Global economic uncertainty, fluctuating exchange rates and inflation are just some of the reasons why more and more people are struggling to balance their finances. Bad debt is escalating and thousands of people simply cannot pay their accounts any longer. Some even face losing everything that they have worked years to accumulate. As a last resort, individuals and businesses can obtain some relief by applying for bankruptcy in Chicago.

A chapter 7 or chapter 13 application for insolvency is not a straight forward affair. The court has to consider numerous issues. The applicant must explain why he became unable to honour his obligations. The finalization of applications can take up to six months and the applicant will have to cooperate fully or face charges. The best course of action is to appoint a lawyer to deal with the matter.

It is very important to understand that insolvency is not an easy route out of financial trouble. Firstly, the applicant will have to convincingly prove that he is utterly unable to honour his obligations. The court does nor focus on the hardship of the applicant, but rather on the rights of the creditors that are owed money by the applicant. Their rights are therefore the main priority.

Once a court agrees to consider an application in terms of Chapters 7 or 13, it will immediately appoint a trustee to oversee the process. The main priority of the trustee is to see to it that claimants receive what is due to them, or at least as large a percentage as possible. To this end he will sell the assets of the applicant at an open auction and liquidate all his investments and savings.

Many applicants are disillusioned when they find out that an insolvency order does not make their financial troubles disappear. This is simply not the case. Obligations such as back taxes, child support payments, secured loans and other debts cannot be set aside or cancelled by the court. All the applicant will be allowed to keep is some furniture, clothes and the tools of his trade, sometimes including his vehicle.

The dire consequences of insolvency can have a devastating influence upon the life of the applicant for many years. He will not be able to enter into some contracts and he will not be able to borrow money for at least ten years. His credit rating will be extremely poor. In most cases the applicant and his family will face many years of hardship and a much reduced quality of life.

Filing for insolvency should be the very last resort. In many cases claimants are willing to negotiate new payment schedules rather than pursuing the matter in court. An experienced lawyer can help those in dire straits with this process. In some cases new payment schedules can even be enforced by means of a court order. The reputation of the applicant remains intact and he does not lose all his assets.

Far too many people end up in the insolvency court because they neglected to take action when they first realized that they are in trouble. It is imperative to get professional help immediately. In most cases a complete financial disaster can be averted but decisive action needs to be taken and the applicant will have to impose strict financial discipline.