If you don't have the ability to pay your existing debts, you may qualify for Chapter 7, or "fresh start," bankruptcy. Chapter 7 is named for the chapter of the Bankruptcy Code in which this type of relief is authorized. Businesses and farms can also file Chapter 7.
Chapter 7 bankruptcy offers a number of benefits. You are allowed to keep up to a certain amount of property, which is then exempt from the bankruptcy case. Any remaining property may be liquidated (sold) by the bankruptcy trustee assigned to your case to pay your creditors. However, in most Chapter 7 cases, there is no non-exempt property. If your case is one of these "no asset" cases, the trustee will not take any of your property.
A Chapter 7 case is usually resolved in four to six months. At the end of the case, you receive a discharge, which gives you a clean financial slate. All your unsecured debts are wiped out, with limited exceptions (such as student loan debt, child support and alimony, some taxes, and a few others). Secured debts, such as mortgages and car loans, may or may not be wiped out, depending on whether you want to keep your home or car.
There is a "means test" to determine if you qualify for Chapter 7 relief. If your income level is too high to qualify for Chapter 7 bankruptcy, you may still qualify for Chapter 13 bankruptcy.
If you have regular income, and can pay off all or part of your debt over the course of three to five years, Chapter 13 bankruptcy might be right for you. In Chapter 13, also known as "wage-earner's bankruptcy," you submit a plan to repay your creditors to the bankruptcy court. The court must approve, or "confirm" your plan, and you repay some or all of your debts according to the plan with your future income. Business entities and farms are not eligible to file Chapter 13.
One great benefit of Chapter 13 bankruptcy is that it can halt a home foreclosure, and allow you to pay any back mortgage payments over the three to five year life of your plan. When you have successfully completed your plan, any remaining debt (except those considered non-dischargeable under the Bankruptcy Code) is forgiven. Most secured, long-term debt is not forgiven unless you give up the asset that secures the debt (such as your home in the case of a mortgage).
Three to five years is a long time, and your circumstances could change. If it happens that you cannot complete the original Chapter 13 plan, you may be able to modify your plan or convert your bankruptcy to a Chapter 7 if you now qualify.
Chapter 128 is an alternative to bankruptcy. It is similar to a Chapter 13, in that it involves a three year debt payment plan. However, unlike Chapter 13, you do not have to include all of your debts in your plan. While bankruptcy is a federal court procedure, created by the United States Code, Chapter 128 is a Wisconsin court procedure, created by the Wisconsin Statutes.
Creditors of individuals and businesses going through bankruptcy are also entitled to representation of their interests during the process. Ash Street Law also represents creditors in some bankruptcy matters.
If you are concerned about your financial future, you don't have to struggle alone. Attorney Nancy Thome has over two decades of legal experience, including in bankruptcy. She makes it a priority to give you the information you need in a clear, straightforward way, to relieve your anxiety, and to help you get a fresh financial start. Ash Street Law serves clients throughout Sauk County as well as clients in Dane County, Columbia County, Adams County, Marquette County, Juneau County, and Richland County, Wisconsin.
We invite you to contact Ash Street Law to discuss your financial concerns and to schedule a consultation. We look forward to working with you.