Frequently Asked Chapter 7 Bankruptcy Questions

Kane County Courthouse  |  Geneva, Illinois

Our firm receives questions each day from individuals who are facing the possibility of bankruptcy. It can be a scary time with plenty of unknowns. We provide answers to your questions and solutions tailored to your needs.

If you are facing bankruptcy, there are people who want to help you. Call Petti Murphy & Associates today to speak with a skilled attorney who has the answers and solutions you need. Call us in Geneva at 630-457-1691. We offer representation throughout the greater Chicago and Tri-Cities areas.

Some of the most common questions we receive are:

Can I choose which debts I want to include in my bankruptcy?

Many people do not want to list in their bankruptcy the family doctor for unpaid medical bills, or the money they owe a family member. BY LAW ALL OF YOUR DEBTS MUST BE INCLUDED IN THE BANKRUPTCY PROCEEDING.

Can I include past-due utility bills in my bankruptcy?

As stated above, all debts must be listed in your bankruptcy petition. So yes, these debts can be listed. However, utility companies do have the right to require that you pay to them a security deposit after you have filed bankruptcy.

Can I keep one of my credit cards?

Almost always your credit cards are canceled by the credit card companies as soon as you file bankruptcy, sometimes even if you have a zero balance. It is the sole decision of the credit card company whether or not you will be allowed to use the credit card after the bankruptcy.

Can I keep my house and my car?

In a Chapter 7 case, you get to keep your property protected by the Illinois exemption laws. Depending on the amount of equity that is in your house or car, you may be able to keep both. Some creditors may have a security lien on your property, such as the mortgage lien on your home, or a title lien on your car. These types of creditors are considered "secured," and the debt owed to them will not be discharged in the bankruptcy. You will have to continue to make your monthly loan payments in order to keep your licensed property.

Some people DO NOT want to keep their house or car, because the monthly payments are too high, and they can no longer afford them. Sometimes they are behind on their payments and cannot get current, or they are in process of having a foreclosure initiated on their house or having their car repossessed. You also have the option of "surrendering" the property in the bankruptcy proceeding, which means you are in essence walking away from the property. When you choose this option, you will not be held liable for any future payments or past-due payments beyond the cash value of the property you are surrendering.

What happens if someone co-signed for my house or car?

If you file Chapter 7 bankruptcy and decide to "surrender" property and not repay the loan, the lender can then go after the co-signer for payment of the debt. If you keep the property and agree to repay it, and stay current with your payments, the lender will most likely not seek payment from the co-signer.

I'm married, does my spouse have to file bankruptcy with me?

No, you can file bankruptcy on your own without your spouse. However, if you and your spouse have joint debt, and your spouse does not file bankruptcy, the creditors will continue to pursue payment from your spouse.

Can I keep the money I get for my personal injuries incurred in auto accident?

If you incurred a personal injury prior to filing Chapter 7 bankruptcy, that claim will become part of the bankruptcy estate. However, you are entitled to an exemption for monies you receive from this type of claim, and you will get to keep the first $15,000 of any monies you collect.

Can I get my student loans discharged?

Student loans are no longer allowed to be discharged in a Chapter 7 bankruptcy unless you can prove that repaying the loan creates an undue hardship on you and your family. Proving such a hardship can be difficult, in that you have to prove that you cannot provide a minimum standard of living for you and your dependants.

I owe back taxes, can I discharge these in my bankruptcy?

Contrary to popular belief, bankruptcy can provide relief for some tax debts. Some of the qualifying factors for having your taxes discharged include:

  1. The type of tax you owe
  2. How old the tax is
  3. Whether you filed a return

Our firm has been successful in getting client's taxes discharged. If you owe back taxes, and are considering filing for Chapter 7 bankruptcy, please call our office today!

Will everyone know that I filed bankruptcy?

Although bankruptcy is a matter of public record, the fact that you filed will not be in the newspaper, and your employer will not receive notice so long as your employer is not a creditor (for example if you have an employment loan). If someone wanted to find out if you have filed bankruptcy, he or she would be able to find out such information by viewing your credit report or viewing the court's records.

I filed for bankruptcy a few years ago, how long do I have to wait to file again?

You are allowed to file for bankruptcy more than once, depending on what type of bankruptcy you intend to file, what type of bankruptcy you filed before, when you previously filed and if you had received a "Discharge" of your debts in the earlier proceedings.

The rules depend on many variables. We can help you understand exactly how they apply to your specific situation.


If you are ready to proceed with a case under the U.S. Bankruptcy Code, or you need more help with your questions about bankruptcy relief, please contact us at Petti Murphy & Associates. Our lawyers and bankruptcy paralegals are skilled professionals ready to assist you with your bankruptcy needs, at reasonable and competitive fees.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.