The Law Office of Thomas W. Drexler specializes in all aspects of bankruptcy for individuals and corporations, including Chapter 7, Chapter 11, Chapter 13, debt consolidation, wage earner plans, financial problems, creditor claims, contract disputes, foreclosures, and repossessions. For over 25 years, we have acted as a debt relief agency, helping Chicago area residents and corporations file for relief under the Bankruptcy Code. As many people are now aware, there have been massive changes made to bankruptcy law in the past few years. Go to our FAQ to find out more about these changes to bankruptcy law. These new changes have made the bankruptcy process more complicated, and full of roadblocks and traps for the unwary. Attorney Thomas W. Drexler can help you navigate this difficult, time-consuming process, help you properly assess your situation and advise you as to your best course of action. INDIVIDUALS For most individuals, there are two types, or Chapters, of bankruptcy for which they are eligible: Chapter 7 and Chapter 13. Individuals with a large amount of debt, over a certain limit, are not eligible for Chapter 13, but instead may be required to file a Chapter 11. CHAPTER 7 for individuals: Chapter 7 is a “straight bankruptcy” where your bills are released, or “discharged”, without a payment plan. You pay only your court filing fee (currently $299.00) and your attorney’s fee, which may vary depending on your situation. Some debts are not dischargeable in bankruptcy, such as child support, spousal maintenance, certain government taxes, and student loans. You should discuss your debts carefully with your attorney to make sure that you know which debts will not be discharged. You must also be aware that filing a Chapter 7 will not allow you to stop making payments on a house or car or other secured debt if you want to keep that item. You will also have the choice of either letting the property go and not owing the money anymore, or electing to keep the property (“reaffirming the property”), and make payments on it. Before you file for Chapter 7, the amount of property you own, and the equity you have in that property, are very important considerations to keep in mind to determine if a Chapter 7 is the appropriate decision. Many people have filed Chapter 7 without being properly advised and have had their property sold in bankruptcy to pay their debts when they didn't know that was a possibility. CHAPTER 13 for individuals: Chapter 13 is a payment plan, often referred to as a "wage earner" plan. Under these cases, you pay back a certain percentage of your debt, generally from 10% up to 100%. Your monthly payment and the length of your case is based on your individual circumstances, and can only be determined after a thorough analysis of your debt, your income, your equity in your property, and other matters affecting your financial status. People choose to file Chapter 13 for a variety of reasons. One of the most common is when their property is in foreclosure. In general, the filing of a Chapter 13 will immediately stop a foreclosure case and a foreclosure sale if done properly. After your case is filed, to retain your home, you must make your regular monthly mortgage payments, plus a Chapter 13 payment to catch up the amount past due on your mortgage. Failure to make timely payments after your case is filed may result in the foreclosure case starting up again. A Chapter 13 can also stop the repossession and sale of your car. Car payments will typically be adjusted and become part of your Chapter 13 payment. A Chapter 13 Plan acts as a debt consolidation plan - that is, all your debts will be handled through one monthly payment. You remain responsible to pay directly, on your own, your regular monthly living expenses (food, gas, insurance, etc.) and usually your mortgage payment. Chapter 13 plan typically runs a minimum of 36 months but not more than 60 months. Besides the advantage of stopping a foreclosure or repossession as discussed above, a Chapter 13 will give you the ability to become debt free. A person who owes $20,000.00 in credit cards with an average interest rate of 20% might only be able to afford to pay $350.00 per month on that debt, and it would take over 15 years to pay it off. In a Chapter 13, even with a lower payment, a person might be able to resolve that debt in 3 years, because interest does not build and because only a portion of the debt may have to be paid. CHAPTER 7 for corporations: Corporations that file for Chapter 7 are no longer eligible to conduct business when they file. The trustee appointed by the bankruptcy court to the case will typically examine the corporate records, determine if there are any assets or claims which might have some value, and will liquidate them on behalf of creditors. CHAPTER 11: Chapter 11 cases are somewhat similar to Chapter 13 cases in that a repayment plan is typically proposed. Corporations are not eligible to file for Chapter 13. Individuals with debt over a certain limit may be required to file for Chapter 11, instead of Chapter 13. Chapter 11 cases, due to the way they are administered by the court and due to various complicated requirements, are much more time consuming and expensive than Chapter 13 cases. A corporation, or business owner, will often file Chapter 11 to stop (or “stay”) an action by a lender or creditor which would have the effect of crippling or destroying the business. For example, a corporate loan might be in default and the lender may be proceeding to repossess the corporation's equipment. Without its equipment, obviously, the corporation cannot continue to make its product anymore, or continue to run the business, and would soon be out of business. The Chapter 11 filing will hopefully give the corporation time to work out a plan of reorganization which will appropriately deal with its creditors and allow the corporation to remain in business. |
