A Chapter 7 Bankruptcy is often referred to as a liquidation bankruptcy whereby the debtor receives a discharge of dischargeable debts thereby enabling the Debtor to obtain a fresh start. A Chapter 7 Bankruptcy is one where the Bankruptcy Trustee looks to sell or liquidate the Debtor’s non-exempt assets to pay back a portion of or all of Debtor’s debts.


A Chapter 13 Bankruptcy is a repayment plan where the Debtor is required to pay his or her monthly disposable income into a Plan as repayment to creditors over a period of 3-5 years. Unlike a Chapter 7 Bankruptcy case, an individual debtor’s assets are not sold or liquidated in a Chapter 13 Bankruptcy. However, a Chapter 13 Bankruptcy Debtor does have to propose a Chapter 13 Plan that satisfies the “best interests of creditors” test, i.e. pays creditors an amount at least equal to the amount that the creditor would receive if the Chapter 13 Debtor’s non-exempt assets were liquidated.


Merit Law analyzes several factors to determine whether an individual may be eligible for a Chapter 7 or a Chapter 13 Bankruptcy filing, including the following:

  1. Nature and amount of debts – consumer or business debts;
  2. Means Test Calculation – A legal formulaic analysis of household income and expenses over 6 months prior to the date of filing the Bankruptcy Case to determine if the debtor qualifies for a Chapter 7 Bankruptcy case filing;
  3. The nature of the assets owned by the Debtor and the fair market value of same;
  4. Analysis of Illinois Exemptions – What Debtor may be able to keep and what debtor may have to surrender to the Bankruptcy Trustee within the Bankruptcy Case.
  5. A detailed study of Debtor’s financial transactions that occurred within 4 years of the Bankruptcy Case to advise clients regarding potentially adverse matters involving a preferential or fraudulent transfer.

While a Chapter 7 Bankruptcy Case may provide tremendous debt relief if done right, it is a highly complicated legal transaction that can result in adverse consequences if done incorrectly. Merit Law is highly experienced in Chapter 7 and Chapter 13 Bankruptcy Cases and can assist you in determining your options.


Please call us or visit our Contact page to set up an appointment.

-- -- -- Merit Law Group on Yelp



© Merit Law Group 2019