Chapter 13 Bankruptcy Attorney In Chicago, Illinois

What Is A Chapter 13 Bankruptcy?

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Chapter 7 vs. Chapter 13 Bankruptcy

Choosing between Chapter 7 and Chapter 13 depends on various factors, including the individual's income, assets, and financial goals. Chapter 7 is typically preferred when the debtor has minimal assets and wants a quicker discharge, while Chapter 13 is suitable for those with a regular income who wish to retain assets and repay debts over time. circumstances.

Brief Comparison between Chapter 7 and Chapter 13

Chapter 7 and Chapter 13 are two distinct types of bankruptcy filings, each serving different purposes and catering to different financial situations. Here's a brief comparison:

What are the benefits of chapter 13 bankruptcy?

One of the primary advantages of Chapter 13 is its ability to help debtors catch up on delinquent payments and avoid foreclosure or repossession.

Chapter 13 bankruptcy offers several advantages, especially for individuals with a regular income who want to reorganize their debts and retain their assets. Here are some key advantages of Chapter 13 bankruptcy:

Protection from Foreclosure or Repossession: Once the debtor files for Chapter 13, an automatic stay is typically imposed, preventing creditors, including mortgage lenders and car loan lenders, from pursuing foreclosure or repossession actions. This gives the debtor time to implement the repayment plan.

Preventing IRS Collection Actions: Filing for Chapter 13 can trigger an automatic stay, which puts a halt to most collection actions, including those by the IRS. This provides the debtor with breathing room to address their financial situation without the immediate threat of IRS enforcement actions.

Prioritization of Child Support Obligations: Support obligations are considered priority debts in bankruptcy. The debtor is required to make these payments a priority in the repayment plan, ensuring that they are addressed ahead of other unsecured debts.

Asset Protection: One of the significant benefits is the ability to retain assets such as a house or a car. Debtors can catch up on missed mortgage or car loan payments through the repayment plan, preventing the risk of foreclosure or repossession.

Flexible Repayment Terms: The debtor has flexibility in determining the terms of the repayment plan. This can be especially beneficial if there are fluctuations in income or unforeseen expenses during the repayment period.

Protection from Creditors: Once the Chapter 13 plan is approved by the court, creditors are bound by its terms. This provides a level of protection to the debtor against aggressive collection actions, wage garnishments, or legal actions by creditors.

Debt Discharge: At the successful completion of the repayment plan, the remaining eligible unsecured debts may be discharged, even if they were not fully repaid. This provides a fresh financial start for the debtor.

Avoiding Liquidation: Unlike Chapter 7 bankruptcy, which involves liquidating non-exempt assets to repay creditors, Chapter 13 focuses on income and allows the debtor to keep their property while repaying debts.

Co-Signer Protection: Chapter 13 can offer protection to co-signers. If someone co-signed a loan for the debtor, Chapter 13 can prevent the creditor from pursuing the co-signer for the duration of the repayment plan.

Potential Interest Reduction: In some cases, Chapter 13 plans may allow debtors to pay off certain debts with reduced or no interest, providing financial relief.

No Income Limitations: Chapter 13 doesn't have strict income limitations, making it accessible to a broader range of individuals compared to Chapter 7, which has income eligibility criteria.



It's important to note that while Chapter 13 offers these advantages, the decision to file for bankruptcy should be carefully considered, and individuals should seek legal advice to determine the best course of action based on their specific financial situation.

How do i qualify for chapter 13 in Chicago, IL?

Chapter 13 bankruptcy, often referred to as a "wage earner's plan" or "reorganization" bankruptcy, is designed for individuals with regular income who want to repay their debts over a period of time. Here are the general qualifications for filing Chapter 13 bankruptcy:

Regular Income: Chapter 13 is typically available to individuals with a regular source of income, such as wages from employment or self-employment income.

Debt Limits: There are specific debt limits for Chapter 13 bankruptcy. As of my last update in January 2022, the unsecured debt limit is $419,275, and the secured debt limit is $1,257,850. These limits are subject to change, so checking for the most current figures is essential.

Types of Debt: Chapter 13 is suitable for individuals with various types of debt, including mortgage arrears, car loans, credit card debt, and certain tax debts.

Ability to Create a Repayment Plan: One key feature of Chapter 13 is the debtor's ability to propose a repayment plan to the court. The plan outlines how the debtor will repay creditors over three to five years.

Disposable Income: Debtors must have enough disposable income to meet the repayment plan requirements. Disposable income is the amount left after necessary living expenses are deducted from total income.

Priority Debts: Priority debts, such as tax debts and domestic support obligations, must be addressed in the repayment plan and paid in full during the bankruptcy period.

Credit Counseling: Individuals are typically required to undergo credit counseling from an approved agency within 180 days of filing for Chapter 13 bankruptcy.

Filing Documents: Filing for Chapter 13 requires submitting various documents, including a petition, schedules of assets and liabilities, a schedule of current income and expenditures, and a proposed repayment plan.

Court Approval: The proposed repayment plan must be approved by the bankruptcy court. Creditors and the bankruptcy trustee will have the opportunity to review and object to the plan.

It's important to note that bankruptcy laws can change, and the eligibility criteria may vary based on jurisdiction. If you are considering Chapter 13 bankruptcy, it is highly advisable to consult with a bankruptcy attorney who can provide guidance based on your specific situation and the current legal requirements.

Advantages of chapter 13 vs. chapter 11

Although both Chapter 13 and Chapter 11 hinge upon reorganization plans, Chapter 11 has no debt limits and there is no 60-month limitation. Chapter 13 cases are generally much simpler and less time-consuming. However, there are many advantages of Chapter 13:

Designed for Individuals: Chapter 13 is primarily designed for individuals (including sole proprietors) rather than businesses. It allows individuals to reorganize their debts and create a repayment plan based on their income.

Simplified Process: The process of filing for Chapter 13 is generally less complex and more streamlined compared to Chapter 11. It is more accessible for individuals with a regular income.

Quicker Resolution: Chapter 13 typically has a faster resolution than Chapter 11. The repayment plan usually spans three to five years, providing a more efficient path to debt relief.

No Unsecured Creditor Committee: In Chapter 13, there is typically no official committee of unsecured creditors, simplifying the negotiation process.

More Affordable: Attorney Fees and court filing fees are generally much less than Chapter 11

Quicker Resolution: The time to confirmation of a Plan is generally much shorter, Confirmation is much simpler, and your appearance may not be required. Creditors do not vote on confirmation. Plan can be confirmed over creditor objection without cramdown procedures.

Debtor Control: Easy in, easy out—Debtor can voluntarily dismiss or convert and there is No involuntary Chapter 13.

No administrative burden: no IDI (Initial Debtor Interview) or monthly reports for non-business debtor.

Less Expense: Chapter 13 Trustee commissions may be less than US Trustee quarterly fees. Debtor is not held to the standards of a fiduciary. Only the Debtor can file a plan.

Objecting to Creditors’ Claims: Creditors must file Proofs of Claim to be paid and we can object to them for you!