HOW DOES CHAPTER 13 BANKRUPTCY AFFECT A SECURED DEBT?

When filing a bankruptcy, a chapter 13 can allow you to catch up on any late payments on secured debts through a no-interest repayment plan.  A secured debt is a debt that is secured by an asset, such as a mortgage or car loan.  If you are behind on these payments, but still want to retain the asset, a chapter 13 bankruptcy will allow a no-interest payment plan.  Assuming you complete the repayment plan successfully, you will simply need to continue the monthly payment moving forward after the bankruptcy, and you will be allowed to retain the asset.

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HOW DO I ESTIMATE THE VALUE OF MY HOUSE FOR BANKRUPTCY?

In a bankruptcy proceeding, you will be required to estimate values of your property, including any real estate you own.  The process for estimating the value of your house depends the amount of equity you have.  If the equity is significantly under the exemption amount, or there is no equity, it can be as simple as using an online estimation tool.  However, if your equity amount is near the exemption level or above it, you may need to utilize a more involved process.  Ultimately, the most accurate tool is to have a real estate broker conduct a comparative market analysis on your property, but that is not always an option.  The more information you have to justify the value to the trustee the better off you will be.  Usually, for properties at or above the exemption level, it is best to undertake at least a couple different methods for determining the value of your property.

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WHAT HAPPENS TO MY TAX REFUND IF I FILE BANKRPTCY?

Generally, if your 341 Creditor's Meeting takes place during or right after tax season, the trustee will inquire about your tax refund.  If your tax refund is over $1,000, you will want to use your personal property exemption to protect it if possible.  If you do not have enough of the exemption left to protect the refund, the trustee will have a right to seize the property if they choose to do so.  If the refund has already been spent on legitimate expenses, there is really nothing the trustee can do at that point.

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CAN AN INDIVIDUAL FILE CHAPTER 11 BANKRUPTCY?

Technically speaking, yes, an individual can file a Chapter 11 bankruptcy, although it is very rarely done.  Chapter 11 of the bankruptcy code provides a reorganization plan for businesses, who cannot file a chapter 13 bankruptcy like an individual can.  If you are looking for a no interest payment plan on your debts, a chapter 13 bankruptcy would generally be more appropriate for a person than a chapter 11.

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IF I OWN A BUSINESS, HOW DOES THAT AFFECT MY BANKRUPTCY?

Many clients have some ownership in a small business that needs to be addressed during the bankruptcy process.  In a chapter 7 bankruptcy, any assets of the business may be at risk for liquidation if the debtor is a 100% owner of the business.  These assets can include equipment, inventory, accounts receivable, etc.  Also, the most recent tax return of the business must be provided to the trustee for review.  Typically, if there are no significant assets of the business, the company will not be affected by a personal bankruptcy and the business can continue to operate after the proceeding.

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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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