Bankruptcy in Illinois: State-Specific Steps and Advice[yoast-breadcrumb]
Bankruptcy in Illinois: State-Specific Steps and Advice
Filing for bankruptcy can be a scary thing. It’s a big decision that affects your financial future. But sometimes, it’s the best option to get relief from overwhelming debt. This article will walk you through the bankruptcy process in Illinois and provide tips to make it less stressful.
Do I Qualify to File for Bankruptcy in Illinois?
The main factor in determining if you can file for bankruptcy is where you’ve lived in the past two years. To file in Illinois, you need to have lived there for the majority of the previous 180 days. But to use Illinois exemptions that protect your property, you must have lived there for 730 days.
You also need to pass the means test, which looks at your income and expenses to see if you qualify for Chapter 7 bankruptcy. If your income is too high, you may have to file Chapter 13 instead.
Should I File Chapter 7 or Chapter 13 Bankruptcy?
Here’s a quick rundown of the two most common bankruptcy options in Illinois:
- Chapter 7 – This liquidates your assets to pay back creditors. Any remaining debts are discharged. Better for those with low income or high debt.
- Chapter 13 – You get to keep assets but must repay some debts through a 3-5 year repayment plan. Better if you have regular income to make payments.
Talk to a bankruptcy lawyer in Illinois to discuss which chapter is right for you. They’ll look at factors like your assets, income, and types of debt.
Step 1: Collect Documents and Information
Filing for bankruptcy requires a lot of paperwork. Make sure you have all these documents handy before you get started:
- Tax returns for the past 2 years
- Pay stubs for the last 60 days
- Statements showing balances for all accounts
- Records of any lawsuits against you
- Details on all debts owed
- Vehicle titles and property deeds
- List of all assets and their values
Having this financial information organized ahead of time will make the process much smoother. The court trustee will review it all.
Step 2: Take a Pre-Bankruptcy Credit Counseling Course
Before filing, you must complete a credit counseling course from an approved agency. This session lasts around 90 minutes and can be done online or over the phone.
The counselor will discuss your financial situation and alternatives to bankruptcy. They’ll issue a certificate showing you completed the course.
Step 3: Decide Whether to Hire a Bankruptcy Lawyer
You can file bankruptcy yourself, but having a lawyer makes the process much easier. They help with paperwork, communicate with creditors, and ensure everything is done correctly.
Shop around to find an attorney experienced in bankruptcy. Ask about their fees and what services are included. Many offer free consultations.
Step 4: Complete the Bankruptcy Forms
The court provides all the petition forms needed to file. With a lawyer, they’ll handle this step. If filing yourself, take your time filling them out fully and accurately. Forms include:
- Voluntary Petition
- Statement About Your Social Security Numbers
- Statement of Financial Affairs
- Schedules listing income, expenses, assets, debts
Double check that all information entered on the forms is correct. Any errors could lead to your case being dismissed.
Step 5: File Your Petition and Forms with the Court
In Illinois, everything is filed electronically through the court’s PACER system. Your lawyer will submit them online. Or visit the court website for instructions on creating an account and uploading the forms yourself.
You’ll have to pay the bankruptcy court filing fee of $338. But if your income is low enough, you can request a waiver by filing a separate application.
Step 6: Attend Your 341 Meeting and Other Hearings
After filing, you’ll be assigned a case trustee and given a date to attend a “341 meeting.” This is a short hearing where you’re asked questions about your bankruptcy under oath.
Be prepared to provide photo ID and originals of documents filed. Answer honestly and fully. Your lawyer can attend with you. The trustee just wants to verify your information.
You may also have to attend a confirmation hearing for Chapter 13 cases. The judge ensures your repayment plan meets requirements before approving it.
Step 7: Complete a Debtor Education Course
Before debts can be discharged, you must take an approved debtor education course. Like the credit counseling course, this can be done online. It teaches about personal finance management.
Submit the completion certificate to the court. Failing to finish the course can result in your case being closed without a discharge.
Step 8: Get Your Discharge and Fresh Start
It takes about 4-6 months to get a discharge order from the court releasing your debts. This wipes the slate clean, stopping collections and garnishments. Some debts aren’t dischargeable, like student loans and alimony.
Congratulations – you’ve completed the bankruptcy process! Now focus on rebuilding credit and making a fresh financial start.
Bankruptcy can seem intimidating but thousands in Illinois turn to it for debt relief every year. Arm yourself with information and consider hiring an attorney. Take it step-by-step and before you know it, this stressful chapter will close and a brighter financial future will open.