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When choosing a family law attorney, you probably have a number of questions. Some of our most common questions are found here. If you do no see yours listed, please contact our office directly. We are happy to help!
Chapter 13 Bankruptcy
Making the decision to file for bankruptcy—whether it is chapter 7 or chapter 13—is not an easy one for any Schaumburg, IL resident. But sometimes, when you are simply unable to pay off your debts, it is the best option. You should be aware, however, that when you file for bankruptcy your credit score will take a pretty big hit. The bankruptcy will be a part of your credit report for quite some time.
Different Types of Bankruptcy
There are two different types of bankruptcy available for most consumers: chapter 7 and chapter 13. Those who file chapter 7 are able to discharge all or most of their debts. Those who file chapter 13 are able to make payments to pay off some or all of their debts. Both types of bankruptcy will be part of your credit report.
How Damaging Is Bankruptcy to Credit Score?
A good credit score of 700 or more will likely drop by at least 200 points when filing for bankruptcy. If your credit score is lower than 700, bankruptcy will probably cause it to drop a bit less, perhaps between 130 and 150 points. The bankruptcy will remain on your credit report for a number of years, but its impact will lessen over time.
Rebuilding Credit After a Bankruptcy
Although your credit score will be damaged after filing for bankruptcy, the good news is that you can rebuild your credit.
Take the following steps in the months following your bankruptcy filing:
- Make sure the bankruptcy was reported correctly by pulling your credit report. If there are inaccuracies on our credit report, get those corrected.
- Apply for a secured credit card to help rebuild your credit with a positive payment history. Make sure to pay everything on time and keep debt levels low.
- Keep track of your progress by periodically pulling your credit report.
Contact Our 60194 Law Firm
If you’re considering Chapter 13 bankruptcy, don’t make a decision until you talk with a Schaumburg, IL lawyer such as Robert M. Kaplan. Call today for a consultation!
In a Chapter 7 Bankruptcy case, you file a petition asking the court to discharge your debts. The idea is to wipe out (discharge) your debts in exchange for your giving up property, except for “exempt” property which the law allows you to keep. In most, but not all cases, your property will be exempt. But property which is not exempt is sold, with the money distributed to creditors. If you want to keep property like a home or a car and are behind on the payments on a mortgage or car loan, a Chapter 7 case probably will not be the right choice for you. That is because Chapter 7 bankruptcy does not eliminate the right of mortgage holders or car loan creditors to take your property to cover your debt.
What Happens in an Illinois Chapter 13?
In a Chapter 13 case, you file a “plan” showing how you will pay off a percentage of your past-due and current debts over three to five years. The most important thing about a Chapter 13 case is that it will allow you to keep valuable property–especially your home and car–which might otherwise be lost in a Chapter 7, if you can make the payments which the bankruptcy law requires to be made to your creditors. In most cases, these payments will be at least as much as your regular monthly payments on your mortgage or car loan, with an additional payment to pay the arrearage you have not paid.
Contact Our Schaumburg IL Law Firm
Do you have more questions on Chapter 13 and Chapter 7 bankruptcy? Please contact our Schaumburg IL law firm to schedule a consultation today.