Bankruptcy is the “game over” of your financial life, so people say. You will lose everything! You will lose your house, your car, and never be able to get credit again! Have you heard these things? They are all WRONG!
In fact, Bankruptcy is more like hitting the “reset” button! The US Congress created Bankruptcy Laws to allow people to get relief from debts, in order to get a fresh start. But, you say, why should people be able to “weasel out” of paying their debts, when other hard-working people have to pay them? And, why should people be able to keep things at all if they go bankrupt?
Think for a minute of a person who loses a job, suffers extreme medical bills, or tries to start a business. We depend on our jobs, and predictable expenses, when we pay our bills. But, things don’t go as we plan all the time. That is why the bankruptcy laws exist, so that everyday people can “reset” their lives.
But, in return for this “reset” should people lose everything? The US Bankruptcy Laws build in some protections, called “exemptions”, so that people will still be able to have a small amount of “necessary” things, even after bankruptcy. These exemptions vary by state you live in. In Illinois, for example, people can protect $15,000.00 per person worth of “equity” in their homes. This may not seem like a lot, but it was, after the housing prices went down so far in the mid-2000’s. People can keep $4000.00 per person worth of other things, called the “wildcard”, which includes money in the bank, and things in the house. And, people can keep their full retirement accounts. Just about every state in the US allows protection for retirement accounts.
So, protecting your retirement savings is a big benefit to bankruptcy, if you think about it. You have to be sure that if you are trying to pay your bills, not to use retirement money, but rather, to use money from what you earn.
These are just some of the protections you get if you need to file for bankruptcy. It is important to call a lawyer early on, when you start having trouble with your bills, to get an idea of what your options are, and what the best plan of attack for you and your family will be. I tailor everyone’s plan to their goals, and needs. The goal—to reset your life, and start again for a secure financial future.
Daniel J. Winter
Offices in Chicago, Gurnee, Oak Lawn, and Skokie, Illinois