Some Illinois residents who are struggling with large amounts of debt may wonder how the bankruptcy process works. There is a misconception with some Americans that filing for bankruptcy automatically wipes out all debts, and that is simply not the case. There are different types of bankruptcy that offer different benefits: Chapter 7 and Chapter 13.
In a Chapter 7 bankruptcy, the consumer's assets are sold and used to pay debts. This process is relatively quick and may allow persons who file to walk away from most debts. In 2012, approximately 70 percent of the 1.175 million consumer bankruptcies in the United States were filed under Chapter 7, and only 30 percent under Chapter 13.