Des Plaines bankruptcy lawyer
Your options for debt you can't pay down
Bankruptcy, the loans, deals with your creditors and the debt relief companies in the ads, each described by what it actually does.
The two chapters
Chapter 7 and Chapter 13, compared by what each one is for
I look at Chapter 7 first. Chapter 13 comes in only if Chapter 7 is not possible or not recommended for you.
Chapter 7 clears the debt
What it is for. Clearing debt you cannot repay. Chapter 7 can clear many credit card debts, medical bills and personal loans, with no repayment plan and no monthly payment to the cards.
Who it is for. Households whose income fits the Illinois means test and whose property is protected.
How long. 3 to 4 months from filing to discharge.
Your property. A trustee can sell property the law does not protect. Illinois law protects a set amount of equity in your home, your car and your belongings, and we check that before you file, not after.
Understand Chapter 7 →Chapter 13 is a court payment plan that keeps property
What it is for. Catching up, and keeping what Chapter 7 would not protect. Chapter 7 cannot catch up missed payments on a house or a car. Chapter 13 spreads them over the plan, and the foreclosure or repossession stops.
Who it is for. People with regular income who are behind on the house or the car, who own something Chapter 7 would take, or whose income is too high for Chapter 7.
How long. Three to five years, on one monthly payment sized to your budget.
Your property. You keep what you own. Credit cards and other unsecured debts are paid what the plan can afford after the mortgage, the car and recent taxes, and what is left unpaid at the end of the plan is discharged.
Understand Chapter 13 →In either chapter, federal law stops creditor actions when the case is filed: the calls, the lawsuit, the deduction from the paycheck. Once you hire me, I deal with your creditors.
Debt from a business you own is a different conversation. See small business bankruptcy.
Outside bankruptcy
The other options, and what each one actually does
Most of these are reasonable in the right situation. I won't try to talk you into the option you already lean toward, or into bankruptcy. If bankruptcy is not the right fit, we discuss the other choices.
A consolidation loan or a refinance
It replaces several debts with one fixed payment, usually at a lower rate. Nothing is written off. You still repay the whole balance.
It works when the problem is the rate and the budget already balances. It fails when the cards are used again afterwards, which leaves the loan and the cards both owing.
A home equity loan or line of credit
It turns card debt into debt backed by your home, usually at a lower rate. Miss those payments, and your home could be at risk.
A card company with a judgment has limited reach. A mortgage lender forecloses. Talk to me before you pledge the house to a credit card balance.
A balance transfer
It moves the balance to a card with no interest for a fixed window. It works when you can clear the whole balance inside that window.
It fails when the window closes with the balance still there. The regular rate comes back on what is left, and the transfer fee went on the balance at the start.
Working with your creditors yourself
You call each card company and ask for a lower rate, a hardship plan or a reduced payoff. No creditor is obliged to agree, and a deal with one creditor does nothing about the others.
A non-profit credit counseling agency can set up a debt management plan: lower rates, one payment, and the balances repaid in full. Forgiven balances can be taxable income.
Doing nothing
Interest and late fees keep running. The balance is charged off and sold or referred to a collection agency, and the creditor or the collector can file suit.
With a judgment, a creditor can reach a paycheck through the employer or freeze a bank account. Illinois law limits how much of a paycheck can be taken and protects certain income and property outright, so we check whether yours is already protected.
What a credit card company can do, step by step →Talk to me before you borrow against your home or take money out of a retirement account.
Your retirement money may have legal protection. Withdraw it, and that protection is gone.
800 numbers, TV ads and billboards
Debt settlement and “debt relief” companies: how they work, and a warning
This describes how the model generally works. It is not a statement about any one company.
How the model generally works
You make monthly payments into an account and stop paying the cards. The company tries to settle each balance for less once it is delinquent enough to interest the creditor.
The company charges a fee for this.
What goes wrong
The accounts go unpaid while the fund builds, so interest, late fees and lawsuits continue.
Forgiven balances can be taxable income, and no creditor is obliged to settle at all.
What a settlement program cannot do
Enrolling does not stop a creditor from suing you or from collecting on a judgment.
The automatic stay, the federal law that stops creditor actions, applies when a bankruptcy case is filed. A settlement program has nothing like it.
What to check before you sign
- What the fee is and when it is charged, in writing.
- Whether you are told to stop paying your cards, and what happens to interest and late fees while you do.
- What the company does if a creditor sues you during the program.
- Whether your creditors have agreed to deal with the company at all.
- Whether anyone compared the program with Chapter 7 and Chapter 13 for your household.
Before you sign with a company from an 800 number, a TV ad or a billboard, have a bankruptcy lawyer look at your whole situation.
Compare the program with every other option on this page before you pay into it. The credit card payoff calculator shows what your current payments cost, and nothing you type there is sent to me.
The first step is to meet a bankruptcy lawyer who considers all of your options
We look at your debts, income and property. I look at Chapter 7 first, at Chapter 13 only if Chapter 7 is not possible or not recommended, and at the options outside bankruptcy.
Consumer cases start with a free consultation by phone, Zoom or in person, with a consultation agreement signed first. If you leave a message, please leave only your name and number.
This page is general information, not advice about your case.