3 Common Bankruptcy Questions and Answers
Filing for bankruptcy is not something a person wants to do and it can be a hard decision to make. It generally comes down to needing to do it for one reason or another. At The Greenberg Law Firm, we have helped many people through this process so they can move on with their lives. Throughout the years, we have been asked many questions about the bankruptcy process. Here are 3 of the most common questions and the answers to them.
Will I lose my house or car?
In most cases, debtors will not lose their cars or homes in bankruptcy. What the trustee will look for in a Chapter 7 bankruptcy is overall EQUITY in items such as a car or house that is not exempt under Illinois law. In simpler terms, if you have a car loan, the car loan reduces the equity in the vehicle. In order for you to lose the car, the estate will have to pay your car loan holder in full before it will be able to distribute anything to other creditors. But even with that, the exemption laws allow you to exempt $2,400 in equity and $4,000 of any personal property per individual (married couples can double the exemption).
The same holds true for homes, which are typically secured through a mortgage. In Chapter 7 bankruptcy, it is about the EQUITY, not the value, of the home. In this case, you can exempt up to $15,000 of equity in the house per individual (or $30,000 if married and both spouses appear on the title).
In other words, these assets are rarely something that will be lost in a Chapter 7 bankruptcy, where certain assets may be liquidated to pay off outstanding debts to creditors, because their equity value may be low. The attorneys at The Greenberg Law Firm are trained to identify these issues well before any filing so we can discuss other options with our clients.
Can I file without my spouse? Will it affect his or her credit?
You can file without your spouse and it will not affect their credit. When you file for bankruptcy, it involves only your credit. That is not to say your bankruptcy attorney will not have to get information from the non-filing spouse throughout the process. You will need to provide income and expense information from your spouse as it is relevant to what chapter of bankruptcy you are eligible for.
What are the benefits of filing a Chapter 13?
A Chapter 13 bankruptcy is a repayment plan where you propose a plan to pay creditors over 3 to 5 years, paying a fraction of what you owe without interest. It really is preferable to other bankruptcy (Chapter 7) and non-bankruptcy options like debt settlement and debt consolidation, which cannot guarantee an outcome or charge you interest.
Other people choose Chapter 13 because they have fallen behind on a mortgage or car payment and need help reinstating the loan. A Chapter 13 typically extends a payment plan up to three years to get you caught up on your loan. This repayment over three years is more than people are typically able to get under other types of loss mitigation efforts.
The attorneys at The Greenberg Law Firm are ready, willing, and able to review your current situation to determine if bankruptcy is the right course of action for you. Contact us today at 630-416-4747 so we can help you weigh your options.