Illinois Bankruptcy Laws should be known by every resident of the state of Illinois. Declaring bankruptcy is every debtor’s dilemma. It can be a tough decision to make and once you’ve decided to pursue this action, it will leave a permanent dent on your credit ratings. While there are other options you can consider, bankruptcy is the easiest way out. This will put a temporary end to disturbing phone calls from collection agencies and will lessen the mess in your mailbox. Therefore, it is vital that every debtor considering bankruptcy should familiarize Illinois bankruptcy laws.
Before you apply for a Chapter 7 or Chapter 13 bankruptcy protection program, a court-mandated attendance of a comprehensive credit counseling program should be accomplished. This should be done 180 days before the bankruptcy petition and should have all the supporting documents to prove that you have attended the counseling. Most importantly, you have to be a permanent resident of the state of Illinois to apply for bankruptcy.
Under federal laws, there are two types of bankruptcy protection. For most debtors, their first option is the Chapter 7 protection or the liquidation plan. To be eligible for Chapter 7, a means test will be administered to determine if your monthly income is below the mean income level of the state of Illinois or if you do not have the capacity to pay $100/month to the creditors. Although there are some asset exemptions if you file for this bankruptcy type, your non-exempt assets will be controlled by the trustee. The trustee is in charge of liquidating your assets and distributing the proceeds to the creditors.
Chapter 13, on the other hand is slightly different from the previous bankruptcy type. This bankruptcy protection program does not wipe out your debts, but instead it offers an extension for the debtors to pay the creditors. This extension is outlined in the repayment plan the debtor has proposed with the trustee’s help. A payment period of 3 to 5 years is allocated to the debtors, wherein an automatic stay will prevent the creditors from making any legal action against the debtor within this payment period. It is necessary for a debtor to have a regular income to declare a Chapter 13 bankruptcy.
Illinois bankruptcy laws specify certain assets protected from bankruptcy. The most essential assets for everyday living will not be given up for liquidation. The following are the state exemptions:
• A residential property with an equity up to $15,000;
• A vehicle with equity up to $2,400;
• Books and tools of trade amounting to $1,500;
• Personal belongings like the Bible, clothing, family photos and portraits, and school books; and
• Other benefits including life insurance proceeds, health aids, public benefits, and child support.
Qualifying for the bankruptcy program is just one of the intricacies you are going to go through. To ensure that you will succeed in the bankruptcy application and establishment a fresh start, seek the advice of a competent lawyer. One of the most important criteria in looking for a lawyer is one is well-versed with the bankruptcy laws of Illinois. This lawyer should also have a license to practice in the state of Illinois. Most importantly, make sure that your only and last option to free yourself from staggering debts is bankruptcy.