If you are facing an insurmountable level of personal debt, filing for Chapter 7 or Chapter 13 bankruptcy might be the most effective way for you to eliminate that debt and get yourself on a path toward financial freedom. It is in your best interest to work with a bankruptcy lawyer to complete the process because a lawyer can advise you about the choices you face and advocate for you during interactions with the court and your creditors.

Working with a lawyer is a professional partnership. In order to help you, your lawyer needs to know every detail of your case, even the ones that you feel are unsavory or embarrassing. If you are not willing to address your problems accurately, you are not ready to file for bankruptcy.

Bankruptcy is a complicated process. As with many other things in life, like parenting your children and putting money away for your retirement, getting divorced complicates the bankruptcy process. If you are not sure about the future of your marriage or if you know that you will file for divorce in the near future, you might opt to put your bankruptcy plan on hold until the divorce is finalized. But sometimes, this is not feasible. In other cases, it actually makes more sense for a couple to file for bankruptcy together before they begin the divorce process. Whether you should wait until your divorce is finalized or not to file for bankruptcy depends entirely on your individual circumstances.

Is Qualifying for Chapter 7 Bankruptcy a Goal?

If so, you might want to wait until after your divorce is finalized because after the divorce, your household income will likely be lower. If you earn less each month than the median monthly income for other Illinois households your size, you automatically qualify for Chapter 7 bankruptcy.

In 2016, ITT Technical Institute filed for Chapter 7 bankruptcy. This came after years of growing debt amid scrutiny of it and other for-profit colleges. The institution closed 136 of its campuses throughout the United States, leaving approximately 350,000 students unable to finish their degree programs. Following the filing, the media turned its attention to these students, many of whom have accrued significant debt while attending ITT Technical Institute.

But the students were not the only individuals impacted by the bankruptcy. In preparation for its liquidation, ITT Tech laid off employees without proper notice, leaving many of them “stranded” as well. The employees are seeking compensation for their lost wages and benefits, such as paid vacation days and 401(k) contributions for the 60-day period prior to laying them off that the institution was required to provide. But because of the bankruptcy proceeding, it is expected that the employees will remain in this position for the foreseeable future.

A trust can protect your assets if you have to declare bankruptcy, depending on the type of trust you have. Assets in revocable living trusts can be seized by an individual's creditors if he or she files for Chapter 7 bankruptcy. Assets in an irrevocable trust cannot be seized. This is because of the difference in the assets' ownership in each of these trust types.

Generally, individuals set up trusts to keep their assets out of the probate process upon their deaths. A trust allows an asset to transfer directly to a beneficiary without subjecting it to the costs and complications of probate, the legal process of determining beneficiaries and transferring a deceased individual's assets to them. Individuals also sometimes create trusts to lower their beneficiaries' estate tax burdens. Below are deeper explanations of each type of trust and what can happen to the assets contained within if you file for bankruptcy. For further information about each type of trust and how it can benefit you, speak with your financial adviser or your bankruptcy lawyer.

Revocable Living Trusts

Although its stores in the Chicago area remain open, Boston-based fast casual sandwich chain Cosi has filed for Chapter 11 bankruptcy. In total, 29 of the company's 74 corporate-owned locations were closed in September 2016. In addition to these corporate-owned stores, there are 31 franchise Cosi locations in the United States. All of these locations are still open. The goal is for Cosi's lenders to purchase the eatery and reorganize it under a Chapter 11 bankruptcy plan.

Chapter 11 bankruptcy is designed to give companies the opportunity to restructure their operations to become profitable again. Although bankruptcy is not the right choice in all situations where a business owner is facing a substantial amount of debt, it can be the right choice for many. If you are considering filing for bankruptcy, speak with an experienced bankruptcy lawyer before you proceed.

Hard Times for Cosi