Bankruptcy is a legal proceeding that allows a debtor (i.e., someone who owes money) to avoid paying some or all of his or her debts. The US Constitution authorized Congress to enact bankruptcy laws. Most recently, Congress enacted the Bankruptcy Abuse Prevention & Consumer Protection Act (BAPCPA), effective October 17, 2005. BAPCPA governs all bankruptcies filed in the United States by consumers, and businesses (i.e., corporations and partnerships).

Thomas Law Group, P.C. specializes in two types of bankruptcy, Chapter 7 and Chapter 13 bankruptcy. You can therefore think of bankruptcy as a federally guaranteed right to obtain a fresh start or free from a crushing burden of debts that you can't possibly pay.

Chapter 7 bankruptcy, otherwise known as "liquidation" or "straight bankruptcy" is generally the easiest and quickest and is available to consumers. When a consumer files bankruptcy, a trustee is appointed by the court. The trustee gathers and sells your "nonexempt" property to pay debt to creditors. You're able to keep any "exempt" property. Most Chapter 7 bankruptcies in the U.S. filed by individuals are considered "no asset" bankruptcy, which means that you don't have "nonexempt property" for the trustee to sell, which means the consumer is able to keep all of his or her property.

Chapter 13 bankruptcy, also known as "reorganization" ore "wage earner's" bankruptcy is filed by consumers who want to pay off their debts over a period of three to five years. This type of bankruptcy appeals to individuals who have non–exempt property that they want to keep. Chapter 13 bankruptcy is an option for individuals who have predictable income and whose income is sufficient to pay their reasonable expenses with some amount left over to pay off their debts.

Exempt Property

In Illinois, the most commonly used exemptions include a person's:

• Homestead (primary residence)
• Motor vehicle
• Personal property (furnishing and closing)
• Pension, IRA, 401(k)
• Insurance
• Work equipment and tools

Credit Counseling Briefing

By law, everyone must receive a credit counseling briefing before they file Chapter 7 or Chapter 13 bankruptcy. You can complete the credit counseling requirement online.

Debtor Education Course

By law, everyone must also complete a debtor education course before they receive their Chapter 7 or Chapter 13 debt discharge.

Thomas Law Group, P.C. is here for you to assist you with your questions regarding Chapter 7 and 13 bankruptcy. Call 866–848–9183 or contact us online to schedule a free bankruptcy consultation.