Filing for bankruptcy is a difficult and daunting process. If you live in Chicago, it can be even more difficult, due to the unique bankruptcy laws and regulations that apply to the state. To help ease the process for those considering filing for bankruptcy in Chicago, here are some frequently asked questions, along with their answers, about the process.

What Is Bankruptcy?

Bankruptcy is an option available to individuals and businesses who are struggling with debt but have limited ability to pay. It gives debtors a way to have their debt discharged via a court-ordered process. Bankruptcy is a type of legal relief from debt that is designed to give individuals and businesses a fresh start. Bankruptcy essentially means that a person or business can no longer legally owe money, instead, having it discharged through the bankruptcy process.

How Does Bankruptcy Work in Chicago?

Bankruptcy in Chicago is governed by both state and federal law. Under the federal Bankruptcy Code, there are multiple forms of bankruptcy available to debtors in the state. Chapter 7 bankruptcy is the most common type of bankruptcy available to individuals and businesses in Chicago. In this type of bankruptcy, the court will discharge most, if not all, of the debtor's debts, and in most cases, the debtor will be able to keep certain assets.

In addition, debtors in Chicago may also be eligible for Chapter 13 bankruptcy. This form of bankruptcy is more involved and complex than Chapter 7, as it involves a repayment plan that must be approved by the court. Under a Chapter 13 bankruptcy, the court will issue a repayment plan that the debtor must follow in order to pay off a portion of their debt.

What Assets Are Protected Under Bankruptcy?

Bankruptcy protection varies depending on the type of bankruptcy a debtor is filing for. In Chapter 7 bankruptcy in Chicago, certain property and assets are exempt or protected from being seized and liquidated by creditors. Exempt assets generally include the debtor's home, certain personal items such as household items and clothing, and retirement accounts. The amount and type of assets protected with Chapter 7 bankruptcy protection depends on the individual's circumstances.

In Chapter 13 bankruptcy, however, the debtor may typically retain all of their property and assets. The repayment plan laid out by the court in a Chapter 13 bankruptcy case must be designed to give the debtor enough money to pay for necessities while allowing them to pay off a good portion of their debt.

What Debts Are Not Discharged by Bankruptcy?

In both Chapter 7 and Chapter 13 bankruptcy, certain debts are not subject to discharge. These debts include child support, alimony, student loans, civil judgments, and certain taxes. To determine whether or not a particular debt is subject to discharge, it is best to speak with a qualified bankruptcy attorney.

What Are the Benefits of Bankruptcy in Chicago?

Filing for bankruptcy in Chicago can provide numerous benefits, including the ability to stop creditor harassment, the protection of certain assets, the ability to start fresh with creditors, and the elimination of certain debts. It can also provide relief from stressful debt burdens and the ability to keep wages from being garnished.

Final thoughts

Bankruptcy in Chicago can be a complex and stressful process. Asking the right questions can help ensure that you are able to make an informed decision. It is best to speak to a qualified and experienced bankruptcy attorney to determine the best course of action for your particular circumstances.

Topics:

Bankruptcy,

Chicago,

Debtors