Chapter 13 Bankruptcy Representation in Cook, DuPage, and Kane Counties
It can be immensely frustrating to have a consistent income but be unable to keep up with mounting debt. You may even feel helpless or hopeless as the debt continues to grow and begins to threaten your hard-earned assets, such as your home or car. Chapter 13 bankruptcy may be able to give you the opportunity to reorganize your finances, save endangered property, and work toward a fresh start.
With 30 years of experience as an Elgin Chapter 13 bankruptcy lawyer, Jim Young has the proven knowledge and skill required to help you secure powerful relief. You will work directly with Jim throughout the firm's handling of your case, and he will always be available to answer your questions and provide case updates. If you are at immediate risk of foreclosure or some other collection action, Jim is prepared to facilitate an emergency filing. He will walk you through how Chapter 13 bankruptcy may be able to do for you and what you should expect throughout the process.
Am I Eligible for Chapter 13 Bankruptcy in Illinois?
Chapter 13 bankruptcy is not the appropriate choice for all situations. Filing represents a serious financial commitment that will significantly affect your life for several years. You must thoroughly review the implications of pursuing this option before proceeding.
You will only qualify for Chapter 13 bankruptcy if you can afford a payment plan. In other words, you must have a dependable income that is not completely exhausted on essential expenses.
To determine your disposable income, subtract allowable expenses (including secured debts like your mortgage and car payments) from your monthly gross income. If you have almost nothing left over, you do not have sufficient disposable income and probably cannot file for Chapter 13 bankruptcy. However, as a consumer, you likely qualify for Chapter 7 bankruptcy, which is a more efficient alternative available to people with minimal disposable income.
If you do have considerable disposable income each month, you are likely eligible for Chapter 13 relief. Still, you should have an Elgin Chapter 13 bankruptcy attorney review your case and advise whether this approach is a viable option.
How Chapter 13 Bankruptcy Works in Illinois
Filing for Chapter 13 bankruptcy will trigger the automatic stay. This invaluable court order will temporarily stop collection actions, including pending foreclosures, repossessions, collection lawsuits, and wage garnishments. In other words, if you are days away from a foreclosure sale, Chapter 13 bankruptcy can be used to stop that process and protect your home.
The automatic stay will in most cases remain in place for the duration of your Chapter 13 bankruptcy case, potentially affording you several years of protection. A creditor can only take action against you if they get special permission from the court, and a legal professional can help counteract those efforts, if necessary.
Soon after filing, you will need to submit your proposal for a Chapter 13 payment plan. This plan should reorganize all of your outstanding obligations into a monthly payment you will make over three to five years. The amount of this payment is linked to your disposable income, so you will not be expected to pay more than what you can financially manage.
One key advantage to Chapter 13 bankruptcy is that your plan payments will target certain types of debts first. Debts with the highest priority – including recent tax debt, missed spousal and child support payments, and secured debts like mortgage arrears – must be addressed and settled before plan payments can touch debts with lower priority, like unsecured debts.
Why is this dynamic important? You cannot discharge recent tax debt, missed child and spousal support payments, or several other types of debt through bankruptcy. You also cannot wipe out mortgage arrears or other missed secured debt payments without losing the assets tied to those debts.
After making all plan payments, you can eliminate remaining unsecured debts, including your medical debt, credit card debt, personal loans, and unpaid utility bills. Your Chapter 13 plan in effect focuses your financial resources on the debts you cannot otherwise discharge.
Assuming you bring your delinquent secured debts current, you will be able to keep the associated assets once the automatic stay lifts. Your home will no longer be at risk of foreclosure assuming you pay off mortgage arrears and continue to make future payments, for example.
Building a sound, strategic payment plan is an important part of a successful filing. The Elgin Chapter 13 bankruptcy lawyer at James Young Law will carefully evaluate your financial circumstances and help you propose a plan that maximizes relief.