Bankruptcy is a legal procedure allowing a person or business to have their debts excused, in part or in whole. It is typically treated as a last resort, because, while it can prevent financial catastrophe, it has some influential long-term consequences. This warrants careful consideration of the costs and benefits. Bankruptcy is controlled by federal law and handled in federal courts, so the procedural and substantive rules involved in Illinois are often the identical as everywhere 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 Morton Grove, Illinois bankruptcy attorney beforehand.
Chapter 7 Bankruptcy in Morton Grove, Illinois
In Morton Grove, Illinois, there are 2 commonly-used types of consumer bankruptcy: Chapter 7 and Chapter 13. Chapter 7 bankruptcy involves a liquidation of some of the debtor's assets, which pays off part of his or her debt. Once this is done, the remaining debt is excused. Fortunately for debtors, many forms of property are exempt from liquidation, including homes, vehicles, necessary personal items, and retirement accounts.
Once the appropriate property is sold, and the funds transferred to the creditors, the dischargeable debt is absolved. Some forms of debt, however, can't be excused in Chapter 7 Bankruptcy in Morton Grove, Illinois. These include student loans, criminal fines, and taxes, among others. If most of your debt can't be excused, Chapter 7 may not be the best choice for you.
Chapter 13 Bankruptcy in Morton Grove, Illinois
Chapter 13 Bankruptcy in Morton Grove, Illinois differs considerably from Chapter 7. It might be a better option than Chapter 7, depending on the facts of your 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 arrangements that gave rise to the debt in the first place. This results in an adjusted 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 Morton Grove, Illinois
Chapter 13 is typically a good option for people who have a stable income, and a large amount of non-exempt property that they can't part with. On the other hand, if most of the debtor's property is exempt, and he or she does not have a stable income, Chapter 7 might be more beneficial.
Of course, you should always seek the counsel of an accomplished local Morton Grove, Illinois bankruptcy attorney before you make the decision to file. He or she will be able to advise you of your options, and suggest the best possible course of action for your specific situation.