Do I Have To Be Behind On My Payments In Order To File Bankruptcy?

It is a common misconception that if you are current on all of your credit cards, loans and other bills that you cannot file for bankruptcy in Chicago. This is not the case and in fact, it may actually benefit you to file before you begin defaulting on your loans. 

With fluctuating interest rates on credit cards and loans there can be some anticipation of increased payments. You may know that the next month you will have to choose which bills you can pay and ultimately miss a payment. Talking with Chicago bankruptcy lawyers in these early stages puts you in a better position for the process.

Once you have defaulted on your loans or become late on your credit cards, it will begin to affect your credit score. The sooner you recognize the need to file bankruptcy the easier it will be to prevent the credit score blemish of late payments. Being proactive may lessen the effect bankruptcy has on your credit score in the long run.

It is important to remember that if you are not behind on payments you need to make sure you have not paid too much to one creditor. If you have paid too much to one creditor and not paid another, this might qualify as a preference. The trustee may then have a right to recover that money in your bankruptcy

When you file bankruptcy in Chicago it is important that you know there are some debts that cannot be discharged.

  • Student loan debt
  • Child support debt
  • Most tax debt
It is important to stay current on these debts as they will remain your responsibility even after bankruptcy. 

Most Chicago bankruptcy lawyers will offer a Free Legal Consultation. This is a great opportunity for a bankruptcy expert to evaluate your situation and offer their suggestions. This is important for anyone filing bankruptcy including someone who has no yet missed a payment or defaulted on a loan.