We’ve written a series of blog posts answering questions regarding Chapter 7 bankruptcy in Wisconsin and its financial impact. Call (262) 827-0375

What Debts are Exempt from Filing For Bankruptcy?

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In times of financial distress, bankruptcy can help people regain control of their finances. However, you should know that not all debts can be discharged in bankruptcy proceedings. This guide examines the debts exempt from bankruptcy under Chapters 7 and 13, shedding light on the limitations and nuances of each chapter.

Chapter 7 Bankruptcy: A Fresh Start through Liquidation

Chapter 7 bankruptcy is a legal process that allows people to rebuild their lives by liquidating non-exempt assets to repay creditors. Also known as “liquidation bankruptcy” because the debtor’s non-exempt assets are sold, and the proceeds are divided among the creditors. This chapter of bankruptcy benefits many debtors by allowing them to eliminate their overwhelming debts and regain financial stability.

However, it is important to note that not all debts are discharged through Chapter 7 bankruptcy. Certain debts are typically exempted from discharge, meaning that the debtor remains responsible for repaying them even after the bankruptcy process is completed. These non-dischargeable debts are carefully defined by bankruptcy laws to protect creditors’ rights and maintain fairness in the overall process.

Student Loans

A student loan is one of the debts, generally non-dischargeable under Chapter 7 bankruptcy. Student loans are often substantial and can create a significant financial burden for individuals. Unfortunately, discharging student loans through bankruptcy is challenging and requires proving an “undue hardship.” This standard is very stringent and typically requires demonstrating that repaying student loans would cause extreme financial hardship that persists over an extended period.

Child Support and Alimony

Debts related to child support and alimony obligations are also non-dischargeable. These debts hold priority status, ensuring that children and former spouses receive the necessary financial support.

Taxes

Most tax debts are not dischargeable under Chapter 7 bankruptcy. This includes income taxes, property taxes, and certain other tax-related obligations. The rationale behind this exemption is to maintain the tax system’s integrity and prevent individuals from using bankruptcy to avoid their tax responsibilities. However, there are exceptions to this rule based on specific circumstances, such as the age of the tax debt and compliance with tax filing requirements.

Debts Incurred through Fraud or Misrepresentation

Debts that result from fraudulent activities, embezzlement, or pretences are generally non-dischargeable in bankruptcy. This provision ensures that individuals cannot abuse the bankruptcy process to avoid debts obtained through dishonest or deceptive practices. Bankruptcy laws aim to uphold the principles of fairness and prevent the misuse of the system.

A Repayment Plan for Financial Rehabilitation

Chapter 13 bankruptcy, a “repayment plan” or “wage earner’s plan,” offers people a structured path to financial recovery. Unlike Chapter 7 bankruptcy, which involves liquidating assets, this chapter allows debtors to create a realistic repayment plan over three to five years to pay off their debts.

This form of bankruptcy is often suitable for individuals who have a steady income and want to retain their assets while repaying their debts in an organized manner. It provides more flexibility compared to Chapter 7, allowing debtors to keep their homes and other valuable possessions while addressing their financial obligations responsibly.

However, it is important to note that certain debts are still considered non-dischargeable under Chapter 13 bankruptcy. This means that even with the repayment plan, the debtor remains responsible for these obligations. Let’s explore these non-dischargeable debts to gain a deeper understanding:

Debts from Willful and Malicious Injury

Chapter 13 bankruptcy does not discharge debts resulting from intentional acts of harm or property damage. This provision ensures that individuals who have caused harm to others through willful and malicious actions remain accountable for their actions. Victims have the right to seek compensation for their injuries or damages.

Certain Tax Debts

While Chapter 13 bankruptcy allows for the inclusion of certain tax debts in the repayment plan, not all tax obligations can be discharged. Recent income taxes, for instance, typically must be paid in full. However, older tax debts or tax penalties may be eligible for inclusion in the repayment plan, allowing debtors to gradually catch up on these obligations.

Debts Not Listed in the Bankruptcy Filing

Debtors must list all their debts in the bankruptcy filing accurately. Failure to disclose a debt can result in it being excluded from the discharge. It is essential to be diligent and thorough in providing a comprehensive account of all debts to ensure a fair resolution for the debtor and the creditors.

Debts Arising After Filing

Debts incurred after the bankruptcy petition has been filed are generally not dischargeable. Debtors must be responsible for managing any new debts or financial obligations that arise during the bankruptcy process. This underscores the importance of prudent financial management and avoiding new debts while undergoing bankruptcy proceedings.

Individuals filing for Chapter 13 bankruptcy can gradually reorganize their finances and repay their debts. Debtors can demonstrate their commitment to financial responsibility and work toward a fresh start by following the structured repayment plan. Seeking the advice of a qualified bankruptcy attorney is critical to successfully navigating the complexities of Chapter 13 bankruptcy.

Conclusion

Understanding which debts are exempt from filing for bankruptcy is crucial for individuals considering Chapter 7 or Chapter 13 bankruptcy. While bankruptcy can relieve certain debts, consulting with a qualified bankruptcy attorney is important to navigate the complex legal requirements.

Chapter 7 bankruptcy offers a fresh start by liquidating non-exempt assets, but student loans, child support, alimony, taxes, and debts resulting from fraud or misrepresentation remain non-dischargeable. In contrast, Chapter 13 bankruptcy provides a repayment plan over a period. Still, debts from willful injury, certain tax, unlisted, and post-petition debts are not dischargeable.

Navigating the bankruptcy process requires careful consideration of individual circumstances and a thorough understanding of the applicable laws. Seeking professional legal advice is advisable to assess the specific situation and make informed decisions accurately.

Bankruptcy laws may vary across jurisdictions, so you must be familiar with the regulations in your area. By obtaining the necessary knowledge and guidance, individuals can work towards financial rehabilitation and establish a solid foundation for their future.

Stopping Wage Garnishment

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If you fail to make debt payments, your creditor may take legal action by suing you and seeking a court judgment. Once this occurs, the creditor can ask the court to garnish your bank account or wages to reimburse the debt.

However, a wage garnishment can worsen an already difficult situation if you’re already struggling to meet your financial obligations. The good news is that there are measures you can take to prevent garnishment from causing havoc in your financial circumstances.

What is Wage Garnishment?

Debt collectors may resort to garnishment if you’re unable to repay a debt. Upon court approval, the creditor can ask for a portion of your wages or bank account funds to settle the debt. These enforced payments can worsen your financial difficulties and make it challenging to meet essential expenses.

Therefore, it’s crucial to engage with your creditor before they initiate a lawsuit to prevent the garnishment. If you’ve already reached that point, however, there are potential alternatives you can explore to eliminate the garnishment.

Understanding Garnishment Process

Wage garnishment regulations differ across states, allowing a limited timeframe for you to raise objections. The duration varies based on your state and the debt’s nature, with the window sometimes as brief as five days.

Nevertheless, the Federal Debt Collection Practices Act (FDCPA) safeguards all consumers. This legislation prevents unfair practices by third-party debt collectors in their debt collection efforts. It shields you against harassment, unsolicited calls during odd hours, and disclosing your debt to anybody other than your spouse.

How Wage Garnishment Works

As said earlier, creditors resort to garnishment as a final measure to recover their owed funds. Before this, they usually explore alternative options such as negotiations, engaging collection agencies, or structured loan repayment plans. If these attempts prove unsuccessful, the creditor may seek court approval to proceed with garnishment.

After the creditor initiates the garnishment request, the court must approve it and forward it to your employer for implementation and compliance. Subsequently, your employer must subtract the specified amount from your paycheck and send it to the creditor. Failure to comply with a garnishment order can hold your employer liable for the debt’s repayment.

It is worth noting that once the garnishment process commences, it will persist until the debt is wholly settled or until legal measures are undertaken to stop it.

5 Ways for Stopping Wage Garnishment

When faced with a garnishment order, taking immediate action is crucial. Assessing potential legal or financial alternatives to halt the garnishment process is valuable. Here is how you can stop the garnishment:

Reimburse the Debt Fully

Paying off the debt is a widely used approach to end garnishment. By doing so, you can instantly halt the garnishment and find reassurance that your employer will no longer deduct your paycheck. However, before pursuing this option, knowing the repayment terms and assessing any potential financial consequences is advisable.

Thus, look closely at your expenses to determine if you can afford to make a single payment to settle the debt. Paying off the debt may be the optimal resolution to cease garnishment.
Challenge the Judgment in a Court

Suppose the garnishment is the result of a judgment. In that case, it might be possible to dispute that judgment in a court. Depending on the available evidence and the circumstances, engaging a garnishment attorney could assist you in this matter. Challenging the judgment can be intricate and time-consuming, but it could be your most viable option if you possess a valid legal argument.

A court hearing will be essential to present your case. If your challenge is successful, the court may modify or completely overturn the judgment. In such a scenario, it can potentially cease the garnishment process. However, it is vital to remember that you must establish your case’s merit per the laws of your state of residence.

File for Bankruptcy

Although filing for bankruptcy carries a social stigma, it can be a powerful strategy for halting garnishment and reclaiming financial control. Once you initiate bankruptcy proceedings, the court will issue an order that immediately stops all garnishments and other debt collection activities. The personal bankruptcy that you can apply for includes:

Chapter 7 Fresh Start: Chapter 7 bankruptcy offers a straightforward approach to eliminate debts swiftly and provide complete relief. This plan eliminates unsecured debts, such as credit card bills, medical expenses, judgments, personal loans, garnishments, and other similar obligations.

Chapter 13 Reorganization Plan: Chapter 13 bankruptcy aims to halt creditor actions and establish manageable repayment terms to help you regain financial stability. Here is where working with a garnishment lawyer comes into play, as they will help you develop a balanced budget based on your unique income and debt obligations.

Agree on a Good Payment Plan

If your present financial circumstances make it challenging to repay the debt completely, negotiating a more feasible reimbursement plan with your creditor is possible. This negotiation process may involve discussions regarding decreased monthly payments, reduced interest rates, extended loan terms, or even a lump-sum settlement. Successful negotiation can halt the garnishment and lessen the debt burden.

Having a well-defined plan can prevent further collections or legal actions while decreasing the overall interest you need to pay. It’s important to remember that creditors may be open to working with you if they perceive it as beneficial to them, so don’t hesitate to engage in negotiations.

File an Exemption Claim

If you believe that a portion of your wages should be protected against garnishment, it is crucial to submit an exemption claim. This claim allows you to assert your eligibility for exemption based on specific factors, such as being the head of a household, having dependents, or maintaining a low income. Moreover, if another creditor is currently garnishing your wages, you can file a claim to limit the amount deducted.

Is Hiring a Wage Garnishment Attorney Worth It?

Hiring a wage garnishment attorney can be a wise decision when facing the possibility of wage garnishment. With their expertise in this area of law, attorneys can provide valuable guidance, protect your rights, and navigate the legal procedures involved. They can alleviate stress, advocate, and help you explore options to challenge or negotiate the garnishment.

Bankruptcy and Credit Card Debt

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Bankruptcy has become an increasingly popular option for debtors in the past decade, with experts crediting this rise to the increasing instability of the economy and low-income families. While bankruptcy has traditionally been pursued by those who have lost their job and fallen into overwhelming debt, recent statistics show that it is now an option for those struggling with accumulated credit card debt. It’s important for you, as a consumer, on this issue to be informed before making any decisions that could have serious repercussions. This is why you should try to avoid accumulating too much debt in the first place by making conscious decisions about how you spend money.

What is Bankruptcy?

Bankruptcy is a legal process that allows debtors to withdraw from their debts by declaring bankruptcy. The filing typically occurs before the defendants’ assets are liquidated to pay the creditors. Borrowers retain property ownership and see their income, salary, or Social Security payments garnished. Jurisdictions of law broadly vary relative to the types of debts that can be included in bankruptcy. In the United States, each of the fifty states has laws regarding what debts can be discharged through this process. It allows individuals earning some income to create a repayment plan that gives them up to five years to repay their debts.

A chapter 7 bankruptcy case is a liquidation bankruptcy case that typically takes four to five months to complete. Chapter 7 bankruptcy petitions are filed under federal law and are governed by the federal Bankruptcy Code. The court in which you file your petition will determine whether you qualify for this type of bankruptcy and if it is approved, it is usually effective within four months. There are two types of chapter 7 bankruptcies, a straight chapter 7 bankruptcy and a chapter 13 reorganization. Those who qualify file under a straight chapter 7 bankruptcy in Wisconsin because it requires no repayment plan. To file for chapter 7 bankruptcy, the steps are as follows:

1. Credit Counseling

Complete pre-file bankruptcy counseling sessions before filing. This is a mandatory step that happens before filing for bankruptcy. It will help you to better decide on what type of bankruptcy you need, determine your liabilities, and understand how debt consolidation, debt settlement, and personal finance can work for you. The class is designed to provide an overview of various options and strategies and help you determine what type of bankruptcy would work best for you. Both federal and state law requires credit counseling as a means to educate individuals about their options before filing for bankruptcy and as a way to avoid defaulting on debts.

2. Find an Attorney

If you are a high-class professional, you must find an attorney specializing in bankruptcy who can help you navigate the process. A qualified bankruptcy attorney will use their knowledge and experience to guide the client through the process and ensure they can successfully file and be protected under the laws in place. An attorney can help you understand the process, help you make a plan, and negotiate with your creditors to file a bankruptcy petition on your behalf. Finding an attorney who can counsel you on all your options is important. If filing for chapter 7 bankruptcy, contact legal aid or pro-bono attorneys who can help with fees or payments.

3. File Paperwork

Once you have found an attorney and decided on what type of bankruptcy you will file, you can begin filling out paperwork. The paperwork needed varies by state, but the forms required to start the case usually include a petition, schedules, and the codebtor information. You will also need to complete credit counseling. The chapter 13 bankruptcy wisconsin petition is the most difficult to file, and certain steps must be followed to file a schedule of assets and liabilities. If you decide to file for chapter 13 bankruptcy wisconsin, it will stay in effect for three to five years and keep you from having your debts discharged.

4. Trustee Takes Over

Once forms have been submitted to start the case, the debtor will be assigned a bankruptcy trustee, who will act on behalf of the debtor. They are responsible for ensuring that creditors receive payments and that all court orders are followed. This means paying all debts and fulfilling any other official duties as they are required.

5. Meeting of Creditors

After completing the education course, a meeting of creditors must be conducted. The meeting is mandatory and will allow you to meet with your creditors before filing for bankruptcy to prepare for this next step. This is when all of the creditors are made aware of your intentions and will also be able to tell you about their rights and those of their respective attorneys. Your lawyer will represent them at the meeting and help make any questions or concerns known.

6. Education Course

The second step is to take an education course. This will help prepare you for the next step, filing for bankruptcy. The course covers what to expect from a bankruptcy case and information about credit counseling and budgeting options. The education course is an important step in the pre-filing process. This is when you hear about opportunities and strategies to help you through your difficult financial situation. The class will also help you determine what will be best for you in the long term by explaining the basics of debt management and personal finance.

7. Your Eligibility is Determined

If you have completed the requirements for chapter 7 or chapter 13 bankruptcy, your petition will be filed by the bankruptcy trustee, and your eligibility will be determined. You may have to appear in court if your case needs to be reviewed. Your attorney will help you prepare the required documents and ensure everything is complete, correct, and up-to-date. This meeting aims to determine what type of bankruptcy you qualify for. This is how the court system becomes aware of your intention to file for bankruptcy, informing them of what kind of bankruptcy you will be filing. This also begins the necessary credit counseling sessions before you can start the case.

Chapter 7 bankruptcy in Wisconsin allows individuals to begin again after financial troubles have become too much to handle. The basic process starts with finding an honest and reputable attorney to help you work through the case. Once that is determined, the next step is completing the credit counseling class and filing paperwork with the court system. During this time, it’s important to learn as much as possible about your options and what type of bankruptcy would suit you.

Bankruptcy & Car Repossession

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For many people, their car is essential to their daily life. It gets them to work, school, and other essential places. However, if you’re struggling with debt and facing bankruptcy, you may be worried about losing your car through repossession. Fortunately, bankruptcy may help you keep your car and even reduce debt.

What is Bankruptcy?

Bankruptcy is a legal process designed to help people struggling with debt. It’s a way to get a fresh financial start by wiping out some or all of your debts, depending on the type of bankruptcy you file. There are two main types of bankruptcy that individuals can file Chapter 7 and Chapter 13.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy, or “liquidation” bankruptcy, involves selling off some of your assets to pay off your debts. However, certain property types are exempt from liquidation, including a certain amount of equity in your car. In Wisconsin, the car exemption is $4,000. If you own your car outright and it’s worth less than $4,000, you can keep it in a Chapter 7 bankruptcy.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy, on the other hand, is a reorganization bankruptcy. It involves creating a repayment plan that lasts between three and five years. You’ll pay a bankruptcy trustee to distribute the funds to your creditors during this time. Chapter 13 can be a good option if you need to catch up on car payments and want to catch up while keeping your car.

Car Repossession

Vehicle repossession occurs when you default on your car loan, and the lender takes back the car. This can happen if you miss payments or violate the terms of your loan agreement. Sometimes, the lender can repossess your car without giving you any notice. However, most states require lenders to provide a certain amount of notice and allow you to bring your payments up to date before repossessing your car.

If your car is repossessed, the lender will sell it at auction to recoup the amount you owe on loan. If the sale price doesn’t cover the full amount you owe, you may be responsible for paying the difference, known as a “deficiency balance.” This can worsen your financial situation, as you’ll still owe money on a car you no longer have.

How Can Bankruptcy Help with Car Repossession?

If you’re facing vehicle repossession, bankruptcy can help. When you file for bankruptcy, an automatic stay goes into effect. This court order prevents creditors from taking any further collection action against you, including repossession. If your car has already been repossessed, the automatic stay can stop the lender from selling it and allow you to get it back.

You can keep your car in a Chapter 7 bankruptcy by reaffirming the debt. This involves signing a new agreement with the lender that allows you to keep the car and continue making payments. However, if you need to catch up on your car payments and can’t catch up, the lender may still be able to repossess your car, even if you’ve reaffirmed the debt.

In a Chapter 13 bankruptcy, you can include your car loan in your repayment plan. This means you’ll make regular payments to the bankruptcy trustee, who will then pay your car lender. If you make your payments on time, the lender cannot repossess your car.

Tips for Dealing with Car Repossession

If you’re struggling with debt and facing vehicle repossession, there are a few things you can do to protect yourself:

1. Communicate with your Lender: If you need help making your car payments, contact your lender as soon as possible. They may work with you to devise a repayment plan or defer your payments.

2. Know your Rights: As mentioned, most states have laws requiring lenders to provide notice and an opportunity to catch up on payments before repossessing a car. Make sure you know what your state’s laws are and what your rights are as a borrower.

3. Consider Bankruptcy:Bankruptcy may be a good option if you’re facing vehicle repossession and can’t afford to catch up on your payments. It can help you keep your car and reduce your debt.

4. Get Legal Help:If you’re facing car repossession or bankruptcy, consulting an attorney specializing in these law areas is a good idea. They can help you understand your options and make the best decision.

5. Consider Refinancing: If you have equity in your car, you can refinance your loan and lower your monthly payments. This could make it easier to keep up with your payments and avoid repossession.

6. Look into a Car Loan Modification: Some lenders may be willing to modify your car loan to make your payments more manageable. This could include extending the loan term, lowering the interest rate, or reducing the monthly payments. Be sure to ask your lender about any loan modification options that may be available to you.

If you’re struggling with debt and facing car repossession, bankruptcy can help. Several options are available, including Chapter 7 and Chapter 13 bankruptcy. By filing for bankruptcy, you can stop vehicle repossession and keep your car while reducing your debt and getting a fresh financial start. However, it’s essential to understand your options and work with an experienced attorney to make the best decision. With the proper guidance, you can get back on track and build a brighter financial future.

How much debt is needed to file bankruptcy?

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If you are wondering how much debt you need to get the ball rolling with bankruptcy, it might come as a surprise. You see, if your debt is less than $10,000 U.S., then you have what is called “non-dischargeable debt.” This means that even if you are successful in discharging most of your debts through bankruptcy proceedings, these outstanding debts will not be wiped off the books.

What about those people with more than $10k in outstanding balances? Well, there is hope for them yet! If your total amount of non-dischargeable debt across all credit cards and loans exceeds $10k U.S. (and there are a few exceptions), then you will be able to discharge your debts through avoidance procedures. Some of these procedures include the following:

1. Live Below Your Means (LBM)
2. Payment Plans
3. Make-A-Wish Foundation (if debt results from an illness or accident) and
4. Auto Financing Protection Plan (this is for automobiles only, not for homeowners).

The good news is that if you have credit card balances with balances that are less than 31% of your total credit limits or for which you make timely and consistent payments, then it could take just a couple of years before you hit the $10k U.S. limit.

The sad part about this is that if you are like most people, then your credit profile will be damaged and it can remain damaged for years.

This is due to how the lending industry keeps tabs on you. Essentially, they buy your credit report from the three major bureaus (Experian, Trans Union, and Equifax) each time you are approved for a new loan. This is done via a purchase order (PO). The purpose of this purchase order is to collect information on you and to make sure that they are getting their money’s worth by making sure you repay them in full at all times.

Chapter 7 bankruptcy vs. Chapter 13 bankruptcy

Chapter 7 bankruptcy, or “wage earner’s” bankruptcy, is a great way to get rid of debt and start fresh. In case you have never heard of a Chapter 7 filing, then here is a quick explanation of what it is all about.

Chapter 7 Bankruptcy allows total unsecured debts to be wiped off the debtor’s credit report once they pay off secured debts if they choose to do so. This can be accomplished by means of things like payment plans, but that is not the primary route used to recover from this type of bankruptcy filing.

Rather, the debtor will normally liquidate (sell off) whatever assets they can and take a lump sum of cash from the sale in order to pay off their outstanding debts. This is a great solution for those persons who find themselves in deep financial ruts, but the one downside is that most secured debts are not covered by this type of bankruptcy.

Chapter 13 bankruptcy is sometimes referred to as “reorganization” bankruptcy. This type of filing will lower monthly auto payments or give you extra time to pay off your mortgage if that is necessary. The good news about Chapter 13 filings is that they do not have to be made by businesses but can be handled on an individual basis. The bad news is that a credit report will reflect this type of filing for 7 to 10 years after the fact.

Due to the length of time that your financial history will be associated with a Chapter 13 filing, most people find this type of filing completely unacceptable, if not completely undesirable. This is because seven years from now, you might find yourself struggling financially again and need another solution to get rid of your debt problems. This means that you could lose out on a second chance at getting out from under your debt load if you use Chapter 13 filings to solve your financial problems today.

Just remember that Chapter 7 bankruptcies only erase unsecured debts, not secured debts. Secured debts are things like mortgages, car loans, and credit card balances that are backed (or secured) by assets such as real estate or collateral of some sort. If you have these types of assets and have a large debt pile to work through, then Chapter 13 is probably the best route for you to take in order to get rid of your debt load once and for all.

Chapter 13 bankruptcies allow people with large amounts of non-dischargeable debt to reduce the amount of money needed to pay off their non-dischargeable debt through repayment plans set up with their creditors. If you have a large amount of non-dischargeable debt, then this would be the best option for you to choose when filing bankruptcy because it will not leave your credit score tarnished for years.

If you are concerned about the reputation of your financial history once the bankruptcy is over, then Chapter 13 filings are not for you. If it is possible to get rid of all your non-dischargeable debt using a Chapter 13 filing and still having enough money to pay off secured debts, then that might be what you need to do. The good news is that there are people who can help guide you in this decision process so that you are aware of all your options.

You need to consider a lot of things prior to filing for bankruptcy. This is why it is always best to let an expert guide you through the process. Bankruptcy should be the final resort and not the first thing you try. It might seem like a good idea to file for it at first, but you will regret it later if you do.

If you are really struggling financially, then Chapter 7 bankruptcy is probably your best bet for getting rid of your debt so that you can start over with a clean slate. This is why most people who have used Chapter 7 filings have found that their credit scores improved after the bankruptcy was over, and this allowed them to get approved for loans on more favorable terms.

Discharge in Bankruptcy – Bankruptcy Basics

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A discharge in bankruptcy is the release of one or more debts by the bankruptcy court. A discharge means that all debts, including any discharged debt obligations, are legally forgiven. There are two types of discharges: general and special. General discharges are any debts belonging to one or more people who can be held liable for the debts, such as cosigners on mortgages and guarantors of student loans. Unusual discharges are not personal debts a debtor has, such as a wage earner’s retirement plans. The courts determine which debts are discharged and which are not by appointing a trustee (or “trustee” in the original, unadorned type of a discharge order). A trustee holds the money owed to creditors and transfers it to the court. The court then distributes the money to creditors on their filed claims.

A general discharge wipes out an individual’s outstanding debts with no remaining liability for those debts. An available shot eliminates the repayment of all debts that would otherwise have been paid through a chapter 13 bankruptcy repayment plan or a chapter 7 liquidation. A particular discharge will only reduce or eliminate debts owed to a creditor, such as credit card debt incurred within the last year.

When does the discharge occur?

After the court has ruled that a debtor is bankrupt and discharged its debts, the debtor is no longer liable for any outstanding debts. The discharge date will be on the court’s bankruptcy order, but if a discharge has not occurred when a debtor has completed all repayment plan requirements, she may request that the court issue an order to make her eligible for release.

The effect of a discharge order

After the granting of a discharge, there are no conditions for filing past-due income taxes and no filing of an “Adversary Proceeding” that stops an IRS audit. The court may also require the debtor to reapply for Federal Deposit Insurance Corporation (FDIC) membership. A debtor must file a tax return yearly during his bankruptcy until he obtains a final discharge. If a debtor receives any income under Chapter 13 or 7 bankruptcy protection, they must disclose this to their trustee.

Individuals can receive chapter 7 or 13 protection only once every eight years. Once an individual files Chapter 7, he cannot file again for seven years. Similarly, if a debtor files for chapter 13 relief within 3½ years of receiving chapter 7 bankruptcy relief, they must wait another three and one-half years before filing again.

For individuals who have committed fraud in their bankruptcy case(s), it is suggested that the copy be resolved before the completion of their bankruptcy discharge. It is always best to consult with an attorney specializing in bankruptcy law so that your intentions and the facts regarding your situation can be thoroughly evaluated and any actions can be taken accordingly.

Chapter 7 in Wisconsin is also a more popular option than chapter thirteen in Wisconsin because of the extra protection that it provides from creditors. It means a bankrupt can be discharged without paying back taxes and interest due on their investment accounts and real property such as their homes.

How does the debtor get a discharge?

After the bankruptcy was filed, a notice was sent to each creditor listed in the petition. The message informs creditors of the bankruptcy petition and provides them with information about the case, including when the plan should be received. A debtor must also file a list of creditors with all required debt and creditor information to the court.

Are all of the debtor’s debts discharged or only some?

Under chapter thirteen, all but secured creditors are discharged. Under chapter seven, all debts are removed. However, a debtor may choose to pay some debts ahead of others, so there is not always a complete discharge of all debts in the first case.

What happens if the creditor disagrees with the discharge?

Creditors have 60 days from being served notice of the bankruptcy to object and state their reasons for objecting to the order discharging their debts. Suppose a creditor needs to file an objection within 60 days of being notified of the bankruptcy petition. In that case, he cannot later object that he was unaware that you filed for bankruptcy or that he was never told of your claim, even if you lied about helping him.

What about taxes?

Federal and Wisconsin income taxes are automatically waived for persons who have filed for bankruptcy relief. However, the creditor may object if a debtor fails to file a federal or state income tax return. Similarly, if a debtor owes state or FHA-insured mortgage loans, the trustee may object to a discharge of those debts and then counterclaim against the debtor in an attempt to collect on the debt. Suppose a debtor fails to pay FICA or ERISA withholding tax owed on wages such as Social Security or Medicare benefits. In that case, his creditors may object to the discharge of those debts and then counterclaim against him in an attempt to collect on these debts. Once the trustee has collected the withheld amounts, he forwards the funds to the Internal Revenue Service for distribution.

What about non-tax debts, such as credit card debt?

Under chapter 7, non-tax debts such as credit card debt and medical bills are discharged. The debtor will also be relieved of liability for student and automobile loans secured by real property. Generally speaking, under chapter 7, all debts are discharged other than those specifically identified on the bankruptcy petition. But a debtor may choose to pay some debts ahead of others so that there is not always a complete discharge of all debts in the first case.

Clear that a person in a bankruptcy proceeding can begin to discharge any debts not listed on the petition. However, if you are ever unsure of your options, consult an experienced bankruptcy attorney. In chapter 7 and chapter 13, the trustee(s) is appointed by the court and given complete control over all debtor’s assets. The proceeds of any sale or transfer of property will then be split between the creditors according to their claims.

DOES BANKRUPTCY COVER MEDICAL DEBT?

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Don’t look now but the cost of medical care in the United States continues to rise and there is no clear relief in sight – certainly not in 2023 – as companies, organizations and individuals navigate through an unstable economy. That’s according to the current Mercer’s National Survey of Employer-Sponsored Health Plans.

The survey reported by Businesswire and the Society for Human Resource Management found that employers in the U.S. can expect medical plans per employee to rise 5.6 percent on average in 2023. The cost-increase forecast is based on the first 864 employers with 50 or more employees responding through August 4.

Many, many people struggle with paying their medical bills. The rising costs of healthcare and patients’ inability to cover themselves and their families with sufficient health insurance has driven people to search for ways that they can be free of their medical debts.

Which brings us to the question: Can filing for bankruptcy help you wipe out debt from your medical bills here in Wisconsin? The answer is a resounding YES! Under Chapter 7 bankruptcy in the Badger State medical debt can be completely cleared.

Under Chapter 7 bankruptcy there are four classifications of debt. These include:

  • Secured debts
  • Unsecured debts
  • Priority debts
  • Nonpriority unsecured debts

Medical debts fall under the last category, nonpriority unsecured debts. Further, there is no cap on how much of your debt can be erased if you file for Chapter 7 bankruptcy. Once you relieve medical debt through Chapter 7 you relieve all of it. If you are overwhelmed by your medical bills and need a fresh start, declaring medical bankruptcy will stop creditors from pursuing you for medical debt repayment.

Chapter 13 bankruptcy treats unsecured debts like medical debt differently than Chapter 7. Although unsecured debts will still be wiped away at the end of your plan, it’s usually necessary to repay a small percentage of these debts during your plan depending on how much disposable income you have and the amount your unsecured creditors would have received if you had filed for Chapter 7 bankruptcy.

Before you file for bankruptcy to rid yourself of medical debt under Chapter 7 or under Chapter 13, there are several things you need to understand:

  • Costs – In Wisconsin in 2022 it costs $335 to file for Chapter 7 bankruptcy and $310 to file for Chapter 13 bankruptcy
  • Filing Without a Lawyer (Pro Se) – This is not a good idea. You will need expert counseling to guide you through the filing process. An attorney can help you qualify for Chapter 7 even when you thought you couldn’t. You’ll want legal representation when you meet with creditors and, by law, only a licensed attorney can provide this service. Filing for Chapter 7 improperly may force you to file for Chapter 13 and pay off a percentage of your unsecured debts. It may also force you to lose assets you didn’t know how to protect. You will need help filling out the forms and paperwork. Finally, if you miss a deadline it could mean delays or even dismissal of your case.
  • Bankruptcy and Your Credit Report – Bankruptcy, even when due to medical bills, hurts your credit score. It can stay on your credit history report between 7 and 10 years depending on which type of bankruptcy you choose.
  • Lending Risk – Filing for bankruptcy typically also increases your lending risk in the eyes of lenders. This will make it harder for you to get financing for big purchases including homes and car loans.

No matter which avenue you choose, filing for bankruptcy will be a very stressful, frustrating and exhausting period in your life. There will be an overwhelming amount of information you will need to understand before you decide to file. This is where you will need assistance from an experienced professional bankruptcy attorney to help you sort things out, guide you through the filing process and restore your financial peace of mind.

For more information about bankruptcy and how we can help you, call Milwaukee Bankruptcy attorney Michael Burr and the experts at the Burr Law office at (262) 827-0375 or visit www.burrlawoffice.com.

CAN YOU FILE FOR BANKRUPTCY WITHOUT AN ATTORNEY?

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CAN YOU FILE FOR BANKRUPTCY WITHOUT AN ATTORNEY?

“He who represents himself has a fool for a client.”

Abraham Lincoln has often been credited with imparting this sage legal advice over the years but researchers have also credited others before Lincoln including William De Britaine in 1682 and Roger L’ Estrange in 1692. The quote has even been cited as an ancient Italian proverb.

Regardless of who first authored the phrase, the point is crystal clear. Sure, you can certainly file pro se for bankruptcy. But why would you? Seeking the advice of a qualified attorney is strongly recommended because filing for bankruptcy has long-term financial and legal consequences.

When filing for personal bankruptcy under Chapter 7 or Chapter 13 your attorney must thoroughly prepare and have a clear understanding of legal issues. Misunderstandings about the law or making mistakes in the process can affect your rights. The law also prohibits court employees and bankruptcy judges from offering legal advice.

There are many ways that your lawyer can help you with your case including giving you advice on whether to even file a bankruptcy petition and, if so, under which chapter you should file. He or she can also advise you on whether your debts can be discharged and whether you will be able to keep your home, car or other property after you file.

Your lawyer can also:

– Advise you of the tax consequences of filing
– Advise you on whether you should continue to pay your creditors
– Explain and help you understand bankruptcy law and procedures
– Assist you in completing and filing forms
– Assist you with most aspects of your bankruptcy case

Those who choose to be pro se litigants need to follow the rules and procedures in federal courts and should be familiar with the Federal Rules of Bankruptcy Procedure and the local rules of the court in which the case is filed. Local rules, along with other useful information, are posted on the court’s website and are available at the local court’s intake counter. Court employees and bankruptcy judges are prohibited by law from offering legal advice.

Bankruptcy Forms are available to the public free of charge.

You will need to use the forms that are numbered in the 100 series to file bankruptcy for individuals or married couples. If you plan to file a bankruptcy on behalf of a nonindividual such as a corporation, partnership, or limited liability company (LLC) you will need to use the forms that are numbered in the 200 series. Sole proprietors must use the forms that are numbered in the 100 series. In addition, many courts require local forms so you should check your court’s website before filing any documents.

So you’re still thinking about going it alone without an attorney? Consider this. If you file bankruptcy pro se you may be offered services by non-attorney petition preparers. By law, these preparers are only allowed to enter information into forms. They are prohibited from giving you legal advice, explain answers to legal questions, or assisting you in bankruptcy court. Further, the petition preparer must sign all documents they prepare for you as well as print their name, address and social security number on the documents. They must also provide you with a copy of all documents and they cannot sign documents on your behalf or receive payment for court fees.

If you need help finding a bankruptcy lawyer here are a couple of resources that may help. If you can’t afford an attorney, you may qualify for free legal services.
– American Bar Association’s Legal Help
– Legal Services Corporation

FILING FOR BANKRUPTCY – THE COST FACTOR

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Bankruptcy.

The very word can send chills up your spine. Many people fear filing for bankruptcy because they dread the thought of being ruined financially. What will this mean for my family? How will it affect my employment or business opportunities moving forward?

As is with so many things in life, two more burning questions come to mind: “How much does bankruptcy cost?” And “Will I have to give up all of my assets?” The answers to these last two may surprise you.

First, bankruptcy may not cost as much as you might think. While the cost factor will vary depending on the situation, the idea that you will lose all of your assets is just a myth. Under Chapter 7 bankruptcy law you may have to liquidate some of your assets but you will also find that many of your assets are exempt. Not only that, filing for bankruptcy under Chapter 13 requires zero asset liquidation!

Filing for bankruptcy is not as financially destructive as you might imagine. However, there are some costs you will need to consider.

Attorney Fees

Under Wisconsin law you don’t actually have to hire an attorney to file for bankruptcy. This is called filing pro se. However, one of the big downsides to taking this route is that you might find yourself vulnerable to push-back from creditors and other issues. This is where an experienced attorney can help guide you through the process efficiently and help you avoid obstacles along the way while keeping creditors at bay at the same time.

At the end of the day, hiring an attorney might end up saving you money. Each time you have a setback in the process that kicks you back to the starting line will cost you more money lost in interest and late payments that you will have to deal with in bankruptcy.

Filing Fees

Again, the price of filing fees vary depending on the type of bankruptcy but if you file Chapter 7 bankruptcy that fee is $335. If you file Chapter 13 bankruptcy the fee is $310. These fees are the same whether you are filing alone or jointly with your spouse and the fees are subject to change. Sometimes the court will allow you to pay the fees in installments.

Credit Counseling Fees

When filing for bankruptcy the state of Wisconsin requires you to take a credit counseling session beforehand. Then, before you are discharged you must take an additional debt management course. The cost for each of these services will depend on who is offering them. The classes are available online or you can take them over the phone and, under Wisconsin law, the providers are required to offer reduced rates or fee waivers in certain situations.

Additional Fees

During the bankruptcy process you may incur a variety of other fees. For example, if you miss a creditor in the initial filing and need to add it in there may be an extra fee. Should you need to file a motion may also require a fee. By hiring an experienced attorney you can save yourself a lot of headaches and cut your risk of extra fees because your attorney will very carefully review your particular situation to make sure that nothing is missed from the very start.

For more information about bankruptcy and how we can help you, call Milwaukee Bankruptcy attorney Michael Burr and the experts at the Burr Law office at (262) 827-0375.

What Happens in Foreclosure & Bankruptcy?

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When you’re having financial problems, it is likely that all of your household bills are affected, including your mortgage payments. While shelter is a basic survival requirement, you may have prioritized immediate needs like food, etc., and neglected your mortgage payments. When you fall behind on mortgage payments, your home may be foreclosed on, and suddenly, the possibility of losing your home looms large. There are ways to save your home. In this post, we’ll explore the interplay between foreclosure and bankruptcy.

Timing is crucial

Under federal law, your mortgage lender cannot officially begin foreclosure proceedings until you have missed four months of mortgage payments. Within that time period, you can take the initiative by filing for bankruptcy before any foreclosure begins. If you have received notice of your lender’s intent to begin foreclosure, you can still forestall it by filing your bankruptcy petition. Even after the foreclosure has begun, filing bankruptcy will interrupt it.

Automatic Stay

Whenever you file bankruptcy, all collection efforts of all types are automatically halted. That means that even if foreclosure proceedings have been initiated, they must be paused. This gives you valuable time to develop a strategy that may save your home. The experienced attorneys at Burr Law can negotiate on your behalf and work with your specific circumstances to preserve your most valuable assets, including your home.

Chapter 13 Bankruptcy

In Chapter 13 bankruptcy, you devise a repayment plan that will clear your secured debts over a three to five year period. This plan will include your past-due mortgage payments, and your continuing mortgage payments. Because your attorneys work with you to create the plan, it ought to be one that you can achieve. Again, the experts at Burr Law can work with your particular circumstances to help you make a realistic plan. As long as you make all of the required payments for the length of the repayment plan, you will avoid foreclosure and be able to stay in your home.

Importantly, if you have a second or third mortgage on your home, Chapter 13 bankruptcy may well serve to eliminate those debts. Typically, Chapter 13 entitles bankruptcy courts to recategorize second and third mortgages as unsecured debt. Unsecured debt receives the lowest priority in Chapter 13 bankruptcy, and usually does not have to be repaid at all.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is also known as liquidation bankruptcy. It eliminates debt completely by selling your assets. So it sounds as though it would mean that you would lose your home. However, that is not usually the case, especially if your home is your only or primary residence. There are exemptions in Chapter 7 bankruptcy, and one of the most important is your home, known as your homestead. The law in Wisconsin allows an individual filer an exemption of up to $75,000 in value in a homestead, and a couple filing together would have an exemption of $150,000. Other exemptions can also be applied to your home. The experts at Burr Law can make sure that you receive all exemptions possible.

Chapter 7 bankruptcy also forgives the homeowner for tax liability for losses the mortgage or home-improvement lender incurs as a result of the homeowner’s default. This may be debt that you have not even considered, but is important in determining which bankruptcy type to pursue. This law initially applied to the years 2007-2010, but has been extended five times and now applies to debts forgiven in the years between 2007 to 2020. Again, this is an aspect of bankruptcy that your attorneys can advise you about.

If you are concerned that your property may be foreclosed upon, or if foreclosure proceedings have already been initiated against you, contact the professionals at Burr Law. We can guide you to the best solution so you and your family can stay in your home.