In East Alton, Illinois, bankruptcy is a court procedure in which a person or business has some or all of their debts excused (or "discharged"), theoretically allowing them to start with a clean slate, and move on with their lives no longer drowning in debt (and hopefully having learned to better manage their use of credit in the process). Bankruptcy should be treated as an option of last resort, and should not be viewed as a convenient way to get out of debt that you just don't feel like paying. Bankruptcy can have severe consequences, including but not limited to damage to your credit rating. A bad credit score can impact your ability to obtain loans in the future, to rent an apartment, and possibly even your ability to get hired at some jobs (as some employers now run credit checks on prospective employees).
For that reason, it would be prudent to speak with a good East Alton, Illinois bankruptcy attorney. This attorney will be able to advise you as to whether or not filing for bankruptcy is a good idea, given your particular situation. This determination is highly dependent on the details of each individual case, so an East Alton attorney's advice is truly indispensable.
Types of Bankruptcy in East Alton, Illinois
In East Alton, Illinois, there are three basic bankruptcy schemes that are most commonly used. They are known as Chapter 7, Chapter 13, and Chapter 11. Being a product of federal law, the procedural rules governing bankruptcy in East Alton, Illinois will be very similar to those in any other part of the United States. Chapter 7 bankruptcy requires the debtor to liquidate some of his or her assets in order to pay off as much debt as possible. Once the sale of the assets is complete, and the proceeds handed over to the creditors, the debt is viewed as discharged. Liquidation is basically selling assets to the highest bidder. Not all of the debtor's assets will need to be sold, and many types of property are totally or partially exempt, including homes, cars, retirement accounts, and insurance policies. This means that the debtor can keep them. It should be noted that some types of debts are not dischargeable in Chapter 7 bankruptcy, including student loans, criminal fines, taxes, and child support payments. Even when the bankruptcy process is complete, these debts will have to be paid in full.
The other commonly used bankruptcy system in East Alton is Chapter 13 bankruptcy. This allows a debtor to repay most or all of their debts in a structured manner. It reorganizes the debt into lower periodic payments that, with a bit of frugality, the debtor should find manageable. This allows the debtor to continue to earn a living, and allows the creditors to eventually collect what they are owed. Once a repayment plan is approved by the bankruptcy court, creditors are legally barred from seeking repayment under the terms of the agreements that gave rise to the debt in the first place, and will instead have to accept payment under the new plan. Chapter 13 bankruptcy is usually a better option for people who have a steady income. Though Chapter 11 bankruptcy can be used by individuals, it is almost exclusively used by businesses. Similar to Chapter 13, Chapter 11 involves restructuring of debts, rather than complete discharge. The debtor is required to come up with a restructuring plan that lays out how it plans to cut costs, streamline operations, and pay its debts. The plan must then be approved by a vote of participating creditors.
A main advantage of Chapter 11 bankruptcy is that businesses can continue their operations while going through the process. Also, they can continue to buy and sell their stock.
How Can a East Alton Bankruptcy Lawyer Help?
The decision to file for bankruptcy in East Alton is not one to be made lightly, and it certainly should not be made without first obtaining the advice of an experienced East Alton bankruptcy attorney.