You do not have to lose your home or car. This article will discuss what might happen to your home or automobile when you file for Bankruptcy in Wisconsin. We will answer the following questions:
- What are secured and unsecured debts?
- What is an automatic Stay?
- What is a reaffirmation agreement?
- What are exemptions?
By the conclusion of this article you should have a better idea of whether or not you will lose your home or car when you file for Bankruptcy in Wisconsin.
What are secured and unsecured debts?
When filing for bankruptcy regardless of chapter, you must include all your debts. Secured debts are debts which are secured by property. This is done when you enter a contract with a creditor for a particular item to be financed. The best example of an item that is typically a secured debt is a mortgage assigned to your home. The other most common secured debt would a car loan. Both of these examples include a debt tied or secured by an asset. Less important to this conversation but equally important with respect to bankruptcies, unsecured debts are debts that are not bound or secured by a specific asset. Examples of these debts include medical bills, credit card debt, and some personal loans. Our other attorney written article is a great source to review the differences between secured and unsecured debts.
What is an automatic stay?
Foreclosures and repossessions are the legal actions the creditors may take when a borrower defaults on a secured debt such as a home or a car. Both a Chapter 7 and a Chapter 13 filing would put a stop to these proceedings with what is referred to as the “automatic stay.” While the stay is in effect, creditors will not be able to move against you or your property. The creditor would have to file for relief prior to continuing with their suit. Often this sets the ground up for negotiations. For a look at frequently asked questions regarding bankruptcy read our article bankruptcy FAQs.
What are Exemptions?
In Wisconsin you can take advantage of both Federal and State based exemptions. These exemptions are used to cover and protect your property from your creditors. Wisconsin exemption 815.20 allows you to exempt property you occupy or intend to occupy to $75,000; $150,000 for married couples filing jointly. 815.18(3)(g) allows you to exempt equity in a motor vehicle up to $4,000, plus any unused portion of the $12,000 personal property exemption. 815.18(3)(b) allows you to exempt equipment, inventory, farm products, books, and tools of trade up to $15,000, or like amount in a closely-held business. There are several exemptions in the code which are flexible and may be used to cover unexpected assets. Therefore it is important to discuss these matters with an experienced attorney.
What are reaffirmation agreements?
Not everything will be covered by the exemptions; however, depending what chapter Bankruptcy you filed, you may be able to retain your property by signing a new agreement with the creditor. With a Chapter 13 repayment plan, you do not have to lose your property, because you are submitting a repayment plan that demonstrates your capacity to cover the debt owed. With a Chapter 7 Bankruptcy, if your property is a secured debt that is not covered by an exemption, you will have to enter into a reaffirmation agreement with the creditor, should you decide to keep the property. Creditors are typically more than happy to keep you if you are demonstrating an ability to pay. Reaffirmations are common tools used for both homes and vehicles. A more in depth look at reaffirmation agreements can be found one our page reaffirmation in bankruptcy. These agreements will allow you to keep your property so long as the judge approves of it and you are able to keep up with the payments.
You do not have to lose your home or car when filing for Bankruptcy in Wisconsin. By discussing this matter with an attorney at our firm, you can find out exactly what can be done to preserve and protect your property.
Bankruptcy is not meant to take things away from you but rather to give you a fresh start. When filing a Bankruptcy case in Wisconsin, the court wants you to consider whether or not it would be in your best interest to retain the property especially considering its loss of value. By hiring our firm, you are hiring attorneys that will advise you on best practices as well as the best strategies to keep your home or vehicle if it is possible. If you have any questions, please give us a call.
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