The word ‘bankruptcy’ often has a negative connotation, and can scare those who are faced with the possibility of filing for bankruptcy. However, in Wisconsin, the process of filing for Chapter 7 bankruptcy can be simple. In this article we discuss that process.
- What is Chapter 7 Bankruptcy?
- Do I Qualify to Apply for Chapter 7 Bankruptcy in Wisconsin?
- Wisconsin Bankruptcy Exemptions
- Do I Need an Attorney to File for Bankruptcy in Wisconsin?
- What Documents Do I Need to File?
- Are There Other Requirements to File Chapter 7 Bankruptcy in Wisconsin?
- How Much Does It Cost to File Chapter 7 Bankruptcy in Wisconsin?
- What Happens Post-File?
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is a process during which a bankruptcy trustee gathers and sells the debtors nonexempt property to repay creditors, and forgives the remaining debt. Bankruptcy discharges many debts, such as credit card bills, overdue utilities medical bills, personal loans, etc. However, bankruptcy does not discharge tax debt or child support or spousal support orders.
Of the various types of bankruptcy, Chapter 7 is the quickest and cheapest. It typically only takes a few months, and does not necessitate that you pay creditors. This is a good option if the majority of your property is personal property or work materials.
It is worth noting that there is no payment plan available to catch up on late payments in Chapter 7 bankruptcy, so those behind on payments may lose equity in excess, nonexempt assets.
Do I Qualify to Apply for Chapter 7 Bankruptcy in Wisconsin?
To generally qualify for Chapter 7 bankruptcy, you must be an individual, corporation, partnership or other business entity. Wisconsin employs a ‘means test’ to determine whether you qualify for Chapter 7 relief. This test compares your household income to the median household income in Wisconsin. If your income is less than the median income, you qualify for Chapter 7 relief. If your income is above the median income, you must determine your ‘actual expenses’ to determine if you qualify.
Wisconsin Bankruptcy Exemptions
There are several exemptions, or property that you may be able to keep, as a part of your bankruptcy case. In Wisconsin, the federal exemptions apply, but there are also several state exemptions that are available. You can use the state exemptions or the federal exemptions, but you cannot mix and match exemptions. However, if you use the Wisconsin state exemptions, you can use the federal non-bankruptcy exemptions. Any property that is not exempt, will be lost.
Some common Wisconsin exemptions include:
- Homestead Exemption (up to $75,000 in equity)
- Motor Vehicle Exemption (up to $4,000 in equity)
- Alimony & Child Support
- Bank Deposits
- Crime Victims’ Compensation
- Fraternal Benefit Society benefits
- Personal Property (up to $12,000 in total value for tangible property), etc.
Do I Need an Attorney to File for Bankruptcy in Wisconsin?
You are not required to file with an attorney in any type of bankruptcy claim in Wisconsin. While there are other types of bankruptcy that may be complicated enough that they encourage consulting an attorney, filing chapter 7 bankruptcy in Wisconsin should be simple enough to do pro se.
However, hiring a lawyer who has experience in these matters may save you more money in the long run. The cost can often range from $1,000 to $2,000.
What Documents Do I Need to File?
There are several official court forms and financial documents that you will need to provide to the Wisconsin court. The court forms can be found online for free. These forms are rather technical, and it may be wise to consult an attorney at this stage in the process if you have not already done so. However, as mentioned above, you are not required to use an attorney.
You will need documents such as your credit report, tax returns, at least six (6) months of paycheck stubs.
Are There Other Requirements to File Chapter 7 Bankruptcy in Wisconsin?
Yes. Since 2015, Wisconsin bankruptcy debtors have been required to take a credit counseling course. These courses are offered online or in-person. You will get a view at your entire financial picture during this time to determine the best way forward for your situation. You must then file for Chapter 7 Bankruptcy within six (6) months in Wisconsin, or you will have to retake the course. Be sure to take the course with a court-approved company.
How Much Does It Cost to File Chapter 7 Bankruptcy in Wisconsin?
The Chapter 7 Bankruptcy filing fee in Wisconsin is $338. If you are unable to pay the filing fee upfront, you may request that the Court allow you to pay the fee in installments. If your income is within 150% of the federal poverty guidelines, you may be able to get the filing fee waived altogether.
Filing Your Chapter 7 Bankruptcy Forms
There are several federal courthouses in Wisconsin that accept Chapter 7 Bankruptcy forms: Milwaukee, Osh Kosh, Green Bay, Madison and Eau Claire. You will personally take all of the required documentation and a picture ID with you to file the application with the courthouse clerks.
After you file your Chapter 7 Bankruptcy application, you will be scheduled for a 341 interview. This formal meeting typically takes place within 30-40 days of your initial filing. During this meeting, the trustee assigned to your case will verify your identity and ask a few standard questions.
After you file your Chapter 7 Bankruptcy application, you will also be required to take yet another credit counseling course. This second course aims to make sure you have the tools and knowledge to take full advantage of the fresh start bankruptcy offers. This course must be completed before you can receive your final discharge from obligation to make payments.
.avif)
.svg){kind=small}
