Filing for Bankruptcy in Illinois

Filing for Bankruptcy in IllinoisFiling for bankruptcy in Illinois is an overwhelming and upsetting experience. If you are undergoing this process, you have to decide which type of bankruptcy you are filing. You have to decide between Chapter seven and Chapter thirteen bankruptcies. Chapter seven bankruptcy deals with clearing your unsettled debts but do not include mandated payments such as child support and alimony. On the other hand, with Chapter thirteen, a five-year payment scheme is created in order for you to repay your creditors.

You have to organize all of your important financial documents that would specify the amount of money that you need to pay and how much income you have at present. These documents will be presented in court as evidence materials that you are unable to settle your obligations. Search for the courts that handle bankruptcy issues in your area. Take note of the complete contact information of the court that you have found. Make sure that you bring your financial documents and the necessary filing fees when you go to the courthouse. The courthouse clerk will provide you with the bankruptcy petition which you need to completely and correctly fill out. A copy of your documents will be made and the original documents will be submitted to the judge for ruling. You will be notified through mail if you pass the means test and if you are assigned a hearing schedule by the judge. Take note of the court date of your summons and make sure that you show up on the correct schedule. Be sure that you take everything with you; you will need to bring your financial documents, bankruptcy petition and the statement of your financial affairs to the hearing date. You will now be awarded bankruptcy when the judge rules in your favor.

Filing for bankruptcy is very difficult process to face. As long as you have all your financial documents in order, then you would be able to file for bankruptcy smoothly and without any hassle.

What you need to know about Bankruptcy in Illinois?

Illinois has a significant number of similarities in bankruptcy laws as other states. However, there are some areas in which they differ, mainly related to exemptions at the time of filing. These are defined in Section 12 of Illinois law, which includes personal property exemptions, retirement exemptions, and maximum wage exemption. These are designed to protect individuals in the case of either Chapter 7 or Chapter 13 bankruptcy filing. What is important to note here is that these exemptions do not apply to property that is used as collateral for debt, such as loans for cars and homes.

Illinois is unique from other states in that the exemptions listed out by the federal government do not apply in the State of Illinois. In a good example of states’ rights vis-à-vis the federal government, bankruptcy laws in Illinois center around specific exemptions spelled out by the state. However, this only extends to federal bankruptcy exemptions. There are several non-bankruptcy exemptions in federal laws outside of the bankruptcy codes that individuals can use outside of their Illinois bankruptcy exemptions. These non-bankruptcy exemptions include wages, social security benefits, civil service benefits, and veterans benefits. Because these benefits are outside of the federal bankruptcy code, they still apply.

Of particular controversy is the homestead exemption in light of recent bankruptcy increases in the mortgage crisis. States in the past enacted unlimited homestead provisions to attract individuals to reside in their state, but this creates the risky house purchasing behavior that led to a large part of the mortgage and housing crisis. Without limitations to homestead exemption, bankruptcy runs a significantly lower risk for individuals. Illinois has a stringent homestead provision of only $15,000, though its law is relatively vague in its wording, causing significant confusion as when it applies, particularly when individuals move within state.

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