If you are feeling overwhelmed by out of control debts or by creditors calling about past due credit cards, medical bills, payday loans or personal loans, filing for bankruptcy becomes a very real possibility.
You've got questions, and we've got answers.
Here’s everything you need to know before you declare bankruptcy, and how to know if you should file at all:
In bankruptcy, the term discharge is defined as: a permanent order of the court that releases you from the legal obligation to pay certain debts. Claiming bankruptcy in Milwaukee can relieve you of most general unsecured non-priority debts.
*Student loans are almost always nondischargeable. It is important to understand that the discharge of student loan debt through bankruptcy is so difficult to obtain, and happens so rarely, it’s hardly worth addressing.
Chapter 7 and Chapter 13 bankruptcy share a few similarities. Both personal bankruptcy options are available to individuals, and both offer you the opportunity to discharge certain debts. Both options immediately impose an automatic stay to keep creditors from taking further action against you, giving you protection during the filing process.
Here’s the primary distinction: Chapter 7 bankruptcy is a liquidation of debts, and Chapter 13 is a reorganization of debts.
Filing for Chapter 7 bankruptcy can discharge certain unsecured debts with no attachment to property. You are not required to pay down these debts. Under certain circumstances, secured debts such as car loans and home mortgages can be discharged if you no longer wish to keep the property. Chapter 7 is a fairly fast process and lasts about 110 days on average. Chapter 7 can be a very effective option for people with lower incomes to get creditors off their back and begin to rebuild a solid financial foundation.
Chapter 13 bankruptcy handles unsecured debts somewhat differently. Although, unsecured debts will still be discharged at the end of your plan, it is usually necessary to repay a small percentage of these debts during your plan. How much of your debt should you expect to pay? It depends on the amount of disposable income you can dedicate towards a 3-5 year repayment plan.
Determining how much disposable income you have is a very important topic that we’ll discuss when we meet. Chapter 13 is an appropriate option for people with a regular source of income. Chapter 13 can work well if you have missed payments on a home or a car and want to get caught up with these debts and keep the property. Chapter 13 can also be a good option for people who earn too much money to qualify for Chapter 7 but need help reorganizing their burden of debt.
Counsel from a personal bankruptcy lawyer is essential for maximizing your chances of qualifying for Chapter 7 bankruptcy.
Qualifying for Chapter 7 bankruptcy is not cut and dried. You must complete what’s called the “Means Test” to determine whether or not Chapter 7 bankruptcy is an option for you.
The Means Test is determined by a set of requirements based on the last 6 months of your financial history, referencing pay stubs, monthly living costs, property, tax returns, and all relevant documents. Calculate your annual household income (take your last 6 months of income and multiply by 2). If that number is lower than the median income in Wisconsin households, you may claim Chapter 7 bankruptcy. Here’s a breakdown of the most current median incomes in the State of Wisconsin:
If your median income is higher than the number listed above, you may or may not be required to file for Chapter 13 bankruptcy. Just because your income is higher than average, does not mean that you must file a Chapter 13. There are exceptions to the rule, and that is why it is so important to have the assistance of a knowledgeable personal bankruptcy attorney.
Feel like you’re in the gray area? You’re not alone. Filing for bankruptcy in Milwaukee is an extremely complex process you shouldn’t face on your own. Contact Milwaukee bankruptcy lawyer Steven R. McDonald for a free consultation, and a guiding hand through the bankruptcy filing process and the requirements for doing so.
There are fees associated with filing for Chapter 7 or Chapter 13 bankruptcy. Filing for Chapter 7 costs $335 and Chapter 13 costs $310.
Filing fees are not based on household size. If you are unable to pay the fee all at once, a payment plan may be arranged. Learn more about the cost of filing bankruptcy in Wisconsin.
The fact that you filed a claim for bankruptcy will remain on your credit report for ten years. Obtaining credit for a mortgage, a car loan or a credit card will be more difficult if you’ve recently filed for bankruptcy. Your credit score can improve in a few short years by paying your bills as they become due and limiting the amount of credit that you obtain.
Filing for bankruptcy does not wipe your credit report clean. There can be long-term consequences for doing so. However, the long-term consequences of not filing are often far worse.
Errors or omissions on critical bankruptcy forms could lead to a loss of assets. You need professional advice!
You might wonder Why can't I just file myself?
Don’t even think about it.
Filing for bankruptcy on your own is regarded as “pro se” filing. This is absolutely not the best way to go about declaring bankruptcy. Learning how to file for bankruptcy in the State of Wisconsin, and anywhere else in the country, is not something you should be doing on the fly with the possibility of losing assets on the table.
Yes, you are well within your right to file for bankruptcy in Milwaukee without a lawyer. Legally speaking, there is no requirement for counseling from a personal bankruptcy lawyer. However, claiming by yourself exposes you to serious risk of losing assets, like your car or house, or having your case dismissed entirely.
Pro se filers often hire a BPP as a cheap alternative to a lawyer in an attempt to save money. They may tell you that all you need to do is to pay them just $75.00 and it will be easy to waive the Court’s $335.00 filing fee. This is often not the case and can eventually result in a dismissal of your case. A BPP can’t provide legal advice when a waiver is denied or when other problems arise.
Let there be no doubt—a bankruptcy petition preparer is nothing more than a typist who, by law, isn’t even allowed to give you legal advice. It isn’t worth your time or money.
When you file a Chapter 7 bankruptcy, nearly all your assets become property of a bankruptcy estate. An exemption is a law designed to preserve your property for your use. Without exemptions, a bankruptcy trustee appointed in each case can sell your property to pay your creditors. The proper use of exemption laws can prevent this. A knowledgeable attorney can help you match the things you own with appropriate exemptions so that you can keep your property.
In Chapter 13 bankruptcy, you are allowed to keep all of your property whether it is exempt or not provided you follow an approved debt payment plan. It is important to know that in Chapter 13, exemptions can be used to help reduce the amount of money that you’ll need to pay to unsecured creditors.
Wisconsin and Federal bankruptcy exemptions are similar. Both include exemptions for a homestead, pensions, child support, and insurance benefits, among others. However, only the Federal exemptions include a wildcard exemption that you can apply to anything you own (up to a certain value).
Under bankruptcy law, you may choose either federal exemption statutes OR state exemption statutes, but you can’t cherry pick from both.
If you want to file for Chapter 7 bankruptcy, you must wait at least eight years since your last Chapter 7 discharge, and at least six years since your last Chapter 13 discharge.
If you want to file for Chapter 13 bankruptcy, you must wait at least four years since your last Chapter 7 discharge, and at least two years since your last Chapter 13 discharge.
The time interval is measured from the date you filed each bankruptcy case in which you received a discharge.
If your last attempt at filing bankruptcy did not result in a discharge, you may be able to file again depending on why your previous debt was not discharged. Bankruptcy law is designed to discourage multiple bankruptcy filings in a short period of time. This practice is referred to as serial filing. If you recently filed a bankruptcy case that was dismissed without a discharge, it is possible that you may not receive the full protection of the bankruptcy law. A good lawyer can ensure that you receive the full protections available under the law and make sure that your case will not get dismissed again.
If you’re considering filing for bankruptcy in Wisconsin, you may also be interested in:
Filing for bankruptcy in Wisconsin is a very time-consuming process, and you need to be focused on making money to get back on your feet as quickly as possible and avoid losing your car, house, or other valuable possessions. The more time you spend focusing on the complexities and rules of your bankruptcy case, the less time you have to heal the virus plaguing your finances in the first place.
The success rate for filing pro se, with or without a BPP, is very poor. Leave the idea at the door. Devote yourself to turning over a new leaf, and let our Milwaukee bankruptcy lawyer handle the rest. You need to know what happens and the full filing procedure. Let us answer your questions about declaring bankruptcy, and the steps you need to take to get back on the right track.