Bankruptcy

This information gives you general information about what happens in a bankruptcy case. Bankruptcy is a federal law.

Q: What happens when I file for bankruptcy?

A: You must choose which bankruptcy chapter best suits your needs and if you meet the qualifications for that bankruptcy chapter.

Chapter 7: A bankruptcy trustee is appointed to take over your person’s property. Any property with value that will be sold or turned in for money to pay back your creditors. You may be able to retain some of your personal property or real estate if the property can be exempted under Illinois’ Bankruptcy Code Exemptions.

Chapter 11: This bankruptcy chapter is mainly used by businesses in financial distress. In a Chapter 11 bankruptcy, you may continue to operate your business. The court and your creditors, however, must approve a plan to repay your debts. There is no bankruptcy trustee in this bankruptcy chapter unless the judge determines that a trustee is necessary. If a trustee is appointed, the bankruptcy trustee will control your business and property.

Chapter 13: Unlike Chapter 7 which is a liquidation of assets, Chapter 13 bankruptcies involve a repayment plan. You can retain most of your property, but you must earn wages or generate some kind of regular income. Part of this discharge will depend on if you agree to pay part of this income to your creditors. The court must approve of this repayment plan and your budge. A bankruptcy trustee is appointed to your case. The trustee will collect your payments, pay your creditors, and make sure that you repay your creditors based upon your agreed upon plan.

Chapter 12: Chapter 12 bankruptcies are very similar to Chapter 13 bankruptcies, but this bankruptcy chapter is only for family farmers and family fisherman.

Depending on your situation, if you have already filed for a Chapter 7 bankruptcy, you may be able to convert the bankruptcy into another chapter.

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Q: HOW LONG WILL A BANKRUPTCY APPEAR ON MY CREDIT REPORT?

A: Your bankruptcy may appear on your credit report for as long as ten years. This may affect your ability to get credit in the future. Also, depending on what type of job industry you work in, your prospective employer may pull a credit report and see your bankruptcy, which may or may not be a factor in their hiring decision.

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Q: WHAT DOES IT MEAN WHEN MY BANKRUPTCY IS DISCHARGED?

A: People file for bankruptcy to get their debts discharged. A discharge is a court order that states that you do not have to pay most of your debts. Not every debt, however, can be discharged. Specifically, you cannot discharge child support debts; alimony payments; most tax debt; most student loans; court fines and criminal restitution; and personal injury lawsuits caused by drunk driving or driving under the influence of drugs.

Not every debt will be discharged. In particular, the discharge only applies to debts that occur before the date you file for bankruptcy. Additionally, if the judge determines that you received money or property through any kind of fraudulent behavior, that debt may not be discharged.

Make sure that you list every property and every debt in your bankruptcy schedules. If you do not list these debts or properties, it is possible that the debt or bankruptcy will not get discharged. If a judge determines that you were not honest with your property, the judge can deny your bankruptcy discharge. As such, you cannot lie about your property; hide or destroy your property; falsify records relating to the bankruptcy or disobey a court order.

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*Please note that this information is not complete nor is it meant to provide you with legal advice or counsel. Each bankruptcy case is different and the outcome of a bankruptcy case will vary based on individual circumstances.*

WE ARE A DESIGNATED DEBT RELIEF AGENCY UNDER FEDERAL LAW AND WE PROVIDE LEGAL ASSISTANCE TO CONSUMERS SEEKING RELIEF UNDER THE BANKRUPTCY CODE.