HOW LONG DOES THE BANKRUPTCY PROCESS TAKE?

The length of your bankruptcy is going to depend on which chapter you file and in which jurisdiction your petition is filed.  Obviously, because a chapter 13 bankruptcy is a repayment plan it is going to take longer than a chapter 7, which is a simple discharge.  Typically, a chapter 7 bankruptcy will take 3-4 months to complete, however, it can take slightly longer if filed in Cook County because of the amount of cases filed in that jurisdiction.  A chapter 13 bankruptcy will usually last a minimum of 38 months if completed by the debtor, but can take up to 62-64 months for a longer repayment plan.  As noted earlier, the repayment plan will be based on the income and assets of the debtor.

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IN WHICH JURISDICTION DO I FILE BANKRUPTCY?

By federal law, your bankruptcy should be filed in the district where you have resided for at least 91 days of the last 180 days.  This is where you would have spent the majority of your time by the courts description.  However, you need to have resided in this district for at least two years in order to use the exemptions of that district.  Otherwise, you are required to the exemptions of the previous district where you resided.

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DO I HAVE TO BE A U.S. CITIZEN TO FILE BANKRUPTCY?

Section 11 U.S.C. 109 of the bankruptcy code details who is eligible to file bankruptcy under federal law.  In this section, it does not state that an individual needs to be a US citizen to file bankruptcy, or even possess a green card.  The law has since been very clear that a debtor just needs to establish residency, that is, live in a jurisdiction long enough to satisfy the statue, in order to file bankruptcy.  A social security number is not required either, although it is helpful to have one.  For any other bankruptcy eligibility questions, please contact one of our bankruptcy attorneys for further information.

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WILL A BANKRUPTCY AFFECT MY RETIREMENT SAVINGS?

When filing a bankruptcy, whether your retirement funds will be affected depends on what vehicle or investment is housing your retirement assets.  Most designated retirement accounts, such as an IRA, 401(k), 403(b), pension fund, and social security benefits will all be exempt from your bankruptcy case.  This means that the trustee will not be able to seize your assets in order to repay your creditors.  However, if your retirement assets are in the form of equity in your house or other non-exempt assets, then those funds could be unprotected in a Chapter 7 bankruptcy.

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DO I HAVE TO INCLUDE THE INCOME OF MY CO-HABITATING PARTNER ON MY BANKRUPTCY PETITON?

As you may recall from previous posts, when filing a bankruptcy petition, you are required to provide information about your household income in order to determine your eligibility for a Chapter 7 bankruptcy or your payment amount for a Chapter 13 bankruptcy.  In Illinois, if you are co-habitating with a partner or living with a spouse, you must include their income as part of the household income.

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HOW DO I VALUE MY ASSETS IN A BANKRUPTCY?

In a Chapter 7 bankruptcy, the state provides certain exemption limits that protects your assets from bankruptcy, and any assets with a value above that limit could be at risk.  The trustee is not interested in your small assets such as everyday clothing or kitchen utensils.  They are looking for assets that can liquidated such as a coin or art collection, sports memorabilia, etc.  As a result, it is very important how your assets are valued on your bankruptcy petition.  In certain situations, your valuation and that of the trustee can vary greatly, and an independent appraisal may be necessary.  For real estate and vehicles, there are several websites available to provide an estimation of the property's value.  With other assets, a valuation can be much more complicated.  For more information on this issue, feel free to contact one of our experienced bankruptcy attorneys.

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WHAT HAPPENS IF I STOP MAKING PAYMENTS IN A CHAPTER 13 BANKRUPTCY?

As discussed in previous blogs, a Chapter 13 bankruptcy requires the debtor to make monthly payments to the bankruptcy trustee, who will then distribute the money to creditors in accordance with their priority.  If the debtor ceases making payments in a chapter 13 bankruptcy, the case will be dismissed with no resulting discharges.  For the debtor, it would be as if no bankruptcy was ever filed, and he or she would lose any of the money that was paid related to the bankruptcy.

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