In West Dundee, Illinois, bankruptcy is a legal proceeding in which a person or business has some or all of their debts legally absolved, when they are unable to pay them. This hopefully allows them to begin over with a clean slate and move on, after having learned to better manage their use of credit in the process. However, bankruptcy is not a free ride, allowing someone who simply doesn't feel like paying their debts to get out of that legal requirement. It is designed to prevent debt which has minimal chance of ever being paid back from ruining the life and finances of the debtor. It also carries significant long-term consequences, which must be carefully weighed against the potential benefits. For example, bankruptcy makes it very difficult for the debtor to obtain credit in the near future.
For that reason, it would be advisable to speak with a good West Dundee, 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 West Dundee attorney's advice is absolutely indispensable.
Types of Bankruptcy in West Dundee, Illinois
In West Dundee, 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 West Dundee, 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 verified, and the proceeds handed over to the creditors, the debt is perceived 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 completely 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.
Under Chapter 13 bankruptcy in West Dundee, most of the debtor's debt is not discharged. Instead, the bankruptcy court, working with the debtor and participating creditors, work out a payment plan that allows the debtor to pay off most of his or her debts over a prolonged period of time, thus theoretically making the debt far more manageable. Once a payment plan is approved by the court, creditors are prohibited from attempting to collect payment under their original agreements that gave rise to the debt in the first place. Though Chapter 11 bankruptcy can be used by individuals, it is almost always 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 authorized by a vote of participating creditors.
A major advantage of Chapter 11 bankruptcy is that businesses can continue their operating while going through the process. Also, they can continue to buy and sell their stock.
How Can a West Dundee Bankruptcy Lawyer Help?
The decision to file for bankruptcy in West Dundee is not one to be made easily, and it definitely should not be made without first obtaining the advice of an accomplished West Dundee bankruptcy attorney.