Imagine getting stuck in a financial storm. Debt is swirling around you, creditors are knocking at your door, and it feels like there’s no way out. Then, you catch a glimmer of something in the distance. Could it be a lifeline? You’ve heard of Chapter 7 Bankruptcy, but is it the right choice for your situation? Let’s dive into the specifics and explore the pathway through Chapter 7 Bankruptcy in Chicago.
Nationwide and state statistics
The good news? Bankruptcy cases have steadily dropped the past couple of years as the country continues to rebound from the global pandemic. Now comes the bad news: Illinois remains a hotspot for bankruptcy filings.
Here’s a snapshot of the latest data from Debt.org:
- Total cases nationally in 2022: 387,721; in 2021: 413,616; in 2020: 544,463; in 2019: 774,940; in 2018: 773,418
- Total Chapter 7 filings in 2022: 157,087; in 2021: 120,002; in 2020: 156,377; in 2019: 286,979; in 2018: 290,146.
- Number of bankruptcies declared in 2022: California (31,792); Florida (26,724); Georgia (22,815); Illinois (20,393); and Texas (19,553).
Understanding Chapter 7 Bankruptcy
Chapter 7 Bankruptcy, or “liquidation bankruptcy,” offers a clean slate for individuals drowning in debt. But it’s not without its caveats. Not everyone qualifies for this relief, and it involves selling off some of your assets to repay creditors. It’s crucial to weigh the pros and cons before starting this journey.
Qualify For Chapter 7 Bankruptcy
The first checkpoint on this journey is to pass the means test, which analyzes your income relative to the median income for a similar-sized household in Illinois. If your income falls below this median, then you qualify for Chapter 7.
However, the test doesn’t end there. If your disposable income, after deducting allowable expenses, is less than $100 per month, then you may qualify to file for bankruptcy under Chapter 7. But if it’s greater than $166 per month, then you would likely need to file a Chapter 13 bankruptcy instead. So what if your situation falls somewhere in between? It may come down to the amount of your unsecured debt and other factors.
Hire a Bankruptcy Attorney
Next, consider hiring a seasoned Chicago bankruptcy lawyer. Sure, this is an added expense – but it’s also an investment in getting the process done right.
“As you can see, the math calculations are very complex,” said bankruptcy attorney David. M. Siegel in his book, “Chapter 7 Success: The Complete Guide to Surviving Personal Bankruptcy.” Siegel is the lead attorney for Illinois-based David M. Siegel and Associates.
The bottom line? Navigating these calculations and understanding the nuances of Illinois bankruptcy laws are tasks best left to professionals if you want to avoid potential pitfalls.
File Your Bankruptcy Petition
It’s time to file your bankruptcy petition after you’ve teamed up with your attorney. The process involves submitting several forms detailing your financial situation to the Illinois bankruptcy court. You must also complete a credit counseling course within 180 days before filing.
Attend Your 341 Meeting
Don’t worry; this meeting isn’t as daunting as it might sound. The 341 meeting, also known as the “creditors’ meeting,” is an opportunity for your creditors to ask you questions about your bankruptcy forms and financial situation under oath. Remember, honesty is your best policy here.
Complete a Debtor Education Course
Before your debts can be discharged, you must complete a debtor education course. This course, required by Illinois law, equips you with the knowledge to manage your finances better and avoid future bankruptcy. Can’t pay the small fee for this course? You may be able to get the fee waived.
Discharge of Debts
Finally, your remaining eligible debts will be discharged if all goes well. Think of it as successfully completing a debt relief program in Illinois. It’s like the break of dawn after a long, dark night. While not all debts can be discharged under Chapter 7, such as alimony, child support, certain tax debts, and student loans, it’s still a significant step toward financial freedom.
Take Charge of Your Future!
Navigating Chapter 7 Bankruptcy in Chicago might feel like steering a ship through choppy waters, but with the right knowledge and the best bankruptcy lawyer in Chicago on your side, you can make it to calmer seas. Take charge of your financial future, consider your options, and take the first step toward regaining control of your financial life. Remember, a setback is a setup for a comeback, and bankruptcy could be the lifeline you need to start anew.
David M. Siegel is the lead attorney at David M. Siegel & Associates, an Illinois-based law firm that specializes in bankruptcy cases with offices in Chicago and Wheeling. Connect with him today if you have questions about navigating the complex bankruptcy process, potential debt relief programs in Illinois, or finding the best bankruptcy lawyer in Chicago to guide you through this challenging time.
