Illinois Chapter 13 Bankruptcy Attorneys Serving DuPage, Kane, Kendall and Will Counties
If you are struggling with loads of debt but you are receiving an income, Chapter 13 bankruptcy may be right for you. In Chapter 13 bankruptcy, you commit to a repayment plan over 3 to 5 years to repay your debt. This is unlike Chapter 7 bankruptcy in which your unsecured debts are discharged. How much you will repay depends partially on what is called the
“Chapter 13 Means Test”.
With Chapter 13 bankruptcy, you are able to keep most of your property while getting relief from your debt.
Why File Chapter 13 Bankruptcy in Illinois?
- Stop Foreclosure – Immediately stop foreclosure and catch up on your payments over a five-year period.
- Protect Assets – Chapter 13 allows you to keep assets you would otherwise lose in a Chapter 7.
- Modify Repayment Time, Interest, and Amount – You can repay your car over a five-year period, lower the interest rate on your car loan and sometimes the amount you pay for the car can also be lowered. In certain cases, you can get rid of your second mortgage!
- Child Support and Divorce Debts Restructured – You can repay back child support over a five-year period (and not go to jail) as well as pay a percentage on other divorce obligations such as property division and debts you assumed in a divorce.
Understanding Chapter 13 Bankruptcy and How To File Chapter 13 Bankruptcy in Illinois
Chapter 13 Bankruptcy Illinois – Basics
When filing a Chapter 13 bankruptcy, you propose a 3 to 5 year repayment plan to your creditors offering to pay off all or part of your debts from your future income. Chapter 13 can be used to prevent a house foreclosure; make up missed car or mortgage payments; pay back taxes; stop interest from accruing on your tax debt (local, Illinois state or federal); keep valuable non-exempt property; and more. Once you have completed all of the payments provided for in the plan, all of your remaining dischargeable debt will be wiped out. The amount to be repaid is determined by several factors including your disposable income. In addition, the total amount paid to creditors under chapter 13 plan must also be at least as much as creditors would have received if you had filed a chapter 7 bankruptcy. To file Chapter 13 bankruptcy you must have a “regular source of income” and have some disposable income to apply toward your chapter 13 plan.
Chapter 13 bankruptcy is generally used for people who are behind on their mortgage payments and want to keep their house or want to keep secured assets, such as a home or car, when they have more equity in the secured assets than they can protect in their Illinois bankruptcy exemptions. Chapter 13 bankruptcy is reorganization whereas Chapter 7 bankruptcy is a liquidation.
Top 5 tips for a successful chapter 13 Bankruptcy Illinois
- Your plan payment to the trustee begins 30 days after your case is filed.
- Make your mortgage payments the next time one comes due after your case is filed. Your mortgage company may not send you a coupon or payment book. You’re responsible for making mortgage payments regardless of whether you have a coupon or not. This may sound unfair but it is just the way it is-period.
- Keep everything. Keep copies of all payments to the trustee and all payments to mortgage companies. If it ever comes to a dispute as to whether a payment was made the burden is on you to produce copies of payments and even proof that the payments were cashed.
- Put your name and bankruptcy case number on all payments you make.
- We strongly encourage you to participate in the monitoring of your case. You should go to Glenn Stearns’ website www.Lisle13.com and obtain a password. The information you obtain from this site will be much more valuable than the 6-month periodic report you will receive from the bankruptcy court. You will be able to monitor who is being paid, how much and when. Just do it!
To learn if Chapter 13 bankruptcy can help you out of your financial difficulties, contact us to schedule a free initial consultation.