Most experts agree that filing for bankruptcy should be a last resort. If you have slipped behind on various payments and your debt has become insurmountable, you might ask a bankruptcy lawyer about your options. If you file Chapter 13 bankruptcy, you will develop a three-to-five-year repayment plan and keep your property. However, not everyone is eligible to file Chapter 13 bankruptcy. Read on to learn about the key eligibility criteria.
Individual vs. Business
Chapter 13 is reserved only for individuals and married couples. Corporations, partnerships, and even sole proprietorships cannot file for Chapter 13 bankruptcy. Business entities looking to file bankruptcy must opt for Chapter 11 bankruptcy instead. Though Chapter 13 bankruptcy is not an option for businesses, an individual who owns a business may file as an individual and discharge his personal debts through Chapter 13, which may help improve his business finances.
You’re more likely to be eligible for Chapter 7 bankruptcy if you have no or little income. However, since Chapter 13 bankruptcy involves repaying your outstanding debts over a three-to-five-year period, you need to prove that you have a steady income before you are deemed eligible. You must subtract your necessary living expenses from your total income and show the bankruptcy court that your disposable income can cover the payments outlined in your repayment plan.
There are also limits to how much debt you can discharge through Chapter 13 bankruptcy. You must have no more than $1,149,525 in secured debts (mortgage, car loan, etc.) and $383,175 in unsecured debts (credit card debt, medical bills, etc.). If your debt exceeds the limit, you may be better off filing Chapter 11 bankruptcy. Finally, you must be completely up to date on your income tax to be eligible for Chapter 13 bankruptcy.
If you are in dire financial straits and your debt relief measures are not working, set up a meeting with Cutler & Associates, Ltd. Our Aurora bankruptcy attorneys have nearly 25 years of experience handling bankruptcy. Visit our website for more information or call (847) 505-0380 to set up a consultation.
There are many factors to consider when making the decision to file for bankruptcy. Under certain circumstances, it may be a good idea for you to delay filing. For example, if you anticipate significant expenses in the near future that will result in new debts, then filing too early will leave you responsible for those debts. One example might be undergoing surgery; filing for bankruptcy after your surgery will eliminate your medical debt.
If you’re considering filing for bankruptcy because you’re facing foreclosure, ask your bankruptcy attorney if it’s a good idea to delay filing. Often, homeowners can obtain a mortgage modification for more favorable terms. However, it’s much more difficult to successfully modify your mortgage after filing for bankruptcy. There are many other reasons why you might wait to file your bankruptcy petition; talk to a lawyer about your unique circumstances.
Cutler & Associates, Ltd. is a bankruptcy law firm with seven convenient locations, including Aurora and Schaumburg. If you have any questions about filing for bankruptcy, give us a call at (847) 505-0380.
Although declaring bankruptcy is sometimes the best option for individuals in difficult financial situations, it does adversely affect credit history. Fortunately, you can start rebuilding your credit immediately after your bankruptcy. Always pay your bills on time and in full. Your credit score is partially comprised of your payment history. You can also apply for a secured credit card, which involves paying a security deposit to the issuer. Make sure you only charge amounts that you can pay off each month.
For more information on bankruptcy and its effect on your credit history, watch this video. This financial advisor discusses some common reasons for filing for bankruptcy and explores secured credit cards.
The law offices of Cutler & Associates, Ltd. can help you resolve your financial problems and stop wage garnishments. Schedule a consultation with one of our bankruptcy attorneys in Aurora by calling (847) 505-0380.
Many people who file for bankruptcy do so because of significant life events, such as exorbitant medical bills due to the illness of a child or the costly burden of a divorce. For many, filing for bankruptcy is an enormous relief; it offers the opportunity to build a new financial future. However, after filing for bankruptcy, you will need to make some changes to your lifestyle and possibly your housing situation. You’ll also need to be firmly committed to improving your credit rating and managing finances wisely.
Evaluating Your Housing Choices
One of the most common questions people have about bankruptcy is whether they will lose their home. In most cases, filers will retain ownership of their home. Some people do choose to give up their home when they feel the financial burden is too much for them. If this describes you, you can expect to rent for a while after your bankruptcy before you can qualify for a mortgage. Landlords and property management groups often evaluate a prospective tenant’s credit history, which will reflect the bankruptcy. Often, filers find that renting an individual property, duplex, or apartment within a small building is more feasible than renting from a landlord that owns a very large complex. Landlords with smaller properties may be more apt to recognize that you’re trying to rebuild your finances.
Modifying Your Lifestyle
Even if you filed for bankruptcy due to circumstances beyond your control, you’ll need to practice sound financial management after filing. Since qualifying for a personal loan when emergencies arise is going to be difficult, it’s vital to build an emergency fund. Plus, if you filed for Chapter 13 bankruptcy, you’ll be making structured payments on your debts. You’ll need to cut unnecessary expenses from your budget and live a modest lifestyle.
Improving Your Credit Rating
Improving your credit rating should be one of your highest priorities after bankruptcy. In addition to making all of your payments on time, you may be able to build your credit with a secured credit card.
The bankruptcy attorneys of Cutler & Associates, Ltd. offer our clients decades of experience in filing for bankruptcy in Illinois. We can help you build a solid financial future with a Chapter 7 or Chapter 13 bankruptcy. Explore your options today by contacting our Aurora or Schaumburg offices at (847) 505-0380.