Illinois Bankruptcy Laws: What are the Laws Regarding Bankruptcy in the State of Illinois?
Life presents various challenges, and one of the most difficult ones you may have to face may have to do with bankruptcy. The reasons why people go bankrupt are myriad – a business could have failed, a loved one could have needed expensive medical treatment or any other scenario. If you ever find yourself in a position where you are without money or in a negative state, then you are in a place to declare bankruptcy.
Bankruptcy is a process that provides aid to people whose finances have fallen to either nothing or the negative. It indicates that you are in debt. When you are filing for bankruptcy, then you or the person filing is called the ‘debtor.' The people, organization or business to who the debt is owed are known as the ‘creditors.' If you find yourself in a situation where you are in a lot of debt, then you can avoid collection by declaring bankruptcy. Such a declaration is known as an ‘automatic stay’ depending on the kind of bankruptcy you are applying for. It could also help you to clear your debts.
What are the bankruptcy laws in Illinois?
Two main bankruptcy laws matter in Illinois. These are:
- Chapter 7: If you declare Chapter 7 bankruptcy, then a lot of your debt may be removed altogether. What this means is that you will no longer owe your creditors the debt that led you to file for bankruptcy in the first place. Instead, your property or belongings could be sold or auctioned off to compensate for your debt. You do not have to fear to lose all your property. Laws about Chapter 7 bankruptcy allow you to maintain some property and possessions. These are exempt from sale. To qualify for Chapter 7 bankruptcy, however, there are certain eligibility criteria that you must meet. Having a low income or a low number of assets and properties can improve your chances of eligibility for filing Chapter 7 bankruptcy.
- Chapter 13: If you declare a Chapter 13 bankruptcy, then necessarily you agree to set up a plan of repayment where you pay off your debts. A process that allows you to retain your property and assets, you give yourself time to pay off your creditors and work your way out of debt. But to become eligible for Chapter 13 bankruptcy, the amount of money that you make must be such that you can pay off your debt as per the repayment plan. A judge will review your application, and if it is passed, the installments you pay will go to a trustee. The trustee will then provide the creditors with that amount. You are required to pay back your creditors in full, and if this is not possible, then you will have to provide them with any disposable income for at least the next five years.
Why you should file for bankruptcy
There are many ways that filing for bankruptcy can protect you. It immediately stops wage garnishment, and creditors cannot harass you either. Matters related to foreclosure or repossession is put on hold until a court of law allows it and you are allowed to keep the exempt property. In addition to this, employers or any public agency cannot have an issue with you if you have filed for bankruptcy.
Although it may seem that filing for bankruptcy can be a difficult situation to undergo, at the end of the day it can help you in reinstating your finances and leading you towards security.