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Errors Could Lead to Dismissal of Illinois Bankruptcy Claim

Posted on in Bankruptcy Attorney

Since the 2005 changes to federal bankruptcy laws, filing for bankruptcy has become a more tedious, time-consuming task. Among the changes made were income specifications that affect which type of bankruptcy claim an individual can file.

Chapter 7 Bankruptcy (Liquidation)

Under a Chapter 7 bankruptcy, a debtor's non-exempt assets are liquidated and sold to pay creditors. Debtors may be allowed to keep property with “exempt” status, which is determined by the state where the claim is filed. In many states, a percentage of your home's value can be exempted.

To determine if you are eligible to file Chapter 7 bankruptcy, you first need to find out how your monthly income compares with the state's median income for a family of similar size. If your income is higher than this median amount, a means test will be applied. Basically, a means test is a calculation of your debt and expenses. This calculation can be determined according to your specific location by state and region. If the results of the means test show that you should be able to make payments on your debts, you will be unable to file for Chapter 7 bankruptcy.

Chapter 13 Bankruptcy (Repayment)

Under a Chapter 13 Bankruptcy, a debtor makes a plan for repayment of their debts. Generally, this claim allows debtors to retain their homes and offers protection for third-party co-signers.

Again, you must determine how your income compares with the state's median. If it's less than the median, your repayment plan is based on a three-year time frame. If it's more, the courts grant a five-year window.

Before you file any bankruptcy claim, make sure you have all the details. Bankruptcy law involves many complex rules and regulations, and if your claim is rejected, you may not file again for another 180 days. If you're thinking about filing for bankruptcy in Illinois, contact a qualified Waukegan bankruptcy lawyer for advice.

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