Should I File Bankruptcy Now or Wait?

When Do You File For Bankruptcy in Illinois

Filing bankruptcy necessitates adhering to certain rules outlined in bankruptcy law. Whether you file for Chapter 7 or Chapter 13 bankruptcy, you must first determine if it is the right time to file. Since bankruptcy is one of the most complicated areas of the law, consult first with an experienced bankruptcy attorney before proceeding. In this article, you will learn the following:

• What Is Bankruptcy And How Does It Work?
• How Long Is The Waiting Period Before Filing The Same Bankruptcy Chapter?
• How Long Is The Waiting Period Before Filing A Different Bankruptcy Chapter?
• Will You Be In Violation Of The Bankruptcy Law If You File Bankruptcy Too Often?

For over three decades, Cutler & Associates, LTD has been assisting individuals in Illinois who are struggling financially. The attorney provides compassionate, diligent, and effective legal advice to help secure your financial future. If you need effective assistance from a top bankruptcy lawyer, schedule a free consultation with us today.

What Is Bankruptcy And How Does It Work?

Bankruptcy is a legal process filed in federal court. In a bankruptcy liquidation or Chapter 7 case, all of the debtor’s non-exempt assets are sold and distributed by the bankruptcy trustee, with the proceeds becoming payments to creditors.

In cases of reorganization, such as Chapter 13 bankruptcy, the court grants a repayment plan of 3-5 years, which provides for partial repayment of debt gradually. The remaining unsettled debts may then be discharged.

Both companies and individual debtors may petition for bankruptcy before the US bankruptcy court. The petition must list all your assets, debts, and other relevant information. If you wish to learn when you file for bankruptcy, Illinois attorneys can help you with the process.

How Often Can You File Bankruptcy In Illinois?

Many debtors are still unaware of the limitations of filing for bankruptcy. Bankruptcy may be an effective legal option, but it cannot be used to solve all financial problems. There are situations wherein multiple bankruptcy filings are required. 

If you are in a situation wherein you are in need of multiple bankruptcy filings, you would need to take note of certain conditions and eligibility requirements for filing compliance. A bankruptcy attorney can help walk you through bankruptcy filings and guarantee you the best outcome. 

Eligibility Conditions And Requirements

While there is no specific rule under the bankruptcy code about the number of times you can file a bankruptcy case, there are still other requirements that you must meet before you can file another bankruptcy petition. For example, you must complete a credit counseling course from a duly approved agency 180 days prior to filing. 

Furthermore, to file for Chapter 7 bankruptcy in Illinois, your income should not exceed a specific level. To be eligible, you have to pass the “means test,” a test that will evaluate your income records and expenses. If your disposable income and household income are significantly high, the bankruptcy court will be less likely to approve your petition for Chapter 7 bankruptcy. 

How Long Is The Waiting Period Before Filing The Same Bankruptcy Chapter?

The amount of time a debtor must wait between bankruptcy filings is always determined by whether they are filed under the same chapter or not. The bankruptcy rules for filing the same bankruptcy chapter for the second time in a row are as follows:

• Filing Chapter 7 – Chapter 7 Bankruptcy 

To be eligible for another Chapter 7 bankruptcy discharge, at least 8 years must have passed since the previous Chapter 7 discharge.

• Filing Chapter 13 – Chapter 13 Bankruptcy

To file for another Chapter 13 bankruptcy petition, at least two years must have passed since the last bankruptcy discharge in the same chapter. Most Chapter 13 repayment plans are fulfilled in 3-5 years; thus, you can file for Chapter 13 bankruptcy for the second time once your repayment plan has ended.

How Long Is The Waiting Period Before Filing A Different Bankruptcy Chapter?

• Filing Chapter 13 – Chapter 7 Bankruptcy

If you are thinking about filing for Chapter 7 bankruptcy after previously filing for Chapter 13, you should wait at least 6 years from the filing date of the former bankruptcy chapter. The exception to this rule is that you must repay at least 70% of your unsecured debts in the previous Chapter 13 bankruptcy petition.

• Filing Chapter 7 – Chapter 13

If you previously filed for Chapter 7 bankruptcy, you should typically wait at least 4 years before filing for Chapter 13.

This doesn’t imply that it is not possible to file for bankruptcy in a shorter period than the allotted time by the bankruptcy code. Each case is unique, and you might not expect that the bankruptcy court would still grant your petition.

In the same vein, there is still a possibility that the bankruptcy court will deny your petition. And if you attempt to file again after the dismissal of your case, you might face extra penalties. To prevent this, you need legal advice from an experienced bankruptcy lawyer. 

Will You Be In Violation Of The Bankruptcy Law If You File Bankruptcy Too Often?

The court is tasked with determining whether you filed in good faith or not. If you are filing bankruptcy to delay creditors, the court will most probably restrict you from filing another petition for a specified amount of time, remove you, or pursue legal action in more severe cases. If the court denies your case in this manner, it is deemed a dismissal with prejudice.

There is no reason to be concerned about violating consumer law as long as you are in good faith and avoid fraud. Penalties can be imposed if you attempt to refile and do not adhere to the allotted time. The most important penalty to keep in mind is that your automatic stay or bankruptcy protection may be revoked.

The automatic stay only takes effect for 30 days should you be denied. You could be ineligible for an automatic stay in the coming bankruptcy filings. In cases like this, your best option is to file a motion before the court and request an extension of the automatic stay.

Call our Illinois Bankruptcy Attorney Now!

The bankruptcy process is undoubtedly complicated, and it may sometimes involve other laws such as family law. If you are in debt, whether it is due to hospital bills, credit card debts, or something else, bankruptcy may be your best option. If you are still unsure, you should speak with an experienced bankruptcy lawyer.

Cutler & Associates, LTD is composed of skilled and experienced bankruptcy lawyers with more than 30 years of combined experience. The legal team aims to rebuild clients’ lives by filing bankruptcy as a financial, legal solution, guaranteeing a change in your situation, be it Chapter 7 and Chapter 13 bankruptcy. If you want to discuss your case with us, schedule a free consultation today!