Chicago Bankruptcy Lawyer
Filing for bankruptcy can be scary and is never an easy decision to make. Unforeseen things happen in life causing people to fall behind on bills and payments. If you are overwhelmed with debt or facing financial difficulties, we are here to help. The Bankruptcy Code was enacted to help people in these situations get a fresh start by eliminated their debt and stopping creditor collection efforts. Our bankruptcy lawyers in Chicago will evaluate your case and give you the best advice on how to get out of debt. This blog will discuss Chapter 13 bankruptcy and reasons why people file.
What is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is for consumers who have disposable income to repay their creditors. In Chapter 13, you have monthly payments that are sent to the trustee. The trustee disburses those payments to your creditors. When your case is filed, a proposed repayment plan is filed that lays out how much you will be paying each creditor. The entire process takes three to five years.
Not every creditor needs to be treated equally. For instance, unsecured creditors (like credit cards, medical bills, parking tickets, and personal loans) can be paid at a fraction of what you owe them. Secured creditors (like vehicles and mortgages) can be treated one of three ways:
(1) they can be paid in the case to retain the collateral;
(2) they can be surrendered if you do not want to keep the asset; or
(3) they can be excluded from the bankruptcy plan and you continue to pay them outside the case.
Further, how much your monthly payments are depends on a few factors. First, is your disposable income in the future. This looks at how much money you will be making and your expenses. Second, is the Means Test. This test is to see if your income for the past 6 months is above the Illinois median income level for a household of your size. Lastly, is the amount of total debt you have to repay. To determine how much your monthly payments will be, it is best to call us to speak with an experienced bankruptcy lawyer in Chicago.
Why File Chapter 13 Bankruptcy?
There are numerous reasons why you should file a Chapter 13 bankruptcy. Because Chapter 13 is a repayment of your debt, it will help you keep your assets. The most common example is if you have fallen behind on your car note or mortgage.
To prevent repossession of your car, you can file bankruptcy and include your car note in the case. Not only will this prevent repossession, but it may also save you money on your auto loan. In Chapter 13, you can “cram” or reduce the interest rate on the loan and even reduce the principal amount based on the value of the vehicle if it was purchased more that 910 days prior to filing.
With respect to mortgages, filing Chapter 13 bankruptcy will prevent foreclosure if you have fallen behind on your payments. In the case, the mortgage arears will be paid in the plan. You then must continue to make the normal monthly mortgage payments going forward.
Another reason to file Chapter 13 bankruptcy is to eliminate debt that would not be eliminated in a Chapter 7 bankruptcy case. This would include Chicago parking, redlight, or camera tickets. Chapter 13 can also help with income tax debt. In your bankruptcy plan, you can repay tax debt instead of dealing with the Internal Revenue Service on your own.
What are the Steps to Filing Chapter 13 Bankruptcy?
The initial process of filing bankruptcy starts with a consultation with one of our bankruptcy attorneys. The lawyer you speak with will review your unique circumstances and help you determine the best path forward. If you decide to move forward, we will schedule a call to get your case started. For the meeting, you will need to provide us with paystubs, tax returns, and complete a credit counseling course. During the meeting we will fill out your bankruptcy petition and answer any questions you may have. Prior to the meeting, it is also best if you make a list of your monthly bills and creditors so we ensure every creditor you owe money to is included in the case.
Call DebtPros Now to Speak with a Chicago Bankruptcy Lawyer
When you call you will talk directly with a bankruptcy attorney who will give you a free consultation.
Do not wait to call. It is always best to get ahead of the situation you are facing than to wait until the last minute. Unlike other firms, we treat you with compassion and closely listen as you explain your situation. If you are interested in filing bankruptcy, give us a call at (312) 883-5422.
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