Bankruptcy Lawyer in Chicagoland
In most ways, filing for bankruptcy in Illinois is the same as filing in another state. The bankruptcy process is governed by federal bankruptcy law rather than Illinois state law, and it works by dissolving contracts between you and your creditors—this is what provides you a fresh start.
However, Illinois’ laws have a crucial role as well. They decide which assets and liabilities you may retain in your bankruptcy case. You’ll also need to know some additional filing information, which we’ll go over in this blog. Consulting a Chicagoland bankruptcy attorney will help you identify your bankruptcy claims.
- The Difference Between Contingent, Unliquidated, and Disputed Claims in Bankruptcy
- When A Bankruptcy Claim Is Straightforward
- When the Amount Of The Claim Is Not Straightforward
- Knowing Which Types of Bankruptcy Claims I Have
- The Need To List All of the Claims When You File For Bankruptcy
- Claims Payment in Bankruptcy
- Bankruptcy Exemptions In Illinois
- Bankruptcy Attorney In Chicagoland, Illinois
The Difference Between Contingent, Unliquidated, and Disputed Claims in Bankruptcy
When filing for bankruptcy, you must disclose all of your debts in order to be released from them after your case is over. Though some of these obligations are straightforward—for example, you have incurred $15,000 of credit card debt and have been missing monthly payments for months—others cannot be quantified at the time you file bankruptcy. They include claims that are contingent, liquidated, or contested. We’ll explain what they are and how to account for them in your bankruptcy petition in this blog.
When A Bankruptcy Claim Is Straightforward
When it comes to listing your bankruptcy claims, you should have little trouble in most circumstances. There will be no unresolved issues that you could use to avoid paying the debt. Simply put, you owe the money.
For example, if you are behind on your automobile loan, the claim would be for the whole amount owed. Similarly, if you owe money from credit card companies, the claim would be for the entire balance.
When the Amount Of The Claim Is Not Straightforward
It might be difficult to figure out how much money you owe to a creditor at times. It’s possible that the amount you owe is contingent on what someone else does, or it hasn’t been established yet. Or you and the creditor may differ on the amount owed.
If any of these bankruptcy cases apply, you must disclose it when listing that claim on your bankruptcy forms (there are checkboxes on the form).
Listed below are the definitions for each term.
What Is A Contingent Bankruptcy Claim?
While the majority of debts do not have any special issues, there may be times when you must make a notation about a contingency in relation to the debt. This could have an impact on the amount you must pay. A contingent claim is a debt that is reliant on an event that has not yet occurred and may or may not occur. You could have committed to cosign a mortgage for somebody, but you will not be liable to make payments on this loan if the primary borrower makes timely payments. Thereby, this is a debt that may never come to fruition.
What is an Unliquidated Bankruptcy Claim?
Another circumstance in which a debt may be difficult to quantify is when you are aware that you have a debt but do not know how much it is.
In a lawsuit, for example, you could have confessed liability, but the damages in the case might not have been determined.
Similarly, you may have hired someone to do a job for you who charges by the hour rather than a flat rate, and the service may not have been finished, thus the bill amount is unclear.
If you’re pursuing a claim against another party for personal injury, copyright infringement, or another issue, you won’t know how much attorney fees you owe until the case is resolved.
Unliquidated claims, like contingent debts, must still be included in your petition for bankruptcy. Or else, you may not be able to discharge the debt in a bankruptcy proceeding.
What Is A Disputed Bankruptcy Claim?
While you are in the middle of a dispute with the alleged creditor about how much you owe or even if you owe anything at all, filing bankruptcy Chapter 7 or Chapter 13 may be needed. Though you may feel that declaring this debt is not needed if you believe you do not owe it, you still need to declare it if the creditor thinks you do. This ensures that if it is found to be valid, it is included in the bankruptcy proceedings.
If there is a disagreement about the amount of the debt, mention the amount that the creditor claims rather than the amount that you feel is owed. This is not an acknowledgment that precludes you from arguing the amount of the debt in the future. You should include the worst-case scenario to ensure that it is covered and, if necessary, dismissed in the bankruptcy. You may always specify in your petition that the debt is being challenged and explain why you believe you do not owe it or owe less than the amount claimed by the creditor.
Once your case is filed, the bankruptcy trustee will decide whether you have sufficient assets to pay your creditors. If you do, they will notify potential creditors and ask them to submit proof of claim documents. This gives a creditor the right to receive proceeds from the bankruptcy estate. Payments from the estate will be made in the required order of priority by the trustee.
Knowing Which Types of Bankruptcy Claims I Have
Due to the uniqueness of each individual’s financial problems, there is no one-size-fits-all solution to eliminating debt. Working with an experienced bankruptcy lawyer who can assess your debts and advise the best course of action is a wise choice since sorting through the many types of claims can be complicated.
The Need To List All Of The Claims When You File For Bankruptcy
It’s normal for someone to prefer to omit a claim from bankruptcy forms for a variety of reasons. You cannot do this. You must list all claims when you fill-out paperwork, both those you believe you owe and those others believe you owe.
This is in your best interests. If you do not disclose a claim, this might not be cleared (discharged debt) in your bankruptcy case, even if it is a qualified dischargeable debt.
Claims Payment in Bankruptcy
Here’s what will happen next if money is available to pay creditors:
- The trustee in bankruptcy assigned to the case will issue a notification to creditors informing them that the case is an “asset case.”
- To be eligible for a share of the available funds, a creditor must submit a proof of claim form by a certain date.
- The trustee will assess the claims and pay them in accordance with the priority payment system of bankruptcy laws.
However, keep in mind that each circumstance is unique. If you are unsure about what will happen to claims in your bankruptcy case, you should consult with competent bankruptcy lawyers.
Bankruptcy Exemptions In Illinois
Whether you’re filing Chapter 7 or Chapter 13, you can protect property covered by an exemption. However, nonexempt property (anything not protected by an exemption) is treated differently in each bankruptcy chapter.
- In a Chapter 7 bankruptcy, bankruptcy trustees sell nonexempt property and distribute the proceeds to creditors.
- In a Chapter 13 bankruptcy, you retain everything you own. However, you must pay either the value of the nonexempt property equity in your repayment plan or your disposable income, whichever is greater.
Regardless of the chapter filed, the differing strategies guarantee that creditors get the same amount.
A Few Of The Bankruptcy Exemptions In Illinois
- Alimony
- Child Support
- Cemeteries and Burial Funds
- Motor Vehicle
- Homestead
- Insurance Benefits
- And so many more
Bankruptcy Attorney In Chicagoland, Illinois
Though you may have heard that bankruptcy filing is a negative thing, we are here to tell you that that is not the case. Filing bankruptcy is one of the best options for a client going through undue hardship to get out of debt and enjoy a fresh start.
Financial difficulties are an inevitable aspect of life. However, if you are one of the millions of people who are hurting financially as a result of COVID-19 or another crisis, bankruptcy filings can make a difference.
Our bankruptcy attorneys will be there for you from the moment you get your free legal case evaluation to the end of your bankruptcy procedure. Contact our Law-firm, Cutler & Associates, Ltd. or schedule a consultation with a Chicago bankruptcy lawyer and learn more!