If you are considering filing bankruptcy and live in the state of Illinois, there are some facts you will need to be aware of before going through this process. Read through the following important information to file bankruptcy in Illinois.
There are some financial acts that cover the process to file bankruptcy in Illinois, as well as other states in the US. It is a good idea to become familiar with these to determine if you qualify and what debts are covered.
- Credit Counseling Act (2005). All consumers that file bankruptcy must participate in credit counseling in the six months prior to filing for relief. They must also complete financial management courses once they file bankruptcy in Illinois.
- Means Test (2005). To determine if you qualify for either Chapter 7 or if Chapter 13 is needed, all income sources, expenses and debts will be considered. The bankruptcy court will analyze your average household income for the preceding 6 month period and then compare it to the median income for the state. This will determine which chapter is applied to file bankruptcy in Illinois.
Paperwork Required to File Bankruptcy in Illinois
When beginning the process you will need meticulous itemization of all your income sources, as well as some other records. Be prepared with all the following information to file bankruptcy in Illinois.
- Financial Transactions. All major financial records for the previous two years will be required.
- Living Expenses. Proof of living expenses for a one month period.
- All Debts. This includes secured as well as unsecured debts owed.
- Assets. This covers any property or possessions that could be sold and converted to cash.
- Tax Returns. Courts require a two year tax return history.
- Deeds and Titles. This applies to real estate holdings that are owned outright and any automobiles that are fully paid off.
- Loan Documents. Any outstanding loan documents will be needed to determine level of debt and terms of repayment agreements.
Steps to File Bankruptcy in Illinois
When all the above documents and information are consolidated, the time has come to determine if any of your property falls under the Illinois seizure exemptions. A two page petition is then filed with the Illinois court by either yourself or your lawyer. There are also several more forms that are necessary to complete the process to file bankruptcy in Illinois. All this paperwork and forms are meant to represent your financial status currently. It is imperative that they be accurate and completely honest, or your petition could be rejected.
There are fees involved to file and you need to be aware of these before you file bankruptcy in Illinois.
- Chapter 7. The fee for Chapter 7 bankruptcy is $306. You may be able to arrange installment payments, but this fee is not eligible to be waived.
- Chapter 13. The fee for Chapter 13 bankruptcy is $281. It is ineligible for waiver as well.
Requirements for Chapter 13
Those that are eligible for Chapter 13 bankruptcy must submit a proposed plan of repayment. Monthly expenses that are reasonable are subtracted from your income, leaving an amount that could be applied to debt that is outstanding. Taxes and child support are considered priority debts that will be paid entirely, while other unsecured debts will be negotiated for settlements at less than the amount owed.
When you file bankruptcy in Illinois, your repayment plan must meet these requirement:
- Good Faith delivery.
- Unsecured creditors should receive the minimal amount covered under Chapter 7 regulations.
- 100% of your disposable income is applied to the repayment plan for a minimum of three years. The court usually insists on wage garnishment to ensure this requirement is met.
Final Steps to File Bankruptcy in Illinois
- Automatic Stay. Once you have been completed the process to file bankruptcy in Illinois, you are protected immediately from further contact by creditors or any foreclosure actions against you.
- Bankruptcy Trustee. When you file bankruptcy in Illinois, the court immediately assumes legal management of all outstanding debts and the property and possessions not covered under the state exemption list. A court appointed trustee then fastidiously analyzes and reviews all documents and paperwork that you have filed with your petition. They are also able to challenge any portion of your petition.
- 341 Meeting. Section 341 of the Bankruptcy act require that a meeting between the court appointed trustee, creditors and petitioner be arranged. Generally, this occurs about 30 days after you file bankruptcy in Illinois. Occasionally, in Chapter 7 cases, creditors may choose not to attend. If objections to any aspect of the plan or exemptions are raised, the trustee can negotiate. When conflicts cannot be resolved the bankruptcy judge will rule.
- Discharge of Property. All non – exempt possessions and properties are sold by the trustee and the money is then applied toward your debt. Occasionally, low value property is returned to you.