Chapter 7 bankruptcy is a common form of bankruptcy for Chicago residents, primarily because it offers the most comprehensive relief from a variety of different debts. However, getting the most out of this process can be difficult without professional guidance, as there are several procedural steps to go through and plenty of places where individual debtors could make a mistake and hinder their own efforts to seek relief.
If you believe Chapter 7 bankruptcy is the right move for your situation, you should speak with a Chicago Chapter 7 bankruptcy lawyer as soon as possible. Assistance from a bankruptcy attorney who has successfully helped people just like you through this process could make a significant difference in your case.
Filing for Chapter 7 bankruptcy is one of the most beneficial options for an individual in debt because it can provide a fresh financial start. The moment a debtor officially files a bankruptcy petition, they can benefit from a court-ordered “automatic stay.” This order immediately halts all collection efforts by all creditors and lasts until the bankruptcy process concludes, at which points many of those debts will be forgiven.
Once the Chapter 7 process is complete, debtors can have all their unsecured debts, such as credit card bills, medical bills, and personal loans, discharged. Even if someone has filed for bankruptcy before in the past, they can generally file again in the future if enough time has passed and they meet the income criteria noted below.
Additionally, individuals filing for Chapter 7 bankruptcy in Illinois can designate a certain amount of home and vehicle equity as exempt from the bankruptcy process, as well as up to $4,000 in personal property as a wildcard exemption. Various other exemptions may be available as well, all of which a Chicago Chapter 7 bankruptcy attorney could identify.
Chapter 7 bankruptcy is a comprehensive means of discharging various debts, but not everyone in the state is eligible for it. Anyone who wants to declare bankruptcy under Chapter 7 must first complete and pass the Illinois means test, which determines whether a debtor’s monthly disposable income is too high to justify such an extreme debt relief measure.
The means test has two stages. The first stage focuses on the median incomes for Illinois households based on size. If the debtor’s average monthly household income is less than the state’s median for a same-sized household, the debtor is eligible to pursue Chapter 7 bankruptcy.
If a debtor’s monthly income exceeds the median amount for a similar household, they must complete the second stage of the means test to determine their monthly disposable income. This involves a more complicated calculation of gross monthly income less various allowed expenses and tax obligations. More than $12,475 of monthly disposable income might disqualify a debtor from Chapter 7 bankruptcy, while less than $7,475 means a debtor passes the means test and is qualified to file under Chapter 7.
A skilled lawyer in Chicago could guide debtors through the additional steps necessary to determine their eligibility for Chapter 7 bankruptcy.
Declaring Chapter 7 bankruptcy can be an effective way to resolve unmanageable debt. Anyone considering this option should be aware of all aspects of Chapter 7 bankruptcy. If this process is the right choice for you, a Chicago Chapter 7 bankruptcy lawyer could help through the proceedings and fight for the best possible results. Call today to learn more.