Schaumburg Chapter 13 Bankruptcy Lawyer

Making the decision to file for bankruptcy—whether it is chapter 7 or chapter 13—is not an easy one for any Schaumburg, IL resident. But sometimes, when you are simply unable to pay off your debts, it is the best option. You should be aware, however, that when you file for bankruptcy your credit score will take a pretty big hit. The bankruptcy will be a part of your credit report for quite some time.

Different Types of Bankruptcy

There are two different types of bankruptcy available for most consumers: chapter 7 and chapter 13. Those who file chapter 7 are able to discharge all or most of their debts. Those who file chapter 13 are able to make payments to pay off some or all of their debts. Both types of bankruptcy will be part of your credit report.

How Damaging Is Bankruptcy to Credit Score?

A good credit score of 700 or more will likely drop by at least 200 points when filing for bankruptcy. If your credit score is lower than 700, bankruptcy will probably cause it to drop a bit less, perhaps between 130 and 150 points. The bankruptcy will remain on your credit report for a number of years, but its impact will lessen over time.

Rebuilding Credit After a Bankruptcy

Although your credit score will be damaged after filing for bankruptcy, the good news is that you can rebuild your credit.
Take the following steps in the months following your bankruptcy filing:

• Make sure the bankruptcy was reported correctly by pulling your credit report. If there are inaccuracies on our credit report, get those corrected.
• Apply for a secured credit card to help rebuild your credit with a positive payment history. Make sure to pay everything on time and keep debt levels low.
• Keep track of your progress by periodically pulling your credit report.

Contact Our Schaumburg Law Firm

If you’re considering Chapter 13 bankruptcy, don’t make a decision until you talk with a Schaumburg, IL lawyer such as Robert M. Kaplan. Call today for a consultation!

To qualify for Chapter 13 bankruptcy in Schaumburg, you must first meet several individual criteria. Because Chapter 13 bankruptcy involves a “payment plan” structured so you can repay your outstanding debts over time, federal bankruptcy courts only offer this option to those most likely to succeed. 

Requirements for Filing Chapter 13 Bankruptcy

The most basic requirements for filing a Chapter 13 bankruptcy case include:

Being an individual

Chapter 13 bankruptcy only allows individuals to file a case. Any business or other entity is excluded from seeking legal relief under Chapter 13. 

Having a steady income

The entire purpose of Chapter 13 bankruptcy is to allow individuals to repay past-due debts while still holding onto their most important assets, such as their cars and homes. Typically, the structure of a Chapter 13 bankruptcy payment plan involves making your regular monthly payments plus an additional payment or payments, so you must have a reliable income throughout your entire bankruptcy proceeding. 

Filing your taxes

Federal bankruptcy courts will not allow you to open a Chapter 13 case without proof of past tax returns. To qualify, you must provide copies of at least the past four years worth of both state and federal income tax returns. 

Having debt within the legal limitations

Chapter 13 bankruptcy is only an option for individuals whose debt is less than the federally established limitations. These limitations, which are set by the government and change every three years, help disqualify potential filers who could not realistically pay back their debts over their remaining lifetime.

• From April 2019 to April 2022, the Chapter 13 debt limitations were $419,275.00 of unsecured debt and $1,257,850.00 of secured debt. 
• Starting in 2023, cases filed between April 1, 2022, and March 31, 2025 debt limitations are $465,275.00 for unsecured debt and $1,395,875.00 for secured debt.
• Updates under the Bankruptcy Threshold Adjustment and Technical Corrections Act increased the combined total debt limit to $2,750,000.

Contact Our Schaumburg Law Firm

If you have additional questions about filing for Chapter 13 bankruptcy in Schaumburg, our knowledgeable attorney can assist you. Give us a call at (847) 845-9477 to retain Mr. Robert M. Kaplan and get answers to your case’s most important questions.

When a person files for bankruptcy, the effects can extend beyond their financial situation, especially if they have a loan co-signer.

What Is a Co-Signer?

A co-signer is an individual who agrees to take on the responsibility of a loan if the primary borrower defaults. Essentially, the co-signer guarantees the loan, providing additional assurance to the lender. This means that the co-signer is equally responsible for the debt.

Types of Bankruptcy

• Chapter 7 Bankruptcy — Chapter 7 (liquidation bankruptcy) allows the primary borrower to discharge most unsecured debts. This process involves liquidating the debtor's non-exempt assets to pay off creditors. While this can relieve the primary borrower from the responsibility of the debt, it does not protect the co-signer. The co-signer remains liable for the loan, meaning creditors can still pursue them for repayment.
• Chapter 13 Bankruptcy — Chapter 13 (reorganization bankruptcy) allows the primary borrower to create a repayment plan to pay off debts over three to five years. This type of bankruptcy can offer some protection to co-signers. If the primary borrower includes the co-signed debt in their repayment plan and adheres to the agreed payments, the co-signer may be shielded from collection actions as long as the plan is in effect.

Legal Protections and Automatic Stay

When bankruptcy is filed, an automatic stay goes into effect, temporarily halting all collection activities by creditors. This can provide temporary relief to both the primary borrower and the co-signer.

However, in Chapter 7 cases, this protection for the co-signer is typically short-lived. In Chapter 13 cases, the automatic stay can extend to co-signers if the debt is included in the repayment plan and the payments are made on time.

Co-Signer's Options and Actions

If you're a co-signer and the primary borrower files for bankruptcy, you should:

• Stay informed. — Keep track of the bankruptcy proceedings and understand your responsibilities.
• Communicate with creditors. — Discuss your situation with the lender to explore possible arrangements.
• Monitor credit reports. — Regularly check your credit report to ensure the loan status is accurately reported.
• Seek legal advice. — Contact a bankruptcy attorney in Schaumburg to understand your rights and potential liabilities.

Contact Our Lawyers in Schaumburg, IL 

Contact the Law Offices of Robert M. Kaplan P.C. for personalized advice and representation to ensure your rights are safeguarded throughout the bankruptcy process.