People can recover from bankruptcy. Filing does not mean the end of being able to buy a car or another home. However, the process is an alternative to paying the minimum on credit card debt, getting deeper in debt and never having extra money. There are several types of bankruptcy but individuals are most familiar with Chapters 11, 7 and 13. Chapter 11 helps troubled businesses reorganize so they can keep their business and pay their creditors. It is an alternative to liquidating and closing down.
Financially troubled individuals have a choice between filing Chapter 7 or Chapter 13. The court issues an automatic stay with both filings. This means that creditors must stop all collection activities when a petition is filed. Creditors are notified and the court assigns a trustee to the case. The trustee’s job is to look for the debtor’s assets and liquidate them to pay creditors. However, Bankruptcy Lawyers In Chicago advise their clients that some assets are exempt. The first step is the meeting of creditors. Creditors have the right to attend but they usually do not. The debtor and lawyer meet with the trustee who asks probing financial questions. The trustee closes the case if the debtor does not have assets. However, the trustee goes after any assets that are found. Chapter 7 usually takes about two months to complete.
Chapter 13 filers propose to pay a certain amount per month to the trustee. The trustee distributes the payment among the creditors. Bankruptcy Lawyers In Chicago negotiate with the trustee on the amount of the monthly payment. It is usually based on how much the debtor makes and how much they have to repay. A debtor must have regular income in order to qualify for Chapter 13. Unfortunately, a large portion of the debtor’s disposable income goes to the trustee. It will be a hard three to five years during the bankruptcy. However, in the end, the debtor gets to keep their home and assets. Further, Chapter 13 is a good tool for renegotiating certain debts like those with the Internal Revenue Service. Most people start rebuilding their credit as soon as the bankruptcy is discharged. Get in touch with us for more information.
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