Illinois Lawyer Referrals and Legal Guidance

Illinois Bankruptcy Laws

Illinois law provides that bankruptcy in Illinois falls under the federal system of statutes and courts which permit persons and businesses which are insolvent (debtors) or (in some cases) face potential insolvency, to place his/its financial affairs under the control of the bankruptcy court. Bankruptcy court is the specialized federal court in which bankruptcy matters under the Federal Bankruptcy Act are conducted. There are several federal bankruptcy courts in Illinois, and each one's territory covers several counties. The office of a court clerk, where petitions can be filed, is located next to each court. Also, a claim in bankruptcy is the written claim filed by persons or businesses owed money (creditors) by a party who files for bankruptcy (debtor) to benefit from the distribution if money becomes available. The known creditors receive written notice of the bankruptcy and will receive a creditor's claim form. They may also receive notice that the bankrupt party has no assets to distribute and that they should not file a claim until further notice.

The bankruptcy procedure, applied by Chicago attorneys and other Illinois lawyers, is: a) filing a petition (voluntary or involuntary) to declare a debtor person or business bankrupt, under Chapter 7, Chapter 11, or Chapter 13, to allow reorganization or refinancing under a plan to meet the debts of the party unable to meet his/her/its obligations. The petition is supposed to include a schedule of debts, assets and income potential. b) A hearing called "first meeting of creditors" with notice to all known creditors. This is often brief and usually results in the judge assigning the matter to a professional trustee. c) Later the trustee reports and there is a determination of what debts are dischargeable, what assets are exempt, and what payments are possible. d) If there are assets available then the creditors are requested in writing to file a "creditor's claim." e) There may be other hearings, reports, proposals, hearings on claims of fraudulent debts, petitions for removing the stay on foreclosures and other matters. f) Debts secured by property or by judgment lien are paid up to the amount of assets and funds available. g) The final step is a hearing on discharge of the bankrupt, which wipes out unsecured debts (or a pro rata share of them). Under Chapter 11 and 13 proceedings, the process will be more drawn out and can go on for years as plans are proposed, possibilities of refinancing are considered and, in effect, the debtor tries either to legitimately get out from under his/her/its financial woes or delay while current profits are made and prayers for economic salvation are made.

We know many Chicago law firms, Chicago lawyers and other attorneys in Illinois that focus their practice on handling Bankruptcy cases in Illinois Federal Courts. If you want a referral to one of these Illinois lawyers please contact us.

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