Bankruptcy is a legal procedure allowing a person or business to have their debts absolved, in part or in whole. It is normally treated as a last resort, because, while it can prevent financial catastrophe, it has some huge 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 Troy, Illinois bankruptcy attorney beforehand.

Chapter 7 Bankruptcy in Troy, Illinois

In Troy, Illinois, there are 2 common types of commonly-used consumer bankruptcy: Chapter 7 and Chapter 13. Chapter 7 liquidates part of the debtor's assets. It requires a certain percentage of the debtor's assets to be sold off to pay as much of his or her debt as possible. However, many forms of property that most people own are exempt, meaning that they don't need to be sold. This often includes houses, vehicles, insurance policies, and basic personal items, like clothing. These assets are not available to creditors.

Once qualified assets are sold, and the money turned over to the creditors, most remaining debt is absolved. However, there are certain types of debt that cannot be absolved in bankruptcy, including student loans, taxes, child support, and criminal fines. If most of your debt is non-dischargeable, it may not be a good idea to file for bankruptcy in Troy, Illinois.

Chapter 13 Bankruptcy in Troy, Illinois

Chapter 13 bankruptcy in Troy, Illinois is markedly different. It may or may not be a better option than Chapter 7, depending on the facts of your individual case. Chapter 13 bankruptcy does not excuse debt, it restructures it. This involves a court coming up with an altered repayment plan designed to be manageable for the debtor. This new plan sets aside the terms of the original contracts that created the debt in the first place. This creates a new payment structure, normally involving a single monthly payment, that the debtor should find manageable.

Which Type of Consumer Bankruptcy Should I File in Troy, 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.

In any case, it would be a good idea to consult a local bankruptcy lawyer in Troy, Illinois. Your lawyer can make an educated judgment as to what your best option is, and advise you accordingly (of course, the choice to file for bankruptcy is ultimately yours).