What exactly is Bankruptcy? and how does it work?

Question

What I would like to know is what can I file Bankruptcy on, and can I still keep my Home and my Car? I live in Illinois. and please list sources.

Answer 1

I'm a bankruptcy lawyer. I practice in Northeastern Illinois, mostly in Cook, Lake and McHenry Counties. Bankruptcy isn't the answer for everyone. If you can avoid bankruptcy, you are better off.

You can keep your house or car if your equity is small enough to be covered by exemptions. Otherwise, you can keep your house and car only if you file and complete a chapter 13 plan.


Bankruptcy is a federal court proceeding allowing you to discharge or defer payments of your debts. You expose either your assets or 3-5 years of your disposable income to the creditors. You may be eligible for chapter 7 if you make less than the median income for a family your size or otherwise pass the "means test." Otherwise, you have to file a chapter 13 case and devote 5 years of your disposable income to payment of creditors' claims. Disposable income is first determined by a complex formula, if it applies, and otherwise, by the difference between income and expenses in your bankruptcy schedules based on your financial life as it presently exists and is likely to exist in the near future.



Points against bankruptcy: It will be on your credit report for 10 years. It won't ruin your credit for 10 years but it will result in credit costing more for you if you need it. Your credit will get progressively better in the years following bankruptcy if you keep your agreements.

Bankruptcy doesn't discharge all debts, such as student loans, taxes less than 3 years old (that's an oversimplification but good enough for discussion purposes), domestic support obligations and many others.

Bankruptcy costs time and money. You can plan on something close to $2000 in most large cities and something less than that in smaller towns/rural areas, plus fees and expenses of another $360 or so.

Some people find bankruptcy to be an emotional experience.

Once you file chapter 7, you can't file another one for 8 years. You can't file a chapter 13 and get a discharge for 4 years after you file. So if things get worse, you may be out of luck.

Your non-exempt property will be sold to satisfy debts in chapter 7.


Things in favor of bankruptcy:

You can discharge dischargeable debts.
You can stop harassing creditors/bill collectors
You can keep your exempt property in chapter 7.
You can keep all your property in chapter 13, including property given as security so long as you continue to pay the secured debt.
You can catch up on mortgage arrearages.

There are other advantages to bankruptcy too.

Source(s):

See http://www.abiworld.org
See resources at my website http://www.bankruptcy.lakelaw.com...

Answer 2

For a very similar situation a found a great solution at: RATESCOMPARE.INFO-

RE What exactly is Bankruptcy? and how does it work?

What I would like to know is what can I file Bankruptcy on, and can I still keep my Home and my Car? I live in Illinois. and please list sources.

Answer 3

1st off, you may want to ask your lawyer this question as far as what you can put on your bankruptcy and if you can still keep your car and home.

2nd, a bankruptcy has 2 different ways to go, either a chapter 7 or 13. A chpt 7 wipes everything out giving you a clean slate but it stays on your credit report for 10 yrs. It does make a little harder to get credit after a few yrs. A chpt 13 is basically a court ordered consolidation whereas your lenders must take what they are offered by the judge.

Best advise..GET A LAWYER!!

Answer 4

Bankruptcy is a legally declared inability or impairment of ability of a individuals or organizations to pay their creditors. Creditors may file a bankruptcy petition against a debtor in an effort to recoup a portion of what they are owed. In the majority of cases, however, bankruptcy is initiated by the debtor (the bankrupt individual or organization).

The primary purpose of bankruptcy is: (1) to give an honest debtor a "fresh start" in life by relieving the debtor of most debts, and (2) to repay creditors in an orderly manner to the extent that the debtor has the means available for payment.

Bankruptcy allows debtors to be discharged from the legal obligation to pay most debts by submitting their non-exempt assets, if any, to the jurisidiction of the bankruptcy court for eventual distribution among their creditors. During the pendency of a bankruptcy proceeding the debtor is protected from most non-bankruptcy legal action by creditors through a legally imposed stay. Creditors cannot pursue lawsuits, garnish wages, or attempt to compel payment.

Answer 5

Bankruptcy is for life.
it will go off your credit report in 7 or 10 yrs but, loans appplications and many jobs applications ask if you have ever filed for bankruptcy. Ever. If you lie to get a loan because you bankruptcy is very old, technically you have committed criminal fraud.

Answer 6

it means your a broke ***
and no one will give you a loan for about 7 years
and no you have to sell everything and live in a basement