If you find yourself drowning in a mountain of debt, you may want to seek remedies before your situation gets even worse. Creditors can file lawsuits that result in judgments to garnish your wages and place a lien on your property.
In Illinois, you may want to take a look at the two main categories of bankruptcy filings. Understanding the pros and cons of both may help you make the decision on which one works best for getting out from under your debt.
Chapter 7: Pay
Bankruptcy through a Chapter 7 filing is the route most people know. Through this process, a court-appointed trustee may choose to liquidate qualified assets to pay off creditors. It is the path that may result in you losing some of your property, possessions and other assets. Illinois’ bankruptcy laws make some exceptions to this, called exemptions. Some items that are exempt (up to a certain amount) from sale by the trustee include:
- Personal motor vehicles
- Primary residence
- Child support and alimony payments
After the trustee pays what debts he or she can with the assets, the remaining debt goes away. Chapter 7 bankruptcy stays on your credit for a decade.
Chapter 13: Repay
You may not have enough equity in personal property or assets to file under Chapter 7, so Chapter 13 is the way for you to go. Under this process, you and the trustee negotiate with creditors to lower the amount due and enter into a payment plan. If you demonstrated an ability to pay for your home and vehicle, they may not become part of this plan. The payment plan must conclude three to five years after it commences, and you must abide by the terms. This bankruptcy path stays on your credit for up to seven years.
Speaking to an attorney who handles bankruptcy filings may help you decide which path works best. Getting clear of crushing debt is important for your future.