If you are someone who has mostly unsecured debt, such as medical bills, personal loans, credit card bills and debts for other types of services, then you may be better just filing a Chapter 7 bankruptcy case through a qualified Burr Ridge bankruptcy attorney. Did you know that you can keep property and still file for bankruptcy? In the state of Illinois, you can keep your house and your car provided you do not have significant equity in those items.
Equity is determined by the market value of the item minus what is owed on that item. In the state of Illinois, you, as an individual bankruptcy filer, can protect up to $15,000.00 worth of equity in your real estate. If you are filing a joint case, husband and wife, then you can protect up to $30,000.00 worth of equity and still eliminate your miscellaneous debt. What this means is that a Chapter 7 trustee is not going to be able to take your house unless you have significantly more than either $15,000.00 in an individual case or $30,000.00 in a joint filing of equity in your home.
Based on the current economic trend and the price of housing and how housing has declined, I have not seen a trustee even seek to go after someone’s real estate in the last five years of practicing bankruptcy law. Back in the day when real estate was increasing in value at the rate of five to seven percent each year, a Chapter 7 bankruptcy trustee knew that if there was even slight equity in the house they would have an interest in seeking to sell that property because the value would be constantly going up. Under the current market, there is no equity in the property and the equity is going down every month. So Chapter 7 bankruptcy trustees are really looking away from real estate unless there is an absolute abundance of equity in the property.
The Chapter 7 trustee knows that they have to put that property on the market. They have to hire a realtor. They have to hire a lawyer to do the closing and they have to find a buyer. Based on the current economic times, buyers are few and far between and, unless there’s significant equity, that trustee is not going to be interested in selling the property.
The same could be said for vehicles. In the state of Illinois, an individual has a $2,400.00 exemption in one motor vehicle. If it’s a joint case, husband and wife, then they can combine their auto exemption and protect up to $4,800.00 of equity in one vehicle. Those are some of the Illinois bankruptcy basics.