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 that 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 Bankruptcy 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 Chapter 7, if you can make the payments that 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.