5320 West 159th St, Suite 501, Oak Forest, IL 60452
Experienced Chapter 7 Bankruptcy Lawyers
Chapter 7 of the Bankruptcy Code allows individuals to discharge most debts and prevents creditors from taking legal or collection actions against the debtor. At Urban & Burt, Ltd., our Illinois lawyers guide clients through the Chapter 7 process, helping them achieve their financial goals through bankruptcy. Led by experienced attorney Edmund G. Urban III, our bankruptcy team is committed to identifying the best legal strategy for each client.
Chapter 7 of the Bankruptcy Code is also known as a “straight bankruptcy.” It allows for the discharge of debts, which releases individual debtors from personal liability for most debts and prevents the creditors owed those debts from proceeding with any collection actions against the debtor. Under the Chapter 7 a Trustee is appointed to review the documents filed with the court to determine if there are any un-exempt assets to be liquidated for the benefit of the creditors.
After a Chapter 7 is filed, a date is set for review of the schedules filed with the court by a trustee appointed to administer your case. Approximately one month after the case is filed, you and your spouse, if you filed jointly, will appear at the trustee’s office or via Zoom for a meeting called a 341 meeting. 341 refers to the section of the bankruptcy code which requires the meeting and gives the trustee and your creditors an opportunity to review the papers filed with the court. This hearing usually lasts less than fifteen minutes. This may be the only appearance at which you may need to be present for. Your attorney will advise you if it is necessary to attend any other court hearings. All debtors must complete a court approved instructional course concerning financial management to receive their discharge. After the 341 meeting, typically the trustee will file a “no asset report” indicating to the judge that there are no assets to be sold for the benefit of your creditors. Once this has been done, the court will sign a discharge order. This discharge order relieves you of any obligation to pay any of your discharged creditors. The Chapter 7 discharge does not eliminate some 19 categories of debts. The most common types of non-dischargeable debts are:
- Debts due on certain types of tax claims
- Debts for spousal or child support or alimony
- Debts for willful and malicious injuries to person or property
- Debts to governmental units for fines and penalties
- Debts for most educational loans or benefit overpayments
- Debts for personal injury caused by the debtor’s operation of a motor vehicle while intoxicated
- Debts owed to certain tax-advantaged retirement plans
- Debts for certain condominium or cooperative housing fees
Determining Eligibility for Chapter 7
Stopping Collection Efforts and Harassment: The Automatic Stay
Filing Chapter 7 bankruptcy stops all creditors’ collection efforts. Known as the automatic stay, this feature of the bankruptcy law requires creditors to cease phone calls, wage garnishment, demand letters, lawsuits and any other collection activities. Our attorneys help enforce the automatic stay when necessary, notifying creditors that they can no longer try to collect a debt.
We also answer questions about other issues, including:
- I’m upside down on my house. Can I walk away?
- Someone told me to consider a short sale. Will I incur tax liabilities?
- What about debt consolidation services?
- Can I discharge my student loans? My back taxes? Child support arrears?
Guiding Clients Through the Process
Our lawyers advise clients about the process that typically includes:
- Filing the Chapter 7 petition that includes lists of assets and debts, income and expenditures, financial statements, pay stubs, copies of tax returns, lists of creditors and other documents required by the bankruptcy court
- Certifying that the petitioner has completed required credit counseling
- Paying the Court and filing fees (currently around $400)
- Meeting with the bankruptcy trustee for a 341 meeting, named for the relevant section of the Bankruptcy Code, to review papers and answer creditor questions (if any)
- Selling of property (if any) not covered by bankruptcy exemptions
- Completing a required financial management class
- Reaffirmation of secured debt or property you wish to retain
- Signing the discharge order
Chapter 7 of the Bankruptcy Code provides the relief that people commonly refer to as a straight bankruptcy. Under Chapter 7, you are provided a discharge from your debts and given a fresh start.
Under Chapter 7, the court enters an order giving you relief from your financial obligations.
The court also appoints a trustee to determine if you own any non-exempt property which should be sold for the benefit of your creditors. In most cases, there is no such property which can be sold. Normally, most property people own is considered to be exempt property.
One of the oldest myths is that if you declare Chapter 7 bankruptcy, you will lose everything. This is not true. Under the law, you are allowed to keep certain property, which is called exempt property. In most cases, the debtor will lose very little, if any, of his or her property, as most is considered “exempt property.” Under the law in Illinois, each debtor is entitled to keep up to $15,000.00 in equity in the real estate where he or she lives. If you file a joint petition with your spouse, you can keep up to $30,000.00 in equity in your home. If you have more than $30,000.00 equity in your home, you should discuss a Chapter 13 with your attorney to protect your home.
Also, the law provides exemptions to each debtor of $2,400.00 in a vehicle; $4,000.00 in personal property; $1,500.00 for tools of the trade, and all necessary personal possessions. Current law allows for the protection of all pension and 401K assets while you are able to discharge your debts. The law also allows certain exemptions for personal injury settlements and workers compensation awards. It is important that you advise your attorney about all potential assets which you own so s/he can properly claim the maximum exemptions to protect your property.
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