|Filing a Bankruptcy Case||
Last updated: August 2010
A bankruptcy can wipe out most, but not all, of a person's debts. It is a drastic step, which should be taken only when absolutely necessary. There are two kinds of bankruptcy available to individuals: Chapter 7 and Chapter 13.
The purpose of a Chapter 7 bankruptcy is to discharge (wipe out) most debts and allow the debtor a "fresh start." A person can file a Chapter 7 only once in eight years. The court fees for filing a Chapter 7 are presently $335.00.
The fact that you filed a bankruptcy can stay on your credit history for up to ten years.
There are two kinds of creditors in a bankruptcy: secured and unsecured.
Examples of secured debts include: cars, furniture, major appliances, jewelry and a mortgage on a house. Even in a bankruptcy, these creditors have a right to the return of their property if they are not getting paid.
Examples of unsecured creditors include Visa, Mastercard, medical bills, utility bills, and most (but not all) store charge cards.
Some debts cannot be discharged in a Chapter 7 bankruptcy. These include alimony, child support, certain kinds of taxes, and student loans, unless the student loan imposes an undue financial hardship on you and your dependents. These debts must still be listed on the bankruptcy schedules, but they cannot be wiped out.
A chapter 7 bankruptcy requires a debtor to list not only what he owes, but also what he owns. This is because a debtor can only keep certain things in a Chapter 7. These things are called exemptions. The most common exemptions are the following:
If a debtor has assets (owns anything) above the exemptions allowed, those assets may be taken, sold, and the money used to pay back the creditors. For a list of Illinois exemptions click here
Chapter 13 bankruptcy, also known as a Wage Earner's Plan, is also a form of bankruptcy. It is heard by the same judges in the same courtrooms. The court fees for filing a Chapter 13 are presently $274.00.
There are several differences between a Chapter 13 and a Chapter 7. The most important are:
Veteran's Benefits 735 ILCS 5/12-1001(g)(2)
Federal Employees' Retirement Benefits 5 USC § 8346
Federal Employees' Workers Compensation Awards 5 USC § 8130
Postal Employees' Retirement Benefits 5 USC § 8346
Postal Employees' Worker's Compensation Awards 5 USC § 8130
Public Aid Benefits 735 ILCS 5/12-1001(g)(1)
Unemployment Compensation Benefits 735 ILCS 5/12-1001(g)(1)
Worker's Compensation Awards 820 ILCS 305/21
Crime Victim's Awards 735 ILCS 5/12-1001(h)(1)
Private Pension or Retirement Benefits 735 ILCS 5/12-1006
Life Insurance Payments 735 ILCS 5/12-1001(f), (h)(3)
Private Disability, Illness, or Unemployment Benefits 735 ILCS 5/12-1001(g)(3)
Maintenance or Child Support Payments 735 ILCS 5/12-1001(g)(4)
Wrongful Death Awards 735 ILCS 5/12-1001(h)(2)
Personal Injury Awards (Up to $7,500.00) 735 ILCS 5/12-1001(h)(4)
Up to $4,000.00 in Personal Property As Chosen By the Defendant, Including Bank Accounts 735 ILCS 5/12-1001(b)
Up to $2,400 in value in any one motor vehicle 735 ILCS 5/12-1001(c)
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