Bankruptcy is a legal procedure allowing a person or business to have their debts discharged, in part or in whole. It is usually treated as a last resort, because, while it can prevent financial catastrophe, it has some major long-term consequences. This warrants careful consideration of the costs and benefits. Bankruptcy is governed by federal law and handled in federal courts, so the procedural and substantive rules involved in Illinois are often the same as anywhere else in the U.S. However, individual bankruptcy courts have slightly different rules for items such as exemptions, so it would be a good idea to consult with a local Huntley, Illinois bankruptcy lawyer beforehand.
Chapter 7 Bankruptcy in Huntley, Illinois
In Huntley, Illinois, there are 2 commonly-used forms of consumer bankruptcy: Chapter 7 and Chapter 13. Chapter 7 involves liquidation of some 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 usually includes homes, vehicles, retirement accounts, and others. These are not available to creditors.
Once the eligible property is sold, and the funds transferred to the creditors, the dischargeable debt is excused. Some types of debt, however, can't be discharged in Chapter 7 Bankruptcy in Huntley, Illinois. These include student loans, criminal fines, and taxes, among others. If most of your debt can't be discharged, Chapter 7 might not be the best choice for you.
Chapter 13 Bankruptcy in Huntley, Illinois
Chapter 13 Bankruptcy in Huntley, Illinois is very different from Chapter 7. Whether or not it is a better option is highly dependent on the facts of each individual case. Chapter 13 does not eliminate any debt, but it creates a new payment plan that should give the debtor some breathing room. Usually, all of the debts are consolidated into 1 periodic payment. While this might make it take longer to pay off the debt, if the debtor is willing to make a few sacrifices, the plan should be manageable.
Which Type of Consumer Bankruptcy Should I File in Huntley, Illinois
The answer to this question depends heavily on your individual situation. If you have enough steady income to manage a payment plan, and a lot of non-exempt property that you are unwilling to part with, Chapter 13 might be a good option. If you don't have much steady income, and most of your property is exempt, Chapter 7 might be better.
Whatever your situation, you should speak with a local Huntley, Illinois bankruptcy attorney. Your lawyer will be able to advise you of your options and their likely consequences, which will help you make a more educated decision.