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How does Chapter 13 bankruptcy work?

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There are many unexpected events that occur throughout people's lives in Illinois. Some of these unexpected events can be pleasant surprises and benefit people. This is not always true though. Some of the unexpected events can create hardships for people. It could be a car breaking down or appliances breaking down. People may be involved in an accident and suffered injuries or developed an illness or disease. They may have close family members suffer sever injuries and illnesses that require extra care or many other types of unexpected events.

The unexpected events that cause hardships also tend to be costly financially as well. It cost money to repair or replace things that break down. When people suffer injuries or illnesses people may incur medical bills which can add up quickly. If they lose a job, they lose income. When people incur these extra expenses, it can cause them to fall behind on monthly obligations and people may need to turn to credit cards to keep up and before they know it they may be overwhelmed with debt.

Basics of Chapter 13 bankruptcy

It may not seem like people may ever be able to rid themselves of the debt, but people do have options. One of those options is Chapter 13 bankruptcy. This option is mainly for people who want to keep their property after the divorce and also have the ability to make payments towards their debt. Unlike Chapter 7 bankruptcy, people do not need to liquidate assets.


What does it mean to liquidate my assets?

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Filing for bankruptcy can be overwhelming, particularly when an Illinois resident does not understand the process. They may hear terms related to bankruptcy and experience confusion when they attempt to understand what it all means. Readers should understand that the information contained in this post does not provide any legal advice and the best answers that they can get to their bankruptcy questions may come from bankruptcy attorneys.

However, one important concept that readers can learn about before filing for bankruptcy is liquidation. This post will only touch on the topic and further inquiry is encouraged for those who are considering filing for Chapter 7 bankruptcy.

Selling off property to satisfy creditors

Chapter 7 bankruptcy's liquidation provisions are premised off the idea that those who use Chapter 7 bankruptcy do not have disposable income to use to pay off their debts. Unlike Chapter 13 bankruptcy, which reorganizes an individual's income so that they may pay down their debts, Chapter 7 bankruptcy presumes that a debtor has no extra money with which to use to reduce their outstanding financial obligations.


The old adage of the only things guaranteed in life are death and taxes continue to be as true today as it ever was before. And, the realities of death have never been more acute than they have been in recent memory. This is why we often get questions from business owners about the best timing for estate planning.

When is the best time to estate plan for business owners?

Now! We never know how many days we have left on Earth. That is simply a fac of life. But, think about the effect the sudden loss of an owner or even a key employee, who knows all the ins and outs of a business. Think about the chaos that loss will invite. And, think about the family that is left behind to fight over that business. Would it survive? Would those family relationships survive? This is why estate planning, or more accurately, transition planning, is so important for business owners.

Transition planning

Business transition planning is part of the estate planning process for business owners. It is the process whereby the drafter is setting out how they want their business to transfer to the next generation. The goal is simple: ensure that the business survives after one's death by empowering the next generation to take over. This process can actually help one's current business too because it really forces business owners to think about how and why their business is growing and how to keep that momentum.


You may have executed what you believe is a comprehensive estate plan including a will, living trust, power of attorney, advance medical directive and other important documents. But just having an estate plan is not the end of the story. There are additional steps to take to ensure your final wishes are carried out.

Communicate your intentions to your loved ones

If your loved ones do not know of your estate plan it can cause delays when it comes to carrying it out or it can lead to the mismanagement of assets. It is important to educate your loved ones about the contents of your estate plan as well as your intentions. This can avoid unwanted surprises upon your passing. Sudden wealth can lead to bad decisions, so if your heirs know well in advance what they are to inherit they can make plans to handle this windfall wisely.

Anticipate drama

Many times, families have hidden conflicts with one another that simmer below the surface while you are still alive. Your death can bring these conflicts to light, especially if one family member believes your will should not be enforced because it was made under coercion, undue influence or if they believe you were not of sound mind when the estate plan was executed. Assuming the kids will figure it out may not be the best choice. Again, education is key.


The year 2020 was a tough economic time for many in Geneva, especially if they were furloughed or lost their jobs. This financial predicament was only escalated when they acquired a significant amount of medical debt that they have no means of paying back. They are not alone. According to U.S. Census Bureau data many families have problems with medical debt.

What is considered medical debt?

In 2017, 19% of households in the U.S. had some type of medical debt. Medical debt was defined as costs people could not pay up front or when they were treated. Of households carrying medical debt in 2017, the median amount of medical debt was $2,000. When households had significant medical debt, they may not have been able to afford the essentials such as food, utilities or their rent or mortgage. Moreover, medical debt forced some families to forgo necessary medical care because they could not afford it. Some people even filed for bankruptcy due to unmanageable medical debt.

Health insurance may not cover all costs

While having health insurance helps pay for medical costs, even those with health insurance could still incur medical debt. While only 16.2% of households in which all family members were insured for the entire year had medical debt, 30.8% of households where all family members were not fully insured had medical debt. The median amount of medical debt for households with full insurance was $2,000. The median amount of medical debt for households without full insurance was $3,000. As this shows, even families who have health insurance struggle with medical debt.

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