on whether you have previously filed bankruptcy and received a discharge. If you filed a Chapter 7 in the past and received a discharge, you have to wait 8 years to file another one. If you filed a prior Chapter 13 and received a discharge the timeline differs depending on how much you paid your creditors in the Chapter 13 case. In cases where you paid creditors less than a specific amount, you need to wait 6 years to file Chapter 7.
The last requirement is completing a mandatory credit counseling/budgeting class at least 180 days prior to filing. You must also have filed your tax returns for the past four years if you are required to file those years.
Chicago Bankruptcy Lawyers You Can Trust
Filing for Chapter 7 bankruptcy can give you a fresh start by eliminating your debt. However, even if you do qualify, there are other considerations to consider before filing. The most common example is if you have property with equity, such a house. In a Chapter 7 bankruptcy, the trustee can liquidate or sell property you own and send the proceeds to your creditors. This rarely happens and our bankruptcy lawyers in Chicago will advise you if there is a chance this may happen before filing. This is why it is vital you hire an experienced bankruptcy attorney to properly guide and advise you on your best options to get debt free. Call DebtPros today by calling (312) 883-5422 to speak with a bankruptcy lawyer for a free consultation.
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