Chapter 7 Bankruptcy Lawyer Chicago

At DebtPros, we live by the tenet that everyone deserves a second chance, a reset button, especially regarding financial struggles. That’s exactly what Chapter 7 bankruptcy offers – a fresh start, a life free from debt, all within just six months. 

Our founder, John Wonais, a native Chicagoan and one of the top bankruptcy attorneys in Illinois, set up DebtPros to be the beacon of hope for those battling overwhelming debt. John, along with our team of dedicated attorneys, has successfully navigated countless individuals and families in Chicago through the Chapter 7 bankruptcy process. John’s relentless approach to protecting the rights of his clients has even led him to battle the City of Chicago, taking a case up to the Supreme Court of the United States.

If you feel weighed down by debt, remember you are not alone. We are here, ready to be your guide and your advocate. With DebtPros Chicago bankruptcy lawyer on your side, filing for Chapter 7 is not a journey to be feared; it’s the start of your new debt-free life. Call us at (312) 883-5422, and let’s hit that reset button together. 

What is Chapter 7 Bankruptcy?

Chapter 7 bankruptcy, also known as liquidation bankruptcy, is one of the most common forms. Liquidation bankruptcy allows you to wipe out most, if not all, of your unsecured debts. Unsecured debts are things like credit card debt, medical bills, payday loans, and in some cases, even tax debt.

Here’s how the bankruptcy process works: After your bankruptcy filing for Chapter 7, a trustee appointed by the bankruptcy court takes over your non-exempt assets, if you have any, sells them, and uses the proceeds to repay as much of your debt as possible. Non-exempt assets may include vacation homes, non-essential vehicles, investments, collections of valuable items, cash, bank accounts, or other investments beyond a certain amount. These non-exempt assets are subject to being taken and sold off (or “liquidated”) by the bankruptcy trustee.

But don’t worry – in many cases, debtors don’t have any non-exempt assets, so they don’t lose any property. Moreover, Illinois and federal bankruptcy laws provide exemptions for essential assets like your home, personal belongings, and tools of your trade.

However, not everyone qualifies for Chapter 7 personal bankruptcy. To file for it in Chicago under the bankruptcy code, you must pass the “means test.” This test looks at your income for the six months before filing. If your income is below the median income for a household of your size in Illinois, you are good to go. If it’s above, you may have to file for Chapter 13 bankruptcy instead, but we can help you figure that out.

It’s important to note that filing bankruptcy under Chapter 7 is not a decision to be taken lightly. It will affect your credit and stay on your credit report for ten years. But, sometimes, the benefits outweigh the downsides. It offers immediate relief from creditor harassment, and within 4-6 months, you could be debt-free, ready to rebuild your financial life from scratch.

What Assets are Exempt in Chapter 7 Bankruptcy?

In bankruptcy cases, certain exemptions allow you to keep some property up to a certain dollar amount. The laws of the state where you are filing determine what exemptions you are entitled to. In Illinois, state exemptions are more favorable to debtors than federal exemptions, so Illinois residents must use state exemptions when filing for bankruptcy. Here are some of the key exemptions you are allowed:

• Up to $15,000 worth of equity in your home or other property; up to $30,000 if you are married and filing together
• Personal items like a car with equity up to $2,400.
• A “wildcard” exemption for personal property of your choosing, valued up to $4,000.
• Trade-related tools and books valued up to $1,500.
• Most types of pensions and retirement accounts, including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP, and SIMPLE IRAs.
• Social Security, Unemployment Compensation, Veteran’s Benefits, and similar public benefits.
• Necessary alimony and child support.
• Proceeds or cash value from life insurance or annuity contracts needed for support when the insured’s spouse or dependent is the beneficiary.

Other exemptions may apply in your case. The amounts are subject to change, so confirm current exemption amounts with an experienced Chicago bankruptcy attorney at DebtPros.

Am I Eligible to File a Chapter 7 Bankruptcy in Chicago?

Determining if you are eligible to file for Chapter 7 bankruptcy in Chicago or any part of Illinois involves a two-step process:

Step 1: The means test

The first step is the means test which compares your total income with the median income for a similar-sized household in your state. If your income is less than the median, you are qualified to file for Chapter 7.

As of 2023, the median income for Illinois is (these amounts are subject to change every year):

• For a single individual: $67,102
• For a household of 2: $84, 892
• For a household of 3: $101,951
• For a household of 4: $122,289

*For each additional individual in your household, add $9,900.

Step 2: The disposable income and unsecured debt analysis

If your income is above the median, you move to the next part of the means test, which is more complicated. It looks at your disposable income (your income minus allowable expenses) and your unsecured debts. If your disposable income is enough to pay back at least 25% of your unsecured, non-priority debts (like credit cards, medical bills, and personal loans), you may not be eligible to file for Chapter 7.

Please keep in mind these are general guidelines, and the specifics of your situation could influence your eligibility. For instance, some types of income might not be counted, and some types of debts might make you ineligible for Chapter 7.

Moreover, even if you pass the means test, you must fulfill other eligibility requirements, such as not having a recent bankruptcy discharge or dismissal and receiving credit counseling from an approved agency.

The best way to find out if you qualify for Chapter 7 is to consult with an experienced bankruptcy attorney at DebtPros. We will review your situation and guide you through the bankruptcy process, ensuring you understand all your options and the potential consequences. Filing for bankruptcy is a serious decision. It can offer a fresh start, but it also has long-term financial and legal consequences. That’s why we will help you consider all your debt relief options before filing your application.

Frequently Asked Questions

How much does filing for bankruptcy cost?

Filing for Chapter 7 in Chicago or anywhere else in Illinois requires a filing fee of $338. At DebtPros, we will upfront this fee for you, so you can move ahead without delay. As for the cost of our legal services, they vary with each case because everyone’s financial situation is unique.

Nevertheless, we pride ourselves on maintaining some of the most competitive rates you will find anywhere. Plus, we always offer manageable payment plans.

Can I keep my house if I file for Chapter 7 bankruptcy?

Yes, as long as your home equity does not exceed the Illinois homestead exemption, which is $15,000 for a single filer and $30,000 for a married couple filing jointly.

Will filing for bankruptcy get rid of all my debts?

No, Chapter 7 can eliminate many debts like credit card debt, medical bills, and personal loans, but it cannot eliminate debts like student loans, most taxes, child support, and alimony.

There is an exception called “undue hardship,” which can be very difficult to prove without a skilled lawyer. If you can demonstrate that repaying, for example, your student loans or alimony payments, would cause you undue hardship, a court may decide to discharge that debt. However, this is very rare and requires a separate lawsuit within the bankruptcy case, known as an “adversary proceeding.”

Can I keep my car when I file for bankruptcy?

Yes, in Illinois, you can keep your car if the equity in it is less than $2,400. However, if you owe money on the car, you must continue making payments to avoid repossession.

Does everyone qualify to file for Chapter 7?

Not everyone. To qualify, you must pass the means test, which compares your total income to the median income for a household of your size in Illinois.

How long does a Chapter 7 case typically take?

Generally speaking, it takes between 4 to 6 months from start to finish.

Can I file for Chapter 7 if I previously filed for bankruptcy?

Yes, but there are time limitations. You can file for Chapter 7 again after eight years from your previous Chapter 7 filing date.

Will I lose all of my personal belongings if I file for Chapter 7?

No, many of your personal possessions are protected under Illinois bankruptcy exemptions. This can include necessary clothing, family pictures, and other personal items.

Does filing for bankruptcy stop calls and letters from creditors?

Yes, as soon as you file, an automatic stay is put in place, stopping most collection actions by creditors.

Will Chapter 7 bankruptcy ruin my credit forever?

No, that’s a common misconception. It will stay on your credit report for ten years, but that does not mean your credit will be destroyed for good. You can start rebuilding your credit immediately after bankruptcy by managing new credit responsibly.

Can I file for bankruptcy without a lawyer?

Yes, technically, you can file for Chapter 7 without a lawyer. However, it is strongly recommended to have legal representation to ensure that the process is handled correctly and to maximize your benefits.

What happens to my retirement savings if I file for Chapter 7?

In most cases, your retirement savings are safe. In Illinois, many retirement accounts, including 401(k)s, 403(b)s, and IRAs, are exempt from bankruptcy.

Can I choose which debts get discharged in Chapter 7?

No, you cannot choose which debts to include in your bankruptcy. All your debts must be listed when you file.

Will my employer find out if I file for bankruptcy?

Generally, your employer will only know about your bankruptcy if you owe them money and they are a creditor, or you voluntarily tell them.

How often can I file for Chapter 7?

You can file for Chapter 7 bankruptcy once every eight years. If you need debt relief before then, other options (including Chapter 13 bankruptcy) may be available to you.

What happens after I file for Chapter 7 bankruptcy?

After you file, a case trustee is assigned to your case. This trustee will meet with you and your lawyer to learn more about your debts and overall financial circumstances. They will figure out what things you can keep and what things might need to be sold to pay back your debts.

While the law gives the trustee the authority to sell your non-exempt assets to settle unsecured debts, in our experience at DebtPros, our clients usually manage to retain all their possessions.

Take Control of Your Debt with DebtPros

At DebtPros, we recognize the strain of debt: a $102,000 debt is a reality for the average American household. As the leading Chapter 7 Bankruptcy specialists in Chicago and surrounding areas in Illinois, we are dedicated to helping you conquer debt.

If you are struggling to keep up with mounting credit card bills and debt or keeping up with your monthly payments is becoming a struggle, get in touch with us. Our DebtPros team will review your financial state in detail and help determine if Chapter 7 bankruptcy is the ideal path for you. When executed properly, this process can help clear all your debt, providing a clean financial slate.

Call us today at (312) 883-5422 or fill out this form to request a free consultation and let us guide you toward a future free from the burden of debt. You’ve earned it.