Chapter 7 is the preferred form of bankruptcy because it eliminates debts.  There are no payment plans or future obligations unless the individual chooses.  However, an individual must qualify to file a chapter 7 Bankruptcy through means testing. The Bankruptcy “means test” determines whether you qualify based upon your income and household size.  The formula is designed to prevent high income Debtors from filing for Chapter 7 Bankruptcy.  High income Debtors who fail the means test may use Chapter 13 Bankruptcy to repay a portion of their debts.  You don’t have to be penniless to qualify for Chapter 7.  Most individuals are able to qualify and receive a Chapter 7 discharge.

Chapter 13 is often used to stop a foreclosure and create a payment plan to catch up the past due amounts.  Similarly, it can be used to stop repossession of an automobile.  Debtors who may not be eligible for Chapter 7 relief are often able to obtain the relief they need through a Chapter 13.  Regardless of the reason that Chapter 13 is chosen, the Debtors are provided an orderly payment plan, relief from creditor harassment, and may only have to pay a fraction of their debts.  

Certain debts are not dischargeable in a Chapter 7 but are dischargeable in a Chapter 13.  For example, a Chapter 13 Debtor may only have to pay a small portion of a property settlement or judgment from a divorce but would not be allowed any relief from that debt in a Chapter 7.  

Some debts must be paid in full regardless of which chapter the Debtor chooses.  These debts include child support, maintenance/alimony and most taxes.  However, a Chapter 13 Bankruptcy can assist in creating an affordable payment plan and provide relief from creditor harassment. If you aren't sure which type of bankruptcy is right for you, contact our Huntley bankruptcy attorneys today.

CHAPTER 7 ELIMINATES YOUR DEBTS

Chapter 7 Bankruptcy is a powerful tool that can provide significant benefits for people with debt problems.  If you are struggling with debt, a Chapter 7 Bankruptcy will allow you to:

Eliminate Most Debts – Credit cards, medical bills, loans, utility bills and most other debts are dischargeable in a Chapter 7 Bankruptcy.  You are not alone.  Over 750,000 people filed for Chapter 13 bankruptcy relief in 2019.  Most people who file for bankruptcy are struggling to pay credit card debts and medical bills.  If you are overwhelmed and can no longer afford to pay your bills you need to speak to an experienced bankruptcy attorney.

Stop Creditor Harassment – Creditors are relentless. They call constantly and send harassing letters.  They call your employer, family, and friends.  They threaten to file lawsuits and drag you through the court system.  Bankruptcy may be the answer.  When you file bankruptcy, all collection efforts must stop.  Bankruptcy can put an end to the harassing phone calls, letters, and threats.

Stop Lawsuits and Wage Garnishments – Creditors who are unable to collect debts through collection letters or harassing collection calls often resort to lawsuits and wage garnishments to collect debts involuntarily.  Court appearances and wage garnishments are embarrassing.  The creditors take your hard-earned money to pay the bills you can no longer afford.  They make it harder for you to pay all your other bills with what little income is left.  You can stop lawsuits and garnishments immediately by filing bankruptcy.

Stop Home Foreclosure – Mortgage lenders are filing more foreclosure suits than ever.  If you are=t paying your mortgage, the lender will surely seek to foreclosure your mortgage and take your home.  You and your family may be forced to move quickly.  The lender may even seek to have you pay a deficiency balance if the home is sold for less than the mortgage balance.  Foreclosure can be temporarily stopped by filing bankruptcy, often providing the necessary additional time to find a new home for you and your family.  It also eliminates your obligation to pay any deficiency balance the mortgage lender may seek.

Stop IRS and Other Tax Collections – If you owe taxes you know that the IRS is a persistent creditor.  The IRS will take your future tax refunds, garnish your wages, levy on your bank accounts and put liens on your property.  Contrary to common belief, often times taxes can be discharged in bankruptcy.  Don’t let the IRS take your money needlessly.

CHAPTER 7 PROCESS

The bankruptcy process is started by the filing of a Bankruptcy Petition.  In a Chapter 7 Bankruptcy, the Court will assign a Bankruptcy Trustee and set a date for the First Meeting of Creditors.  Notices will be sent to all Creditors listed in the Bankruptcy Schedules.  The Debtor and his or her counsel appear before the Bankruptcy Trustee for the First Meeting of Creditors.  Creditors are invited to attend as well.  Generally, the Debtor is sworn in and the Bankruptcy Trustee asks various questions about the Bankruptcy Petition including whether or not it is a true and correct copy of the Bankruptcy Petition and Schedules, whether all assets have been included, all debts have been disclosed, and if the Petition, Schedules and other documents are complete and accurate.  At the conclusion of the First Meeting of Creditors, the Trustee generally makes a determination of whether or not there are sufficient assets to gather and liquidate to pay creditors.  If the Trustee determines that there are no such assets, he will file a report with the Court indicating such and shortly thereafter the Debtor will receive a discharge.

Reaffirmation Agreements – Debtors that desire to retain certain property may agree to reaffirm such debt.  This is most often done when the Debtors desire to retain a home or automobile after the bankruptcy.  Reaffirming a debt means that the Debtor signs and files with the court a legally enforceable document, which states that he promises to repay all or a portion of the debt that may otherwise have been discharged in his Bankruptcy case.  Reaffirmation agreements must generally be filed with the court within 60 days after the first meeting of the creditors.  Reaffirmation agreements are strictly voluntary B they are not required by the Bankruptcy Code or other state or federal law.  Alternatively, a Debtor can voluntarily repay any debt instead of signing a reaffirmation agreement, but there may be valid reasons for wanting to reaffirm a particular debt such as retaining an automobile.

Reaffirmation agreements must not impose an undue burden on the Debtor or his dependents and must be in the Debtor=s best interest.  A reaffirmation agreement, may be canceled at any time before the court issues a discharge order or within sixty (60) days after the reaffirmation agreement was filed with the court, whichever is later.  If a Debtor reaffirms a debt and fails to make the payments required in the reaffirmation agreement, the creditor can take action against him to recover any property that was given as security for the loan and collect any remaining debt from the Debtor.

Debtors often chose not to reaffirm a debt but continue making payments.  This is known as a Aride through@ and is beneficial when the Debtor wants to retain his home but does not want to be personally liable in the event, he cannot make payments at a future date.  Although the Debtor may lose the home in a foreclosure if he stops making payments, the creditor will not be able to seek any additional payment from him or a deficiency judgment.

Exemptions – Bankruptcy does not mean that Debtors have to give up all of their property. Certain property is exempt and the Debtor may retain that property despite the bankruptcy filing.  In Illinois the most common exemptions utilized are:

Homestead Exemption – this allows the Debtor to retain up to $15,000 equity in his home.  This exemption is $30,000 if the filing is joint between a husband and wife who both reside in the residence and both are on title to the home.  

Automobile Exemption – each Debtor is allowed to retain an automobile worth $2,400 or less or in the alternative retain equity in such amount.

Clothing – A Debtor may retain all reasonable and necessary wearing apparel.

Alimony, Maintenance and Child Support – A Debtor may retain all alimony, maintenance, and child support due to the Debtor and such amounts may not be garnished or levied upon.

Social Security Payments and Awards – A Debtor may retain any Social Security payments and awards and such amounts may not be garnished or levied upon.

Unemployment Compensation Benefits – A Debtor may retain any unemployment compensation benefits and such amounts may not be garnished or levied upon.

Life Insurance Benefits and Cash Value of Life Insurance Policies – A Debtor may retain such life insurance benefits if reasonably necessary for their support or that of dependent children.  Furthermore, a Debtor may retain the cash value of any life insurance policy pursuant to which his or her spouse or children are beneficiaries and the policy is necessary for their support in the event of his or her death.

College Savings – College savings can be retained by the Debtor if they have been placed in certain college savings plans.

Retirement Funds – A Debtor’s interest in a pension, profit sharing, 401(k), or other qualified retirement plan is protected and can be retained by the Debtor.

Personal Injury Settlements and Awards – A Debtor can retain $15,000 from any personal injury award he receives or due him.

Workers’ Compensation Awards – A Debtor can retain 100% of any Workers= Compensation Award.

Proceeds from Exempt Property – A Debtor may retain any proceeds from property to the extent that such property is otherwise be exempt.

Other Property – A Debtor may retain up to $4,000 of other property that he may elect.  This is most often used to protect a small bank account, household goods and furnishings, or even equity in an automobile that would otherwise not be exempt.  Joint Debtors may aggregate this exemption allowing them up to $8,000 of other property that is jointly owned.

There are numerous other exemptions available to Debtors.  Careful analysis of Debtors property is necessary to ensure all available exemptions are exercised. Our bankruptcy attorneys in Huntley can help you with this process.

CHAPTER 13 PROTECTS YOUR PROPERTY, STOPS CREDITOR HARASSMENT AND REDUCES YOUR DEBTS

Chapter 13 provides significant relief to Debtors who need additional time to pay their debts or otherwise cannot file a Chapter 7 case.  A Chapter 13 enables individuals with regular income to develop a plan to repay all or part of their debts.  Under this chapter, Debtors propose a repayment plan to make installments to creditors over three to five years.

Advantages of A Chapter 13 – Chapter 13 offers individuals an opportunity to save their homes from foreclosure.  By filing under this chapter, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time.  Nevertheless, they must still make all mortgage payments that come due during the Chapter 13 plan on time.  Another advantage of Chapter 13 is that it allows individuals to reschedule secured debts (other than a mortgage for their primary residence) and extend them over the life of the Chapter 13 plan.  Doing this may lower the payments. Chapter 13 also has a special provision that protects third parties who are liable with the debtor on “consumer debts.  This provision may protect co-signers. Finally, Chapter 13 acts like a consolidation loan under which the individual makes the plan payments to a Chapter 13 Trustee who then distributes payments to creditors.  Individuals will have no direct contact with creditors while under Chapter 13 protection.

Eligibility – Any individual, even if self-employed or operating an unincorporated business, is eligible for Chapter 13 relief providing that the individual’s unsecured debts are less than $419,275 and secured debts are less than $1,257,850.  These amounts are adjusted periodically to reflect changes in the consumer price index.  An individual cannot file under Chapter 13 or any other chapter if, during the preceding 180 days, a prior bankruptcy petition was dismissed due to the debtor’s willful failure to appear before the court or comply with orders of the court or was voluntarily dismissed after creditors sought relief from the bankruptcy court to recover property upon which they hold liens.

CHAPTER 13 RESTRUCTURES YOUR DEBTS AND GIVES YOU TIME TO PAY THEM 

Chapter 13 Bankruptcy provides protection from creditors and allows the Debtor time to pay his debts.  If you are struggling with debt problems, a Chapter 13 Bankruptcy will allow you to:

Stop Creditor Harassment – Creditors are relentless. They call constantly and send harassing letters.  They call your employer, family and friends.  They even threaten to file suit dragging you through the court system.  Bankruptcy may be the answer. When you file bankruptcy, all collection efforts must stop.  You can put an end to the harassing phone calls, letters and threats.

Stop Home Foreclosure – Mortgage lenders are filing more foreclosure suits than ever.  If you aren’t=t paying your mortgage the lender will surely seek to foreclosure your mortgage and take your home.  You and your family may be forced to move quickly.  However, a Chapter 13 can stop the foreclosure, give you time to catch up the past due payments and save your home.

Stop Repossessions – Automobile lenders are repossessing vehicles at a faster pace than ever.  A Chapter 13 allows the Debtor time to catch up the past due payments and may even reduce the amount due to the lender.

Eliminate Second Mortgages – Second mortgages and other junior mortgages may be stripped off and eliminated through a Chapter 13.  The drastic fall in home values has wiped out the mortgage holder=s equity in many second mortgages and other junior mortgages.  A Chapter 13 may allow these mortgages to be stripped off and eliminated.  The creditors would then be treated as an unsecured Creditor and, in many cases, only be paid a small fraction of the amount otherwise owed.

Restructure Most Debts – Credit cards, medical bills, loans, utility bills, and most other debts are restructured and paid over time through one monthly payment.

Stop Lawsuits and Wage Garnishments – Creditors who are unable to collect debts through collection letters or harassing collection calls often resort to lawsuits and wage garnishments to collect debts involuntarily.  Court appearances and wage garnishments are embarrassing at best.  The creditors take your hard-earned money to pay the bills you can no longer afford.  They make it harder for you to pay all your other bills with what little income is left.  You can stop lawsuits and garnishments immediately by filing Chapter 13.  Your debts will be restructured and you will be able to pay those debts with one monthly payment.

Stop IRS and Other Tax Collections – If you owe taxes you know that the IRS is a persistent creditor.  The IRS will take your future tax refunds, garnish your wages, levy on your bank account and put liens on your property.  Contrary to common belief, often times taxes can be discharged in bankruptcy.  Don=t let the IRS take your money needlessly.  A Chapter 13 will stop the IRS action and allow you to pay over period of time with one monthly payment.

Prevent Further Late Payments and Penalties – Creditors thrive on charging late fees and penalties.  However, in a Chapter 13 the creditors can no longer add on these fees and costs saving the Debtor substantial sums of money.

CHAPTER 13 BANKRUPTCY PROCESS 

The bankruptcy process is started by the filing of a Bankruptcy Petition.  In a Chapter 13 Bankruptcy, the Court will assign a Bankruptcy Trustee and set a date for the First Meeting of Creditors.  Notices will be sent to all Creditors listed in the Bankruptcy Schedules.  The Debtor and his or her counsel appear before the Bankruptcy Trustee for the First Meeting of Creditors.  Creditors are invited to attend as well.  Generally, the Debtor is sworn in and the Bankruptcy Trustee asks various questions about the Bankruptcy Petition including whether or not it is a true and correct copy of the Bankruptcy Petition and Schedules, whether all assets have been included, all debts have been disclosed, and if the Petition, Schedules and other documents are complete and accurate.  The Chapter 13 Trustee is often most concerned about the Debtor=s income and expenses which determine the payment to the Plan and whether the Plan is in compliance with the law.  Once satisfied that this Plan is appropriate, the Trustee will recommend confirmation by the Court.  

Proposed Plan and Confirmation – The Debtor must propose a Chapter 13 Plan pursuant in which he will make monthly payments to the Chapter 13 Trustee.  The Chapter 13 Debtor will receive a discharge upon making all payments due under the Plan.

Plan Payments – The payment made by the Debtor to the Trustee is referred to as the APlan Payment.@  Calculation of the Plan Payment is quite complex.  The basic requirements are that the Debtor:

Pay to the trustee all of his disposable monthly income which is generally defined as total gross income less reasonable and necessary monthly living expenses. 
The amount paid into the Plan must be sufficient to pay the Secured Claims in full, except for secured payments that would otherwise extend beyond the length of the Plan such as a home mortgage or auto loan. 

The amount paid into the Plan must be sufficient to pay the Unsecured Creditors at least as much as they would receive in a Chapter 7 Liquidation. 
Payments by the Trustee – The Trustee is required to pay Creditor claims in the following order:

Attorney fees and costs to the Debtor’s attorney not previously paid. 
Secured Creditors such as mortgage arrears and auto loans. 
Priority Unsecured Creditors (child support, maintenance/alimony, most income taxes, property taxes, and other obligations specified by the Bankruptcy Code). 
General Unsecured Creditors (credit cards, personal loans, medical bills etc.). 
Plan Term – The length of the Plan is dependent on a variety of factors.  However, if the General Unsecured Creditors will not be paid in full, the Plan will be for a period between 36 and 60 months unless the unsecured creditors are paid in full prior to that time.  

Creditors and Claims – All creditors are required to file a proof of claim if they wish to be paid.  Secured Creditors who fail to file claims may still retain their security interest but do not get paid anything from the Plan.  Therefore, a Debtor may file a proof of claim on behalf of a Secured Creditor that fails to do so.  However, an unsecured creditor who fails to file a claim will not receive any amounts paid under the Plan and will be discharged without receiving any payment.

AUTOMATIC STAY AND DISCHARGE INJUNCTION 

Upon the filing of any Bankruptcy Petition the Automatic Stay is triggered.  This is a very powerful tool that prohibits creditors from making any contact with the Debtor or taking other actions to collect the debt without specific permission from the Bankruptcy Court.  Violations by the creditors are punishable generally through monetary sanctions.  This will stop the creditors from calling, garnishing wages, foreclosing on homes, and otherwise attempting to collect the amounts due during the pendency of the case.  Furthermore, existing wage garnishments, property levies, and foreclosures must stop immediately.  Upon discharge, there is an injunction forever barring the Creditors from taking collection action.

Limitations on the Automatic Stay – There are limitations of the automatic stay for Debtors who have had a previous bankruptcy matter pending within the previous 12 months.  If the Debtor had one case pending within the preceding 12 months then the automatic stay is only for 30 days.  The Debtor may file a motion to extend the stay and such motion must be heard within 30 days or no extension shall be granted.  If the Debtor had more than one case pending within the previous 12 months there is no automatic stay.  However, in such case the Debtor may file a motion requesting a stay and that motion must be heard within 30 days.

Modification of the Automatic Stay – The automatic stay may be modified upon motion filed with the bankruptcy court.  There are specific standards for the modification of the stay, but it can be simply summarized as “for cause.”  This may mean that property is depreciating in value, adequate protection has not been given to a creditor, an insurance policy or indemnity may also be liable on the claim, or a host of other reasons.  The issues raised in a motion to modify the automatic stay are usually urgent.  The Bankruptcy Code provides that the bankruptcy court must hold a preliminary hearing on an automatic stay motion within 30 days after its filing, and then a final hearing must be commenced in another 30 days. If these hearings are not held or if the court does not extend the period of time, the automatic stay is deemed to have been terminated.

Discharge Injunction – Upon successful completion of a consumer bankruptcy case the Court enters a Discharge Order.  The Discharge Order replaces the Automatic Stay and forever bars the creditors from taking any action to collect money due them for debts incurred prior to filing the Bankruptcy Petition.

Limitations of the Automatic Stay and Discharge Injunction – Unfortunately, some debts are non-dischargeable, some are non-dischargeable in a Chapter 7 but are dischargeable in a Chapter 13, and others are only dischargeable in certain circumstances.  These are referred to as “non-dischargeable debts.”

INDIVIDUAL FILING OR JOINT FILING WITH SPOUSE 

Unmarried Debtors must file individually.  However, married Debtors may file individually or jointly with their spouse.  A joint filing allows both husband and wife to have their debts discharged at the same time within to the same proceeding. This is often most economical because the Debtors only incur one attorney fee and one filing fee with the Bankruptcy Court. Each of the spouses will have to sign the Bankruptcy petition and appear at the First Meeting of Creditors.  Alternatively, in some cases it is advantageous to have only one person file.  Each case should be properly analyzed to determine the best way to file.

Attorney’s Fees and Costs

Fees for Chapter 7 vary depending upon the specific situation.  The costs incurred are $335 payable to the Court for filing fees and $37 for a credit report in the case of an individual or $74 in the case of a joint filing between husband and wife.  In certain cases additional financial reports are necessary requiring an additional cost.

Fees for a Chapter 13 case are limited by the Court except in certain circumstances.  The fee, or a portion thereof, may be paid through the Chapter 13 Plan thereby limiting the amount paid at the commencement of the case.  The costs incurred are $310 payable to the Court for filing fees and $37 for a credit report in the case of an individual or $74 in the case of a joint filing between husband and wife.  In certain cases additional financial reports are necessary requiring an additional cost.

Additional costs may be incurred for postage and other ancillary expenses.

NONDISCHARGABLE DEBTS AND OBLIGATIONS 

Unfortunately, some debts are non-dischargeable, some are non-dischargeable in a Chapter 7 but are dischargeable in a Chapter 13, and others are only dischargeable in certain circumstances.  

Child Support and Maintenance/Alimony pursuant to an order of a domestic relations court are never dischargeable.  However, a Chapter 13 Bankruptcy can be used to pay such obligations that are past due or in arrears.  These obligations are broadly defined as amounts due to a spouse, former spouse, or child of the Debtor or such child’s parent, legal guardian, responsible relative or governmental unit.  They include child support, maintenance/alimony, medical expenses, educational expenses and guardian ad litem fees.

Property Settlements pursuant to a judgment for dissolution of marriage or divorce decree are never dischargeable in a Chapter 7 Bankruptcy but may be dischargeable in a Chapter 13 Bankruptcy for less than the full amount due.

Federal and State Income Taxes are not dischargeable in a Chapter 7 Bankruptcy unless more than three years have passed since the income taxes became due and the income tax returns were filed more than two years prior to filing the bankruptcy.  A Chapter 13 Bankruptcy can be used to pay such obligations and avoid garnishments, levies, and other collection actions by the IRS and other taxing authorities.

Other Taxes such as payroll withholding taxes and sales taxes are non-dischargeable in a Chapter 7 Bankruptcy.  A Chapter 13 Bankruptcy can be used to pay such obligations and avoid garnishments, levies and other collection actions by the IRS and other taxing authorities.

Fraudulently Incurred Obligations are not dischargeable in a Chapter 7 Bankruptcy.  These obligations generally occur when the Debtor has made false statements that have induced the creditor to act adversely to its own interests.  A Chapter 13 Bankruptcy can be used to pay such obligations and avoid garnishments, levies, and other collection actions by the Creditor.

Obligations Arising from Theft or Larceny by the Debtor are non-dischargeable in a Chapter 7 Bankruptcy.  A Chapter 13 Bankruptcy can be used to pay such obligations and avoid garnishments, levies, and other collection actions by the creditor.

Obligations for Death or Personal Injury are non-dischargeable in a Chapter 7 Bankruptcy if the obligation was caused by the Debtor’s operation of a motor vehicle, vessel, or aircraft if such operation was unlawful because the Debtor was intoxicated from using alcohol, a drug, or another substance.  A Chapter 13 Bankruptcy can be used to pay such obligations and avoid garnishments, levies, and other collection actions by the Creditor.

Student Loans are non-dischargeable in all chapters of bankruptcy except in cases of undue hardship.  The burden to show undue hardship is on the Debtor and is often very difficult to prove. A Chapter 13 Bankruptcy can be used to pay such obligations and avoid garnishments, levies and other collection actions by the Creditor.

Criminal Fines and Restitution are non-dischargeable.  A Chapter 13 Bankruptcy can be used to pay such obligations and avoid garnishments, levies and other collection actions by the Creditor.

Consumer Debts Incurred for the Purchase of Luxury Goods aggregating more than $725 and obtained within the 90 days of filing a Bankruptcy Petition are non-dischargeable.

Cash Advances Aggregating more than $1,000 and obtained within 70 days of filing a Bankruptcy Petition are non-dischargeable. 

MANDATORY CREDIT COUNSELING AND FINANCIAL MANAGEMENT 
Disclosures pursuant to 11 U.S.C. 527(a)(2)

All information that you are required to provide to the Bankruptcy Court in your petition and thereafter in connection with your bankruptcy is required to be complete, accurate and truthful. 
All of your assets and liabilities are required to be completely and accurately disclosed in the documents filed to commence the case, and the replacement value of each asset as defined in Section 506 of the Bankruptcy Code must be stated in those documents where requested after reasonable inquiry to establish that value. 
Your current monthly income, the amounts specified in Section 707(b)(2) of the Bankruptcy Code, and in a case filed under Chapter 13 of the Bankruptcy Code, your disposable income (determined in accordance with Section 707(b)(2) of the Bankruptcy Code), are required to be stated after reasonable inquiry. 
Information that you provide during your case may be audited by the Office of the U.S. Trustee pursuant to provisions of the Bankruptcy Code.   Any Failure to provide such information may result in dismissal of your Bankruptcy case pursuant to provisions of the Bankruptcy Code or another sanction, including a criminal sanction. 
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Disclosures pursuant to 11 U.S.C. 527(b)

If you decide to seek bankruptcy relief, you can represent yourself, you can hire an attorney to represent you, or you can get help in some localities from a bankruptcy petition preparer who is not an attorney. THE LAW REQUIRES AN ATTORNEY OR BANKRUPTCY PETITION PREPARER TO GIVE YOU A WRITTEN CONTRACT SPECIFYING WHAT THE ATTORNEY OR BANKRUPTCY PETITION PREPARER WILL DO FOR YOU AND HOW MUCH IT WILL COST.  Ask to see the contract before you hire anyone.

The following information helps you understand what must be done in a routine bankruptcy case to help you evaluate how much service you need.  Although bankruptcy can be complex, many cases are routine.

Before filing a bankruptcy case, either you or your attorney should analyze your eligibility for different forms of debt relief available under the Bankruptcy Code and which form of relief is most likely to be beneficial for you.  Be sure you understand the relief you can obtain and its limitations. To file a bankruptcy case, documents called a Petition, Schedules and Statement of Financial Affairs, as well as in some cases a Statement of Intention need to be prepared correctly and filed with the bankruptcy court.  You will have to pay a filing fee to the bankruptcy court.  Once your case starts, you will have to attend the required first meeting of creditors where you may be questioned by a court official called a trustee and by creditors.

If you choose to file a Chapter 7 case, you may be asked by a creditor to reaffirm a debt.  You may want help deciding whether to do so.  A creditor is not permitted to coerce you into reaffirming your debts.

If you choose to file a Chapter 13 case in which you repay your creditors what you can afford over 3 to 5 years, you may also want help with preparing your Chapter 13 Plan and with the confirmation hearing on your plan which will be before a bankruptcy judge.

If you select another type of relief under the Bankruptcy Code other than Chapter 7 or Chapter 13, you will want to find out what should be done from someone familiar with that type of relief.

Your bankruptcy case may also involve litigation.  You are generally permitted to represent yourself in litigation in bankruptcy court, but only attorneys, not bankruptcy petition preparers, can give you legal advice.

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Disclosures pursuant to 11 U.S.C. 527( c)

Personal property values shall be determined based on the replacement value of such property as of the date of the filing of the petition without deduction for costs of sale or marketing.  With respect to property acquired for personal, family, or household purposes, replacement value shall mean the price a retail merchant would charge for property of that kind considering the age and condition of the property at the time value is determined.  11 U.S.C. 506

Real property values shall be determined based upon fair market value as of the date of the filing of the petition without deduction for costs of sale or marketing.

Your current monthly income includes all income you have received from any source in the last 6 months.  This includes wages, salary, tips, bonuses, overtime, commissions, income from operation of a business, profession or farm, rents and real property income, interest, dividends, royalties, unemployment, pension and retirement income.  Income also includes regular contributions to your household expenses, including from a child, roommate or spouse.  Income includes income from any other source not listed above.  11 U.S.C. 101

You will be required to complete a means test to determine the bankruptcy chapter you can file. This test will be applied based upon your monthly income as explained herein.  This test will also be applied based upon monthly expenses.  Some of these expenses will be based upon applicable monthly expense amounts specified under National Standards and Local Standards, and some on your actual monthly expenses.  Your actual monthly expenses include your average monthly expenses for payments to secured creditors on your automobile, amounts actually incurred for taxes, mandatory payroll deductions, life insurance premiums, money required to be paid by court order, including spousal or child support, education expenses required for work, child care, health care not otherwise reimbursed and the amount you pay for telecommunication services.  11 U.S.C. 707(b)(2)

In a Chapter 13 case, your income and expenses also include Chapter 13 administrative expenses.  11 U.S.C. 707(b)(2)

You will be required to provide a list of all your creditors.  This list must include the name and address of the creditor as well as your account number with this creditor.  If, within 90 days before you file bankruptcy, a creditor supplies to you in at least 2 communications the account number and an address that the creditor request to received correspondence, you must use this address and account number. The creditor may also file with the court a notice of address to be used to provide notice to such creditor.  11 U.S.C. 342

You can exempt certain property from property of your bankruptcy estate.  You may use the exemptions available under Illinois law if you have lived in Illinois for 730 days prior to the bankruptcy filing. If you have not lived in Illinois for the last 730 days, you will have to use the exemption laws under the state that you lived in prior to Illinois if you lived there for at least 180 days. If you did not live in that state for 180 days, you will have to use the Federal Exemptions available under 11 U.S.C. 522. You value your exempt property under the replacement value as previously defined. 

MANDATORY DISCLOSURE: We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

DISCLAIMER: The information contained in this website is not to be considered legal advice. Anyone seeking legal advice should consult an attorney. Brody Brandner, Ltd. and its attorneys hereby disclaim any responsibility and liability for the use of the information contained in this website. Furthermore, the reading or use of the information contained in this website shall not be construed to form an attorney client relationship by and between any person reading or utilizing the information in this website, and Brody Brandner, Ltd. and its attorneys.

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