Move Out of Chicago and Qualify For Chapter 7 Bankrupcy

Deciding to file bankruptcy includes the decision of what type of bankruptcy is best for you. Some people prefer to file for chapter 7 bankruptcy because they would be discharged of all existing debt with some exceptions. Applying for this type of bankruptcy requires that you take a means test. The means test evaluates your income in comparison to the median income of your state. If you make less than the median income you are eligible to file for chapter 7 bankruptcy.

The other option many people consider is chapter 13 bankruptcy. Chapter 13 bankruptcy can be good because it potentially allows you to keep your assets. There is a down side though because you have to make payments against your debts for 3-5 years before you will be discharged of your debt. Someone with no assets would typically prefer to file for chapter 7 bankruptcy but if they make more money than the median income for their state then they will be forced to file chapter 13.

The median income for an Illinois family of four is $66,507 while the median income for a single person is $20,750. These numbers may be especially low for Chicago residents. There was a time when bankruptcy law allowed you to cross state lines and file in a new state with a higher median income. For example, if an Illinois resident were to move to Michigan the median income is $68,337 or if they went as far as Maryland the median income is $82,879. For someone with a lot of debt and no assets worth keeping, filing chapter 7 bankruptcy could be worth the relocation. 

Today's law states that if you've lived in a state for 6 months you can benefit from their bankruptcy requirements. This means that having to physically relocate to a new state and establish residence before you can qualify to file bankruptcy there. In the event that you've relocated to a new area and have resided there for less than 6 months then you can still file for bankruptcy in that state however you will be held to the exemption laws set in place by the state you last lived in. This stops any moves that take place for the wrong reasons.

Consulting the knowledge and expertise of a Chicago bankruptcy attorney will help you to learn and understand the exemptions within your current state of residency. They can also provide guidance to determine the best course of action for you.