Bankruptcy Basics For Illinois Residents
In Illinois, the most common form of personal bankruptcy is a Chapter 7 bankruptcy. The court sells most of your assets and uses the proceeds to pay as much of your debt as possible. Any debt that cannot paid is then considered discharged or erased. If you opt instead for a Chapter 13 bankruptcy, you’ll develop a plan to pay off priority and secured debts, along with as much unsecured debt as possible, over a specific duration of time. Either way – or even if you choose an option other than bankruptcy – if you’re struggling with mounting and overwhelming debts, discuss your rights and options with an experienced Chicago bankruptcy lawyer as soon as possible.
Chapter 7 bankruptcy is available in Illinois to debtors whose average monthly income for the previous six months is less than the state’s median income. In Illinois, the median income for a single-person household is $48,232 annually, as of November 2014. People with higher incomes may file for Chapter 7 bankruptcy only by passing a rigorous means test. How your monthly income compares to the state median also determines how long you will be in Chapter 13 bankruptcy if that’s your option. If you earn less than the median income, your plan should not last longer than three years, although the bankruptcy court may extend it up to five years for good cause. If your monthly income matches or surpasses the state median, your plan generally lasts five years, but if you can pay all of your unsecured debt in less time, your Chapter 13 plan may conclude sooner.
You are allowed to keep some of your personal property when you file for bankruptcy protection in Illinois. These items are called exemptions. Illinois allows you to keep personal property up to a certain value, including health aids, a Bible, your clothes, and prepaid tuition trust funds. Certain pensions, public benefits, and the property of a business partnership are also exempt. Illinois exempts up to $15,000 of equity interest (the amount you actually own) in owner-occupied real estate and $2,400 of equity interest in motor vehicles. Bankruptcy can put you back on the road to financial freedom and offer you some protections along the way, but it’s not for everyone. If you’re considering bankruptcy, don’t act before speaking to an experienced Chicago bankruptcy lawyer, and if you’re struggling with debt, make the call today.
