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Lake County IL Bankruptcy Law Blog

Why people in Illinois choose Chapter 7 bankruptcy

When overwhelming debt looms, there may not be enough that a person in Illinois can do on his or her own to get out of this financial bind. Even properly handling their money and attempting to pay off what they owe might end up leaving them in a tough spot because of interest rates and other factors. In cases like these, some people choose to file for Chapter 7 bankruptcy. Why do they choose this type of filing?

There are many reasons, but one of the top reasons is that they still get to make an income -- and keep it -- later on in life. For example, they could face financial hardships, file for bankruptcy and then start making a lot of money two years later, when they get back on their feet. Typically, lenders cannot show up and ask for that money at that time, as it is considered to be a closed case.

Why do people really get into credit card debt in Illinois?

There is a perception that people who run into credit card debt are simply not good at handling their money. However, new studies have shown that this is not the case. In fact, those studies have gone so far as to say that the people with the debt are more likely to be frugal and wise with their money than those without.

Instead, the reports showed that it was often things that people could not control that gave them so much debt.

Bankruptcy filing leaves Illinois-based lender high and dry

Truland, an electrical contractor, shut down months ago after filing for bankruptcy. The company officially filed for Chapter 7 bankruptcy, and the move has been described as being rather abrupt. Now, it has left lenders trying to get back what they can.

One of those lenders is BMO Harris Bank, which is based out of Chicago, Illinois. Back in July, records indicate that the bank was owed about $27 million. Being unable to repay that money was part of the reason that the company shut down.

Four groups of people who may file for bankruptcy

Difficult economic times make it likely that someone in Illinois may want to file for bankruptcy. One thing that is for certain is that many of the people who decide to use this method fall into four different categories -- though, of course, not everyone can be lumped into these groups. Regardless, knowing what the groups are can help people decide if bankruptcy is right for them.

First, there are those who have lost their jobs. Even though they are no longer bringing home paychecks, they could still have a lot of expenses, such as car payments, mortgage payments and the like.

Is bankruptcy governed by the state in Illinois?

The short answer is that Illinois does not govern bankruptcy itself, and no other state in the United States does either. This is something that falls under the jurisdiction of the federal government. The United States Code -- Title 11, in particular -- relates to bankruptcy, and references to it are found in the U.S. Constitution, calling for laws to be uniform across the country.

This does not mean that states are entirely cut out of the process. For one thing, state governments can make laws that impact the relationship between creditors and debtors. They simply cannot make laws that regulate bankruptcy itself.

How much does medical debt affect creditworthiness?

According to the Consumer Financial Protection Bureau, individuals with medical debt in Illinois and throughout the country may see an unnecessarily harsh hit to credit scores if that debt goes to collections. Not only does medical debt impact creditworthiness in a way that some experts say is inaccurate, but the Federal Reserve study indicated that medical debt made up over 50 percent of reported collections.

In a study of 5 million anonymous credit reports, the Consumer Financial Protection Bureau found that all that medical debt was having a harsh impact on individual credit worthiness. Specifically, creditworthiness of individuals with medical debt seemed to be underrated. The Bureau says that medical debt is treated the same as non-medical debt when it enters collections,which isn't an accurate interpretation of a person's ability to maintain accounts.

These is a good chance that a credit report in Illinois is wrong

Recent reports have shown that many people struggle with issues on their credit reports, but these reports are essentially wrong, not reflecting their true position as a borrower. In some cases, this can keep people from getting home loans or credit cards. It can also mean that they have to take higher interest rates on the loans that they do take out than they should.

For example, one man said that he was told that he owed around $3,500 for credit card debt. It was an old debt, and he says that he did not even know what it was from. He did not want to pay, but he felt like he had no choice since the collection agency was able to get a legal judgement in their favor, and against him.

Bankruptcy contributes to sale of Applebee's locations

Knowing exactly how bankruptcy is going to impact any assets that a person owns is very important before they decide to declare it. They must have a grasp of the different types of bankruptcy -- such as Chapter 7 or Chapter 13 -- and they must know the intricacies of each. This is the only way for them to choose the one that fits their situation, and it ensures that they know exactly what is coming in the future.

The way that this plays out can clearly be seen in Arlington Heights, Illinois. In that town, a building that used to be an Applebee's location was just sold on E. Algonquin Road. It is around 5,500 square feet, and it carried a sale price of $1,360,000. Pictures of the building show its distinctive style, though the awnings, signs and other decorative items that marked it as part of the chain have been taken down.

Frequently asked questions about bankruptcy in Illinois

Before declaring personal bankruptcy, those in Illinois may have a number of questions about the process. It is important to get the answers to all of those questions before moving forward. Not only does this give someone peace of mind about the process, but it also ensures that everything is done correctly.

For example, some people are concerned that collection agencies or creditors are still going to be asking for money, even after bankruptcy has been declared. They wonder what they should do if this happens. The answer is actually quite simple. They just have to give the creditor the case number for the bankruptcy filing to ensure that they know what steps are being taken.

A tactic for letting Illinois students use bankruptcy for loans

Back in 2011, Occupy Wall Street raised some awareness around the United States, from Illinois to California, for the student loan debt crisis. One important thing to note is that student loans cannot be erased at this time by the use of personal bankruptcy. This is a tactic that people can use to get rid of other things, such as credit card debt or business debt.

The idea has long been that student loans should be outside of bankruptcy court for two reasons. First, lenders need to be responsible about whom they give money to in the first place, and ensuring that they do not get the money from the taxpayers has been seen as a way to maintain this. The other idea is that students may borrow without caution, or use the money for pointless degrees, if they plan to erase the debt with bankruptcy.

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