Affordable Debt Relief
Our firm is dedicated to assisting individuals who are in need of debt relief. In these tough economic times, many people find themselves unable to meet their financial obligations. Crystal Lake Bankruptcy Attorney Timothy Brown helps these individuals obtain the debt relief they deserve, for a reasonable price. We sincerely care about our clients, and we do whatever it takes, within the confines of the law, to obtain a favorable outcome.
If you are experiencing overwhelming debt, foreclosure, wage garnishment, lawsuits, collection, or repossession, we would like to help. Contact us now for a free consultation. When you call, you will speak with a Crystal Lake Bankruptcy Lawyer instantly, or will receive a call back, promptly. If you prefer, you can send a message using the “Contact Us” feature located to the left, or you can send a case evaluation form by clicking on the “Case Evaluation” button.
TYPES OF BANKRUPTCY
Bankruptcy law is governed by Title 11 of the United States Code. The law allows bankruptcy relief for individuals and businesses. Qualifying individuals typically file for Bankruptcy under either Chapter 7 or Chapter 13. Whether an individual should file under Chapter 7 or Chapter 13 will depend on a variety of factors, as each has its own qualifications and remedies.
Chapter 7 may be an excellent option for you if:
(1) you have low to moderate income,
(2) you do not own a significant amount of property or property of substantial value, and
(3) you have a substantial amount of unsecured debt.
Eligibility- The Means Test
An individual can file for Bankruptcy under Chapter 7 if certain requirements are met. Most importantly, the individual must pass the “means test.” Under the first part of the means test, the so-called “median income test,” you are eligible to file under Chapter 7 if your income does not exceed the state’s median income level, based on U.S. Census data as designated by the U.S. Trustee. If your income exceeds the current median income level, however, you may still qualify under the second part of the test.
The second part of the test requires more complex calculations. Under the second part of the test, in simplified form, if your monthly disposable income (your income minus certain allowed expenses) is less than a certain portion of your monthly unsecured debt obligation, you pass the second part of the test and thus qualify to file under Chapter 7. If you do not pass the means test, you may want to consider filing under Chapter 13.
Chapter 7 eliminates most unsecured debt. Unsecured debt, as opposed to secured debt, is debt that is not secured by real estate or personal property (i.e., the debt is not secured by collateral). Examples of unsecured debt include credit cards, most personal loans, medical bills, and utility bills. Not all unsecured debt can be discharged, however. Examples of unsecured debt that cannot be discharged include: child support, alimony, school loans, certain debts owed to government entities, and certain tax debt. These types of debts will survive your bankruptcy.
Once your debts are discharged, you are relieved from the obligation to pay the debts. This will give you a fresh start, which is the goal of Bankruptcy representation.
Chapter 7 allows most people, in most cases, to keep their property. In Illinois, an individual is allowed to keep all property that is properly determined to be “exempt” by Illinois law. The most important exemptions are as follows:
(1) Homestead exemption- $15,000
(2) Motor vehicle exemption- $ 2,400
(3) Wildcard exemption (any property) - $ 4,000
(4) Most Pensions and 401(k) plans - 100%
In effect, the U.S. Bankruptcy Trustee will allow you to keep your property, unless the value of your property exceeds the allowed exemptions. You must be aware, however, that exemptions will not prevent foreclosure or repossession where the creditor has a lien or perfected security interest on your property. While exemptions may prevent a Trustee from taking your property, they do not prevent a secured creditor from enforcing a lien on a secured debt. If you have property that is secured by a lien, you may be able to keep it by re-affirming the debt.
If you are current on your payments to your secured creditor, you may be able to enter into a reaffirmation agreement. A reaffirmation agreement is an agreement between the debtor and the secured creditor in which the secured creditor agrees to allow you to keep the secured property, so long as you continue to make payments in accordance with the agreement. We usually advise against entering into a reaffirmation agreement where the amount owed is significantly more than the value of the property. The Bankruptcy Court will allow you to reaffirm a secured debt, unless payment of the debt would cause an undue hardship.
Chapter 13 may be an excellent option for you if
(1) you do not qualify to file for Bankruptcy under Chapter 7,
(2) you own a significant amount property or property of substantial value or
(3) you are behind on your mortgage payments and wish to keep your house.
An individual is eligible to file for Bankruptcy under Chapter 13 so long as the individual
(1) has regular income that is sufficient to fund a payment plan,
(2) has unsecured debts that do not exceed $360,475, and
(3) secured debts are less than $1,081,400
11 U.S.C. 109(e) (Note: figures are subject to change. These figures were valid on 07/27/10)
Under Chapter 13, the individual proposes a plan to repay his creditors over a period of three or five years. Debtors who are behind on their mortgage payments are given an opportunity to pay the arrearage over a reasonable period of time. At the end of the plan, most unsecured debts are discharged. Certain debts, however, are non-dischargeable, including but not limited to: child support, alimony, college loans, certain long-term obligations, and certain tax obligations.
Chapter 13 allows you to keep your property.
Plan Payment Amount
The amount of your payment under the plan will depend largely on your “disposable income.” “Disposable income” is income less amounts reasonably necessary for the maintenance or support of the debtor or dependants and less charitable contributions up to 15% of debtor’s gross income.
Length of Plan (3 years or 5 years)
The length of your plan will depend upon your monthly income. Your plan will be for three years if your income is less than the state median income for a family that is the same size as yours.Your plan will be for five years if your income exceeds the state median income for a family that is the same size as yours.
WE ARE A DEBT RELIEF AGENCY
The Law Office of Timothy Brown is a debt relief agency. We assist individuals in filing for Bankruptcy under the Bankruptcy Code.
WE WANT TO HELP YOU
We sincerely care about our clients. We will do whatever it takes, within the confines of the law, to obtain a favorable outcome in your case. Call or Click now for a free consultation.