We’ve written a series of blog posts answering common questions regarding bankruptcy in Wisconsin, and how it can impact your finances. Call (262) 827-0375

Can You Declare Bankruptcy and Keep Money?

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The short answer here is: Yes. The longer answer is: It depends on where the money is. Bankruptcy is designed to alleviate an untenable financial situation, not reduce you to abject poverty forever. You don’t have to give up everything when you file for bankruptcy. You can keep any property that qualifies as an exempt asset—including cash. Because bankruptcy is nation-wide, there are certain exemptions that have been established at the federal level. Some states only allow those federal exemptions, others require you to use the state exemptions. Wisconsin is one of only 16 states that allows you to choose. In this blog, we’ll explore ways in which you can keep your money when you declare bankruptcy.

Wisconsin State Exemptions

When using the Wisconsin state exemptions, your personal property is exempt up to $12,000, as are your bank deposits up to $5,000. Those amounts are doubled if you are filing jointly. College savings accounts or tuition trust funds will not be touched. Only some retirement accounts apply, though. It really requires professional analysis to make the best choice.

Federal Nonbankruptcy Exemptions

If you choose to use Wisconsin state exemptions, you cannot use federal bankruptcy exemptions. However, there are federal nonbankruptcy exemptions that you will still have access to. These include retirement benefits, death and disability benefits, survivor’s benefits, and other miscellaneous exemptions. Each has its own qualifications. Here is information about some of them:

Retirement Funds

Federal bankruptcy exemption for retirement funds in pension plans and individual retirement accounts is available to all debtors, even those in “opt-out” states who would not otherwise be permitted to claim the federal exemptions. The maximum dollar amount for this exemption adjusts every three years, and currently the maximum aggregate value of funds in retirement accounts that may be exempted is $1,512,350.

Education Funds

Some education funds are simply not considered part of the bankruptcy estate; they are held to be separate from the debtor’s other property and assets. This applies to funds placed in an education IRA, a section 529 tuition savings program, and a qualified ABLE account. However, the money must have been put there between 365 and 720 days before the bankruptcy petition was filed.

Here are some of the things that can be excluded from your bankruptcy estate: wages, unemployment benefits, public assistance, cash or bank balances, and personal injury proceeds. Also, you are able to keep Social Security proceeds, though there are special conditions that apply. That money needs to be held in a separate bank account as it loses its protection when placed in an account where there is income from other sources as well.

In summary, there are a number of exemptions for bankruptcy, so you can definitely declare bankruptcy and keep money and other assets. The experts at Burr Law can help you to retain absolutely everything you can while still obtaining all the benefits that bankruptcy brings. Your particular situation will be examined carefully and we will find the best solution for you.

Can You File Bankruptcy on IRS Debt?

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Unpaid taxes can add up to a huge financial burden, especially on top of all your other expenses. And with more and more people freelancing and the gig economy in full swing, it’s not uncommon for people to have IRS debt. If you’re feeling overwhelmed by your financial situation, you may be considering bankruptcy. Bankruptcy is a good way to clear unsecured debt, but what about tax debt? This post explores the question of what happens with tax debt when you file for bankruptcy.

Automatic Stay

The moment that you file for bankruptcy, whether it is Chapter 7 (most commonly) or Chapter 13, all your creditors must stop harassing you for payment. That includes the IRS. So no more threatening letters, phone calls, etc. The automatic stay also applies to property. The IRS can’t touch your more valuable assets. So no matter what stage the IRS collection effort is in, the automatic stay stops it completely. However, an automatic stay is just a pause. If you want to eliminate IRS debt as well as other debts, choosing the right time to file for bankruptcy is crucial.

Conditions for Tax Debt to be Discharged

You may be unsurprised to learn that IRS rules and regulations are like an impenetrable maze. There is a regulation for almost everything, including specific rules for bankruptcy discharge. You should expect that the IRS will object to eliminating your tax debt if it can find any reason to do so. That’s why it is especially important to have expert legal counsel if you are trying to eliminate IRS debt.

Income Taxes

Chapter 7 bankruptcy only discharges income tax debt. Your 1040 taxes are obviously income taxes, but other taxes are not. For instance, property taxes and trust fund taxes are definitely not income taxes. So the kind of taxes you owe the IRS makes all the difference. If you do owe unpaid income taxes, then that IRS debt can be discharged. Then there are some rather complicated regulations dependent on timing.

Taxes Filed for Last 2 Years

You have to have filed your taxes for at least the last 2 years (if you were required to file). At the time you file for bankruptcy, the IRS needs to have your tax filings for the previous 2 tax years, and that applies whether or not you filed those taxes on time. If you didn’t file and the IRS prepared substitute returns to determine what you owed, those do not count as taxpayer-filed returns.

Tax Debt Must Be at Least 3 Years Old

Your income tax debt must be at least three years old. And it’s crucial to remember that Tax Day is not always April 15. Some years, it could be the 16th, 17th, or even 18th. In 2020 it was July 15 because of the COVID-19 pandemic. IRS lawyers have been known to object to discharge if the timing is off even by one or two days. So, make sure you file the petition on the correct day, or else you will have to start over.

240 Day Rule

Your tax assessment can’t be more than 8 months old, or must not have been assessed yet. If the IRS has not assessed the debt within the last 240 days, the income tax debt is not dischargeable. It’s almost impossible to tell if the IRS has assessed the debt or not, because this process is an internal accounting tool. But generally, if you’ve not received a bill which breaks down the amount due by tax years, the IRS has probably not assessed the debt yet.

Burr Law Helps with Complexities

At Burr Law, our professionals have years of experience dealing with bankruptcy law. We understand the complicated IRS rules around bankruptcy, and will work with them to make sure your tax debt is included in your bankruptcy. Don’t leave something this important to chance.

Things to Know About Chapter 13 Bankruptcy in Wisconsin

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There are two main types of bankruptcy that individuals can pursue, Chapter 7 and Chapter 13. This post focuses on Chapter 13. Chapter 13 bankruptcy acts more like a reorganization than anything else. It’s often called the “Wage-Earner’s Bankruptcy,” because it is designed for someone who has a regular income, but has become overwhelmed by debt. Unlike Chapter 7 bankruptcy (also called “Liquidation Bankruptcy”), it doesn’t have an income limit and you won’t need to worry about losing your valuable assets. It does have limitations on the amount of debt you have, though. To be eligible to file for Chapter 13 bankruptcy, you must have no more than $419,275 in unsecured debt and you also can have no more than $1,257,850 in secured debts, which includes mortgages and car loans. If your debt falls within these parameters, Chapter 13 bankruptcy may be for you. Here’s what you need to know.

Chapter 13 Plan Lasts from 3 to 5 Years

The typical Chapter 13 reorganization plan lasts from three to five years. That’s a long time. Many debtors find it impossible to maintain, though they are contractually and legally obligated to do so. Again, seeking professional advice from attorneys dedicated to bankruptcy law makes a tremendous difference here. Crafting a reorganization plan that anticipates periodic extra expenses and realistically assesses your earning potential over the next five years makes the length of the reorganization workable.

Chapter 13 Protects Your Assets

Filing Chapter 13 causes all collection actions to stop, including home foreclosure. Chapter 13 bankruptcy preserves your secured assets, so you don’t have to worry about losing your home or car. The objective is reorganization of debt rather than liquidation of assets.

Chapter 13 Eliminates or Diminishes Unsecured Debt

Unsecured debt includes credit card debt, medical bills, and other debts that don’t depend on collateral. Chapter 13 bankruptcy results in unsecured debt being discharged entirely or diminished significantly. If the debt is not completely eliminated, you will be paying off a small portion of what you owe over the course of three to five years.

Second Mortgage Can Become Unsecured Debt

If your home’s second mortgage is worth less than what you owe on your first mortgage, then you can petition the court to have your second mortgage classified as unsecured debt. Upon completion of your debt repayment plan, your second mortgage may be reduced greatly or discharged. This is a situation where the guidance of the experts at Burr Law can make the difference.

Other Debt Included in Chapter 13

One of the professional bankruptcy attorneys at Burr Law may be able to help you incorporate debts not usually available for reorganization. For instance, while domestic support obligations (DSO) like child support remain due and payable, past-due amounts can be worked into the reorganization plan and paid over three to five years. Likewise, if you owe back taxes, there are some situations where some amounts of tax debt can be incorporated into the reorganization plan too.

Necessary Forms

A typical Chapter 13 bankruptcy package could be 100 or more pages. When you file Chapter 13, you must complete the approved bankruptcy forms and any local bankruptcy forms required by the bankruptcy court. The forms for a Wisconsin Chapter 13 case include information about your eal estate, personal property, bankruptcy exemptions, debts, income, expenses, co-debtors (your spouse or life partner), leases and executory contracts. This is not an exhaustive list. The Statement of Financial Affairs is a form with almost two dozen questions about your received financial transactions. It includes income for the past two years, recent payments to certain creditors and insiders, a list of lawsuits, gifts, contributions, leases, transfers, and other information. The experts at Burr Law can assist you in gathering all the necessary information and completing the forms correctly and comprehensively.

Is It Better To Have A Foreclosure Or Bankruptcy?

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When you’re feeling extreme financial pressure, especially when it involves being behind on your mortgage, you probably feel assaulted on all sides. It might be easiest to avoid dealing with the situation, but we all know that ignoring it won’t work for long. In this post, we’ll explore what foreclosure and bankruptcy actually mean; in order to decide which is better for your particular situation, though, you should seek the advice of one of the experts at Burr Law.

Who Is The Actor?

Foreclosure happens TO you. Your mortgage company or bank initiates foreclosure on your property when you are behind on your mortgage payments. You do not have control over the timing, or any other part of the process. On the other hand, you CAUSE bankruptcy. You make the decision to pursue bankruptcy, and which chapter to file. You decide when it is best to begin the process and which exemptions to go with (Wisconsin is one of only 16 states where you can choose the state or federal exemptions).

Will You Definitely Lose Your Home?

The purpose of foreclosure is for the bank or mortgage company to reclaim your home, so you would no longer be able to live there. Once the foreclosure process has been begun, you have few options to prevent that from happening. And all of them need to be approved by the mortgage company. You can try to negotiate a loan modification or a forbearance, though usually the time to do that would be before the foreclosure has started. The only real way to guarantee that you will not lose your home is to pursue reinstatement of the loan. Wisconsin redemption law allows you to have the mortgage reinstated any time before or after judgment, but before sale. However, Wisconsin’s redemption law is complicated, and it also changed significantly on April 27, 2016. Even if foreclosure has begun, when you file for bankruptcy, all collection activities must cease. So that automatic stay pauses the foreclosure. In bankruptcy, whether you file Chapter 7 or Chapter 13, there is a very good possibility that you will keep your home. If you have a second or third mortgage on your home, that can be declared unsecured debt and entirely eliminated by Chapter 7. The past due mortgage amounts can be considered along with all other secured debt and a reasonable repayment plan devised.

Will You Still Be In Debt?

There is the danger that you might face a deficiency judgment after the foreclosure process ends. What this means is that your bank or mortgage company is not able to recover the entire amount owed to them and therefore they are legally allowed to go after you to recover that excess amount. For example, if you owe $350,000 on your mortgage and the bank sells your property through foreclosure for $250,000, it can then file a claim against you for $100,000. So it is possible for you to end up homeless, and still significantly in debt. With Chapter 7 bankruptcy, all unsecured debt is completely eliminated and you should emerge from the process completely free of debt. In Chapter 13 bankruptcy, your debt may be much less than it was, and you will have a 3 to 5 year plan to repay your creditors that the court approves.

What Happens to Your Credit?

Whether you go through foreclosure or through bankruptcy, your credit score will be affected. Foreclosure stays on your credit record for 7 years; bankruptcy for 10. That doesn’t necessarily mean that bankruptcy is worse for your credit than foreclosure though. If you’ve been paying all your credit card bills, but not your monthly mortgage, your current credit score may be high; foreclosure will cause a significant drop, and you will lose your home. Once you have gone through foreclosure, it will be extremely difficult for you to get another mortgage. In bankruptcy, there is a good chance that you can keep your home, and while the bankruptcy remains on your credit report, it does eliminate all unsecured debt. Another factor to consider is the state of your credit score currently. If you are in significant financial distress, it is likely that your credit score is already low. Bankruptcy may decrease it further, but the actual effect will probably be small. There are credit cards designed to help people re-establish creditworthiness after bankruptcy.

The choice between foreclosure or bankruptcy is complicated, and it is best to speak with the professionals at Burr Law. We can analyze your specific situation and advise you on the best course of action for you.

Preparing to File for Bankruptcy in Wisconsin

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You might think that making the decision to file for bankruptcy is the only real preparation necessary. However, whether it is Chapter 7 or Chapter 13 bankruptcy you plan to pursue, careful preparations need to be made in order for the bankruptcy code to work to your advantage. It is vital to work with bankruptcy experts (like those at Burr Law) who will guide you through the whole bankruptcy process, and that process starts well before the petition is filed in court.

Time of Filing

Chapter 7 bankruptcy is the best choice for actually getting rid of your unsecured debt. It requires a means test, though; you can’t make more than the median household income for your state. For Wisconsin, that amount is $64,168. The calculation of your household income is made from all of your income for the six months prior to the month in which you file for bankruptcy. So if there are particular times of the year when you receive money (for example, a bonus from your work or a payout from an investment) it would be wise to file for bankruptcy so that any extra income isn’t included. For instance, if you get a work bonus around the 20th of December every year, filing in December means that your household income is figured from June 1 through November 30. It is especially important to consider timing if your household income is close to the limit allowed for Chapter 7.

Credit Card Spending

When you are contemplating bankruptcy, it may be tempting to make a number of purchases on your credit cards. You may think that it is a good idea to use them while you still have them, and that it’s your final chance to buy something major. There is some truth to this thinking. No matter whether you declare bankruptcy using Chapter 7 or Chapter 13, you will no longer have access to your credit cards. However, it is important for you to know that some credit card debt can be determined nondischargeable. If you go on a spending spree just before filing bankruptcy, your credit card company can claim those were fraudulent purchases, that you never intended to repay them, and request that they be declared nondischargeable. You would need to be able to prove that you intended to repay them or that you didn’t plan to declare bankruptcy.

Presumed Fraudulence

There are some instances where the law presumes that your intent was fraudulent. If you use your credit cards in the three months before filing bankruptcy for luxury goods and services totaling more than $725, fraud is presumed (11 U.S.C. § 523(a)(2)(C)(i)(l). Likewise, If you use your credit cards for cash advances totaling more than $1,000 within 70 days before filing bankruptcy, fraud is presumed (11 U.S.C. § 523(a)(2)(C)(i)(l).

Necessary Spending

The designation of luxury goods is significant. The court will not penalize you for using your credit card for necessary expenses. So, while buying an in-home sauna would not be allowed, paying for your heating for the winter would. If you are considering taking a cash advance on your credit card in order to pay for necessary living expenses, it would be better to use your card to pay for the gas you need to get to work and the groceries to feed your family. Those expenses are easy to describe as necessary.

Bankruptcy Exemptions

Finally, Wisconsin is one of only 16 states that allows you to choose whether to use federal bankruptcy exemptions or Wisconsin state exemptions. This is an either/or choice though, you can’t choose a few Wisconsin exemptions, and mix them in with federal exemptions. The professionals at Burr Law will be able to give you the best advice for your particular situation.

When you decide to pursue bankruptcy, you need the help of experts right from the start. At Burr Law, we will be with you from the beginning—preparing to file, choosing which Chapter to use, deciding on the exemptions, and pursuing the bankruptcy through to completion.

What Happens to Your Credit Cards When You File for Bankruptcy?

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When your financial situation is overwhelming, you may consider filing for bankruptcy. One of your worries might be what would happen to your credit cards should you pursue bankruptcy. That’s a legitimate concern; you may well lose access to your credit cards. Then the question becomes whether filing bankruptcy would bring more benefits than the detriment of losing your current credit cards. In this post, we’ll explore what happens with credit cards when you pursue bankruptcy.

What Kind of Debt Is it?

Credit cards are unsecured debt. Unsecured debt refers to any kind of debt that is taken on to buy everyday goods and services. Credit cards issued by banks or other financial institutions, department store cards, gas cards–all are examples of revolving credit. It is unsecured because you haven’t had to offer any kind of collateral in order to get it. Unlike your auto loan, where the vehicle itself functions as the collateral, credit card companies offer you short-term loans that you agree to repay with the stated interest. You can pay for your groceries with your credit card just like you can buy a computer with your credit card. In either case, the credit card company cannot come and take the food out of your refrigerator, or the computer off your desk. Since there is no collateral with credit cards, there can be no repossession.

Credit Card Interest

Because credit cards are actually short term loans, they charge a high rate of interest. In the first 3 months of 2022, Americans’ credit card balances reached $841 billion, and the average credit card interest rate is 21.33%. Department store interest rates are even higher. So there is a lot of money in play. If you pay your minimum amount due every month, you’re paying only the interest and are locking yourself into perpetual, costly debt. Wisconsinites have an average of $4587 on their credit cards. That means that if you want to pay off the entire amount in 6 months, you have to make monthly payments of over $800. If all of this sounds discouraging, you’re not alone.

Credit Card Debt and Chapter 7

Chapter 7 bankruptcy is called Liquidation Bankruptcy, but don’t let that name scare you off. While it is designed to repay a portion of your debts through the sale of your assets, there are exemptions, and the experts at Burr Law can make sure your car and your home remain yours. The truth is that using exemptions to their fullest, you can completely eliminate your credit card debt while keeping your most valuable possessions. There is no minimum or maximum amount of debt needed to file a Chapter 7 bankruptcy. There is an income status requirement, though. Your income needs to be equal to or below Wisconsin’s median income, $64,168. If you are close to or slightly over that number, the professionals at Burr Law can help with timing or calculation to make Chapter 7 work for you.

Credit Card Debt and Chapter 13

Chapter 13 bankruptcy functions more like a reorganization. A trustee assigned by the bankruptcy court draws up a plan whereby you repay a portion of your debts over the course of 3 to 5 years. Your creditors then need to agree to the plan, and the bankruptcy court approves it. Credit card debt is often, but not always, eliminated. Even when it is not entirely written off, you will end up having to repay only a small portion of your credit card debt. With this type of bankruptcy, you will retain your car and your house as well. There is no income status requirement, though there is a maximum debt level. To be eligible to file for Chapter 13 bankruptcy, you must have no more than $419,275 in unsecured debt and no more than $1,257,850 in secured debt, which includes mortgages and car loans.

Basically, if most (or all) of your crippling debt is credit card debt, you might find that it’s worth it to lose access to your current credit cards and get rid of that debt. The best course of action is to contact the experts at Burr Law. They can listen to your specific situation and guide you to the best decision.

Does Bankruptcy Clear Tax Debt?

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If you have any tax debt and you are considering bankruptcy, it is absolutely essential that you work closely with experts in bankruptcy law and IRS regulation. It is indeed possible to eliminate tax debt when filing Chapter 7 bankruptcy, but it is not easy to do so. In this post, we will explore how bankruptcy can clear tax debt.

Criteria

You won’t be surprised to find out that IRS rules and regulations are complex, and even more so around tax debt and bankruptcy. You should expect that the IRS will object to eliminating your tax debt if it can find any reason to do so. There are a number of conditions that must be met before tax debt is eligible to be discharged through bankruptcy. Briefly they are:

  • You did not deliberately evade paying your taxes or file a fraudulent return
  • Your tax debt is at least 3 years old
  • You have filed a tax return for the 2 years prior to your bankruptcy filing
  • Your tax debt assessment can’t be over 8 months old, or not yet done

Automatic Stay

The moment that you file for bankruptcy, whether it is Chapter 7 (most commonly) or Chapter 13, all your creditors must stop harassing you for payment. That includes the IRS. The automatic stay also applies to property. So no matter what stage the IRS collection effort is in, the automatic stay stops it completely. However, an automatic stay is just a pause. If you want to eliminate IRS debt as well as other debts, choosing the right time to file for bankruptcy is crucial.

Income Taxes

Chapter 7 bankruptcy only discharges income tax debt. Your 1040 taxes are obviously income taxes, but other taxes are not. For instance, property taxes and trust fund taxes are definitely not income taxes. So the kind of taxes you owe makes all the difference. If you do owe unpaid state or federal income taxes, then debt can be discharged. Then there are some rather complicated regulations dependent on timing.

Taxes Filed for Last 2 Years

You have to have filed your taxes for at least the last 2 years (if you were required to file). At the time you file for bankruptcy, your tax returns need to be with the appropriate state tax department and with the IRS. This applies whether or not you filed those taxes on time. If you didn’t file and the IRS prepared substitute returns to determine what you owed, those do not count as taxpayer-filed returns.

Tax Debt Must Be at Least 3 Years Old

Your income tax debt must be at least three years old. And it’s crucial to remember that Tax Day is not always April 15. Some years, it could be the 16th, 17th, or even 18th. In 2020 it was July 15 because of the COVID-19 pandemic. IRS lawyers have been known to object to discharge if the timing is off even by one or two days. So, make sure you file the petition on the correct day, or else you will have to start over.

240 Day Rule

Your tax assessment can’t be more than 8 months old, or must not have been assessed yet. If the IRS has not assessed the debt within the last 240 days, the income tax debt is not dischargeable. It’s almost impossible to tell if the IRS has assessed the debt or not, because this process is an internal accounting tool. But generally, if you’ve not received a bill which breaks down the amount due by tax years, the IRS has probably not assessed the debt yet.

Burr Law Helps with Complexities

At Burr Law, our professionals have years of experience dealing with bankruptcy law. We understand the complicated IRS rules around bankruptcy, and will work with them to make sure your tax debt is included in your bankruptcy. Don’t leave something this important to chance.

Wisconsin Bankruptcy Exemptions

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When you’re interested in filing for bankruptcy, there are a lot of factors to consider. Should you file Chapter 7 or Chapter 13? Or maybe even Chapter 11? Does it matter when you file? And often, most important to people is this question: Will I be able to keep my house, car, and other important personal property? The answer to that last question depends on whether or not those items are considered exempt from the bankruptcy proceedings. Because bankruptcy is nation-wide, there are certain exemptions that have been established at the federal level. Some states only allow those federal exemptions, others require you to use the state exemptions. Wisconsin is one of only 16 states that allows you to choose.

Residency Requirement

If you want to choose Wisconsin exemptions, you must have been a Wisconsin resident for about 2 ½ years. The law says that you must have lived in Wisconsin for at least 2 years, but it is not that clear-cut. If your domicile hasn’t been in the same state for over two years, the rules get more complicated. You’ll need to choose the state exemptions of the state that you lived in the longest during the 180 days immediately before the two years before filing. For example, if you plan to file on July 1, 2022, your two-and-a-half-year period would start January 1, 2019. Imagine that you were living in Iowa (for instance) on January 1, 2019 and moved to Wisconsin in May of that year. You would need to use Iowa state exemptions. If you moved to Wisconsin in March, though, you could choose to use Wisconsin exemptions or federal exemptions.

No Cherry-Picking

When deciding whether to use Wisconsin state exemptions or federal exemptions, it’s important to remember that it’s a slate of exemptions you’re choosing. You must accept all the exemptions in whichever slate you’ve gone with; you can’t pick a few from the Wisconsin list, and a few from the federal list to create the most advantageous situation for you. Given that fact, it’s wise to have one of the experts at Burr Law examine your particular situation to determine which set of exemptions most suits your needs.

What Are The Wisconsin Exemptions?

The most relevant Wisconsin exemptions are for your home, car, tools of your trade, and personal property. The homestead exemption in Wisconsin is $75,000 of the equity in the home, or $150,000 for joint filers. That compares to the federal exemption of $25,150 or $50,300 for joint filers. The exemption for your car is $4,000 (plus any unused portion of the $12,000 allowed for your personal property). Any tools of your trade (like business equipment, inventory, or actual tools) are at $15,000 compared to $2,525 for the federal exemption. Your personal property is exempt too, up to $12,000, as are your bank deposits up to $5,000. College savings accounts or tuition trust funds will not be touched. Only some retirement accounts apply, though. It really requires professional analysis to make the best choice.

Federal Nonbankruptcy Exemptions

The federal nonbankruptcy exemptions are federal exemption laws that exist outside of the Bankruptcy Code and protect property from creditors whether or not a bankruptcy case has been filed. By contrast, federal bankruptcy exemptions are listed in the Bankruptcy Code and provide protection only in a bankruptcy proceeding. If you are using Wisconsin state exemptions, you can still use the federal nonbankruptcy exemptions as a supplement for additional protection of your property, assuming you qualify for them. The qualifications vary, and the experts at Burr Law will be able to guide you in evaluating whether you can benefit from them. These federal nonbankruptcy exemptions include retirement benefits, death and disability benefits, survivor’s benefits, and other miscellaneous exemptions. Each has its own qualifications.

If you are filing for bankruptcy in the state of Wisconsin, you are fortunate to be able to decide whether the Wisconsin state exemptions or the federal exemptions will better protect your assets. The professionals at Burr Law have extensive experience in working with the exemptions, and will talk you through your options.

How Much Debt Do You Need to File Chapter 7?

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When you’re in financial distress, you may begin to consider your bankruptcy options. Maybe you’ve heard that Chapter 7 completely eliminates all unsecured debt and leaves you free to rebuild. That’s true. You may be wondering whether your kind or quantity of debt is allowed in Chapter 7 bankruptcy. Well, the good news is that there is no minimum or maximum amount of debt in order to file for Chapter 7.

Eligibility Is Means Tested

Chapter 7 bankruptcy is means tested. The income limit is the median household income for your particular state, and you need to be at or below that amount in order to file Chapter 7. For Wisconsin, the median household income is $64,168. Your median household income is calculated using the average gross monthly income that you had for the six months prior to you filing Chapter 7 bankruptcy. If your circumstances suggest that you may be close to that amount, then it is likely that expert advice can help you meet the requirement. The professionals at Burr Law can help determine your eligibility for Chapter 7.

Chapter 7 Ends Collection Actions

When your debt is crippling, it comes with collection agents working relentlessly to extract money you don’t have. Letters that threaten dire consequences, phone calls that badger you at all times of day or night, these tactics can make you feel hunted, haunted, or both. The moment you file bankruptcy, all collection activities must stop. That’s true with all bankruptcy filings, including Chapter 7.

Chapter 7 Eliminates Unsecured Debt

Unsecured debt describes money you have gotten without putting down any collateral. So it applies to all credit card debt, for instance. With Chapter 7 Bankruptcy, you don’t need to worry about any sort of repayment for your credit card debt, medical debt, and other unsecured debt. The entire process takes between 3 to 6 months, and then your debt has disappeared. Your debts are cleared, once and for all.

You Are Not Alone

Often unspoken, the negative impact on your mental health when you have significant financial issues is undeniable. Filing for bankruptcy shifts all of that stress and tension. Instead of facing your money problems alone (or trying to ignore them), you will be working with professionals dedicated to helping people in your situation. Over 6000 Wisconsinites declared bankruptcy in the first 8 months of 2021, and 75% of them were Chapter 7 filings. The experts at Burr Law can guide you through the process step by step, and you can breathe a sigh of relief.

Bankruptcy can give you a clean slate, though it is not without difficulties and dangers. If you are considering bankruptcy, it is vital that you consult with experts. There is no minimum or maximum amount of debt that you need in order to file Chapter 7 bankruptcy. The process is complicated, though, and the professionals at Burr Law can evaluate your particular circumstances and advise you on the best way forward.

Does Bankruptcy Prevent Utility Shutoff?

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When your financial situation is overwhelming, it can happen that you fall behind on your regular bills, like utility payments. Being threatened with having your power cut off is really disturbing, and it may prompt you to think about the different ways you can deal with your money troubles. One thing that undoubtedly comes to mind is bankruptcy. Bankruptcy is a way of eliminating unsecured debt, and back utility bills fall into that category. If you are overdue on utility bills and are in danger of a shutoff, filing for Chapter 7 or Chapter 13 bankruptcy creates a bankruptcy stay that prohibits this shutoff for gas and electric. There are specific steps you need to take, though, in order for the power to remain on.

How It Works

As soon as you file a petition to begin the bankruptcy process, your utilities cannot be shut off for 20 days. It’s best if you complete all the bankruptcy paperwork at the same time that you submit the petition, but if you can’t, then be sure to do it within 14 days. That 20 day utility shutoff prevention period gives you almost 3 weeks of breathing room, and the professionals at Burr Law will be there to help you strategize your next moves.

What Happens With Your Utilities

The utility company (WE Energies) will send you a deposit letter approximately 20 days after filing the bankruptcy petition. You are required to pay this deposit. This is really important! If you do not pay it, then the utility company will shut you off. You need to pay the deposit and pay your gas and electric bill on time and in full for the next twelve months. These are the bills for the monthly usage, not the past due amounts. At the end of that 12 month period, the utility company will refund your deposit with interest.

Past Due Amounts Eliminated

A Chapter 7 bankruptcy takes anywhere from 3 to 6 months and at the end of it, all your unsecured debts will be discharged. That means that any past due amounts you owe to your utility company will be completely discharged (along with credit card debt, medical debt, and other unsecured debts). So bankruptcy will definitely prevent your utilities from being cut off for 20 days, and it can provide you a way to get rid of the debt you owe entirely.

Should You File or Not

Filing for bankruptcy is a big decision and if your primary concern is your utility bills, it is likely that a less radical solution can be found. When you have mounting medical debt, credit card debt, and other obligations along with your utility bills, then bankruptcy may be your best option. You can always consult with the professionals at Burr Law to clarify your situation.

If you are worried about your utilities being shut off, or feeling overwhelmed with financial difficulties, contact the professionals at Burr Law. You don’t need to struggle through it alone. We’re here to help.