In Franklin Park, Illinois, bankruptcy is a court procedure in which a person or business has some or all of their debts cleared (or "discharged"), theoretically allowing them to begin 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 proper 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 receive 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 Franklin Park, 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 individual situation. This determination is highly dependent on the details of each individual case, so a Franklin Park attorney's advice is absolutely indispensable.
Types of Bankruptcy in Franklin Park, Illinois
In Franklin Park, Illinois, there are three basic bankruptcy schemes that are most often used. They are recognized as Chapter 7, Chapter 13, and Chapter 11. Being a product of federal law, the procedural rules governing bankruptcy in Franklin Park, 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 property, and use the proceeds to pay creditors. While this doesn't sound like much of a relief at first glance, the upshot is that once the qualifying property is sold, and the proceeds given to the creditors, all of the debtor's eligible debts are deemed paid in full, regardless of how much the creditors actually ended up getting. Not all of the debtor's property has to be sold off - the debtor will normally be allowed to keep things like a house, at least one car, some types of personal property, retirement accounts, and insurance policies. It should be noted that some debts are not dischargeable, and will have to be paid in full even if the debtor files for bankruptcy. This includes student loans, taxes, and criminal fines.
The other normally used bankruptcy system in Franklin Park 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 contracts 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 normally a better option for people who have a steady income. Chapter 11 bankruptcy is almost exclusively used by businesses, but there is nothing that legally prevents it from being used by individuals, and its use by individuals is very rare. Chapter 11 bankruptcy requires the debtor to come up with a restructuring plan - telling the court how they propose to cut costs, improve their operations, and pay down their debts. The plan has to be approved by a majority vote of participating creditors.
One main advantage of Chapter 11 bankruptcy is that it allows businesses to continue their operations while the process plays out. Additionally, their stock can still be bought and sold.
How Can a Franklin Park Bankruptcy Lawyer Help?
Filing for bankruptcy in Franklin Park is a very important decision, and should not be made lightly. Before filing, one should consult with a good Franklin Park bankruptcy attorney for help.