Illinois Laws on Chapter 7 Bankruptcy
Residents of Illinois can file for consumer bankruptcy protection under Chapter 7 or Chapter 13. In a Chapter 7 bankruptcy, certain kinds of debt are erased and you agree to give up some or all of your property. If you have few assets and are unable to repay your debt, Chapter 7 bankruptcy may be right for you. If you live in Illinois, it's important to understand what the process for filing involves.
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Who Can File
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To file Chapter 7 bankruptcy in Illinois, you must be a resident for at least two years prior to filing. There is no limit to the amount of debt you can claim in Chapter 7. You must pass a means test for income prior to filing. The means test measures your median income against the federal median income for your family size. As of 2010, the median income limit for a single debtor in Illinois was $45,941. The limit was $81,175 for a family of four. If your income exceeds the limit for your family size, you may have to file Chapter 13.
Financial Education
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Chapter 7 debtors in Illinois are required to complete two courses in financial education. You must complete credit counseling with a court-approved agency in the six months prior to filing. This requirement may only be waived in emergency situations. Within 45 days of filing, you must also complete a second course in financial management. If you fail to do so, your case may be dismissed.
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Filing
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You can file your Chapter 7 petition in the Illinois Northern, Southern or Central district bankruptcy court, depending on where you live. When you file, you must pay the filing fee and submit your supporting paperwork. As of 2010, the filing fee was $299. Along with your petition, you must provide the court with your credit counseling certification, a list of all your creditors, a list of your debts and assets, your prior year's tax return and a summary of financial affairs.
Property Exemptions
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Each state allows you to exempt a certain amount of your property in bankruptcy. As of 2010, Illinois allows homeowners to exempt up to $15,000 in home equity value. You may also exempt up to $2,400 worth of motor vehicle equity; clothing; health aids; books; tools of the trade up to $1,500; retirement accounts; education savings accounts and personal injury recoveries up to $15,000.
Chapter 7 Discharge
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Within 20 to 40 days of filing, you will attend a 341 meeting, also known as a meeting of creditors. At this meeting, the bankruptcy trustee who is responsible for overseeing your case will ask you questions about your financial situation. If no new issues are raised, the trustee will recommend that your case be discharged. You can expect to receive your discharge within three to six months of this meeting. Once you receive your discharge, your debts are eliminated. Your Chapter 7 bankruptcy will remain on your credit for up to 10 years.
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References
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