The appeal of bankruptcy is that once a person has filed, creditor efforts to collect are halted. A debtor can protect their assets. Certain steps can help prepare for a successful bankruptcy filing, and can assist in an organizational manner. For instance, if you fail to include all dischargeable debts you may not receive a full discharge. At the Bankruptcy Center of Illinois, our bankruptcy attorneys help people throughout DuPage County prepare for and file for bankruptcy. Whether this is your first time filing or you have a repeat filing, we can counsel you and advise on your next steps.
One main purpose of filing for bankruptcy is to obtain a discharge of the majority of debt. There are different types of bankruptcy, including Chapter 7 and Chapter 13. Chapter 7 bankruptcy provides for discharge of the majority of debt, leaving you without liability. Many debts remain unpaid under a Chapter 7 bankruptcy. Chapter 13 includes a repayment plan for a larger percentage of debts. Debts are repaid over a period of 3-5 years.
First, protecting the money in your bank account is important. Prior to filing for bankruptcy, pay off necessary bills. Reducing the amount of money in your bank account can reduce the amount the bankruptcy trustee has control over. The rule is that any funds that do not fall under an exemption will be under the control of the trustee. If the bank freezes your account to protect the funds for creditors, it is possible to ask a trustee to contact the bank and lift the freeze.
After filing, an automatic stay. This legal order prohibits creditors from collecting debts. In some situations, it may take creditors time to halt automatic payments, even with notice of the automatic stay and the bankruptcy filing. You may notify a creditor on your own in order to make the process a little quicker. This can include sending an email or a letter that provides the bankruptcy filing date and case number, as well as the name of the court.
There are steps to take when preparing for bankruptcy that can help avoid financial challenges. Stopping an automatic payment or authorized deductions from a bank account before filing for bankruptcy can prevent the situation in which you have insufficient funds to make a payment. Again, there may be a period of time between stopping automatic payments and your bankruptcy filing. It is also advantageous to stop using credit cards or borrowing money after you have decided not to repay it. Refrain from transferring assets or money to avoid it being included in the bankruptcy estate.
Before considering filing for bankruptcy, it is advantageous to ensure credit cards and loans are not associated with a financial institution at which you have an account with money. Some bank account holders sign up for a loan or a credit card through the bank. Often, banks have the right to a set off. A set off is essentially the right to any outstanding debt. This includes the right to take funds from the account to repay the loan or the credit card debt.
A utility company may use a security deposit to set off any outstanding payments when you file for bankruptcy. For this reason, catching up with payments before filing for bankruptcy can be a wise decision. If you expect a set off, it is also possible to add funds to a security deposit before filing for bankruptcy.
By taking appropriate steps when filing for bankruptcy, you can navigate any potential challenges or complications more easily. At the Bankruptcy Center of Illinois, our DuPage County attorneys are here to help you understand and navigate the process of obtaining a discharge of your debts. Our dedicated lawyers can be reached by phone at (773) 993-0024 or online and provide a free consultation.