Bankruptcy is frequently touted as a way to get rid of debt and become free of all of your bills forever. While this is true, the chapter you wind up filing under plays a major role in just how it gets done. As a consumer, you are required to fill out something known as the means test. The test has you enter in your monthly debts, your income and do some simple math to arrive at how much money you have left over every month. It also has you determine how much your debt to income ratio is in order to figure out which chapter of bankruptcy you are to file under.
The rule of thumb for which chapter you enter is if your income is under the median for your state, you file Chapter 7. In the event that it is higher than the median, you file Chapter 13 bankruptcy in Chicago instead. There are more variables that come into play, and sometimes, someone who initially qualifies for Chapter 13 may find that Chapter 7 is open to them. However, a Chapter 13 may be more preferable due to the way the chapter 13 bankruptcy rules work.
A Chapter 13 Bankruptcy in Chicago is essentially a reorganization of your debt. You and your lawyer go through your income and debts, then determine how much money you can afford to pay on a monthly basis. This money is sent directly to the court, and the trustee overseeing your case distributes the funds. Your creditors are obligated to accept the amount if they want to get any money at all. Essentially, the creditors are settling for pennies on the dollar when they accept the bankruptcy plan that is offered to them. They can not come back to you and try to get more money; instead, they have to go to the trustee if they have any issues with what they are being paid.
Chapter 13 lasts up to five years, and impacts your credit rating much less than a Chapter 7 will. Any debt that remains at the end of the bankruptcy is wiped out at discharge, allowing you to move forward, debt-free. visit the Chicago Debt Solutions for more details. You can follow them on Google+.