Should I file bankruptcy is a common question that I often answer as a Willow Springs bankruptcy attorney? A person should file bankruptcy when they know that their bills and expenses are more than the income that they are bringing in, whether it be per month or per year. The reason being is if you know – if a person knows that they are unable to deal with their financial obligations and they know for a fact that the income that they receive is not going to change any time soon and the debt is heavily compounding, then they should consider filing Chapter 7 bankruptcy.
Furthermore, if there are court ordered garnishments, liens on bank accounts or even liens on property, this is a good indication that someone might want to consider filing bankruptcy. Bankruptcy is going to stop any garnishments or unfreeze any bank accounts that may be on the person’s bank accounts or in the person’s employment. If a person really is feeling the stress of the financial difficulty with dealing with their financial obligations, then bankruptcy could be a good option in order to reduce that stress and become debt-free. Essentially, that person would regain a fresh start in their financial life by claiming bankruptcy.
Not only should you consider filing for bankruptcy before you actually are sued in court for several things that a creditor may sue you for, you should also consider the possible assets that could be in danger when you file bankruptcy. When a person files for bankruptcy, specifically in a Chapter 7, a person has what is called the bankruptcy estate, which is put in place when someone files bankruptcy. That bankruptcy estate is the estate of any assets or anything of value that could be liquidated in a Chapter 7 bankruptcy.
So before someone considers filing any type of individual bankruptcy, they should look at the equity they have in a property, equity they have in a car or any monetary value of bank accounts, checking accounts and things of that nature. They should also consider any assets that they may be receiving within the next six months, specifically an inheritance for that person from someone who has either passed away or has given that person money through some kind of probate estate.
However, these assets that a person may have are protected to a certain amount. In Illinois, there are many exemptions that a person can take in order to protect a portion of value of an asset. For instance, a person in Illinois has an exemption of $15,000.00 for their home. This means that a person can have at least $15,000.00 of equity in a property that can be protected.
So if a property is worth an amount that yields an equity of $30,000.00, then a single person can protect $15,000.00 of it. The other $15,000.00 would probably not be taken by the trustee, but it really depends on the situation and it’s a case by case scenario. Furthermore, all of the exemptions in Illinois bankruptcy are doubled when a person files jointly with a husband or a wife, or in some circumstances, with a deceased spouse.