Yes, you can generally keep your retirement savings if you file for bankruptcy in Illinois. Under Illinois law, retirement accounts like 401(k)s, 403(b)s, and IRAs are fully protected, which means they’re also protected under the bankruptcy code. However, there is an important caveat: the funds must be in officially recognized retirement accounts.
Sometimes people put money into regular savings accounts, CDs, or money market accounts with the intention of using it for retirement, but these types of accounts don’t receive the same legal protections.
There’s a potential loophole in the law that allows for some funds to be protected if they were intended for retirement, but it’s a gray area and could lead to litigation. Because of this uncertainty, it’s safest to ensure your retirement savings are in formal, ERISA-approved accounts.
No, filing for bankruptcy doesn’t mean you’ll never be able to own a home again. The purpose of bankruptcy is to give you a fresh start by relieving you of overwhelming debt, not to permanently exclude you from homeownership.
That said, bankruptcy will impact your credit score for a time. A Chapter 7 bankruptcy stays on your credit report for 10 years, while Chapter 13 and Chapter 11 stay on your record for 7 years. However, this doesn’t mean you can’t rebuild your credit during that period.
If you avoid incurring new debt, make timely payments, and demonstrate responsible financial behavior after bankruptcy, you can potentially qualify for a mortgage after as little as four years. Some people have even been able to buy homes within a year, but finding financing right away can be challenging. The key is to avoid repeating the behaviors that led to bankruptcy in the first place, such as building up new debt or missing payments.
In short, filing for bankruptcy is not the end of your homeownership dreams. With careful financial management, you can rebuild your credit and purchase a home again in the future.
The duration of a bankruptcy case depends on the type of bankruptcy you file.
In most cases, Chapter 7 is a relatively quick process. If you are fully transparent with your attorney and there are no complications, your case should be completed within four to six months.
The exception to this rule is if you have assets that need to be sold to pay creditors, which could extend the process – but you’ll still typically receive your discharge within that initial time frame.
This is a longer process because it involves a payment plan. Chapter 13 cases usually take three to five years to complete, as you will be making payments to creditors over this time.
Similar to Chapter 13, Chapter 11 can take years, depending on the type. For example, Subchapter V Chapter 11 cases typically involve a five-year payment plan, but the overall duration depends on how negotiations with creditors play out.
If your case involves litigation—such as accusations of fraud or misrepresentation—it will take longer because the case will remain open until the litigation is resolved.
In summary, Chapter 7 is generally quick, while Chapter 13 and Chapter 11 can take several years due to the payment plans involved.
Attorney Penny Bach is a seasoned lawyer based in Illinois who has helped countless clients just like you navigate the intricacies of bankruptcy law. With nearly two decades of experience, she is prepared to assist you in restructuring your financial situation so that you can regain control and focus on what truly matters.
Still have questions? Ready to get started? Contact Bach Law Firm today to schedule an initial consultation.
Technically, no, you cannot be fired simply for filing bankruptcy. Federal law protects people from being terminated solely because they sought bankruptcy protection. This right is rooted in the U.S. Constitution, which prevents employers from using bankruptcy as a reason to punish employees.
However, there are some practical considerations to keep in mind. If your job requires you to be financially bonded (common in fields where you handle other people’s money, such as contractors, bookkeepers, or accountants), filing for bankruptcy could impact your ability to remain bonded. If you can’t be bonded, that could affect your ability to perform your job, leading to potential job loss.
It’s also worth noting that, in reality, if an employer is strongly opposed to bankruptcy, they might look for other reasons to let you go, like citing poor job performance or decreased productivity –even if the real motivation is your bankruptcy filing. Of course, they won’t openly admit the bankruptcy as the cause, but if they are determined to act on it, they may find another justification.
That said, it’s rare for anyone to lose their job because of bankruptcy. In my experience, having worked in bankruptcy law since 2000, I’ve never had a client tell me they were fired for filing.
Most professions, even those where people handle money, don’t typically face job loss just because of bankruptcy. If you’re in a field like real estate, construction, or finance, it’s worth discussing your situation with an attorney to make sure you’re fully protected, but losing your job due to filing bankruptcy is highly unlikely.
No, filing for bankruptcy as an individual should not affect your spouse’s credit. Bankruptcy is tied to the individual who files, not to their spouse.
However, there is an exception to this that you should watch out for: if you share joint debts, such as a mortgage, car loan, or credit card, your bankruptcy might accidentally show up on your spouse’s credit report.
This doesn’t happen often, but if it does, it’s a simple fix: all your spouse needs to do is file a dispute with the credit bureau. To do this, I recommend sending the dispute by regular mail with return receipt so you have proof of when it was received.
The dispute should explain that the spouse didn’t file for bankruptcy and that any related entries on their credit report should be removed. Since bankruptcy filings are tied to social security numbers, this issue can be resolved relatively easily.
No, married couples do not have to file bankruptcy together. It’s completely possible for one spouse to file while the other does not, and sometimes that makes sense depending on your financial situation. However, there are a few things to consider…
First, if you and your spouse share significant debts, like a mortgage or credit cards, filing as an individual might not bring full relief. While your bankruptcy might discharge your responsibility for those debts, your spouse would still be responsible for paying them.
Second, filing jointly usually makes financial sense if you both have debt. It costs only $40 more to file together, while filing two separate bankruptcies would double the costs. So, if both partners have significant debt, filing together may provide the best value and the most complete debt relief.
Finally, if your debts are separate and one partner’s financial burden isn’t severe, filing individually could be sufficient to ease the financial strain. However, it’s important to evaluate whether that partial relief will be enough to improve your overall financial situation.
Yes, medical bills can be fully discharged through bankruptcy. Whether you’re filing for Chapter 7 or Chapter 13, medical debts are generally treated the same as other unsecured debts like credit cards. This means that, upon completion of the bankruptcy process, those debts can be wiped out.
That said, if your bankruptcy is solely for medical debts, particularly hospital bills, it might be worth exploring other options first. In Illinois, there are state laws and programs that may help reduce or manage hospital bills. Before filing for bankruptcy, consider reaching out to the hospital directly to discuss possible payment plans or financial assistance programs.
One of the wildest misconceptions I’ve heard from clients is, “I’m going to lose everything.” People often believe that filing for bankruptcy means they’ll lose their house, their car, their spouse—essentially everything they own. They imagine they’ll be left with nothing and end up living on the streets. It’s one of the most extreme and unfounded fears out there, but it’s a belief that keeps people from even considering bankruptcy as a solution.
On the flip side, another common misconception is, “Of course, they won’t take my home or car—I need them to live and get to work.” This belief is equally dangerous because it overlooks the fact that, while many assets can be protected, certain circumstances could lead to losing them. Trustees aren’t allowed to make decisions based on personal needs; their duty is to follow the bankruptcy code and consider what assets are available for creditors.
It’s important to take your time and consider all options before deciding to file for bankruptcy. While it’s an incredibly helpful tool, bankruptcy should always be a last resort, and there are often other solutions that can be explored first.
Even if you’re meeting with me to discuss bankruptcy, it’s important not to rush into the decision. Once you file, you can’t undo it, so it’s critical to go in with your eyes wide open and make sure it’s truly the best option for your situation. Unless you’re facing an immediate crisis, like losing your house tomorrow, there’s no reason to file impulsively—think it through carefully.
Still Have Questions? Ready To Get Started?
For more information on Bankruptcy In Illinois an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (847) 440-5998 today.
Attorney Penny Bach is a seasoned lawyer based in Illinois who has helped countless clients just like you navigate the intricacies of bankruptcy law. With nearly two decades of experience, she is prepared to assist you in restructuring your financial situation so that you can regain control and focus on what truly matters.
Still have questions? Ready to get started? Contact Bach Law Firm today to schedule an initial consultation.
