First you have to determine whether you're eligible.
Eligibility depends on how much your monthly income is. The law uses a "means test" to identify debtors who can pay some money to their creditors. If your income is above a set amount in the "means test" you will have to file a 5-year Chapter 13 plan to pay creditors back instead of filing a Chapter 7.
If your income is lower than this, then the "means test" won't affect you and you can file a Chapter 7 bankruptcy. If your income is over the median then your will have to qualify under the "means test" to get a Chapter 7.
Also, you can only file Chapter 7 once every eight years. If you are eligible for Ch. 7, you can discharge the credit card debt and reaffirm the debt for the mortgage.
If your income is over the median income in Illinois, then the "means test" will apply to your bankruptcy. The "means test" looks at 3 things:
(1) Current monthly income, measuring the total income a debtor has available;
(2) A list of allowed deductions from current monthly income; and
(3) "Trigger points," which are the income levels that tell you that the debtor will not be able to file a Chapter 7 bankruptcy.
According to the "means test," you take your current monthly income and subtract the deductions that are allowed. If the amount left over qualifies as a trigger point, then you can not file for Chapter 7 bankruptcy.
You will not be able to file a Chapter 7 bankruptcy if either of these apply to you:
- If you have at least $166.67 in current monthly income after the allowed deductions; or
- If you have at least $100 in current monthly income after the allowed deductions and the income is enough to pay at least 25% of your general unsecured debt over five years.
If the amount left over qualifies as a trigger point, then your Chapter 7 bankruptcy case will either be dismissed or changed to a Chapter 13 bankruptcy case. In a Chapter 13 bankruptcy, the debtor tries to repay his creditors rather than wipe out his claims with no payment.
You should speak to a bankruptcy attorney in your area if you do plan to file.