Bankruptcy in Illinois: What You Need to Know

Date Posted: February 26, 2024
By: Maggie Marques

Are you worried about filing for bankruptcy in Illinois? Let’s get into the topic and erase all misconceptions about it. If this has been at the back of your mind for quite some time and you don’t know how to go about it, I have the things you need to see for you here.

Understanding the basics

Bankruptcy isn’t all that bad. Yes, it could be better financially, but it is a lifeline. Bankruptcy is a legal process that can help somebody deeply in debt repay their debts and start anew. You usually have two bankruptcy options in Illinois: Chapter 7 and Chapter 13.

What is Chapter 7? Chapter 7 is known as the liquidation bankruptcy. This involves selling off your non-exempt assets so you can repay your creditors.  What are your non-exempt assets?  These are generally the following:

  • Real estate. This can be your secondary homes, rental properties, or home equity beyond your state’s exemption.
  • Cars. If the value of your vehicle is more than the exemption limit.
  • Investments. Bonds, stocks, and non-retirement investments are usually non-exempt.
  • Business Assets. Your business and its assets can be considered non-exempt.
  • Valuable Personal Property. Items like pieces of artwork, expensive pieces of jewelry, or collectibles.

On the other hand, Chapter 13 is the reorganization bankruptcy. This will allow you to keep your assets while you repay your debts within three to five years.

Please talk to a bankruptcy attorney, as your decision is crucial. This will affect your financial situation and financial goals in the long term.

Exemptions: Your Financial Armor

When talking about bankruptcy, exemptions are your best friend. Exemptions protect specific assets from being sold off in Chapter 7. It also has an essential influence on how you will repay in Chapter 13. For example, homestead, personal property, vehicle, and certain types of income can be exempted in Illinois. You can exempt $2400 in your car and $15000 of equity in your home. But again, you need to understand these exemptions and use them wisely to protect your assets.

The Role of Credit Counseling
In Illinois, you must complete credit counseling from an accredited agency within 180 days before you file for bankruptcy. This will help you explore options before resorting to bankruptcy. Treat credit counseling as an opportunity to learn and grow financially.
Bankruptcy
Last but certainly not least, let’s talk about credit counseling. In Illinois, you must complete credit counseling from an approved agency within 180 days before filing for bankruptcy. This step is more than just a legal formality; it’s an opportunity to explore alternatives to bankruptcy, understand the process, and plan for a financially stable future. So, embrace it as a learning experience, not a chore. 🎓
Bankruptcy in Illinois can be intimidating, but remember that this is a lifeline, not a death sentence. It can help you reset your financial situation and start afresh. Seek professional advice and remember that there is always hope after bankruptcy.

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