I don’t think that anyone sets out to file bankruptcy. In fact, most people would rather explore their alternatives and try avoiding bankruptcy. After all, if you can get out of debt without having to file for bankruptcy, you are better off, right? Well, it really depends upon the nature of the debt and the financial circumstances of the debtor. It also has a great deal to do with whether the creditors are receptive to a settlement. Not every creditor is anxious to assist someone who owes money. Many creditors will hold out for big money or threaten to garnish wages or clean out bank accounts.
One major alternative to bankruptcy is to work out an installment payment plan with your creditors. This is possible if you have the ability to make in installment payments and if the creditor is willing to accept such payments. The creditor will likely want to know more about your financial situation than you are willing to give. For example, the creditor will probably want to know where you work, whether you rent or own and what your budget is per month. If you are simply unable to pay monthly, you may be best just to claim bankruptcy.
Our bankruptcy lawyer can advise you on all of your legal rights. Maybe the creditor is trying to take too much per month in an installment payment plan. The lawyer will be able to tell you if that amount is more than the creditor would receive should there be an actual wage garnishment. Never assume that the creditor is being straight-forward with you. Their job is to collect as much as possible as soon as possible. They are fully aware that you have the option to seek bankruptcy protection at any time during the process. If they can get a payment or two prior to you filing for bankruptcy, then they have at least salvaged some repayment of the debt.
Thus, in addition to your non-bankruptcy options, you had best understand your bankruptcy options. You have two basic chapters of the bankruptcy code at your disposal. The first is chapter 7 which is also known as fresh start bankruptcy. That is where someone with little or no assets can gain a fresh start. The other chapter is chapter 13. That is where a person repays either all or a portion of his debts over a three to five year period. Chapter 13 much more complex than Chapter 7 and you would be best served with the help of a talented attorney.
There are several requirements involved in claiming bankruptcy. I often refer to the requirements as the bankruptcy basics. For example, you will have to make at least one court appearance. This court appearance is called the creditors’ meeting or 341 meeting of creditors. It’s Section 341 of the Bankruptcy Code, and it is a meeting between the trustee, the attorney, the debtor, and any creditors that decide to show up. I would say 95 percent of the time, creditors do not show up in a simple Chapter 7 case, especially when there are no assets to be distributed. If there are no assets to be distributed, creditors will not show up. The court appearance usually comes roughly 30 days after you file your bankruptcy petition. That is generally the only court appearance a debtor has to make.
However, in certain circumstances, a debtor might have to appear in court for possibly a reaffirmation agreement. They always have the option to go to court, especially in a Chapter 13 where the attorney has to make multiple court appearances. If the debtor wishes to go to court, they can; however, most of the time, more often than not, the debtor does not have to appear in court unless the judge specifically asks for the debtor to come to court. The attorney takes care of all of that. Your attorney will explain in great detail all of your bankruptcy options. So your court appearance as the debtor is very limited and the court appearance for the 341 creditors’ meeting is not a court appearance in the sense of going to an actual room with a judge and a court reporter. It’s not that type of situation.
The 341 meeting is generally very informal. It’s with the trustee, once again, not necessarily in a courtroom. It could be in an office or it could be in the courthouse. People are afraid of going to that hearing, but it’s not really difficult at all. The Trustee will ask a series of questions to determine whether or not there are assets to administer. In the overwhelming majority of Illinois bankruptcy cases, there are no assets to administer and the debtor is granted a discharge. If there are issues that arise at the meeting, your Chicago bankruptcy lawyer will explain to you your options and the likely outcomes. Have confidence in your attorney. Your attorney is trained to handle obstacles and clean up all the details of your case. Most importantly, you should feel comfortable that your attorney is up to the task.