Do I Qualify For Chapter 7?

Most Illinois families are only one financial emergency away from disaster. These situations include serious illness, job loss, and other events everyone faces from time to time. About a third  of Illinois families would be hard-pressed to pay a $400 emergency expense. Frequently, when money gets tight, unsecured debts, like credit card and medical bill payments, are the first things to go. Once a family falls behind on these bills, it’s almost impossible to catch up.

During times of financial crisis, many bankruptcy debtors try to save money by filing do-it-yourself bankruptcies. But a Chicago Chapter 7 bankruptcy lawyer can chart your way out of these dangerous financial waters. Only an attorney can give you and your family solid legal advice. Additionally, a Chicago bankruptcy lawyer can unlock some advanced Chapter 7 options which, in many cases, can save your family thousands of dollars. And, as outlined below, most people qualify for this federal debt relief program.

Benefits of Chapter 7

The Automatic stay, asset protection, and unsecured debt discharge are the three biggest benefits of Chapter 7 bankruptcy.

Let’s start with the Automatic Stay. As soon as debtors file their voluntary petitions, Section 362 of the Bankruptcy Code stops:

• Foreclosure,
• Creditor harassment,
• Repossession,
• Wage garnishment, and
• Eviction.

In other words, Chapter 7 gives families the breathing room they need, so they can make good decisions about their financial futures.

Bankruptcy also protects your house, motor vehicle, personal property, retirement account, government benefits, and other key assets. If debtors do not file bankruptcy, in many cases, creditors do not need court orders to seize these and other assets.

Finally, Chapter 7 discharges most unsecured debts in a matter of months. Imagine what your family can do with the hundreds of dollars a month that currently go to credit cards, payday loans, and other unsecured debt treadmill payments.

Formal Qualifications

The means test is the main Chapter 7 qualification item. Debtors are automatically eligible for Chapter 7 if their incomes are below average for that geographic area. As of May 15, 2021, that amount is $108,549 per year for a family of four.

If automatic qualification is unavailable, you probably still qualify based on your monthly income and expenses. That’s especially true if your family lives in Chicagoland, where the cost of living is higher.

If you do not qualify based on your actual income, other debt relief options, such as non-bankruptcy debt negotiation, are available. Sometimes, the threat of filing bankruptcy is more effective than a filing. The creditor doesn’t know the threat is an empty threat.

Additionally, all bankruptcy debtors must complete one pre-filing and one post-filing debt/budgeting class. These classes, which are normally available online, only take a few minutes and only cost a few dollars.

Informal Qualifications

The formal qualifications are set by federal law and they are the same for everyone. The informal qualifications are usually set by the trustee (person who oversees the bankruptcy for the judge) and vary in different jurisdictions.

The most common informal qualification involves Schedules I and J, which are the monthly income/expense schedules. Unless the debtor is at least a little bit in the red every month, many trustees question the need to file Chapter 7, which is a rather extreme form of debt relief.

This informal qualification, and others like it, often blindside DIY filers. They simply have no idea they are coming. In contrast, a Chicago bankruptcy attorney helps you prepare documents accordingly, without violating the law, and also advocates for you if the trustee asks pressing questions.

Count on Hard-Working Cook County Lawyers

Most people qualify for Chapter 7 and expedited debt discharge. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. Convenient payment plans are available.

Resource:

minneapolisfed.org/article/2021/what-a-400-dollar-emergency-expense-tells-us-about-the-economy