Legalities

Legalities, a weekly column that appears in the Help section of the Southern Illinoisan, is a free service of the Self Help Legal Center. You can visit the Southern Illinoisan website at: http://www.southernillinoisan.com

Q: I would like to file for bankruptcy but am confused as to whether I should file for Chapter 7, 13, 12, or 11. What are the differences?

A: First, filing for bankruptcy is not something that we recommend for people to do without an attorney. While there are numerous books and do-it-yourself kits for doing your own bankruptcy, because both the complexity of the procedure as well as the risk that you will do something wrong are great, it is not something that you should try without legal assistance.

A Chapter 7 bankruptcy, also known as a "straight" bankruptcy, discharges (or cancels) most of your debt. Most of these debts will be bills and credit card debt. In a Chapter 7 bankruptcy, the person filing for bankruptcy must surrender all of his or her non-exempt property to the bankruptcy trustee. This property is sold so that a pool of money is made available from which to pay the people or businesses that are owed money.

Unlike Chapter 7, which results in a discharge of most debts, a Chapter 13 bankruptcy is designed to give the debtor (a person who owes money) more time to reorganize their financial situation and pay his/her debts. The usual amount of time is three years, although under certain circumstances, the court will give the debtor five years to repay the debt. The typical Chapter 13 filer is someone who has a lot of non-exempt property that he could lose if he/she files under Chapter 7, or has secured debt such as a home mortgage or a car loan. Because Chapter 13 has to do with reorganizing, not canceling a person's debt, the debtor must be able to prove to the court that he/she has the ability (a source of income) to pay off the reorganized debts over the period given.

Businesses, or persons with unsecured debts over $750,000, file for debt reorganization under Chapter 11. Chapter 12 is used for family farmers. Please remember that filing for bankruptcy is a serious matter that has long-term consequences and as a debtor, you may have other options besides bankruptcy when faced with a large amount of debt. To discuss these options, contact a Consumer Credit Counseling Service near you or seek the advice of a licensed attorney.

Do you have a legal question? Write us at Self Help Legal Center, SIU School of Law, Mailcode 6804, Carbondale, Illinois or e-mail us at selfhelp@siu.edu. Not all questions will be answered and may be edited for space or content.

Legalities is written by the Self Help Legal Center, a public service of the SIU School of Law. The Self Help Legal Center cannot provide legal representation. It can, however, help you find the answer to your legal problem. This column is for general legal information purposes only and the advice given in this column may not apply to your situation. For specific legal advice about your situation, you should consult an attorney licensed to practice in Illinois. This column is not meant to give legal advice and does not create an attorney-client relationship.