Chicago IL Bankruptcy Attorney
Consider a Chicago Bankrupty attorney if you have a lot of questions and your not sure what to do. A lot of our clients have questions about the difference between Chapter 7 and Chapter 13 bankruptcy. This article will help to provide some information about the difference between the two as well as the requirements of both.
There are a number of things that bankruptcy can help you with. It can wipe out things like credit card debt, medical bills, HOA dues and even some taxes. It also stop a pending foreclosure, and a Chapter 13 bankruptcy can help to eliminate a second mortgage so you can catch up.
What is a Chapter 7 Bankruptcy?
Chapter 7 bankruptcies are the most common and it might be the right option for you. It can be used for an individual or a business, and the process involves liquidation of your assets and the money is distributed to creditors. There are many advantages to a chapter 7 bankruptcy.
- It stops creditors from calling or harassing you.
- It postpones foreclosure proceedings so you have time to make other arrangements.
- There is no minimum on the amount of debt you can discharge.
- There is also no maximum on the amount of debt you can discharge.
- The process of a chapter 7 takes 3 to 6 months to complete.
- There are no monthly payments that need to be made to the court.
There are also some disadvantages to filing a chapter 7 bankruptcy. The list below will help to break them down for you.
- A Chapter 7 will not catch you up on delinquent vehicle or mortgage payments.
- Property that is not exempt from the bankruptcy may be at risk of being surrendered to creditors.
- Debt such as child support, spousal support, student loans, and some taxes are not exempt.
- This type of bankruptcy can make it very difficult to get loans in the immediate future and can significantly lower your credit score.
- You can only file a chapter 7 bankruptcy every eight years.
What is a Chapter 13 Bankruptcy?
A Chapter 13 bankruptcy is different in that it is designed to help you catch up on your bills. It will remove unsecured debts, but payment plans are set up for secured debts. The payment plans are typically set up over three to five years of time. The amount of the payment is based on the amount of disposable income that you have each month. You must be able to prove that you have enough money to support your monthly expenses as well as a monthly payment to the court. There are a number of benefits to a Chapter 13 bankruptcy.
- It will stop creditor calls and harassment.
- It will stop wage garnishments.
- Filing a Chapter 13 bankruptcy can do away with second mortgages.
- Chapter 13 will stop repossessions.
- It can stop a pending foreclosure.
- Chapter 13 can also stop pending debt collection lawsuits.
Many people believe that they will lose their vehicle, home and other assets if they file for Chapter 13 bankruptcy. This is not true. There will typically be a drop in your credit score, but it is possible to rebuild your credit over time. In a Chapter 13 you will not lose your assets in a liquidation process. Your debts are lumped together and you have to pay them off over 3 to 5 years.
If you have any questions about Chapter 7 or Chapter 13 bankruptcy please don’t hesitate to call. The law office of Ranj Mohip LLC is here to assist you in any way we can. We know this can be a stressful situation to go through, but we promise to make it as easy as possible.
What is Redemption
If you have filed for bankruptcy you will be required to value all your vehicles. If you have a case where your vehicle is worth less than what you owe your lender, it may be possible to do a redemption. If you redeem the loan you get the court to help you force the lender to take the fair market value of the vehicle. This is accepted as full payment on the loan by the lender.
This process can save you a large amount of money because you are only paying what the vehicle is actually worth. The problem for most people in this situation is that they often do not have the money to pay for the final cost of the vehicle. Redemptions do not allow for payment plans, the lender must be paid up front. You can get a hard money loan from a new lender, but it usually comes with high interest rates. For some people the new payment is unaffordable.
At the Law Office of Ranj Mohip, LLC we can help you negotiate your redemption loan. There are a few steps to this process, but you can potentially save a lot of money and you get to keep your vehicle. Please don’t hesitate to call with any questions that you have about Chicago redemptions. We’re here to help.