How Often Can You File Chapter 7 Bankruptcy in Illinois?
- The U.S. Bankruptcy Code provides a number of different chapters under which a debtor may file for protection. A Chapter 7 bankruptcy, often referred to as liquidation bankruptcy, allows the debtor to discharge most of her debts and start with a clean slate. Chapter 7 relief is available only to individuals. Corporations and partnerships must file under another chapter. Under a Chapter 7 bankruptcy, the debtor's non-exempt property is sold to pay off debts with any remaining debts discharged, or forgiven.
- In order to qualify to file for protection under a Chapter 7 bankruptcy, the debtor must satisfy the means test. The means test looks at the debtor's current income, deductions and the median income for the area where the debtor resides to determine whether she qualifies for Chapter 7. A debtor may be disqualified from filing a Chapter 7 petition if she has had another petition dismissed within the preceding 180 days. All debtors must also complete a credit counseling class prior to filing a Chapter 7 petition.
- Technically, a Chapter 7 petition may be filed as often as a debtor wishes to file one. Filing a petition, however, does not provide relief for the debtor. The relief sought is a discharge of the debtor's debts. While the bankruptcy code does not prevent a debtor from filing as often as she wishes, it does limit how often a debtor's debts can be discharged. Debts under a Chapter 7 petition cannot be discharged if the debtor filed another Chapter 7 or Chapter 11 petition within the preceding eight years or filed a Chapter 12 or 13 petition within the preceding six years, with discharge as the result. A calculation of the time frame starts with the date a previous petition was filed -- not when it was discharged.
- For an Illinois debtor considering protection under Chapter 7 of the bankruptcy code, legal counsel is strongly encouraged. Bankruptcy is a complicated legal undertaking; a mistake can prevent discharge of debts. To initiate a bankruptcy proceeding, a petition must be filed in one of the three Illinois bankruptcy courts: Northern, Central or Southern District. Upon filing of the petition, the court will issue an automatic stay which prevents creditors from any further efforts to collect on debts while the bankruptcy is pending. The debtor will attend a meeting of creditors about 60 days after filing the petition. If no legitimate objections to the petition are pending, the debtor will receive a discharge of all eligible debts about 60 days after the meeting of creditors.