When deciding whether or not to file for Chapter 7 or Chapter 13 bankruptcy, often the choice boils down to the immediate finances. Chapter 7 bankruptcy usually requires a higher upfront payment, typically around $1,000 versus Chapter 13 may offer $0 deposit. Throughout the duration, Chapter 13 is more expensive, approximately $3,000, but many debtors are unable to produce the higher initial costs for the alternative, and Chapter 13 often allows the inclusion of the fees in the repayment plan. Unfortunately, for a significant portion of the population, this decision is costly with lasting effects on the credit for only short-term relief.

Debtors Below The Poverty Line Are More Susceptible to Relapse

The low initial costs of Chapter 13 bankruptcy is alluring for many individuals struggling to make ends meet. Armed with the dream of living in a home without collectors calling around the clock and having some money left over at the end of the month, many debtors turn to debt relief options. However, not all bankruptcy options are equal. Chapter 13 operates on a repayment plan, typically about five years in length. So long as payments are kept up to date, collectors are unable to harass clients. However, for the population living under the poverty line and struggling to make ends meet, about half make it through the first year, let alone five years, and the calls begin once more.

One of the most commonly asked questions for people considering bankruptcy is, "what is a bankruptcy discharge?" A bankruptcy discharge is a court order that makes previously charged debts permanently unenforceable, effectively wiping the slate clean. The debtor becomes no longer responsible for the payment. As an additional benefit, all harassing calls, letters, and other forms of communication from creditors attempting to collect the money must stop. If collection attempts continue, creditors risk being in held in contempt of court and face potential punishments.

Are All of My Bills Dischargeable?

Not all debts discharge. Some obligations remain valid even after the completion of the bankruptcy process. Eligibility for payment discharge depends on the chosen bankruptcy chapter. Typically, Chapter 13 has a broader range of dischargeable payments. The following expenses are commonly non-dischargeable:

Having to file for bankruptcy can be devastating. And while it is a serious issue, there are several facts that many individuals do not know about bankruptcy as a whole. There are two notable types of bankruptcy: Chapter 7 and Chapter 13. To fully understand bankruptcy, it is very important to understand the differences.

What is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy, also referred to as a “wage earner’s plan,” gives individuals with regular income an opportunity to create a plan to pay off their debts.

The decision to file for bankruptcy is not one easily made. There are many potential downsides, such as the impact to your credit and the potential loss of some assets. Yet, when the calls from creditors have become a source of constant stress, the negative consequences seem worth enduring to receive the debt relief that bankruptcy can provide. So just how do you decide if bankruptcy is the right option for you? Many debtors find that a comparison of the pros and cons can help. Learn more about them, and discover what an experienced attorney can do to help you through the process, with help from the following information.

Potential Bankruptcy Benefits (Pros)

Many of the benefits that can come from filing for bankruptcy, such as the protection from creditor harassment and aggressive collection actions, are well-known. However, there are several other, lesser-known potential benefits as well. Examples include:

Filing for bankruptcy can relieve financial stress and give debtors a fresh, new start – but what many debtors do not realize is that the obligation to one’s creditor remains in effect until the debts are legally discharged. What is a bankruptcy discharge, when does it occur, and is there anything that debtors can do to expedite the process? The following information explains, and it describes where you can find assistance for your Illinois bankruptcy case.

What is a Bankruptcy Discharge?

A discharge in bankruptcy is a legal and permanent order that releases the debtor from any further obligation to the creditor. It also prohibits the creditor from contacting the debtor (i.e., email, phone, mail, or in-person) and they can no longer use legal actions to collect the debt (i.e., wage garnishment, intercepting tax refunds, etc.). It is important to note that discharge does not stop a creditor from repossessing or recover property with a valid lien (i.e., homes, vehicles, etc.). Some debtors may be permitted to work out an arrangement with their creditors to keep an asset. Others may be permitted to keep certain exempt assets. An experienced attorney can help determine if you may be eligible for either of these options.

Filing for bankruptcy has never been “easy,” but changes over the last several years have made the process even more complex than it used to be. Now, consumers must attend both credit counseling and debtor education before they can receive a bankruptcy discharge. Learn more about these counseling requirements in the following paragraphs, including how they are different and what you can expect during the process.

Why Counseling is Required

Most consumers would rather stay out of debt and avoid bankruptcy, but without the right tools, strategies, and information, doing so can be extremely difficult – especially in a world where credit is necessary for almost everything. Seeing the disconnect, the U.S. Government decided to put a new requirement in place; all debtors would need to attend counseling to improve their understanding of credit, debt, and how to manage it all wisely.

The decision to file for bankruptcy is not one easily made. It requires a debtor to take an honest look at their situation and admit that they need help. Filing for bankruptcy can also cause feelings of guilt, and it may negatively impact your credit score. How do you rebuild it, and how long does it take? The following provides some advice and guidance on this issue and explains where you can find assistance with your bankruptcy needs.

How Does Bankruptcy Affect Your Credit?

When you file for bankruptcy, your credit does take a hit. Furthermore, the bankruptcy stays on your credit for a total of 10 years. However, the damage is not as extensive as most people think. Yes, bankruptcy might make you a subprime borrower, but you also cannot file for bankruptcy again for another eight years if you file Chapter 7. Also, if you file Chapter 13, your debt-to-income ratio could be significantly decreased over the course of just a few years.

Credit is often used to obtain the important things in life: homes, vehicles, furniture, and more. Unfortunately, the use of credit also places consumers in debt. Should a life crisis occur – an illness, an auto or work accident, a layoff at their job, or another unexpected event – debt can quickly go from manageable to a full-on crisis. Is it possible to regain control without filing for bankruptcy? Perhaps, but even if bankruptcy is required, some strategies can be used to improve your circumstances.

An Overview of the Bankruptcy Process

Debtors who are unable to make good on their debts may be eligible to file for either Chapter 7 or Chapter 13 bankruptcy. Both offer a way to start with a “clean slate,” but both also have an impact on your credit score and ability to obtain new credit. The effect is temporary, of course, but it is an inconvenience that debtors should consider and discuss with an attorney before moving forward with the bankruptcy process.

The debt we are responsible for can pile up on us, seemingly out of nowhere. In an economy that pays lower wages in comparison to a steadily increasing cost of living, more and more people are getting crushed under the weight of their debt. Filing for bankruptcy can be a way out. The two most common types of bankruptcy in Illinois are Chapter 7 and Chapter 13; each has their unique characteristics.

Chapter 7 Bankruptcy

Filing for Chapter 7 Bankruptcy is a way to obliterate your debt—a process where your debt assets are sold, your creditors receive outstanding payment, and you are released from the debt. It is important to understand that while a Chapter 7 Bankruptcy can eliminate your debt, you also lose possession of any of the property you filed inside of the Chapter 7.