Bankruptcy is an alternative when bills pile up, and are not being paid. Many people live from paycheck to paycheck, only to have nothing left over to pay bills. Some people wait to act, until they are faced with losing a home, or a car. Do the homework and learn more about bankruptcy. The process helps consumers get a fresh, financial start.
Bankruptcy allows consumers to eliminate or repay some or all of their debt, under the protection of the Federal Bankruptcy Court. Most bankruptcies fall into two categories: liquidation or repayment. Chapter 7 bankruptcy is in the liquidation category. The bankruptcy trustee may take some or all of a person’s assets to repay debt. An Aurora Bankruptcy Lawyer informs clients which property is exempt under state law. The office of Ledford & Wu offers free consultations in the Chicago area.
Chapter 7 can be filed by individuals or businesses, and typically lasts for three to six months. Additionally, there are income guidelines for filing Chapter 7. Filers take the means test to see how much disposable income they have. Further, the filer’s income must meet or be less than their state’s median income.
Chapter 13 falls under the repayment category of bankruptcy. In order to file, people must have a regular source of income. The Aurora Bankruptcy Lawyer will propose a repayment plan to the court. The plan will propose how debt will be repaid over a three to five year period. The minimum payment is determined by three factors:
- how much money is earned
- how much is owed
- how much unsecured creditors would have received under Chapter 7
People who file Chapter 13 are not allowed to have more than $1.1 million in secured debt and $383,175 in unsecured debt. Filers have an option to keep their cars and homes, and make up missed payments over time. Everyone who files bankruptcy is required to complete credit counseling with a government-approved agency. The purpose of the counseling is to ascertain whether bankruptcy is really needed. The counselors may suggest other informal repayment plans. People who are failing financially can benefit from the counseling. It is a beginning to finding out the best way to get out of debt.
