Chapter 13 Bankruptcy in Chicago, Illinois
Reorganization or Consolidation Bankruptcy
People who do not qualify for Chapter 7 bankruptcy, or have non-dischargeable debt, often turn to Chapter 13 bankruptcy to alleviate their debt. Chapter 13 bankruptcy, also referred to as “reorganization,” allows people to keep their assets by consolidating all of their debt and restructuring it into an affordable monthly payment plan.
This payment plan is usually carried out in a time frame of three to five years. The time frame is decided by the court and based on the debtor’s current income. If the income is less than the state median, then the time is three years and if the income is more than the state income then the plan will be five years. According to federal law 11 U.S.C. §1322(d) the payment plan is not to exceed five years. In addition during the three or five year period, creditors cannot continue their collection process.
If you file for Chapter 13 bankruptcy, all of your debt will be consolidated to be paid over time. A reorganization plan is filed and approved by the court. Chapter 13 bankruptcy is a great option for people who are in foreclosure, behind on their car payments or have non-dischargeable debts. This plan is especially advantageous for those who want to save their homes from foreclosure because they can stop foreclosure proceedings, consolidate the debt, and make payments over the time of the scheduled plan.
The Process of Chapter 13
A notable point about Chapter 13 is that in order for an individual to be eligible an individual's unsecured debts must be less than $360,475 and their secured debts less than $1,081,400. Prior to filing for bankruptcy a debtor must complete credit counseling with an accredited agency.
To start the process, the individual must file a petition with the bankruptcy court nearest to their home, or the court that serves the community. There is a charge for filing for bankruptcy and the fees should be paid to the court clerk at the time of filing. If an individual is unable to pay for the fees, they can be paid in installments. With the petition, the individual will also be responsible for filing:
- List of assets and liabilities
- Statement of current income and expenditures
- Statement of contracts and leases
- General statement describing their financial situation
- Statement that includes the source, amount, and frequency of income
- List of all creditors and amounts of debts
- List of all properties
- Statement of the individual’s monthly expenses
It is important to realize that Chapter 13 bankruptcy does not completely eliminate your debt. You will still be required to pay off a portion or all of your debts, which is the purpose of the structured payment plan. Fortunately, the amount you pay towards your debt every month will be based on your monthly income, current monthly expenses, and any non-exempt assets. After you have finished making all of your payments, your remaining unpaid debt will be discharged. And the best part of all is that you get to keep your assets during the repayment process!
What to Do if You Need to File for Bankruptcy
If you are contemplating filing for bankruptcy, you should speak with a Chicago bankruptcy lawyer. My firm can review your case and let you know your options. While you may be in the midst of a financial crisis you do not have to go through it alone. Having an attorney on your side can make a difference during the filing process. The Law Office of Marc Wagman, LLC can help you seek debt relief and ensure that you are on the right path to financial freedom.