File for Chapter 13 Bankruptcy in Chicago and Save Your Assets

19-Oct-2010 For most of us bankruptcy is very confusing and all of the options for filing can be totally overwhelming. When deciding between chapter 7 and chapter 13 bankruptcy there are a few important things to consider.

When you file for chapter 13 bankruptcy you do not liquidate your assets to pay off creditors. Instead you go to court and the court approves a new repayment plan for your debts. This repayment plan will be free of interest and you are given up to 5 years to pay back your debt. This differs from chapter 7 bankruptcy where all your assets are liquidated and the money garnered from liquidation is used to pay back creditors.

Once you enter into your new payment plan and as long as you adhere to the payment schedule creditors will no longer be able to hound you for payment. Creditors are also not allowed to sue you, shut off your utilities or repossess any property.

With chapter 7 bankruptcy creditors get only a portion of what is owed to them however with chapter 13 creditors are usually paid back in full.

Chapter 13 bankruptcy is typically used by businesses that do not want to lose their assets and feel that with a little extra time they can turn things around. Individuals can also file chapter 13. The main criteria required is that you have a regular income. This income will be used to pay off your debt within the repayment plan.

Both chapter 7 and chapter 13 bankruptcy will have a negative effect on your credit score however chapter 13 is less severe. Chapter 13 will stay on your credit record for approximately 2 years less than chapter 7 bankruptcy.

In some cases a person or business suffers additional setbacks after the chapter 13 repayment is in place and they are unable to continue paying. There is a chance that in this situation the payment plan can be adjusted or that the bankruptcy filing can be converted to chapter 7.

Due to the complexities of filing for bankruptcy it is in your best interest to get a bankruptcy attorney who is well versed in both chapter 13 and chapter 7 proceedings. Your attorney will advise you as to what type of bankruptcy will be the best fit for your situation and guide you through the process from start to finish.

Chang and Carlin Disclaimer
The content found on the Chang & Carlin site is not legal advice and is purely for informational purposes. The information contained herein is not a substitute for the advice of an attorney and does not create an attorney-client relationship. If you are interested in obtaining information about chapter 7 bankruptcy, chapter 13 bankruptcy, foreclosure services, real estate legal services, you are encouraged to call our law firm at 866-790-8601 or Request a Free Legal Evaluation. Chang and Carlin serves clients in Chicago, Schaumburg, Joliet, Warrenville, Waukegan, Illinois.