One of the benefits of filing for bankruptcy in Illinois is the automatic stay, which will be automatically ordered after the bankruptcy petition is filed. It is an injunction against the person’s creditors ordering them to cease all collection activities and stop foreclosures, creditor lawsuits, garnishments, collection phone calls and debt collection letters. Both Chapter 7 and Chapter 13 bankruptcy cases will include an automatic stay. However, how long it lasts will depend on the type of bankruptcy case and whether or not a creditor files a motion to lift the automatic stay.
Duration of the automatic stay
In a Chapter 7 bankruptcy case, the debtor’s non-exempt assets will be liquidated to repay the creditors a portion of what they are owed. Since a Chapter 7 bankruptcy case generally only lasts a few months, the automatic stay will end when the discharge is ordered. Most non-secured debts will be discharged in a Chapter 7 bankruptcy, and those creditors will not be able to try to collect on the debts after the discharge. However, secured creditors can proceed after the discharge and renew foreclosure or repossession actions.
In Chapter 13 bankruptcy cases, people reorganize their debts and enter into repayment plans lasting up to five years. As long as they continue making their payments as ordered, the automatic stay will continue while they are in bankruptcy. People can use the repayment period to catch up on arrearages for their secured debts while continuing to make their regular payments. Chapter 13 might be a good way for people to save their homes from foreclosure or their vehicles from repossession.
Is it time to file for bankruptcy?
People who cannot repay their debts and are dealing with garnishments, lawsuits or the threat of foreclosure might benefit from filing for bankruptcy. A bankruptcy attorney may review a potential client’s situation and help them decide which type of personal bankruptcy might make the most sense for them.