Chapter 7 Bankruptcy Attorney In Chicago, Illinois

Individuals considering bankruptcy should seek the advice of a bankruptcy attorney to understand the specific rules and implications based on their unique circumstances. They can assess your specific circumstances, provide legal advice, and guide you through the decision-making process. Keep in mind that bankruptcy is a serious financial decision with long-term implications, and seeking professional guidance is advisable.

Determining whether Chapter 7 bankruptcy is right for you depends on your financial situation, goals, and eligibility. Here are some factors to consider:

Eligibility: Chapter 7 bankruptcy has income eligibility requirements. Your income should be below the median income for your state or pass the means test to qualify. You can only obtain a discharge every 8 years.

Type of Debt: Chapter 7 is suitable for unsecured debts like credit cards, medical bills, and personal loans. Secured debts (e.g., mortgage, car loan) can be discharged, but it may involve relinquishing the associated collateral unless you reaffirm the debt.

Asset Protection: If you have significant assets you want to protect, Chapter 7 might not be the best option. Certain assets may be liquidated to pay off creditors. Our Attorneys can discuss the exemptions available to protect assets.

Quick Debt Discharge: Chapter 7 typically offers a quicker debt discharge process compared to Chapter 13. If getting a fresh start promptly is a priority, Chapter 7 may be more suitable.

Financial Fresh Start: Chapter 7 provides a more comprehensive debt discharge, offering a "clean slate" after the process is complete. Only available every 8 years and certain debts may not be discharged.

No Repayment Plan: Chapter 7 doesn't involve a repayment plan. Once eligible debts are discharged, you are not required to make ongoing payments.

Debt Amount: If your debts are primarily unsecured and the total amount is significant compared to your income, Chapter 7 might be more appropriate.

Future Income: If your future income is uncertain or likely to decrease, Chapter 7 might be preferable since it doesn't involve a repayment plan based on income.

Chapter 7 bankruptcy offers several benefits for individuals facing overwhelming debt. Here are some key advantages:

Quick Debt Discharge: Chapter 7 typically provides a relatively quick resolution. The process is completed within a few months, allowing for a faster debt discharge compared to Chapter 13.

Fresh Start: Chapter 7 offers a comprehensive discharge of unsecured debts, providing a fresh financial start for the debtor.

No Repayment Plan: Unlike Chapter 13, Chapter 7 does not involve a repayment plan. Once eligible debts are discharged, the debtor is not required to make ongoing payments.

Automatic Stay: Filing for Chapter 7 triggers an automatic stay, which halts most collection actions, including wage garnishments, lawsuits, and creditor harassment.

Exemption of Certain Assets: Chapter 7 allows debtors to retain certain exempt assets, which may include the primary residence, car, and personal belongings. Exemption laws vary by state.

No Debt Limit for Debt Discharge: Chapter 7 does not have a cap on the amount of debt that can be discharged, unlike Chapter 13, which has Debt limitation requirements.

Simplicity: The Chapter 7 process is generally simpler than Chapter 13, involving fewer court appearances and a shorter timeframe.

Credit Score Recovery: You do not have to wait 10 years. Some individuals find that their credit scores start to improve more quickly compared to those who go through Chapter 13.

Legal Assistance: The straightforward nature of Chapter 7 makes it more feasible for individuals to navigate without a lengthy legal process, potentially reducing legal fees.

Elimination of Unsecured Debts: Chapter 7 can discharge unsecured debts such as credit card balances, medical bills, and personal loans.

It's important to note that while Chapter 7 has these advantages, it may not be suitable for everyone. Eligibility criteria, including income requirements and considerations regarding assets, must be carefully assessed. Additionally, some debts, such as student loans and certain tax debts, may not be dischargeable in Chapter 7. Seeking advice from a bankruptcy attorney is highly recommended to understand the specific implications for your unique financial situation.

It's important to note that not all tax debts are dischargeable in bankruptcy, and certain conditions must be met. Priority tax debts, recent tax debts, and those resulting from fraud may not be dischargeable.

Federal income taxes are generally not dischargeable in bankruptcy. However, there are some circumstances under which income tax debts may be discharged. Here are some key points:

Criteria for Discharge:

Income Tax Only: The tax debt must be for income taxes only and not for other types of taxes, such as payroll taxes, trust fund taxes (e.g., payroll taxes withheld from employees), or fraud penalties, which are not dischargeable in bankruptcy.

Tax Return Due Date: The tax return must have been due at least three years before filing for bankruptcy.

Tax Return Filed Date: The tax return must have been filed at least two years before filing for bankruptcy.

Assessment Date: The IRS must have assessed the tax debt at least 240 days before filing for bankruptcy or not at all.

No Fraud or Willful Evasion: The taxpayer must not have committed fraud or willful evasion regarding the income tax debt.

Timing is Crucial: You must carefully consider the timing of your bankruptcy filing in relation to the due dates of tax returns and assessments.

Chapter 7 vs. Chapter 13/11: Chapter 7 bankruptcy may provide a complete discharge of qualifying tax debts. In contrast, Chapter 13 or 11 bankruptcy may allow for the creation of a repayment plan that includes some tax debt.

Consult with a Tax or Bankruptcy Attorney at Benjamin Legal Services

It's crucial to consult with a qualified bankruptcy attorney to assess your specific situation and determine if your tax debts are eligible for discharge. Bankruptcy laws can be complex, and professional guidance is essential to accurately navigate the rules and requirements. Keep in mind that while Chapter 7 may discharge eligible tax debts, other types of debts and obligations may not be dischargeable, and the impact on your credit score should also be considered.