This article discusses Chapter 13 bankruptcy repayment plans in Wisconsin.
Many people associate bankruptcy with liquidation, sometimes known as Chapter 7 bankruptcy, and all of the concerns regarding exemptions that go along with it.
In Wisconsin, filing for Chapter 7 bankruptcy will cost $335 in 2020, and filing for Chapter 13 bankruptcy will cost $310. A single person or a married couple can file for bankruptcy in Wisconsin for the same price. The court may allow you to pay the filing fee in installments if you can't pay it all at once.
Bankruptcy filing fees are non-refundable.
What is Chapter 13 Bankruptcy and How Does It Work?
In general, Chapter 13 bankruptcy is a court-ordered repayment plan for individuals or families with steady income. It's not just for persons who can't file Chapter 7; anyone with a regular income and debt problems could benefit from a Chapter 13 and the bankruptcy court's protections. You may be able to enroll into a 36- or 60-month plan, depending on your income restriction, and you will pay only what is available after calculating your net monthly income and subtracting expenses to arrive at your monthly plan amount. To learn more about Chapter 13 Bankruptcy read our article Wisconsin Chapter 13 Bankruptcy FAQ.
The Chapter 13 Plan
Your Chapter 13 plan will be made up of your monthly disposable income and a term duration that will be determined by your gross family income and if it is higher than the median income for a family of your size in Wisconsin. The plan will also specify how you will repay your obligations and which obligations will be discharged at the conclusion of your plan period. Certain duties will be met outside of the plan as well. Assume a Chapter 13 debtor has a home mortgage, two auto payments, college loans, and credit card debt, for example. The mortgage would normally be paid directly (outside the plan), but if there is a mortgage arrearage, it would have to be paid inside the plan. Payments for automobiles are usually included in the plan (but can be paid direct as long as there is a good reason). Student loans are determined by the total plan, whether they are included or paid directly, and credit card debt is paid out after the student loans. Unsecured obligations will be reimbursed only after all administrative, secured, and priority claims have been settled. Essentially, the debt that would normally be dismissed in a Chapter 7 must wait until the end of the payment plan to be dismissed.
How is the amount paid to unsecured creditors determined by the plan?
Lawyers are frequently asked how the amount of money given to general unsecured creditors is determined. In layman's terms, how many pennies on the dollar your credit card debt, medical debt, consolidation loan debt, and other debts will receive. The basic rule is that unsecured creditors should receive at least as much in a Chapter 13 bankruptcy as they would in a Chapter 7. Your non-exempt assets and median income will be used in this calculation. Assume that a person does not want to file Chapter 7 because they have exceeded the car exemption limit, and that the amount in vehicles that they cannot exempt is roughly $5,000. In that circumstance, the plan would have to provide that the general unsecured creditors receive the $5,000 that they would have got if the assets had been sold by the trustee in a Chapter 7 case. The median income limit is another example. In most cases, Chapter 7 is only available to people and families who, depending on their size and gross income level, fall below the state's median income limit. You can be over the median limit in a Chapter 13 bankruptcy and still file, but keep in mind that you may have to repay a portion of your unsecured debt in order to receive a release.
Chapters 7 and 13 have a lot in common.
The parallels between Chapter 7 and Chapter 13 can be seen in the bankruptcy court's protections, the filing requirements, and the debtor education courses required. You will be protected from garnishments, civil suits, and collection agency calls regardless of which Chapter you file. The filing requirements are similarly comparable, since the filing cost for Chapter 13 is $310 (vs. $335 for Chapter 7) and you'll need to fill out the identical paperwork and schedules in order for your case to move forward. The credit counseling and debtor education courses share one last similarity. You must have completed a credit counseling course through an accredited agency prior to filing your Chapter 13 case.
The second course you must take on debtor financial management must be finished before the conclusion of your plan's term. The second course will take longer to finish because Chapter 13 will span at least three years from the start of the case. An Initial Meeting of Creditors is held in both Chapter 7 and Chapter 13 cases and lasts around 5 to 10 minutes each case.
Please bring your tax returns, both federal and state, for the last two years when speaking with our office, as the trustee will require them prior to your Initial Meeting of Creditors. We also recommend bringing any pay stubs from employers you've worked for in the last six months, as well as copies of any bills you want to include in your bankruptcy.
Request a consultation with an attorney. Call our office at (630) 324-6666 or schedule a consultation with one of our experienced lawyers today. You can also fill out our confidential contact form and we will get back to you shortly.
To learn more, read our article about Chapter 13 bankruptcy repayment plans.
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