Service FAQs

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There are several “Chapters” of the bankruptcy code.  Most  individual debtors will chose between a Chapter 7 and a Chapter 13  bankruptcy.

Chapter 7 bankruptcy is known as a liquidating bankruptcy.  A  Chapter 13 bankruptcy is a reorganization, or payment plan bankruptcy.   Most individuals would prefer to file a Chapter 7 bankruptcy.  There are  three general factors that could cause a debtor to choose a Chapter 13  instead of a Chapter 7.  The first factor is having too much equity in  the debtor’s assets.  In this situation the debtor would file a Chapter  13 bankruptcy and pay the Trustee an amount of money at least equal to  the “excess” equity in their assets.  The second factor for filing a  Chapter 13 is to stop a foreclosure or repossession of the debtor’s  assets.  A common example would be a debtor who, due to illness or  unemployment, has fallen behind in their house or car payments but now  is working and can afford to make the regular payments and perhaps a  little more to catch-up on the arrearage.  The lender, however, wants  all the back payments immediately or they threaten to foreclose on, or  repossess, the asset.  If the debtor files a Chapter 13 bankruptcy the  court, upon confirmation, will force the lender to allow the debtor  additional time to pay back the arrearage.  The third major factor  causing the debtor to file a Chapter 13 bankruptcy would be if a debtor  makes too much money as determined by a surplus in their budget (before  deducting credit card payments) or if their income exceeds the median  income for a family of the same size in the county where the debtor  resides.

The means test is an objective calculation created by the  Bankruptcy Reform Act that became effective in October 2005.  The means  test starts with comparing the debtor’s gross income to the median  income for a family of the same size in the state and county where the  debtor resides.  If the debtor’s income is lower than the median income,  it is said that the “presumption of abuse” does not arise and the  debtor can file a Chapter 7.  If the debtor’s income is higher than the  applicable median income, the means test has additional calculations to  determine whether the debtor’s personal expenses on its secured debt or  medical expenses exceeds the average and thus might still allow the  debtor to file a Chapter 7 bankruptcy.  The means test is quite complex  and in some situations a debtor may qualify for a Chapter 7 bankruptcy,  notwithstanding personal income that exceeds the median income by  thousands of dollars.

No.  Tax deferred, tax qualified, retirement assets are considered exempt assets in Illinois.

Personal injury claims are only exempt up to the first  $15,000.00.  Any award in excess of $15,000.00 would likely be claimed  by the Trustee to distribute to your unsecured creditors.  Workman’s  compensation claims are completely exempt under Illinois law so long as  the debtor keeps the proceeds from that type of claim segregated from  their other assets.

No.  You can payoff any debt of your choice after your bankruptcy,  but the Trustee can retrieve payments made up to a year in advance of  your bankruptcy filing if paid to a friend, family member, or business  associate.

There are several specific dates that apply to someone who has  filed a personal bankruptcy.  The bankruptcy will be reported on your  credit report for up to 10 years, the same length as most other  information, good or bad, is reported.  Another date that is often  confused is the time limit before a debtor is eligible to file another  bankruptcy.  In the case of a Chapter 7 debtor they cannot file another  Chapter 7 bankruptcy until eight years after the date of discharge from  the prior bankruptcy.  The time period for your credit score to recover  is not governed by any law; but, instead, your credit score and  availability of credit is governed by the practices of lenders.  In some  cases, credit scores can increase by up to 100 points in the first 18  months after your bankruptcy.  Some lenders will make offers to debtors  immediately after filing their bankruptcy, although these offers tend to  be high cost, high interest, low limit offers.  12 to 24 months after  your bankruptcy most debtors who work to rebuild their credit scores  will find themselves getting credit card offers from more traditional  credit card issuers.  Finally, most individuals find that they would be  eligible for any loan as early as 36 months after their discharge,  provided they make all their post bankruptcy payments timely and work to  rebuild their credit scores.

Yes.  Because your initial consultation will be with Mr. Schelli  (as opposed to an intake clerk or paralegal) we charge $200.00 for the  initial consultation.  Consultations typically last between one and one  and one-half hours and the fee represents approximately one-half of Mr.  Schelli’s normal billing rate.  The $200.00 consultation fee is,  however, applied against the bankruptcy fee ultimately charged.   Therefore, if you were to hire Mr. Schelli to represent you in your  bankruptcy, the initial consultation really does not cost any extra. 

Mr. Schelli’s bankruptcy practice is different than many other  practitioner’s in that he conducts the initial consultation, he will  work with you directly in completing and reviewing your petition, and he  will be with you at your Section 341 Creditor’s Meeting.  When  comparing the services of other firms it may be wise to ask whom you  will be dealing with, as well as whom will be returning your telephone  calls if you should call with a question.

The 2005 Bankruptcy Reform Act did create the requirement that  debtors take both a pre-filing credit counseling course as well as a  post-filing financial management training course.  Fortunately, both  courses can be taken online or on the telephone from the privacy of your  own home.  Webster & Schelli has arranged an agreement with a  service provider that will be billed to the firm and will be included in  the cost of your bankruptcy.

While each case is unique, generally the legal fees for a Chapter 7  bankruptcy range from $3,000.00 - $5,000.00.  Some very straightforward  cases may be slightly less.  Additionally, Mr. Schelli has the ability  to discount further if the facts and the debtor’s ability to pay warrant  a hardship exception.  Mr. Schelli will determine a fixed fee and  payment arrangements at the initial consultation.