Deciding to declare bankruptcy is not something to be taken lightly, a decision of this magnitude will have an impact on your life for years to come. However, once you have weighed the options and decided that bankruptcy in Illinois is the best solution for your particular set of circumstances you next have to decide which Chapter of bankruptcy is the better choice.
As a small business or an individual the two choices which are most obvious are Chapters 7 and 13. Of the two, Chapter 7 calls for almost total liquidation while Chapter 13 allows you to reorganize your finances over a period of time agreeable to the court. In both cases there are rules and regulations which apply, many of which you may not be aware of that you can use to help you determine the best route to take.
Chapter 7 bankruptcy:
If the individual mired in debt opts for Chapter 7 bankruptcy they will be forced by the court into liquidating the greatest majority of their assets, from the disposition of the assets the court, through an appointed trustee, pays the creditors at least a portion of the money they owed. At the completion of this process all debts incurred by the bankrupt individual are discharged, simply meaning that the person is now given an opportunity for a fresh start without the burden of debt. The process does not take a great deal of time, usually within six months the entire process is completed. During this time a meeting is held with all the creditors, in the majority of cases the creditors agree to the proposed outcome of the asset sale and the percentage of their exposure that they can expect to recover.
Chapter 13 bankruptcy:
Chapter 13 bankruptcy in Illinois is different and is usually the choice of those who do have substantial assets that they want to keep, and they are gainfully employed. Chapter 13 demands that the debtor, in tandem with his or her attorney develop a plan of debt reorganization. The plan takes all the current circumstances into account; the total debt, the total monthly income of the debtor and the monthly expenses of the debtor. Based on these variables a plan is put together for debt repayment, free of interest over a period of time agreed upon by the court. Once agreed it is managed by a court appointed administrator.
Chapter 7 bankruptcy is often the best choice for those who are unemployed and have very few assets of any value; Chapter 7 is also the best way for those who have a situation where their house is worth less that they owe on the mortgage.
Chapter 13 bankruptcy in Illinois is the better choice for those people who are employed and have assets that they want to keep as well as those who are facing home foreclosure.
