People who are struggling to pay their bills may consider filing for bankruptcy. Filing for bankruptcy in Illinois can help you get a fresh start and relieve some of your financial stress. However, before taking any action, you should understand the process and what to expect. This blog post will provide an overview of how to file for bankruptcy in Illinois. Keep reading to learn more!
What Is Bankruptcy?
Bankruptcy provides relief to individuals and businesses who owe more debt than they can pay. Bankruptcies are accompanied by an order called an “automatic stay.”. This lets your creditors know that they cannot collect from you, at least temporarily, so you can work out a payment plan.
Indicators that You May Need to File for Bankruptcy
If you’re considering bankruptcy, it’s important to know that bankruptcy isn’t the right choice for everyone.
Here are some indicators that you may need to file for bankruptcy:
- You can’t catch up with your mortgage payments.
- Your creditors won’t work out a payment plan with you.
- You’re using your credit cards to pay for rent and food.
- Debt collectors are calling you, or your house is being foreclosed on.
Is Bankruptcy the Only Option?
It’s important to explore all your options before considering bankruptcy. Alternatives to bankruptcy may include debt settlement or credit counseling. You can discuss any of these options with a financial advisor.
You can reduce your debt by consolidating it into a single monthly payment. Doing so will save you money on interest and help you repay your debt more quickly.
You can also negotiate directly with your creditors. Reaching an agreement can be tricky, but if you can do it, you’ll avoid bankruptcy.
What Are the Types of Bankruptcy?
There are two main types of bankruptcies available in Illinois: Chapter 7 and Chapter 13.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy involves selling some assets to repay your creditors. It is often referred to as a “liquidation bankruptcy.” Ensure your eligibility for Chapter 7 bankruptcy by talking with an attorney.
Chapter 13 Bankruptcy
In Chapter 13 bankruptcy, also called reorganization bankruptcy, you keep your assets while repaying your debts over time. In order to qualify for Chapter 13 bankruptcy, you must have a steady income and debts below a certain amount.
How Do You File for Bankruptcy in Illinois?
If you’ve decided to proceed with filing for bankruptcy in Illinois, it’s important to know how the process works. The steps have been outlined below.
- Gather Your Illinois Bankruptcy Documents: You will need copies of your tax returns from the previous two years and your last 60-day pay stubs.
- Take a Credit Counseling Course: Learn more about the credit counseling course here.
- Fill Out the Bankruptcy Forms: You can download the forms free through USCOURTS.gov.
- Pay Your Filing Fee: Chapter 7 bankruptcy requires a court filing fee of $338. When your income does not exceed 150% of the poverty guidelines in Illinois, you can request a filing fee waiver.
- Print Your Bankruptcy Forms: Make sure to print all forms on regular, white 8.5″ x 11″ paper using black ink.
- File the Forms With the Illinois Bankruptcy Court: Where you live will determine your bankruptcy options in Illinois. Each of the Northern, Southern, and Central Districts has very different rules for people filing for bankruptcy without an attorney.
- Mail Documents to Your Trustee: You will be assigned a trustee after filing for bankruptcy.
- Take Another Course: Attend a debtor education course within 60 days of the 341 meeting.
- Attend Your 341 Meeting: Your creditors can attend this meeting to ask questions.
What Happens After You File for Bankruptcy in Illinois?
A bankruptcy discharges most of your unsecured debts, so you won’t have to pay them back. Nevertheless, some debts such as student loans, child support, and alimony, cannot be discharged through bankruptcy. Depending on your bankruptcy choice, you may also have to give up some assets.
How Does Bankruptcy Affect Your Credit Score?
If you file for bankruptcy, your credit report will reflect the bankruptcy for seven to ten years. This may make it difficult for you to get a loan or credit line approved.
Rebuilding Your Credit Post Bankruptcy
Contrary to popular belief, bankruptcy does not mean you’ve lost your financial future. The following actions can help you rebuild your credit:
- Taking out a small loan.
- Making on-time payments.
- Getting a secured credit card.
- Maintaining a good payment history.
- Regularly checking your credit report for errors.
- Becoming an authorized user on a credit card.
Sell Your House for Cash & Avoid Bankruptcy in Illinois
If you’re considering filing for bankruptcy, you may be able to avoid it by selling your house. At Favor Home Solutions, we buy houses as-is for cash, so you don’t have to worry about making repairs or endure the emotional stress that comes with bankruptcy.
Let’s work together to develop a solution that meets your unique needs within your preferred timeframe! Get the cash you need in as little as 14 days and regain your peace of mind. Contact us today to learn more about how we can help you!