Dealing with a financial crisis is stressful and frustrating. By the time people come to our office to discuss Chapter 7 and Chapter 13 bankruptcy options, they have typically tried everything they can think of to pay their bills from getting part-time jobs to selling their property and dipping into their retirement accounts.
We encourage people to come see our Eureka bankruptcy attorneys for a free consultation before they begin liquidating assets or retirement accounts because we can typically find an affordable bankruptcy solution that will erase their debts while allowing them to keep their assets. If you decide to file bankruptcy, it then because a question of choosing between Chapter 7 and Chapter 13.
Choosing Between a Chapter 7 and Chapter 13 Bankruptcy Case
Chapter 7 cases are also known as liquidations because the Chapter 7 trustee liquidates assets and uses the funds to pay the debtor’s creditors. The good news is there are bankruptcy exemptions that the debtor can claim to protect his or her assets from the trustee and the creditors. In almost all cases, the debtor’s property is fully protected by the bankruptcy exemptions allowing the debtor to erase most if not all of his or her debt while retaining the property. If the bankruptcy case is a no-asset case, the debtor should receive a discharge and the case will be closed in four to six months after the filing date. However, in order to be eligible to file for Chapter 7 relief, the debtor must meet certain income requirements.
The main difference between Chapter 7 and Chapter 13 is the income requirements for the debt. A Chapter 13 case is also called a wage earners plan. Through a Chapter 13 case, the debtor proposes a bankruptcy plan detailing how the debtor will repay his or her debts over a three to five-year plan. In most cases, the debtor only pays a percentage of his or her unsecured debt with the remaining unsecured debt being discharged when the plan is completed. The advantage of a Chapter 13 bankruptcy is that the debtor can save a home from foreclosure or property from repossession by catching up the past due payments through the Chapter 13 plan. Past due mortgage payments are paid through the plan with no interest. Car payments can often be included in the plan at a lower interest rate.
Chapter 7 and Chapter 13 are both excellent ways to resolve debt problems while keeping your assets. In order to determine the best chapter of bankruptcy to file in your situation, our attorneys will discuss your current financial situation including your income, expenses, debts and assets to determine what chapter you are qualified to file as well as the advantages and disadvantages, if any, of filing bankruptcy to resolve your debt problems.
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Serving Our Clients With Sound Guidance And Unparalleled Dedication
Pioletti Pioletti & Nichols is a full service law firm that represents individuals and businesses in a variety of areas of law including criminal defense, family law, bankruptcy and estate planning. With offices located in Eureka and Bloomington, we represent clients through Woodford County and McLean County.
When you need the assistance of an experienced bankruptcy attorney in Illinois, you need to call the compassionate and skilled attorneys of Pioletti Pioletti & Nichols. We are dedicated to giving our clients exceptional service to help them overcome the financial problems that is keeping them from enjoying life.