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Chapter 13 advantages and disadvantages in Illinois

Being behind on one's bills is nearly a national pastime in the United States these days. With the rise in costs of living generally outstripping real wage rates, many Illinois residents, as with people throughout the country, find themselves in a position where they cannot make all their payments every month. Having to pick and choose whom to pay and what one goes without can be stressful, and impact not only one's mood, but one's physical health as well. When this begins to happen, people may want to begin considering whether filing for bankruptcy is a logical choice.

Simply deciding to file for bankruptcy protection is not the only choice to be made, however. One of the other decisions is what kind of bankruptcy is best for the individual's situation. As readers of this blog may remember, there are two major forms of bankruptcy available to most individuals. These are 'Chapter 7' and 'Chapter 13.' While chapter 7 will discharge most debts, it may also result in the loss of certain property. Chapter 13, on the other hand, will require repayment of some debt, but may serve to help protect things important to the filer.

So what are some of the 'pros and cons' of filing for Chapter 13? First off, as mentioned above, people who own property that has some equity, like a house or a car, may benefit from Chapter 13 in that they can retain the property while making payments on the bankruptcy payment plan. These payment plans will last from three to five years, and will take up all of a filer's 'disposable' income, but after successfully completing the payment plan, the debtor may have the remainder of the debt discharged. Chapter 13 bankruptcy will affect a filer's credit for up to 10 years, but missing payments that the debtor cannot make will also affect this rating.

It should also be remembered that as with other forms of bankruptcy, Chapter 13 will not discharge certain debts, such as alimony, child support, and in most instances, student loans. Whether bankruptcy is a good idea in any given situation, and what kind is best is a question that may cause Illinois residents to consider speaking with an experienced bankruptcy attorney.

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