Bankruptcy
Chicagoland Bankruptcy Lawyers
Bankruptcy is the most powerful debt relief available in the United States. It can stop creditors in their tracks and permanently discharge debts. It can give individuals a fresh start and allow them to retain most or all of their property.
Bankruptcy is a complex subject, however. There are many choices to make and things to consider. Individuals considering bankruptcy need to be aware of their rights and responsibilities, as well as the possible risks and pitfalls.
If you are considering bankruptcy, you need a lawyer you can trust. The experienced attorneys of Madden Lawyers LLC can lead you through the process of getting a fresh start through bankruptcy. We will help you understand how bankruptcy can affect you, give you honest, compassionate advice and guide you to what we believe is the best solution for your circumstances. Bankruptcy is not always the best solution, and we will not pressure you to file.
Picking up the phone to call us is often the hardest part for many of our clients. But it is the first step to a fresh start.
Did You Know...?
The Founding Fathers of the United States included Bankruptcy in the original Constitution, written in 1787. Article I, Section 8, of the United States Constitution authorizes Congress to enact “uniform Laws on the subject of Bankruptcies.” See for yourself at the website of the U.S. National Archives.
Chapter 7 Bankruptcy
Chapter 7 is designed for individuals in financial difficulty who do not have the ability to pay their existing debts. The person filing a bankruptcy case is called a “debtor.” In every Chapter 7 case, a “Bankruptcy Trustee” is appointed, who is the official responsible for overseeing the case.
In a Chapter 7 case, the debtor can keep all exempt property, and any non-exempt property that the trustee abandons. Also, the debtor may be able to keep property subject to a secured claim by redeeming the property or reaffirming the debt. The Bankruptcy Trustee may have a right to sell valuable, non-exempt property to pay creditors.
At the end of the Chapter 7 case, the debtor will be discharged from most pre-bankruptcy debts. Some types of debts, however, are non-dischargeable, and the debtor will continue to be responsible for those debts even after the bankruptcy case is over.
Individuals whose debts are primarily consumer debts are subject to a “means test” to determine whether the case should be permitted to proceed under Chapter 7. The “means test” determines whether an individual would have enough disposable income to repay at least some of his debts under a Chapter 13 repayment plan.
The means test is not a pencil and paper, multiple-choice test. Rather, it is an analysis of the individual’s finances to determine whether they should be eligible for Chapter 7.
An individual will generally pass the means test if his household’s income is less than the median income for his state of residence and family size.
As of November 1, 2024, the effective median income in Illinois is $67,617 for a household of 1, $86,279 for a household of 2, $105,384 for a household of 3, and $128,739 for a household of 4.
If an individual’s income is higher than the state’s median, then a debtor may still pass the Means Test under a second analysis. The second analysis looks at the debtor’s income, after deducting certain amounts such as expenses for food, clothing, health care, housing and utilities, transportation, taxes, childcare, and payments on secured claims.
Chapter 13 Bankruptcy
Chapter 13 is designed for individuals with regular income who can pay all or part of their debts in installments over a period of time.
A debtor is only eligible for chapter 13 if their debts do not exceed certain dollar amounts set forth in the Bankruptcy Code. Effective April 1, 2025, individuals and married couples are eligible for Chapter 13 if their unsecured debts are less than $526,700 and secured debts are less than $1,580,125.
Chapter 13 Repayment Plan: Under chapter 13, a debtor must file with the court a plan to repay creditors. Generally, the debtor must pay the full amount of all secured claims relating to property that the debtor wants to keep, and must also pay all or part of unsecured claims, using the debtor’s future earnings. The total amount paid to unsecured creditors over the course of the plan must generally be at least the amount that the creditors would have received if the debtor’s non-exempt property had been sold in a Chapter 7 case.
The period allowed by the court to repay debts may be three years or five years, depending upon the debtor’s income and other factors. The court must approve the plan before it can take effect.
After completing the payments under the plan, the debtor’s pre-bankruptcy debts are generally discharged, with some exceptions.
Chapter 7 Vs. Chapter 13 Bankruptcy
Filing for bankruptcy is not an easy decision for many individuals. But when you’re overwhelmed by debt and there’s no end in sight, it might be time to consider your legal options. Moreover, it’s important to figure out which type of bankruptcy best fits your situation. While both Chapter 7 and Chapter 13 offer debt relief, they work differently—and choosing the right option can make a big difference in your outcome and your financial future. We’ll help you look over your options and your assets and talk it over with you to help you make your decision. That’s what we’re here for: trusted financial and legal guidance.
The Difference Between Chapter 7 And Chapter 13
The most common types of personal bankruptcy are Chapter 7 and Chapter 13. There’s also Chapter 11, but that’s primarily reserved for helping to resolve business debt. Most non-business-owners choose either Chapter 7 or Chapter 13, depending on their unique situation. Each one offers its own form of relief, depending on your income, assets, and financial goals.
Chapter 7 is what most people think of when they hear the word “bankruptcy.” It’s designed to wipe out unsecured debts like credit cards, personal loans, and medical bills. If you don’t have a lot of income or property, this might be a fast way to a fresh start. Most Chapter 7 cases wrap up within a few months and often involve little or no asset liquidation. On the other hand, Chapter 13 bankruptcy is more of a repayment plan. Instead of wiping out your debts right away, you’ll agree to pay back a portion of them over three to five years. This can be a good fit if you’re behind on a mortgage or car loan and want to keep your property while catching up over time.
Once you’ve decided which type of bankruptcy is right for you, it’s time to start filing. One of the biggest advantages of filing bankruptcy is the automatic stay that gets put in place, which means creditors have to stop collection efforts as soon as your case is filed. Whether you’re leaning toward Chapter 7 or Chapter 13, the first step is reviewing your income, your debt, and any property you want to keep. It’s important to note that if your income is too high, you might not qualify for Chapter 7. In alternate situations, if you’re trying to save your home from foreclosure, Chapter 13 may give you more control.
We help clients sort through the pros and cons of each. What matters isn’t just the type of debt you have—it’s how your entire financial picture fits together. We’ve handled countless bankruptcy cases, so we know what to expect and can help walk you through the entire process.
Let’s Talk About What’s Next
If you’re unsure about your next move or want to learn more about your debt relief options, we’re here to talk. Regardless of if you’re looking for help with the bankruptcy discharge process, you’re wondering how to stop creditor harassment, or if you’re trying to decide if Chapter 7 or Chapter 13 fits your financial future, we’ll walk you through it without pressure or sales tactics.
With over two decades of legal experience, we bring a practical and compassionate approach to every case. As a member of the American Bar Association, Illinois State Bar Association, and Chicago Bar Association, our goal is to help you in any way we can. Contact Madden Law LLC today to schedule a confidential consultation. Our experienced attorney can help you take the next step toward financial clarity—whatever that looks like for you.