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Chicago Bankruptcy Question: Can I file for Chapter 7 if I am current with all my bills?

Chicago Bankruptcy Question of the Day: Can I file for Chapter 7 if I am current with all my bills?  If you are otherwise eligible to file for Chapter 7 bankruptcy protection, then it is not relevant whether or not you are up to date or behind with your bills.  There are three common scenarios where this occurs.

First, many people who file for Chapter 7 in Chicago are completely current with their credit card payments, loan payments, etc., but are unable to gain any ground when it comes to paying off their balances.  They are simply maintaining interest payments.  Most of the time, these payments come at the expense of saving for the inevitable issues in life; car repairs, home repairs, short-term reductions in income, etc.  Then, when these events occur, these people must go even deeper in debt to resolve them.

Second, many people who file for Chapter 7 bankruptcy in Chicago are in the "debt spiral".  They are using their regular income to make payments on their debts.  They then have no money left over to pay their month to month expenses, requiring them to use the credit cards and take more loans in order to pay their ordinary monthly bills.  At the end of this spiral, either the income is insufficient to make the payments on the debt or credit limits are reached.  Either way, these people then start to miss payments and are in real trouble.

Third, many people file for Chapter 7 bankruptcy protection because they are aware of an upcoming issue that will keep them from making their debt payments and elect to file before this issue hits.  Usually this is either an anticipated change in income, such as retirement or a planned layoff, or an anticipated change in expenses, such as student loans coming out of deferment or mortgage payments increasing.

If you are up to date with your payments, but one of these scenarios is all too close to home, then it is time to consult with an experienced Chicago bankruptcy lawyer.  A good bankruptcy attorney will be able to review your situation, determine whether or not you currently qualify for Chapter 7 bankruptcy protection and present a strategy as to when the best time for you to file for Chapter 7 bankruptcy would be (if at all).  At Ledford & Wu, our experienced Chicago bankruptcy lawyers are happy to offer you a free, no pressure or obligation consultation to review your options and determine whether or not filing for Chapter 7 bankruptcy protection is the right option for you.

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