Northbrook, Illinois Bankruptcy Practice Areas and Legal Definitions
Illinois New Bankruptcy Laws:
Bankruptcy is a federal court process designed to help individuals and businesses eliminate their debts or repay them under the protection of the bankruptcy court. Bankruptcies can generally be described as liquidation or reorganization. Under a liquidation bankruptcy (Chapter 7), a claimant files to eliminate debt through the bankruptcy court. Under a reorganization bankruptcy (Chapters 13), a claimant files a plan with the bankruptcy court, proposing how to repay creditors.
As of October 17, 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act changed the requirements a debtor must meet in order to file Chapter 7 bankruptcy. New restrictions include the following: debtors are required to seek budget and credit counseling six months prior to filing, financial "testing" is required to determine the debtor's capacity for debt repayment, Chapter 7 cannot be filed if the household income is greater than the median household income as determined by the state, and state exemptions cannot be applied unless the debtor has resided at his or her current residence for more than two years.
Due to these new laws, debtors who were eligible to file under Chapter 7 will now have to file under Chapter 13 bankruptcy instead, a separate procedure in which individuals and creditors agree to a court-imposed plan requiring that some or all debts be repaid over five years, with an appointed trustee to monitor the repayment process. Bankruptcy filings will continue to be recorded on an individual's credit report for seven years in the case of Chapter 13 and for up to ten years for Chapter 7. For additional information related to New Bankruptcy Laws, contact Northbrook, Illinois bankruptcy Attorney Paul M. Bach.
Chapter 7:
Chapter 7 cases are commonly referred to as straight bankruptcy or liquidation cases, and may be filed by an individual, corporation, or a partnership. Under chapter 7, the debtor is allowed to claim that certain property is exempt. In exchange for this, the debtor gets a discharge, which means that the debtor does not have to pay certain types of debts.
Chapter 13:
Chapter 13 permits individuals to keep their property by repaying creditors out of their future income. It is not available to corporations or partnerships. Each chapter 13 debtor proposes a repayment plan that must be approved by the court. After completion of payments under the plan, chapter 13 debtors receive a discharge of most debts.
Chapter 11:
Chapter 11 is the reorganization chapter that enables businesses and individuals with substantial assets and/or income to restructure and repay their debts. Chapter 11 allows flexibility in structuring the reorganization, and there is no debt limit under Chapter 11. However, only a chapter 11 debtor that qualifies as a small business may request expedited treatment under chapter 11. To qualify as a small business, the debtor must be engaged in commercial or business activities, other than the ownership of real property, and the total of its debts (secured and unsecured) must be less than $200,000. In addition to the filing fee paid to the Clerk, a quarterly fee must be paid to the U.S. Trustee in all Chapter 11 cases. Due to the expense and complexity of Chapter 11, the decision to file a Chapter 11 petition should be made in consultation with an attorney.
Illinois Debt Consolidation:
Contrary to popular belief, debt consolidation is not a loan; rather, it is a process that restructures debt into one low monthly payment. It further enables a consumer to reduce the amount owed, thereby eliminating interest.
Very often a consumer can detect warning signs of having too much debt long before any collection notices are received. If more than two of these apply to you, it is best to contact Illinois bankruptcy Attorney Paul M. Bach to discuss your debt consolidation options:
- You have begun charging essential expenses such as food and daily expenditures to your credit card
- You are making only the minimum payments on your credit cards each month
- You are near the limit on your credit cards
- You have too many credit cards
- You are unsure how much money you owe creditors
Illinois Bankruptcy Fraud:
Bankruptcy fraud is a bankruptcy filed with criminal intent--i.e. the intention of evading payment for goods or services even though the consumer has funds for repayment, or accepting payment for goods or services without supplying such services. Common types of bankruptcy fraud include petition mills, false oath, concealment of assets and fraudulent conveyance.
If you or someone you know in Northbrook, or anywhere in the greater Chicago metropolitan area, needs debt consolidation legal counsel or the assistance of an experienced bankruptcy lawyer, contact Bach Law Offices today at (866) 283-7838, or complete the contact form provided on this site to schedule your free initial consultation.