Breaking Down an Illinois Chapter 13

Job loss, sudden illness, divorce, and other such financial storms can strike any family at any time. Most Illinois families live from paycheck to paycheck. So, they do not have the resources to deal with these storms. As a result, although they are able to tread water for awhile, they soon fall behind on home mortgage payments and other secured debts.

As a rule of thumb, if you are at least two months behind on such payments, you should probably consider bankruptcy. That’s the only way to keep creditors at bay, protect your assets, and obtain time to make income-based catch-up payments.

An experienced Chapter 13 lawyer does more than file paperwork. Only an attorney can give you the legal advice you need to make the most out of your fresh start.

The Automatic Stay

When debtors file their voluntary petitions, Chapter 362 of the Bankruptcy Code normally takes effect immediately. This provision instantly stops all forms of adverse creditor action, including:

• – Repossession,
• – Foreclosure,
• – Creditor lawsuits, and
• – Wage garnishment.

Generally, the Automatic Stay remains in effect as long as the bankruptcy is pending.

Moneylenders can only get around the stay and resume adverse action if they have special permission from the bankruptcy judge. Such permission is almost impossible to obtain, unless the debtor has threatened the collateral in some way (e.g. “I’m going to burn the house down instead of paying the mortgage”).

Additionally, if there is a legitimate dispute as to the amount owed, most judges refer such matters to mediation. In this forum, creditors have a duty to negotiate the debt in good faith. In other words, they must be willing to make financial sacrifices to get a deal done. Moneylenders who refuse to do so often draw the ire of a federal judge.

Some Property Exemptions in an Illinois Chapter 13

Many people think that they will lose most or all of their assets if they declare bankruptcy. Fortunately, that only happens in board games like Monopoly. The real world in much different. The Bankruptcy Code protects most of your assets, including:

• – House,
• – Motor vehicle,
• – Retirement account,
• – Government benefits, including Social Security payments, and
• – Personal property.

Furthermore, an Illinois bankruptcy lawyer knows how to maximize your assets. For example, debtors must declare the as-is cash value of things like their cars. Most vehicle investors only pay pennies on the dollar for used vehicles. With such an offer as a benchmark, the debtor can shift exemption money to other assets, including cash in a bank account.

The Protected Repayment Period

As mentioned, the Automatic Stay normally remains in effect as long as the bankruptcy is pending. In a Chapter 13, that period could be up to five years. The protected repayment period gives debtors plenty of time to catch up on secured debt payments. As long as their payment remain current, moneylenders usually cannot challenge the agreement in court.

About six weeks after the filing, the trustee (person who oversees the bankruptcy for the judge) works with the debtor and the debtor’s attorney to formulate an income-based repayment plan. At the end of the plan, the debtor will be caught up on all secured debt payments. Additionally, the judge will discharge most remaining unsecured debts, such as credit cards and medical bills.

Contact Assertive Lawyers

Chapter 13 gives you and your family a fresh financial start. For a free consultation with an experienced Chapter 13 bankruptcy attorney, contact the Bentz Holguin Law Firm, LLC in Chicago. Convenient payment plans are available.

Resource:

uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-13-bankruptcy-basics

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