Answers to Your Questions About Bankruptcy in Wisconsin
Are you facing overwhelming debt and contemplating bankruptcy? There is a great deal of misinformation when it comes to the bankruptcy process. With more than 14 years of experience as a Milwaukee bankruptcy attorney, I understand that in these tough economic times, many people are forced to examine their debt relief options. No matter your situation, I can help you regain a sense of hope and show you how to take legal action to resolve your financial difficulties. My law office has been able to help thousands of men and women throughout the state of Wisconsin find hope in the midst of a difficult situation. I take a caring approach to every new case, I inform my clients of all of their debt relief options, and many times I am able to help them avoid bankruptcy altogether. If a client does decide to file bankruptcy, my team walks them through the process step-by-step, helps them decide which chapter to file, and assists with all of the necessary paperwork.
I truly enjoy helping others. Nothing makes me happier than being able to help my clients regain financial freedom. That's why I offer my credit restoration program free of charge after bankruptcy. This groundbreaking program has allowed many of my clients to begin earning strong credit scores immediately after filing bankruptcy. My goal is to educate and inform my clients so that they are able to make the best decision for themselves and their families. Here are some of the most common questions I am asked about the bankruptcy process:
What is bankruptcy?
The right to file bankruptcy arises under Title 11 of the United States Bankruptcy Code. Bankruptcy imposes a stay that provides protection from creditors and allows individuals and organizations to eliminate or re-pay (consolidate) debts they owe. If creditors are to be paid, bankruptcy provides an orderly process through which they can receive payment. Bankruptcies are normally filed under Chapter 7, Chapter 13, Chapter 12, and Chapter 11.
A bankruptcy filed under Chapter 7 clears out (or "discharges") your debt quickly. A petition is filed and your debts are discharged within a few months. Both individuals and corporations can file Chapter 7. There is no long-term monthly payment plan. In some cases, Chapter 7 involves liquidation - that is, non-exempt assets are liquidated and used to pay creditors. If you cannot afford to pay your bills, Chapter 7 is a great way to get a new financial fresh start.
Chapter 13 is for individuals only (corporations cannot file Chapter 13). Under Chapter 13 the court requires the bankruptcy filer (the debtor) to submit a debt repayment plan and to pay the debt (or a portion of the debt) over a period of three to five years. Chapter 13 typically forces a creditor into a payment plan that has the effect of lowering the amount the debtor must pay out each month and it provides re-payment terms that are more convenient for the debtor.
Chapter 11 is a consolidation for corporations. In rare cases, individuals can file Chapter 11 if the amount of debt they have exceeds the Chapter 13 debt limits set forth under 11 U.S.C. § 109. Chapter 12 is for family farmers.
What things should I avoid before filing bankruptcy?
There are numerous mistakes that I see people make before bankruptcy. Bankruptcy is complicated and is filled with numerous traps and pitfalls. If you are beginning to encounter financial difficulties, it is never too early to consult with a bankruptcy attorney. By meeting with an experienced Milwaukee bankruptcy attorney early enough, you can ensure you won't make some of the many mistakes that can complicate your bankruptcy case. Some of the many mistakes I often see include:
- Large amounts of credit card use before filing bankruptcy - including charges, cash advances and balance transfers
- Paying off loans to friends or relatives prior to filing bankruptcy
- Transferring or selling an asset because you are worried about losing it when you file bankruptcy
- Concealing assets or not disclosing assets to your attorney
Who can file bankruptcy?
Bankruptcy can be filed by a corporation or an individual. Married couples don't have to file together. In some cases it is advisable for one spouse to file and not the other. If you and your spouse are not getting along or if you are not sure whether you want to file with your spouse, it is recommended that you call an attorney to schedule your first meeting without your spouse being present. During the meeting, I can help you decide whether you should include your spouse in your bankruptcy filing or not.
Can I file bankruptcy if I have already filed bankruptcy in the past?
If you have filed bankruptcy in the past, you may need to wait before you are eligible to file again. How long you must wait will depend on what chapter your prior case was filed under and what chapter you are seeking to file your second case under. To summarize, the waiting periods are as follows:
- If you receive a discharge under Chapter 7, you will need to wait at least eight years after the first Chapter 7 was filed before you can file another Chapter 7.
- You can file a Chapter 13 after you receive a Chapter 7 discharge; however, you won't be eligible to receive a discharge under that Chapter 13 case unless it is filed at least 4 years after the prior Chapter 7 case was filed.
- If you receive a Chapter 13 discharge and paid 70 percent or less to unsecured creditors, you must wait six years after the Chapter 13 filing date before you can file again under Chapter 7.
- If your Chapter 13 paid more than 70 percent to unsecured creditors, you can re-file under Chapter 7 right away.
- If you file Chapter 13 and receive a discharge, you must wait two years after the first Chapter 13 filing before you can file under Chapter 13 again.
- If you have filed Chapter 13, but your case was dismissed, you can re-file a Chapter 13 or 7 bankruptcy immediately, so long as these eligibility requirements are satisfied; however, the automatic bankruptcy stay will terminate if your second case is re-filed within one year after the dismissal of the prior case. This termination of the stay can be prevented if you bring a successful motion to continue that stay within the 30 days after your second bankruptcy case is filed.
- If you have filed a Chapter 13 or Chapter 7 and you voluntarily dismiss the case after a motion for relief has been filed or if your case was dismissed for willful failure to follow court orders, you must wait 180 days to re-file bankruptcy. This requirement is laid out in 11 U.S.C. § 109. You may also be unable to re-file if you commit fraud.
What are the debt limits for filing bankruptcy?
Remember, those with high debt levels may not be eligible to file Chapter 13 bankruptcy. In these rare cases, they may be eligible under Chapter 11. According to 11 U.S.C. § 109, if your total unsecured debts are not less than $360,475.00 or if your total secured debts are not less than $1,081,400.00, you are not eligible to file under Chapter 13. These amounts are increased every few years. The debt amount restrictions do not apply to those who file Chapter 7.
Can I file Chapter 7 if my income is higher than the state median?
Filing a Chapter 7 won't be easy if your income is above the median income in your state. As of May 2015, the median income for an individual in Wisconsin is $43,666 and for a household of two it is $59,740. For a household of three people it is $69,600.
If your income is above the median, you are required to first complete and file the means test. This means test form is very complicated and you will need to hire an attorney who specializes in bankruptcy to help you complete the form and determine whether you qualify for Chapter 7. Those with high incomes who cannot file Chapter 7 are often still eligible under Chapter 13, so long as their debts don't exceed the Chapter 13 debt limits.
Will I lose my assets if I file bankruptcy?
In some cases you can stand to lose assets when you file bankruptcy. That is why Sapinski Law Office, S.C. will review all of your assets with you before filing your case. If you accurately communicate what you have before you file, everything should be protected. Almost all my clients who file bankruptcy keep 100 percent of their property. I am able to protect their property in a variety of ways. Through careful use of "exemptions" you can protect your assets. Exemptions are values or dollar amounts which apply to homes, cars, personal property, retirement accounts, depository accounts, cash, and other types of property. The exemption declares an amount up to which that particular type of property is protected. Through careful and diligent use of these exemptions, Sapinski Law Office, S.C. routinely protects the property of bankruptcy clients.
While you can keep your exempt property, non-exempt property can be seized by a Chapter 7 bankruptcy trustee, liquidated, and used to pay your creditors. Many who find they have un-exempt assets can still keep them if they file Chapter 13. Each state has its own set of laws regarding the use of exemptions. Under the Wisconsin exemptions, you may keep almost all your property, including:
- A home with equity up to $75,000 (or $150,000 for a married couple)
- Up to $5000 in your bank accounts (or $10,000 for a married couple)
- Up to $12,000 in household goods ($24,000 for a married couple)
- Possibly all of the money in your children's college savings accounts
- If you own your own business, you may also be able to protect as much as $15,000 ($30,000 if married)
Other assets that may be shielded from liquidation include pensions, security disability benefits, and personal injury awards. Some states allow you to use the federal exemptions. Wisconsin is one such state. Under the federal exemptions you cannot protect as much equity in a home; however, a "wildcard exemption" of up to $25,450 for married couples may be available. Always consult with an experienced lawyer who can help you determine whether the Wisconsin scheme or federal scheme is best for you.
It is also important to keep in mind that timing your bankruptcy filing can be very important. In fact, timing can mean everything, and a knowledgeable bankruptcy lawyer will tell you when it is best for you to file. Sometimes you first need to make non-exempt assets exempt through a process lawyers call "exemption planning." Improper exemption planning can result in allegations of fraud; therefore, it is critical that you retain an experienced bankruptcy attorney before you begin any exemption planning. Remember, it is a federal crime to not disclose all your assets when you file bankruptcy. Failure to list assets can result in denial of your bankruptcy discharge, loss of exemptions, and criminal prosecution. Federal law also requires you to disclose all inheritances, property settlements, or life insurance benefits received within 180 days after filing for bankruptcy. Such money will likely need to be paid to your creditors if it cannot be declared exempt.
Will I be required to go to court if I file bankruptcy?
You won't have to appear in front of a judge, especially if the attorney does his or her job. You will, however, be required to attend a 341 meeting and meet with a bankruptcy trustee. These meetings are usually held at a courthouse near you. If you hire Sapinski Law Office, S.C., my team will fully prepare you for this meeting and will make sure all the required documents are submitted. With this ground work, you will find the meeting to be quite painless.
Most of the time, the 341 meeting is a short and simple procedure. You will be asked, under oath, about your bankruptcy forms and financial situation. In most cases, creditors do not bother to even show up for the meeting! On occasion, complications can arise or a creditor may choose to dispute a debt. In these situations you may need to appear before a judge at a hearing. If you need to go to court, you will receive a notice from the court and from your attorney.
If I file for bankruptcy, will I lose my home?
It is possible to lose your home after filing for bankruptcy; however, it will largely depend on the chapter you file, your loan status, and the exemptions you choose. Those who file for Chapter 13 bankruptcy will not lose their home if they stay current on their payments.
In Chapter 7 bankruptcy, chances of losing your home are higher. Since the court-appointed trustee has control over your assets, he may decide to liquidate non-exempt homestead property to pay back creditors. If your home has no equity or a homestead exemption covers all the equity in your home, then the trustee will most likely not choose to sell your home.
It is recommended that you speak with a bankruptcy attorney who can evaluate your options, if you want to keep your home.
What else do I need to know about bankruptcy?
Here are some more things that you should know about filing for bankruptcy:
- Utility services: Public utilities, such as WE Energies, cannot refuse to cut off services because you have filed bankruptcy; however, they may require you to provide a deposit for future service.
- Discrimination: An employer or government agency cannot discriminate against you because you have filed bankruptcy.
- Driver's license: If you lost your license solely because you could not pay court-ordered damages you caused in an accident, bankruptcy may allow you to get your license back.
- Co-signers: If someone has co-signed a loan with you and you file bankruptcy, the co-debtor may be required to pay the debt (however, Chapter 13 may help to resolve that problem).
How long will it take to rebuild my credit?
You may be able to reach a good credit score in as little as a few months. You may not be able to apply for a credit card right away, but you may be able to use secured credit cards, secured loans, and retail cards to build back your credit. Those who follow my free credit restoration program find they have their best credit ever within a few months after completing their bankruptcy.
Do you have more questions? Call Sapinski Law Office, S.C. today!
By now, you may have a clearer vision of whether or not filing bankruptcy is right for you. Remember, there are alternatives to bankruptcy available to Wisconsin residents, such as debt negotiation and Section 128. One of these options may be better for you and your family.
If you have questions, don't hesitate to contact Sapinski Law Office, S.C. to set up a free case consultation. Together, we can go over your finances, discuss your options, and work toward the solution that is right for you.