Misconceptions about Chapter 7
Aurora Illinois Bankruptcy Lawyers & Attorneys
Jesse Barrientes: Let me ask you about this. Let's say a lot of people have misconceptions about Chapter 7. I have a house, and I have some equity in my house, but I have a lot of unsecured debt. Am I going to possibly be available to do a Chapter 7 for me?
David Siegel: What we have to do is mathematical equation to determine how much equity is available for creditors. The State of Illinois allows an individual like yourself to protect up to $15,000.00 worth of equity in your home.
Jesse Barrientes: What happens if, again, I own it with my wife?
David Siegel: She gets the exemption as well, so now the two of you can protect $30,000.00 worth of equity.
Jesse Barrientes: What if she's not filing for Chapter 7?
David Siegel: She's still factored in, not for her equity, exemption amount, but for her 50 percent interest in the house if it's jointly owned. She would have to be given credit for that. It basically helps if she's on the property with you, even if she's not filing bankruptcy.
Jesse Barrientes: Okay. Now what happens if say I'm a little bit behind in my mortgage? Let's say I've missed a couple of payments, and maybe the payments are a couple thousand bucks a piece. As I'm sitting in your office having a consultation I'm maybe two payments behind, so $4,000.00 behind. Am I still going to be able to do that Chapter 7 and keep my house?
David Siegel: You can still do a Chapter 7 with an Aurora bankruptcy lawyer, yes. You don't have to be current with your mortgage to do a Chapter 7. In fact, if you do a Chapter 7, you've effectively eliminated your credit card debt, your medical bills, your personal loans. You're likely going to be able to catch up on the mortgage that you fell behind, but if you can't, and you can't catch up, and you find that you're just not going to be able to make that payment, you have the ability to walk away from the house because you've technically eliminated the debt inside your Chapter 7. You'll just have to vacate once it's gone through a full foreclosure situation, and gone to a Sheriff Sale.
Jesse Barrientes: Essentially what you're saying then, for us to be able to keep the house, I'm eventually going to have to catch up those two payments.
David Siegel: You're going to have to catch up if you want to keep the house under Chapter 7 bankruptcy laws. If you fall behind and you don't have the ability to make one lump sum payment to catch up, there is another chapter, Chapter 13, that will allow you to repay your mortgage over years, as well as make your regular mortgage payment once again over the next three to five years. It really is a home saver, Chapter 13. Most people, if they're doing a Chapter 7, they're able to make that mortgage payment.
Jesse Barrientes: Okay.
David Siegel: They just have to get rid of all of the stuff that they can't pay.
Back to Aurora Illinois Bankruptcy Lawyers & Attorneys
See Also:
Chapter 7
Misconceptions about Chapter 7
Life after Chapter 7 bankruptcy
Privacy is protected in bankruptcy
Household income qualifications
Converting Chapter 13 to Chapter 7
Converting Chapter 7 to Chapter 13
Chapter 13
Using Chapter 13 to save a home
Choosing Chapter 13 versus Chapter 7
Debt consolidation & late fees
Administrative fees & the bankruptcy trustee
Chapter 13 payment plan dismissal
