Illinois Chapter 7 Bankruptcy Attorney

Also known as straight or liquidation bankruptcy, Chapter 7 bankruptcy is a way to eliminate some or all of your debt. When you file for Chapter 7 bankruptcy, the court can sell your non-exempt assets to partially repay your creditors. When your Chapter 7 case is closed, your remaining debt is discharged.

Chapter 7 Bankruptcy Eligibility

Not everyone is eligible to file for Chapter 7 bankruptcy. All Chapter 7 petitioners must pass what is called a “means test.” In order to qualify, you must earn less than the median income for a family of your size in your area. If you earn more than the median income and can afford to pay $100 a month towards your debt over five years ($6,000 total), you will only be able to file for Chapter 13 bankruptcy.

Additionally, you cannot file for Chapter 7 bankruptcy if you have previously filed for Chapter 7 within the past 8 years or Chapter 13 within the past 6 years. If a previous bankruptcy filing was dismissed within the last 180 days, you are also ineligible to file. There are additional requirements for Chapter 7 eligibility. At Northwest Suburban Bankruptcy, we examine our clients’ financial situations carefully to determine if Chapter 7 bankruptcy is a viable option.

Chapter 7 Liquidation

When you file for Chapter 7 bankruptcy, you receive an automatic stay, or Order for Relief, immediately. The stay prevents creditors from attempting to collect on your debt including halting foreclosures, wage garnishments and repossessions. Once the bankruptcy process begins, a judgment is made on which of your assets if any will be liquidated to repay your debts. Typically these assets include:

  • Cash, stocks, bonds and financial investments
  • Valuable collections and heirlooms
  • Secondary homes (i.e. Vacation or investment homes)
  • Second vehicles
  • Valuable musical instruments (unless used for your profession)

Most of your property is exempt from seizure in a bankruptcy. Typically you can keep:

  • Primary vehicles (up to a certain value)
  • Your primary residence (and part of the equity)
  • Household furnishings
  • Personal effects and clothing
  • Jewelry (up to a certain value)
  • Life insurance (up to a certain value)
  • Public benefits (such as Social Security)

To learn more about the specifics of filing for Chapter 7 bankruptcy, contact us at Northwest Suburban Bankruptcy.