Illinois residents who are considering bankruptcy may be confused about the different bankruptcy types and their benefits. This week, this column will address some of the benefits of choosing a Chapter 7 bankruptcy over a Chapter 13 bankruptcy — if one qualifies to do so. Chapter 7 filings are not available to everyone.
A Chapter 7 bankruptcy is available to those who meet the necessary income restrictions. This type of bankruptcy is meant for those Individuals who lack the income to pay creditors. Those who want to know if they meet the income restrictions can take a means test.
For those who do qualify for a Chapter 7 filing, approval can mean a fresh start. All qualifying debts may be discharged. Those debts that do not qualify for discharge include:
- Certain taxes
- Alimony payments
- Child support
- Student loans
- Civil or criminal court judgments
Some of the benefits of pursuing a Chapter 7 filing, aside from debt discharge, include no repayment plan, no debt limitations and quick discharge. With a Chapter 13 filing, a petitioner will still be responsible for paying creditors over a three- to five-year period. In Chapter 7 bankruptcy, debt is simply cleared. It does not matter how much debt one has. If approved, discharge happens almost immediately.
Who wouldn’t want a fresh financial start? Illinois residents who are in serious debt, lack funds to pay it back and have no other way to get on top of it may be able to successfully pursue Chapter 7 filings. An experienced attorney can review the details of one’s situation and either help one through the bankruptcy process or find another debt relief option.
Source: FindLaw, “Reasons to File for Chapter 7 Bankruptcy Instead of Chapter 13“, Accessed on Feb. 15, 2018