Bankruptcy is a legal procedure that allows an individual or business to have some or all of their debts discharged. It is normally considered as an option of last resort, because while it can stave off financial disaster, it has some considerable long-term consequences warranting careful consideration of the costs and benefits. Since it's a creation of federal law, bankruptcy is handled in federal courts. Therefore, the rules and procedures governing it in Illinois will be the same as everywhere else in the country. Particular courts in Belvidere, Illinois will have some unique rules, however, so you should consult with a local lawyer before you file.
Chapter 7 Bankruptcy in Belvidere, Illinois
In Belvidere, Illinois, there are 2 common types of commonly-used consumer bankruptcy: Chapter 7 and Chapter 13. Chapter 7 involves liquidation of part of a debtor's assets. It requires that a certain percentage of the debtor's property to be sold to pay off as much debt as possible. The majority of property that most people own, however, is exempt. This normally includes homes, vehicles, retirement accounts, and others. These are not available to creditors.
Once all non-exempt assets are sold, and the money from the sales turned over to the creditors, most remaining debt is absolved. But some forms of debt cannot be discharged through Chapter 7 bankruptcy. These include child support payments, student loans, and criminal fines, among others. If most of your Belvidere, Illinois debts are not dischargeable, you may want to consider options other than bankruptcy.
Chapter 13 Bankruptcy in Belvidere, Illinois
Chapter 13 Bankruptcy in Belvidere, Illinois is very different from Chapter 7. Whether or not it is a better option is very dependent on the facts of each particular case. Chapter 13 bankruptcy does not discharge debt. Instead, it restructures it. This involves the bankruptcy court coming up with a new payment plan that supersedes the terms of the contracts that gave rise to the debt in the first place. This results in an altered payment plan that the debtor should find manageable, if he or she can make a few sacrifices.
Which Type of Consumer Bankruptcy Should I File in Belvidere, Illinois
Whether Chapter 7 or Chapter 13 is the right choice for you depends heavily on your particular situation. If you have a stable income stream, and a lot of non-exempt property, Chapter 13 might be right for you. If you don't have a stable income, and most of your property is exempt, Chapter 7 might be a better way to go.
Whatever your situation, you should speak with a local Belvidere, Illinois bankruptcy Lawyer. Your Attorney will be able to advise you of your options and their likely outcomes, which will help you make a more educated decision.