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Chapter 20 Bankruptcy in Illinois

Sometimes, neither Chapter 7 nor Chapter 13 bankruptcy completely solves your financial woes. However, Illinois law provides an alternative—Chapter 20 bankruptcy—which combines the advantages of both Chapter 7 and Chapter 13. Although beneficial, this strategy also has its limitations.

Chicago-based bankruptcy attorney John D. Ioakimidis is committed to guiding you through the most effective bankruptcy filing process. Navigating multiple bankruptcy filings demands strict compliance with legal requirements. To discuss your unique financial circumstances, schedule a Free Consultation today by calling us at 1-312-593-1765.

How Does Chapter 20 Bankruptcy Work?

Chapter 20 isn't an official bankruptcy code but refers to first filing a Chapter 7 case to quickly erase unsecured debts, followed by a Chapter 13 case for longer-term debt management. While Chapter 7 helps to eliminate unsecured debts quickly, it doesn't allow for extended repayment plans or protection against losing property. Chapter 13 enables these but comes with debt limitations.

Chapter 20 may face legal challenges as some view it as an abuse of the system. However, if you intend to genuinely restructure and reduce your debts via Chapter 13, Chapter 20 could be an option for you.

Who Should Consider Chapter 20 Bankruptcy?

This approach is not for everyone but could be suitable in specific scenarios:

  1. Debt Level and Time Constraints: If you exceed Chapter 13 debt limits, Chapter 7 can reduce your debt load, making you eligible for a Chapter 13 repayment plan later on.
  2. Income Accessibility: Eliminating unsecured debt through Chapter 7 frees up income for managing arrearages or non-dischargeable debts in a Chapter 13 plan.
  3. Lien Stripping: Only Chapter 13 permits the removal of junior mortgages when your property value is less than your first mortgage.

Pros and Cons


  • Wipes out unsecured debts through Chapter 7 and allows structured repayment for remaining debts in Chapter 13.
  • Enables you to meet Chapter 13 eligibility by first reducing unsecured debts in Chapter 7.


  • Not universally accepted, as some jurisdictions view it as a misuse of bankruptcy laws.
  • Trustees may challenge its validity.
  • Lien stripping may not be permitted everywhere.

Consult an Illinois Bankruptcy Attorney

Navigating the financial labyrinth of bankruptcy requires specialized guidance. While Chapter 20 is not commonly deployed, its benefits can be significant when applied judiciously. To explore this route, contact John D. Ioakimidis for a Free Consultation either online or by phone at 1-312-593-1765. We are here to help you resolve your debts.

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I'm committed to helping you get out of debt and starting a new life. If you live in Chicago, Cook County, Lake County, DuPage County, Kane County, McHenry County, or Will County, contact me for a free consultation over the phone, in person, or video call.

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