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How To File Your Own Bankruptcy In Illinois

Passing The Il Bankruptcy Means Test

Filing Bankruptcy in Illinois – A Brief Overview by Attorney John Carlin

Illinois Chapter 7 bankruptcies come with a test. Its called the means test. This test determines whether you are eligible to file Chapter 7 bankruptcy in Illinois. Heres how it works: You factor in your annual income and the size of your household if that income is higher than the median household income for households of your size in Illinois, you fail the means test.

The following are the Chapter 7 income limits for Illinois households as of August 2021:

  • One person: $57,983
  • Four people: $107,226
  • Five or more people: Add $9,000 for each household member exceeding four

You probably just did the math in your head. If you passed, thats great you likely qualify for Chapter 7 bankruptcy in Illinois. If you failed, you still have another chance. Even if your income exceeds the limit, you can still qualify to file Chapter 7 bankruptcy if your reasonable monthly expenses leave you with too little to pay into a Chapter 13 repayment plan.

Chapter 1: Family Farmer Bankruptcy

Given the very favorable tax provisions of Chapter 12 bankruptcy, weve represented many Iowa and Illinois family farmers who have had to right-size their operations by selling assets. Doing so often results in substantial income tax liabilities.

We know the difference between corporate farming and the economic challenges faced by family farmers like you. Chapter 12 bankruptcy is unique: it allows you to treat your income taxes that arise from the sale of farm assets used in your farming operation as unsecured debts.

In many situations, using Chapter 12 can allow a family farmer to retain some farming assets after right-sizing the operation without paying the taxes in full. The amount that is actually paid to obtain the discharge of the taxes varies on a case-by-case basis. Some family farmers pay very little others pay a significant portion of the income taxes.

In addition, Chapter 12, like other bankruptcies, buys you time since the collection activities of most creditors, including the IRS, are stopped by the automatic stay when the case is filed. The automatic stay keeps your creditors, including the IRS and state revenue departments, at bay. With your creditors held at bay, we work with you, your financial advisors, and tax advisors to formulate your individualized bankruptcy plan.

Trust the bankruptcy experts at Ag & Business Legal Services. We will get you started on the road to financial recovery.

Filing Chapter 13 To Save Your Home

If you are behind in your mortgage payments, Chapter 7 will not work, unless you wish to surrender the home or pursue a loan modification. But you can avoid or stop foreclosure by filing a Chapter 13 and proposing a plan to catch up your payment arrearage. However, to do so you must have disposable income that will fund a repayment plan.

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What Type Of Bankruptcy Should I File

Based in Beloit, Wisconsin, our attorneys at The Fitzgerald Law Firm understand the question, Should I file bankruptcy? can weigh heavily on the minds of our clients. When making this important decision, it is best to first explore the pros and cons of filing for bankruptcy with a knowledgeable attorney.

Once you have consulted an experienced attorney and been able to determine that you do want to file bankruptcy, the next step is to answer the question, What type of bankruptcy should I file? In our experience, the best way to do this is to understand the differences between the different types of bankruptcy .

Print Fill Out And File Your Forms

How Will Bankruptcy Affect My Taxes?

Once you have made sure you will be able to pay the filing fee , its time to print out and complete your forms. Every possible form you could need for bankruptcy in Illinois is available online.

This is often the trickiest step in the Illinois bankruptcy process. These forms ask for a lot of information, and mistakes could lead to debts being left out when you get your bankruptcy discharge or even make it so you dont qualify for bankruptcy at all. This is why many Illinoisans work with a bankruptcy law firm that can fill out the forms for them perfectly.

After the forms are filled out, you have to file them with the proper bankruptcy court in your district.

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Do I Need An Attorney To File

You may file your own bankruptcy petition if you are an individual, but it is difficult to successfully file and complete your case without a competent Chicago bankruptcy attorney at your side. Thebankruptcy process itself is complex, and the ramifications of an incorrectly or fraudulently filed bankruptcy petition are harsh. Your chances of successfully discharging your debt, stopping foreclosure or reorganizing debt are much greater with the proper legal counsel.

Whats The Difference Between Chapter 7 And Chapter 13 Bankruptcy

The major difference is time Chapter 7 takes 4-6 months Chapter 13 takes 3-5 years and money. You can have most, or all your unsecured debt discharged in Chapter 7 bankruptcy. In Chapter 13, some of your debt is forgiven, but only if you meet the conditions approved by the trustee and bankruptcy judge.

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What Is Small Business Bankruptcy In Illinois

After decades of helping individuals and businesses one thing is clear. Each client is unique and that includes their problems, situations, and possible solutions. Experienced lawyers do not offer cookie cutter options. The Bankruptcy laws have parameters, rules and regulations. Within these parameters experienced lawyers should look for solutions that best fit the needs of the individual person or company. Our motto is that you are special and should be treated as such.

Bankruptcy is sometimes a necessary event in the life of a business. When cash is short, creditors start calling or taking other actions to collect. Bankruptcy provides breathing room for an orderly way of paying creditors. Sometimes reorganization is possible. Sometimes the company needs to liquidate. Either way, bankruptcy offers help to the business and its owners.

For any type of case filed, papers must be filled out that show all property owned by the business, all debts owed, and a cash flow schedule. As will be discussed a little later all creditors must be listed so they can participate in the proceedings. Any creditor that is not listed and given the opportunity to participate can later attack the bankruptcy.

Before determining the options for a small business, whether liquidating or reorganizing, the formal ownership of the business has to be determined. Each type of bankruptcy has its own advantages depending on the ownership. The 3 main possibilities are:

Will The Court Staff Explain The Filing Procedure To Me

How To Avoid Filing For Bankruptcy In Bad Faith In Illinois

To some extent, yes, but it depends on the court.

Some courts are quite willing to help non-attorneys and will give you a packet of information that explains the filing procedure in detail, and in plain English.

Other courts are quite hostile to debtors attempting to represent themselves and will make it a point not to help you at all.

The difference between courts can be dramatic, as evidenced by the wide range of difference between various court websites.

See the “court ratings” section on this page. The list of courts that “get it” provide helpful information to non attorneys.

If the staff at your court tells you that they can’t offer you any help, you may wish to refer them to the websites of these other bankruptcy courts that manage to provide ample help the general public.

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About 30 Days After The Case Is Filed

Within 30 days after filing the petition, or before the meeting of creditors, you must file a Statement of Intention. In this document, you tell the court one of two things:

  • You want to keep any property that serves as collateral for your debts
  • You want to give the property to the creditors

If you want to keep the property, you have two options.

  • Reaffirm the debt and continue making all payments on the debt. Reaffirming the debt means you agree to pay the debt, even though it could be discharged or wiped out in the bankruptcy. Reaffirming the debt allows you to keep the property, but you must sign an agreement with the creditor that you will continue to pay the debt after your bankruptcy.
  • Redeem the property by paying the fair market value for it. Redeeming property allows you to keep the property by paying the creditor the fair market value. If you owe more than the property is worth, the amount you owe is lowered to the fair market value. Usually, you have to redeem in a single payment, so you have to pay the entire price at one time.

You must tell the court which option you choose in the Statement of Intention. You must also serve a copy of the statement on the bankruptcy trustee and all creditors when filing it with the court.

Professional Assistance With Your Chicago Bankruptcy Filing

While corporations and partnerships are required to have an attorney to file for bankruptcy, individuals are allowed to file pro se. However, the bankruptcy process is technical and complex and a misstep can be detrimental to the successful outcome of your case. At Smith Ortiz, P.C., we have more than 26 years of combined legal practice, with backgrounds rich in tax, finance, and law experience.

Our knowledgeable lawyer can guide you through the complex process and help ensure that your documentation is correct and complete. We have helped many clients obtain relief from overwhelming debt throughbankruptcy andother debt solutions. Our firm provides comprehensive representation, analyzing our cases with the full financial picture in mind, rather than focusing on bankruptcy alone. We make it a priority to provide debt relief solutions personally tailored to your situation.

Contact us for outstanding legal assistance in your bankruptcy filing, starting with an initial consultation!

Our Past Clients Share Their Stories

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Chapter : Liquidation Bankruptcy

Business owners frequently have too much debt and need to get creditors off their backs so their debts can be forgiven. The bankruptcy term for debt forgiveness is discharge. Chapter 7 bankruptcy is a tool used to obtain a court discharge of debt. Filing this type of bankruptcy claim stops most collection activities. This can provide a great deal of immediate relief to a beleaguered debtor.

Under Chapter 7 status, you do not have to file a plan of repayment. Rather, your non-exempt assets with equity are gathered by the trustee and sold with the proceeds being used to pay your creditors. You will be allowed to keep some types of exempt property, including your salary and any property you purchase after you file for Chapter 7.

Its important to note that all bankruptcy filings will appear on your credit bureau record for up to ten years. Upon filing a bankruptcy you can lose access to credit cards or lines of credit even if you did not owe that creditor anything on the date you filed your case. Some creditors refuse to extend credit to people that file any chapter of bankruptcy.

A trustee is appointed to review your assets and liabilities and determine what assets can be liquidated with the proceeds used to pay your unsecured creditors.

What Happens To The Property I Own That Is Subject To A Lien

How To File Bankruptcy Chapter 7 Yourself

In some cases, the Bankruptcy Court can set aside or reduce a lien on your property. Additionally, individuals who want to keep the property secured by a lien can enter into reaffirmation agreements with the secured creditors. Under a reaffirmation agreement, the debtor promises in writing to continue to pay the amount owed to the creditor despite the bankruptcy and in return, the creditor agrees to not seize the secured property so long as the debtor continues to make the necessary payments. All reaffirmation agreements must be filed with the bankruptcy court. If you default on your payments under a reaffirmation agreement, the creditor can hold you liable on any deficiency and repossess the secured property accordingly.

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Requirements For Bankruptcy Pro Se In Illinois

Although you are legally entitled to file on your own, the United States Courts highly recommend that you hire an attorney to file forbankruptcy. They stress that the rules are technical, and failure to follow them precisely may affect your rights. You canread these recommendations for yourself. Legal representation is vital.

If you file bankruptcy pro se, you are expected to:

  • Know the Federal Rules of Bankruptcy Procedure
  • Know the local rules of the court where the case is filed
  • Know the United States Bankruptcy Code
  • List all your property and debts in your bankruptcy schedules

It is important that your schedules are correct and complete. Individual bankruptcies are randomly audited for accuracy, truthfulness, and completeness of information, and if you make mistakes or omissions you could easily find yourself in serious legal trouble forbankruptcy fraud. Don’t take chances with the outcome of your case by trying to do it yourself. Our attorney can help ensure that the information you provide to the court is accurate and complete.

What Is A 341 Hearing

A 341 hearing is the so-called “creditors meeting” that every bankruptcy filer must attend shortly after you file your bankruptcy papers.

For many filers, this will be your only trip to the courthouse. This is when you meet with the bankruptcy trustee appointed to your case, and are asked questions about the information you have entered on your forms.

Most court websites post schedules of 341 hearings, and when you file, you will be notified of your hearing date. When you show up for your hearing, you will find that many other people have hearings set for the same day. You sit wait for your name to be called.

This is also the time when creditors can ask questions about your papers, and objections to your filing may be raised by creditors.

See the Products & Services page for a podcast about what happens at a 341 meeting. Also, the book How to File For Chapter 7 Bankruptcy has information about what to expect at your 341 hearing.

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Southern District Of Illinois Requirements

If you are among the 1.2 million people living in the 38 counties in Southern Illinois, your Chapter 7 bankruptcy case in Illinois will be assigned to this district. There are three divisions within this district, and court is held in East St. Louis and Benton. Several creditors have provided a preferred address to the court in this district. When you create the creditors’ mailing matrix, check this listing and update the addresses for your creditors accordingly.

How To File For Bankruptcy

Filing Bankruptcy in Illinois A Brief Overview by Attorney John Carlin

Filing for bankruptcy is a legal process that either reduces, restructures or eliminates your debts. Whether you get that opportunity is up to the bankruptcy court. You can file for bankruptcy on your own, or you can find a bankruptcy lawyer, which most experts regard as the prudent avenue to pursue.

Bankruptcy costs include attorney fees and filing fees. If you file on your own, you will still be responsible for filing fees. If you cant afford to hire an attorney, you may have options for free legal services. If you need help finding a lawyer or locating free legal services, check with the American Bar Association for resources and information.

Before you file, you must educate yourself on what happens when you file for bankruptcy. Its not simply a matter of telling a judge Im broke! and throwing yourself at the mercy of the court. There is a process a sometimes confusing, sometimes complicated process that individuals and businesses must follow.

The steps are:

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Which Type Of Bankruptcy Should A Person File

Just as when to file for bankruptcy depends on an individuals situation, the type of bankruptcy also falls in this category. There are two types of personal bankruptcy an individual can file, Chapter 7 and Chapter 13. Chapter 7 bankruptcy will discharge most, if not all, of a persons debt. This allows the person to begin anew with a clean financial slate. Chapter 13 bankruptcy gives the filer a repayment plan to pay off their debts instead of discharging them. If you are unsure of which type of bankruptcy is best for you, a Champaign, Illinois bankruptcy lawyer can provide you with that legal advice.

Requirements For Chapter 13

Those that are eligible for Chapter 13 bankruptcy must submit a proposed plan of repayment. Monthly expenses that are reasonable are subtracted from your income, leaving an amount that could be applied to debt that is outstanding. Taxes and child support are considered priority debts that will be paid entirely, while other unsecured debts will be negotiated for settlements at less than the amount owed.

When you file bankruptcy in Illinois, your repayment plan must meet these requirement:

  • Good Faith delivery.
  • Unsecured creditors should receive the minimal amount covered under Chapter 7 regulations.
  • 100% of your disposable income is applied to the repayment plan for a minimum of three years. The court usually insists on wage garnishment to ensure this requirement is met.

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Illinois Bankruptcy Lawyer Cost

If youâre having a hard time matching up your assets with the exemptions available to you in your Illinois bankruptcy, hiring a lawyer may be a good investment. The cost of a bankruptcy lawyer in Illinois ranges from, $900 to $1,200 and most Illinois bankruptcy lawyers offer free initial consultations.

Chapter 1: Business Bankruptcy

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A Chapter 11 bankruptcy may be chosen by a farmer if your debts exceed the limit for Chapter 12 bankruptcy$10,000,000.00. It is also commonly chosen when you own a non-family farm or business to restructure your obligations. A Chapter 11 bankruptcy is considerably more complex than a Chapter 12 bankruptcy.

Your goals are important. At Ag & Business Legal Strategies, we listen to your goals and help evaluate whether they are achievable in or out of a bankruptcy. Not all goals are reasonably attainable in a bankruptcy. Our collaborative approach to problem solving with our clients and their team focuses on attainable solutions to complex financial problems.

Chapter 11 is commonly filed by corporations, partnerships and other businesses or individuals experiencing financial distress. A Chapter 11 allows a debtor to keep operating its business as a debtor-in-possession.

As a debtor-in-possession, you have a fiduciary obligation to creditors as your business seeks to restructure its obligations. Thus, the bankruptcy court will have control over your major financial decisions, including sale of assets, borrowing money, using a creditors collateral to continue business operations, and payment of professional fees.

Most Chapter 11 cases take between six months to two years to achieve a confirmed plan. Talk to the experienced attorneys at Ag & Business Legal Strategies to see if Chapter 11 is an appropriate solution for you.

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