Why Is Chapter 13 Bankruptcy Right for Me?
Are you facing insurmountable debt? Job loss, illness, and other life-changing events may make you consider bankruptcy.
Chapter 13 bankruptcy allows debtors to develop a plan to repay all or part of their debts to creditors while keeping their property.
Chicago Bankruptcy Clinic in Oak Brook, IL, guides you through the process and helps determine if Chapter 13 bankruptcy is right for you.
Understanding Bankruptcy Plans The Different Chapters of the Bankruptcy Code
Chapter 7
Often a first choice for individuals and business entities with few luxury items, Chapter 7 is a liquidation bankruptcy in which a debtor sells their non-exempt assets to pay their creditors. The remaining debt can be discharged. Chapter 7 bankruptcy is quick, taking about four months to complete.
Chapter 13
Chapter 13 is a reorganization bankruptcy designed for debtors with normal income who have enough left over each month to pay some of their debts using a three- to five-year repayment plan. Unlike Chapter 7, debtors don't have to resort to selling certain belongings to pay back creditors. The amount you must pay will depend on your income, your debt, and how much property you own.
Chapter 11
Chapter 11 is another reorganization bankruptcy for individuals whose debt is too high to qualify for Chapter 13 and struggling businesses. This plan allows a debtor to reorganize their debts into a manageable payment plan after a financial setback. The plan can include selling assets, downsizing operations, and debt forgiveness.
When Chapter 13 May Be Right for You
There are many reasons why Chapter 13 bankruptcy may be more appropriate for your situation than Chapter 7 bankruptcy. Typically, Chapter 13 is best for debtors who:
- Don't qualify for Chapter 7, but need debt relief to lower credit card debt, prevent a wage garnishment, or stop litigation
- Want to keep nonexempt property by paying for it over three to five years in a repayment plan
- Have fallen behind on house payments and want to save their home from foreclosure
- Have fallen behind on car payments and want to save their car from repossession
- Want to prevent a collection action while paying off nondischargeable debts like child support, alimony, and overdue taxes
Which Debts Can Be Erased?
Any nonpriority unsecured debt you can erase with Chapter 7, you can erase with Chapter 13, but Chapter 13 goes even further. Bankruptcy filings with Chapter 13 can wipe out common debts like:
- Medical bills
- Personal loans
- Credit card balances
- Overdue utility bills
- Most types of lawsuit judgments
- Certain government fines and penalties
- Debts for damaging someone's property
- 401(k) or other retirement account loans
- Older income taxes that qualify as nonpriority debts
- Debts incurred as a result of a divorce decree or similar proceeding
However, debts like alimony, child support, recent tax debts, and student loans won't be erased in a bankruptcy case. Before filing, be sure that bankruptcy would erase enough of your debt to make it worthwhile. Our bankruptcy law attorney offices in Chicago and Oak Brook can help.
Get Your Life Back on Track With Our Oak Brook Team
At Chicago Bankruptcy Clinic, we can handle all the details of your bankruptcy filing with precision and professionalism. Our team can help you determine if Chapter 13 bankruptcy is the correct solution for your situation, or if another option like Chapter 7 bankruptcy would be better.
Our bankruptcy attorney, Mr. Alex Ranjha, and his team are familiar with the rules and procedures of the local bankruptcy courts and have developed working relationships with bankruptcy trustees in jurisdictions throughout Chicago. Our legal team has a well-earned reputation as dedicated advocates of our clients and as honest brokers.
If you are considering filing for Chapter 7 or Chapter 13 bankruptcy, don’t go it alone. When you work with our bankruptcy lawyer, you can have peace of mind knowing that debt relief is on the way. Please contact our Chicago or Oak Brook office today for a free consultation.
Navigating Bankruptcy Law So You Don’t Have To
"I would strongly suggest anyone looking to file for bankruptcy to contact them for immediate debt relief." Joanne Saviano
Our Oak Brook Law Firm Can Make a Difference Understanding the Bankruptcy Code for You
Navigating bankruptcy law can be difficult for the average person, so we're here to do it for you. Our bankruptcy attorney and his dedicated team will help you qualify for the chapter of your choice, help you keep your property, determine when it's time to file, handle calls from creditors, prevent bankruptcy fraud, and explain when you can stop paying the bills that will be erased in your bankruptcy case.
Many debtors find it difficult to represent themselves when filing for Chapter 13 because they are required to draft a repayment plan the bankruptcy court will confirm. With our Oak Brook team on your side, you can make the process as easy as possible and keep many of the things you've worked hard to secure.
Chapter 13 Bankruptcy Eligibility
Filing for bankruptcy to erase credit card balances, medical bills, personal loans, and more has a few requirements.
Your repayment plan may call for full repayment of certain debts or offer creditors a percentage of their claim.
Sources of Income for Your Repayment Plan
To show that a debtor will have enough income to meet the obligations to their creditors under their repayment plan, they can include the following sources of income:
- Salary or regular wages
- Seasonal wages
- Self-employment income
- Commissions
- Social Security benefits
- Pension payments
- Child support or alimony payments
- Disability compensation benefits
- Workers’ compensation benefits
- Unemployment benefits
- Public benefits (like welfare payments)
- Royalties
- Rents
- Proceeds from property sales
If a debtor is married and not working, they can file solo and use money from their spouse as a source of income. Debtors can also file jointly with their working spouse.
We'll Make the Process Easy And Keep You Informed Every Step of the Way
"Very respectable and well spoken professionals." Damiano Manzella
