Print This Page

Chapter 7 Bankruptcy Frequently Asked Questions

What is bankruptcy?

Bankruptcy is your legal right to get out of debt and get a fresh start. It’s guaranteed by the Constitution and the Bankruptcy Code.

What can I expect from my bankruptcy case?

You can expect to eliminate or discharge all dischargeable debts – this includes credit card debt, medical debt, and personal obligation on mortgage debt, judgments, and most other debts. You can expect to stop all law suits, all wage garnishments, all harassing collection calls and all threats to collect debts. In chapter 13, you will have a chance to catch up on mortgage arrearage and even missed payments on your car loan. You can eliminate some tax debts if they are more than 3 years old. You may even be able to eliminate a completely unsecured second mortgage on your home. You can get your drivers’ license back if it was suspended for failure to maintain insurance.

What can’t I expect from my bankruptcy case?

You can’t eliminate debts for alimony or child support in bankruptcy. You can’t eliminate recent tax debt. You can’t eliminate “trust fund” tax debts for items such as sales tax you collected or withholding from your employees’ paychecks. In most cases, you can’t eliminate student loan debts in bankruptcy. You can’t eliminate fines in bankruptcy. You may have to give up some of your property to a bankruptcy trustee in a chapter 7 case if it is not exempt. You can’t hide your assets and you can’t give them away to friends, family or relatives to avoid this.

How often can I file a bankruptcy case?

You can file a chapter 7 case only one time every 8 years. If you file a chapter 7 case, you can’t get a discharge in chapter 13 for another 4 years. If you get a discharge in a chapter 13 case, you can’t get a discharge in chapter 7 for another 6 years.

Is Illinois chapter 7 bankruptcy right for me?

Illinois chapter 7 bankruptcy cases will allow you to eliminate most of your debts. You’ll keep most if not all of your property taking into account Illinois exemptions. But if you need to catch up on house or car payments, chapter 7 bankruptcy in Illinois is not the best option for you.


Is Illinois chapter 13 bankruptcy right for me?

Chapter 13 bankruptcy in Illinois is a good option for people who want to keep their assets. It is mandatory for those who make more than the median income and don’t “pass the means test.” It’s a great option for people who are behind on their mortgage or car payments and want to catch up. In Illinois, you have to file your chapter 13 case before a sheriff’s sale if you are trying to save your house. Chapter 13 in Illinois is a great option for people who need help settling claims from their divorce cases which are not alimony or child support (“domestic support obligations.”)


Can I keep my property in bankruptcy?

Illinois has sufficient exemptions to protect most people in bankruptcy. Most people will keep their homes and cars in an Illinois bankruptcy case.

Can I get credit after bankruptcy?

Yes, you can get credit after bankruptcy. Frequently you can get credit right away after bankruptcy – even credit cards. Maybe you won’t get a large line of credit. But you can start to re-establish your credit right away.

Can I get my driver’s license back after bankruptcy?

Bankruptcy can get your driver’s license back if you lost it for driving without insurance.   You can’t get your drivers’ license back through bankruptcy if you lost it for drunk driving, OWI or DUI.

Can I file bankruptcy without my spouse?

You can file bankruptcy without your spouse.

Can I file bankruptcy in Illinois?

You can file bankruptcy in Illinois if you lived in Illinois the greater part of the 180 days before the date you file bankruptcy.


Can I sue my creditors?

Sometimes. If creditors violate the Fair Debt Collection Practices Act, we can sue them. If creditors violate the automatic stay – which stops creditors from taking action against you after bankruptcy – we can sue them. And if creditors violate the discharge injunction – which protects you from creditors’ actions after bankruptcy – we can sue them. If your creditors called your cell phone with an automated phone call without your permission, we can sue them. It’s your job to keep good records and notes of everything that happened. You gather the evidence and we will protect your rights. You might be surprised how much you might be able to recover in this sort of situation.

Can I continue with any lawsuits I had before bankruptcy?

If you file a chapter 7 case, any lawsuit you had before bankruptcy would be continued by the chapter 7 trustee. Any money you receive would be paid to creditors. If creditors are paid in full, you get the rest. You keep any portion of the settlement which is exempt. If you file a chapter 13 case, you can continue the lawsuit on your own. Any proceeds of the lawsuit would be paid to your chapter 13 plan. Your chapter 13 plan could be modified to take into account the additional money you might receive from the settlement of the lawsuit.

How long will bankruptcy be on my credit report?

Bankruptcy stays on your credit report for 10 years. However, the impact gets smaller with each passing year.

Can I get rid of student loans in bankruptcy?

Rarely. Some people who have a hopeless economic situation never will be able to work, and have tried very hard to resolve their student loans, can eliminating their student loans. However, laws and the application of laws can change. We will always advocate for you. In particular, if you are permanently disabled or otherwise unable to work, we can seek a discharge of your student loans because of your substantial hardship.

Can I lose my job if I file for bankruptcy?

You can’t be fired or otherwise discriminated against on the job if your file for bankruptcy. Some types of employers can consider your bankruptcy for future employment. Some industries, particularly the securities industry consider bankruptcy a big problem.

Can I lose my security clearance if I file for bankruptcy?

Many of our clients find that the must file a bankruptcy to keep their security clearance because it clears up their credit problems. Andre filed a chapter 7 bankruptcy, got rid of all his debts and maintained his security clearance.

Can I file for bankruptcy with my spouse in a same-sex marriage?

If the same-sex marriage is legal where you were married, then it will be recognized in bankruptcy. Lakelaw welcomes clients regardless of sexual orientation. We filed bankruptcy for couples before the Defense of Marriage Act was declared unconstitutional.

Can I file for bankruptcy if I am in the military?

Yes. Lakelaw offers members of the military on active duty as well as career veterans or veterans of foreign war a 20% discount. We make special arrangements as well for disabled veterans. Lakelaw honors the service of our nations’ servicemen and servicewomen. Please note that to file a bankruptcy in Illinois, you have to have had a presence for the greatest portion of the last 180 days. We maintain a very strong relationship with service-people at Great Lakes Naval Station. We even filed a bankruptcy case for a medic while he was stationed in Iraq.

Lakelaw has offices in Chicago as well as in Waukegan, Illinois. We represent people and small businesses throughout Illinois. Areas served include Cook County, DuPage County, Will County, Kane County, Kendall County, Lake County and McHenry County and throughout Northern Illinois.