Chapter 7 vs Chapter 13
Chapter 7 — the clean break
Chapter 7 is the clean break. It erases qualifying debt so you can start over.
Debts it typically erases:
Debts it typically does not erase:
One caution. A judgment recorded as a lien against your home can survive the case unless it is removed through a separate step. Tell us early if a creditor has already sued you.
You may qualify even if you think you cannot. The means test is the calculation that decides who can file Chapter 7. It starts by comparing your household income to the Illinois median for your household size. A second calculation then subtracts allowances and deductions set by the Bankruptcy Code.
People above the median qualify regularly, and you might too. Do not rule yourself out on a salary figure alone.
Most people who file keep everything they own, and you probably will too. Exemptions are the legal protections that keep your property out of your creditors’ reach. Illinois exemption law protects categories including household goods, vehicles, tools of your trade, and qualified retirement accounts. Each category has its own limit.
Whether you keep everything depends on what you own and what it is worth. That is exactly the kind of question the free consultation answers.
What happens after you file? We prepare your petition and schedules. Those are the court forms that list your debts, income, and property. The filing triggers the automatic stay.
The automatic stay is the federal rule that stops most collection activity the moment your case is filed. A trustee then reviews the paperwork. The trustee is the court officer who checks your case. You attend one short meeting about a month later, with us beside you.
A few months after filing you typically receive the discharge. The discharge is the court order that erases the qualifying debt. Most people who file do it once in their lives. It should be done once, only once, and done right.
Chapter 13 — the structured fix
Chapter 13 is the structured fix. Chapter 7 is faster, but Chapter 13 does things Chapter 7 cannot. Each item below is an option available to you.
It can save your home. Arrears are the payments you have missed. Chapter 13 spreads them over three to five years while you resume your regular payments. The lender cannot refuse a plan that meets the legal requirements.
It works when Chapter 7 does not fit you. Your income may be too high for Chapter 7. You may own property with more equity than the exemptions protect. Under Chapter 13 you keep the property and pay through the plan instead.
It handles the stubborn debts. Taxes that cannot be erased can be forced into a structured repayment plan. Student loans can be brought under control. License suspensions based on unpaid debts can be cleared.
It may protect your co-signers. Chapter 13 includes the co-debtor stay. That rule can shield the person who co-signed your consumer debt while the plan runs.
It is one payment. You pay the trustee. The trustee pays your creditors under the plan’s terms. Late fees stop stacking.
At the end of the plan the remaining qualifying balances are erased. A private debt consolidation company cannot do this. It has no legal authority and needs your creditors’ cooperation. A Chapter 13 plan binds them.
Ask us which chapter fits your situation. The consultation is free.
Fixes you may not expect
Your driver’s license
Is your license suspended over an unpaid accident judgment, tolls, or parking tickets? Addressing the underlying debt through a bankruptcy case can generally clear the suspension. That often happens quickly after filing.
Old tax debt
Income taxes more than three years old may be erasable in Chapter 7 if you filed the returns on time. Chapter 13 can force repayment terms on the rest.
The debt that survived losing something
Did the lender repossess your car or foreclose on your house and still bill you for the difference? That leftover amount is called a deficiency balance. It is typically erasable. Losing the thing should be the end of the thing.
What will this cost you?
The consultation is free. There is no charge to find out where you stand and no obligation afterward. If you hire us, you will know your fee before you decide.
Your debt has a legal off switch. Find out which one is yours
One free conversation and you will know whether the answer is Chapter 7, Chapter 13, or something else entirely. You will also know what it would cost. Call, send a message, or email us. We answer all three the same way.
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