Understanding Bankruptcy in Chicago

Although federal bankruptcy law mainly regulates bankruptcies, the individual states can have specific guidelines for the process within their jurisdiction. States can typically choose to have their own rules that govern the types of exemptions that the debtor is allowed to keep after filing for a discharge of their debts.

However, if you have property that clearly exceeds the exemption value - let's say you have $80,000 of equity in your home and are unable to exempt that - you could consider filing for Chapter 13. That's because if you file for Chapter 7, the trustee could theoretically sell off your house and use that money to pay off your creditors.

Chapter 13 Bankruptcy is also known as reorganization on Bankruptcy. Chapter 13 Bankruptcy is filled by individuals who want to pay off their debts over a period of three to five years. This type of Bankruptcy appeals to individuals who have no exempt property that they want to keep. It is also only an option for individuals who have predictable income and whose income is sufficient to pay their reasonable expenses with some amount left over to pay off their debts.

2. Freedom from debts - This bankruptcy code clears almost all the forms of unsecured debt. However, secured debts cannot be shaken off unless there is a reclamation shortage.

You'll also need to bring information about any assets that may be discharged under a bankruptcy, including your home, your car, stocks, bonds, valuable jewelry, and anything else you can think of. Last but not least, you'll need to bring your most recent pay stubs. How much you earn will determine what type of bankruptcy you're eligible for.

Here is how Chapter 13 bankruptcy works. The process begins by filing a bankruptcy under Chapter 13 of the Bankruptcy Code. You list all of your assets, debts, income and expenses, propose a Chapter 13 plan that repays certain debts and eliminates others, and then complete your plan over a 3-5 year plan term.

If this happens, the lender and local government will not be able to move forward with any other collection activities or actions to transfer the property. The automatic stay is in effect, the homeowners have an interest in the house, and the property is now a part of the bankruptcy proceedings. If the sale is confirmed or the deed transferred after the filing, it may be reversed at a later date as a violation of the stay.

The duration of an undischarged bankrupt depends on the type of bankruptcy you are filing. But at maximum it may last for four years. To get the discharge at an ease, provide accurate records to the court and be cooperative with them. Those filing Chapter 7 bankruptcy, creditors have the right to object to your filing. They will try to show and prove that you have the capacity to pay your debt and are acting fraudulently. If the creditors don't object, once the tenure for objection is over, a judge will automatically discharge your bankruptcy. But this is not applicable to chapter 13 bankruptcy.