Chapter 13 Or Chapter 7 Bankruptcy: Which Is The Right Choice?

In these days of unstable world economics, many businesses are finding it tough to profitably carry on as they had in the past. This in turn has lead to job loss and instability for many Illinois citizens. While things are currently looking up economically, many are still struggling and turning to bankruptcy to get back on their feet.

Bankruptcy should be a last resort for both firms and individuals who are facing financial troubles, but it can be very effective under the right circumstances. There are several types of bankruptcy, each of which are explained in the U.S. Bankruptcy code. The most commonly used are Chapter 7 and Chapter 13.

Chapter 7 Bankruptcy in Chicago

If you file for bankruptcy under Chapter 7 in Illinois, almost all your assets will be sold off to pay debtors. Then the remaining outstanding debt is then written off, with a few exceptions. The firm or individual is given a clean slate and is free to begin life anew. You’ll want to find an experienced Chapter 7 lawyer in Chicago to help you save as many assets as you can and still ensure you start off with a clean slate. However, you need to keep in mind that you’ll lose assets and your credit rating will certainly suffer.

Chapter 13 Bankruptcy

Chapter 13 Bankruptcy, on the other hand, avoids liquidation of your assets, and if you are a firm, you can carry on normal operations. The bankruptcy code will agree on a plan to repay your creditors over 3 to 5 years, depending on an agreement between you, the court, and creditors. You’ll then be protected from your creditors, and be able to concentrate on getting your financial affairs back on track.

Once you have filed for bankruptcy, your creditors cannot pester you for payment as long as the repayment plan is adhered to, regardless of the chapter you file under. Chapter 13 bankruptcy in Chicago does not affect your credit rating as badly as a Chapter 7. The former also allows firms to continue functioning instead of closing down, and individuals to regain control of their financial affairs without losing their personal assets.

Each type of bankruptcy has its own set of pros and cons, so it’s best to approach a qualified and experienced lawyer to explain the intricacies of each so you’ll understand which chapter of bankruptcy will work best in your situation.

If you are filing for bankruptcy in Illinois, get in touch with Chang and Carlin, LLP today for a Free Bankruptcy Consultation. We understand what you’re going through and can help you navigate the bankruptcy process with precision.