Chapter 7 and Chapter 13 bankruptcies are different tools for different situations. With the proper information, the debtors who are claiming bankruptcy and their Westmont bankruptcy attorney can determine the best and proper course of action in a given financial situation. The inquiry does not simply end when Chapter 7 eligibility is established; in some circumstances, a Chapter 13 filing can be a better tool. Other cases, which at first blush appear to be textbook Chapter 13 cases, may turn out to be a Chapter 7. Understanding the debtors’ goals can be a key factor in how they want to proceed.
Practicality and feasibility also need to be considered. In many situations, debtors may be so financially disorganized that they are in a state of shock and unable to make sound financial decisions. Giving sound and practical legal and financial advice is very important, and in some cases, the harsh and bitter realization that the debtors need to give up a property or car for financial freedom can be, in the end, a better decision.
Illinois bankruptcy filers are seeking a discharge which is the heart and purpose of any bankruptcy filing. The discharge order not only renders a debt discharged, but also acts as a permanent injunction that prohibits creditors from engaging in any collection activity on the discharge debt.The vast majority of debt is dischargeable in bankruptcy. Commonly discharged debt includes credit cards, medical bills, payday loans, and unsecured lines of credit. A bankruptcy will also discharge personal liability on secured debts, including mortgages.
Let’s now move to another area of bankruptcy basics which in non-dischargeable debt. There are debts that are non-dischargeable. Under 11 U.S.C. §523(a)(1) to (19), non-dischargeable debt includes recent taxes, domestic support obligations, government or criminal fines, and debts incurred as a result of driving under the influence of drugs or alcohol. Any debts incurred within the 90 day period prior to filing of bankruptcy are presumed to be non-dischargeable.
In order to render some debts non-dischargeable, a creditor must bring an adversary proceeding to determine the non-dischargeability. These debts are typically those incurred through fraud or other nefarious activities.
Federal income tax debt that is more than three years old may be dischargeable as well, provided that the debtors filed their tax returns timely and several other factors are met. The Social Security Administration will also generally accept a bankruptcy discharge for overpayments. To prevent an adversarial complaint from being filed is impossible. However, with the proper bankruptcy advice, you may not put yourself in a position to have such a complaint filed. You may need to wait out a specific time period prior to filing. You may want to think twice before you transfer any property out of your name. You certainly do not want to repay a family member or insider within one year of filing for Chapter 7 bankruptcy. These and other items can be explained further by your attorney.