Bankruptcy Q & A

1. What is the difference between Chapter 7 bankruptcy and Chapter 13 bankruptcy?

A Chapter 7 bankruptcy is commonly referred to as a liquidation bankruptcy or straight bankruptcy. Once a person files a Chapter 7 an estate is created comprised of all the property that you own. Approximately one month after filing a Chapter 7 you will go for a meeting with the trustee (an officer of the court) who has the duty to sell any un-exempt property and pay your unsecured creditors. The trustee’s job is to administer any non-exempt assets for the benefit of your creditors. Approximately 2-3 months after your meeting with the trustee you will receive a discharge order from the court. Discharge is the goal of a Chapter 7 bankruptcy and this means that your unsecured creditors will be wiped away and you will no longer have to pay those creditors.

Chapter 13 bankruptcy does not eliminate your unsecured debt, but is a consolidation of all of your debt. Chapter 13 is also known as a reorganization bankruptcy. A plan is filed with the court to consolidate your debts into a monthly payment plan to be paid over a period of time, usually three to five years. The amount you pay each month will be determined by how much income you bring home per month, your monthly expenses, your portion of assets that are un-exempt, and how much of your debt has already been paid off. In addition, Chapter 13 bankruptcy also permits you to keep all of your assets and property throughout the entire process, as well as possibly paying off only a portion of your debt and discharging the rest of the debt owed.

2. What debts are dischargeable during bankruptcy?

Dischargeable debts include:

Credit Cards
Medical Bills
Unpaid Rent or Utility bills
Repossessions
Consumer Debt
Judgments and Lawsuits
Collections
Pay Day Loans
Personal Loans
Some tax debts

Debts that cannot be discharged during bankruptcy are referred to as “non-dischargeable debt,” and include:

Student Loans
Child Support
Alimony/Spousal Support
Tax Debt
Debt to the government
Debt for crimes committed
Court Fines
Personal injury related to operation of a motor vehicle or other vehicle while intoxicated or under the influence of drugs
Parking Tickets or Toll way Fines Liens

3.      Will I lose my home or car?

You most likely will be able to keep your home provided that you continue to make your mortgage payments. Because Illinois allows for exemptions that protect certain property during the bankruptcy process, most people are able to keep their home and car. When you come to the Law Offices of Swanson & Wagman LLC, we make sure that you do not lose any of your assets.

4.      Will my wages be garnished?

As soon as you file for bankruptcy, any wage garnishment should stop. If your wages continue to be garnished even after you have filed for bankruptcy, it’s important to contact us as soon as possible, as this a direct violation of the law.

5.       How long does a bankruptcy stay on my credit report?

A bankruptcy will appear on your credit report for anywhere from seven to 10 years after your case has been discharged. However, even though a bankruptcy appears on your credit report, it does not mean that you will not be able to obtain credit. There a many ways to build credit even after you have filed for bankruptcy, and my credit restoration will give you the best chance to recover and rebuild your credit as fast as possible.

6. How can I restore my credit after I’ve filed for bankruptcy?

There are many ways to rebuild or restore your credit after filing for bankruptcy. After you have filed for bankruptcy, it’s important to get a credit card or small bank loan in your name. From there you must make all of your monthly payments on time. If you can pay your bills earlier than the due date it’s even better. This will help increase your credit score and financial standing. Furthermore, continuing to make payments on-time toward your mortgage, car, or other household expenses will also help to build and restore your credit.

7. Does non-bankruptcy related credit consolidation work?

90% of all bill consolidations fail. The reason that most fail is because there is no law forcing all the creditors to enter into the consolidation, nor force them to stop charging interest on the money you owe them. In essence, you will not be able to pay less than what you owe and have to pay interest on it. Additionally, your credit will not begin to recover until you make your final payment, which is on average 3-5 years after you begin the process. Bankruptcy on the other hand will help you recover and will force all creditors to adhere to the FEDERAL LAW.

Please click here for more information on how to restore your credit .