Do you have a job but are struggling to meet financial requirements and falling behind day by day? Are you making too much to qualify for Chapter 7 Bankruptcy? Chapter 13 Bankruptcy may be the right option for you to keep your home and assets while paying off your debt in a managable way!
Want to know more? Here are a few of the common questions our clients often ask about Chapter 13 Bankruptcy:
1. How Should I Get Organized for Chapter 13 Bankruptcy?
Unfortunately you can’t just hire a Chicago bankruptcy lawyer when debt becomes more than you can manage and then just sit back and let them do all the work. Yes, hiring a lawyer relieves you of all the complicated paperwork and legal requirements of filing bankruptcy but there is still plenty for you to do!
Your job during a chapter 13 bankruptcy case is in the preparation. You need to organize all the information and debt details your attorney needs. Here is a basic list of what you want on hand for your Chicago bankruptcy lawyer.
- Personal information like the social security numbers of you and your spouse as well as recent addresses.
- Proof of income is needed for a minimum of the past 6 months. This includes pay stubs as well as bank statements.
- All asset information like mortgages or property titles.
- Bill details for every creditor. Copies of the bills are best because you’ll need contact information for the creditors.
- Investment details like retirement accounts, insurance policies, and investments like CD’s, bonds and stocks.
- Assets sale details including property sales or transfers for the past year.
- Legal details like past bankruptcy filings or any lawsuits against you will be needed.
The more organized you can be with the necessary documentation the more smoothly your bankruptcy filing will go. You may even save money on legal fees by helping your bankruptcy lawyer work more efficiently.
2. How Can Chicago Residents File Bankruptcy But Keep Their Assets?
The first question on anyone’s mind when they decide to file for bankruptcy is whether or not they will be able to keep their assets.
If you are filing for bankruptcy but still have a steady income you may be able to file for chapter 13 bankruptcy and keep your assets.
Chapter 13 bankruptcy sets you up on a revised payment plan for your assets. You make the assigned payments for a certain block of time and once you have completed the terms agreed upon you will be discharged of remaining debts and you can keep your assets.
People who have an income below the median for the state of Illinois are eligible to file for chapter 7 bankruptcy. Chapter 7 bankruptcy is typically identified as the “liquidation” form of bankruptcy. The only way to keep an asset while filing chapter 7 bankruptcy is to reaffirm your debt. This means that you work with the creditor and come to an agreement to keep your asset and continue to make payments towards you debt. Reaffirming your debt can keep that asset out of the bankruptcy proceedings.
Contrary to popular belief it is possible to keep your assets when you file for bankruptcy. Bankruptcy can be much easier to accept when you can keep your home or vehicle safe. To better understand what type of bankruptcy best suits your situation you should discuss your options with a Chicago bankruptcy attorney.
3. What is the Best Way To Make Payments to a Chapter 13 Trustee?
When you file for chapter 13 bankruptcy you are assigned a bankruptcy trustee. During the chapter 13 process your trustee will attend the creditors meeting with you and collect your payments and distribute the money to your creditors.
In order to be discharged of debt through chapter 13 Chicago you are required to make payments towards your debts for 3-5 years. These payments need to go directly to your trustee.
Missing payments will result in having your chapter 13 case dismissed. The payment process is there to prove that you are responsible for your debts and committed to getting back on your feet financially.
Your chapter 13 trustee will not accept a personal check for your payment. You will need to obtain a money order or cashiers check. At the time of getting this money order or cashiers check make sure you save the receipt. You also need to make sure you put your full name and court case information on the front of your check. Your chapter 13 trustee has a lot of cases that they’re responsible for. Having your payments organized will help them do their job faster.
A bankruptcy trustee typically receives payments at a PO Box address. This is important to note because if you’ve waited until the last minute to send in your payment you will not be able to send it quickly with FedEx. Instead you can use Express Mail through the United States Postal Service. Even if you give yourself plenty of time, send your payment through certified mail. That way you can track the delivery.
4. Will Filing Chapter 13 Bankruptcy Cause Employers to Reject Me?
There are many reasons why we may be passed up for a job. The most common would be a better, more experienced candidate or a change in hiring requirements during the process. People who have filed bankruptcy often go into the job search process with the fear that they may be passed up due to having chapter 13 bankruptcy on their record. Chapter 13 bankruptcy is often looked at more favorably than other types of bankruptcy but there are still workplace concerns surrounding bankrupt employees.
In order to qualify for chapter 13 bankruptcy you and your bankruptcy attorney show the court that you have a steady income. This income will allow you to make payments towards your debts for 3-5 years before you are discharged of the remaining debt. For those who file chapter 13 their job security is extremely important.
The 3-5 year payment plan is a long time and a new job opportunity may present itself during this time. Should the job be a promotion it could help rebuild their financial profile and get them back on track with debt.
Background and credit checks have become very common in human resources hiring processes. This means that when you apply for a job and get close to being hired your potential employer is very likely to find out you have filed bankruptcy.
Thanks to the Bankruptcy Act of 1978, those who have filed for bankruptcy are protected against discrimination in the workplace. This means that a candidate cannot be passed up simply because of the fact that they have filed for bankruptcy.
In the United States we are also protected from discrimination due to our ethnicity, gender, religion, age, and even if we are pregnant. This is thanks to the Civil Rights Act of 1964.
Because of these laws all people can feel confident and honest when they enter into a new job search.
5. What if I Lose My Job Before I’ve Paid Off My Debts?
For many Chicago residents, chapter 13 bankruptcy is a great way to get out of debt but still keep you assets. You will be required to make payments for a period of 3-5 years to your creditors. At the end of that time you will be discharged of remaining debts.
The payments during this time are made to a trustee who then distributes the money to your creditors.
There are situations where the debtor has a major life change that effects their income. This could involve a lost job or a death in the family. In order to initially qualify for chapter 13 you have to show proof of steady income. Should you lose that income you would likely be unable to make the 3-5 years of payments.
When this happens the debtor can petition for a hardship discharge. This means that something has caused major hardship in their finances and they are unable to continue payments. Assuming your hardship qualifies and you have made payments equivilant to what your creditors would receive through a chapter 7 filing, you are likely to be discharged of your remaining debt.
Should the court feel that you do not qualify for a hardship discharge you may still be able to get a modification to your agreement. For example you may be able to have your payments decreased so they are more manageable.
Whatever your circumstances if it becomes hard to make your chapter 13 payments contact your bankrupcy attorney. They can work with you to find a solution.
6. What are The Downsides to Filing Chapter 13 Bankruptcy in Chicago?
Many people believe that chapter 13 is the best type of bankruptcy filing because most people can keep their assets after filing. This is a favorable feature of chapter 13, however it has its inevitable negative aspects as well.
- Credit Score Decrease: You may still have your assets but your credit score will be destroyed. Chapter 13 bankruptcy stays on your credit report for 10 years and it will take 3-4 years until you’ve built your score back up.
- Breaking Your Agreement Ends Your Protection From Creditors: When you file for chapter 13 bankruptcy you agree to keep to a payment plan agreed upon in court. These payments go against your debt and as long as you make them your creditors cannot cancel your services, foreclose your home or reposess your property. In the event that you stop making those payments your assets become at risk again.
- Not All Debts Will Be Discharged: After you’ve completed the agreed upon payment plan toward your debt you will be discharged of the remainder. However some debt such as child support, spousal support, student loans and tax debt. You will still be responsible for paying those debts.
- Bankruptcy is Public Record: When you file for bankruptcy it becomes public knowledge. Many people feel ashamed that others may see their financial troubles so publically.
When deciding if chapter 13 is the right form of bankruptcy for you it is wise to discuss your options with a qualified Chicago bankruptcy attorney.
Get The Legal Help You Need With Chapter 13 Bankruptcy
There is a lot more to dealing with Chapter 13 Bankruptcy than what we’ve discussed above. Due the complexities of the process, it’s a good idea to get some assistance from an experienced attorney. The bankruptcy lawyers at Suburban Legal Group PC are sensitive to the difficult time you may be facing and bankruptcy services to help you through this tough personal time in your life. We can help you determine what your options are and create a road map to help you get out of debt.
You can also download our book on the 12 Things You Should Know Before Filing For Bankruptcy. You’ll learn all the essentials on filing for bankruptcy in Illinois.
DISCLAIMER: All information on this website are provided for informational purposes only and are not intended to be construed as legal advice. Suburban Legal Group PC shall not be liable for any errors or inaccuracies contained herein, or any actions taken in reliance thereon.