Are you trying to pay bills that you do not have the income to pay? If so, you are not alone. Many people struggle to pay bills as they try to cover their living expenses and support their families. Unfortunately for some, they will not be able to resolve their debt problems without some assistance. Bankruptcy is an affordable solution to debt problems for many people. After filing bankruptcy, they are able to rebuild their finances without the stress and anxiety of dealing with creditors and debt collectors. Bankruptcy gives people a fresh start.
However, many people do not explore bankruptcy because they have heard “horror stories” about Chapter 7 trustees taking away all of a person’s property because he or she filed bankruptcy. While liquidating assets is one of the roles of a Chapter 7 trustee, it is a role that is rarely seen.
Chapter 7 Bankruptcy or a Liquidation Bankruptcy
Chapter 7 is also referred to as a liquidation bankruptcy because the Chapter 7 trustee has the duty of examining the debtor’s assets to determine if the trustee can liquidate any assets to pay the debtor’s creditors. However, in almost all of the Chapter 7 cases filed in Illinois, the debtor retains all of his assets while discharging most, if not all, of his debts. In order for a Chapter 7 trustee to liquidate property, there must be sufficient equity in the property for the trustee to have funds to pay to the creditors.
To determine the equity in a specific piece of property, the Chapter 7 trustee will deduct any liens (i.e. mortgages, car loans, etc.) and any exemptions (statutory amounts that are protected from creditors) from the market value of the property. In most cases, once the trustee deducts the liens and exemptions, there is no equity for the trustee to liquidate. In this case, the trustee declares the bankruptcy to be a “no asset” case meaning that there are no assets for the Chapter 7 trustee to liquidate.
Other Roles of the Chapter 7 Trustee
The primary role of a Chapter 7 trustee is to locate and liquidate non-exempt assets. In order to do this, the trustee reviews the bankruptcy forms filed by the debtor, presides over the First Meeting of Creditors to question the debtor under oath about the debtor’s finances and assets, and files necessary motions or objections that may lead to the recovery of assets for the estate. The Chapter 7 trustee may also object to the debtor’s discharge if the trustee finds evidence that the debtor has committed fraud or failed to meet the requirements for a discharge. Because most cases are no-asset cases and the debtor retains all of his or her property, the Chapter 7 trustee does not perform any other duties after filing his no asset report with the court.
Will You Lose Property if You File Bankruptcy?
While most of the Chapter 7 bankruptcy cases filed in Illinois are no asset cases, each bankruptcy case is different. Before filing a Chapter 7 case, you should consult with an experienced bankruptcy attorney to discuss your options as well as the exemptions available to protect your assets.
Contact Our Office for a Consultation with an Experienced Illinois Bankruptcy Attorney
The attorneys of Pioletti Pioletti & Nichols represent individuals who need experienced bankruptcy attorneys. We serve clients throughout McLean, Woodford, Tazewell and Peoria counties by providing compassionate, competent legal services. We offer free consultations. You can contact our office by calling 309-938-4838.
When you need the assistance of an experienced bankruptcy attorney in Central Illinois, call the compassionate and skilled attorneys of Pioletti Pioletti & Nichols. We are dedicated to giving our clients exceptional service and support throughout the bankruptcy process.