In Illinois and across the United States, people are experiencing a range of financial worries because of the ongoing health crisis still engulfing the nation. That has led to major medical expenses, lost income, the inability to pay debts, the need to use credit cards for everyday necessities and more. When the bills reach a level where they cannot be paid, people are frequently unsure of what to do. There may be a reluctance to file for Chapter 7 bankruptcy because of fears about the process, how it could negatively impact the future, and the perceived stigma surrounding it. In truth, Chapter 7 is a perfectly legal and reasonable way to get into a stronger financial situation and move forward.

Even people with significant income may need Chapter 7

For those who are fearful, it might be beneficial to know there are people who have substantial assets and major income whose debts become so onerous that they need to file for Chapter 7 to get into a better position. A National Hockey League player, Evander Kane, has filed for Chapter 7 bankruptcy in California where he is under contract with the San Jose Sharks. Mr. Kane, 29, owes almost $27 million and is facing legal claims for his debts.

In 2019, he signed a contract with his team for seven years and $49 million. He has stated that he might not play in 2021 due to the health crisis and that he has a newborn baby. He would not be paid for 2021 if he left because the opt-out date for this season was on Christmas Eve. For his career, he has earned approximately $53 million. His assets are reportedly around $10.2 million. According to the bankruptcy petition, he suffered $1.5 million in gambling losses since last year. He had other gambling costs and supports much of his family including his parents and his child.

Filing for bankruptcy helps protect assets if debt becomes overwhelming. While Chapter 7 may provide a fresh financial start, bankruptcy law does not protect all debtor property from creditors.

Chapter 7

A Chapter 7 bankruptcy allows the discharge, or remove liability, of most debt owed on the date the bankruptcy is filed. It is typically a three-month process.

Some property may be lost in this bankruptcy. Property transferred before the bankruptcy filing may be reversed to the debtor.

People in Geneva facing financial difficulties in these uncertain times may wonder if filing for bankruptcy is right for them. One fear they may have regarding bankruptcy, though is that they will lose everything in the process and be destitute. However, this fear is unfounded as there are a variety of exemptions that allow people filing for Chapter 7 bankruptcy to keep certain assets so they can move forward on solid financial footing.

What are some unlimited Chapter 7 bankruptcy exemptions?

In a Chapter 7 bankruptcy, your assets will be sold, and the proceeds used to pay you're your creditors. This is why it is referred to as “liquidation bankruptcy.” However, when you file for Chapter 7 bankruptcy, you are allowed to keep any property that is “exempt” under state or federal law. Some examples of exempt assets in which a person can keep no matter what the value of the asset include:

• Family photographs
• Necessary clothing
• Qualified retirement plans
• IRAs
• Life insurance policies

What are some limited Chapter 7 bankruptcy exemptions?

Chapter 7 bankruptcy also allows for some assets to be exempt up to a fixed dollar amount. Some examples of this include:

Americans are facing a lot of hardship right now. The pandemic spurred a recession which may hamper the U.S. economy for years. If you've lost a job, seen a reduction in hours, accrued steep medical bills or suffered any other pandemic-related misfortune, you may be wondering if bankruptcy is something you can even consider, much less take advantage of.

Before you decide, though, why not discuss your case with an experienced bankruptcy attorney? You may be surprised by what you learn when you hear the facts and receive case-specific advice.

Are you making decisions based on facts of fiction?

Unless you've really done your research, chances are good that what you know about bankruptcy was probably pieced together by things you've heard or overheard throughout your lifetime. As such, the assumptions you make about bankruptcy may be partially or completely false. That's not a very effective way to make such an important decision. Here are some of the myths about bankruptcy you may have heard or may assume are true: