Bankruptcy and Non-Bankruptcy Alternatives
At Burleson Legal Group, we believe that filing bankruptcy is not an end, but rather a beginning. It’s an opportunity to let go of old stresses and begin anew. We are committed to helping Wisconsin residents achieve peace of mind through financial freedom. Our firm understands your need to resolve difficult matters quickly and finally. With our down-to-earth approach, and more than 10,000 satisfied Wisconsin clients, Burleson Legal Group is your first step to revive and thrive!
Wisconsin residents are fortunate in that they have a specific law called Chapter 128 that they can use to avoid bankruptcy. During your initial consultation, one of our experienced attorneys will calculate your monthly payment to determine whether a debt amortization under Chapter 128 is right for you. We will look for alternatives to bankruptcy before we recommend it.
Call Burleson Legal Group to speak with an experienced attorney today. Not only is the consultation free but you will be provided with the tools to take your first step toward financial freedom and a fresh start on life. 608-268-9073
Chapter 7 Bankruptcy
Chapter 7 is known as a “liquidation bankruptcy’ because it discharges most of your unsecured debt. That includes credit card debt, medical bills and personal loans.
It’s the quickest, simplest and most common type of bankruptcy.
An even more encouraging bankruptcy statistic: 94.3% of Chapter 7 filings had their debts discharged, meaning forgiven.
You must pass a means test to qualify for Chapter 7 filing. The bankruptcy means test examines financial records, including income, expenses, secured and unsecured debt, to determine if your disposable income is below the median income (50% lower, 50% higher) for your state. The means test income level varies from state to state.
You might be forced to sell any non-exempt assets.
Generally, the Chapter 7 process can be completed in 3 to 4 months.
Chapter 7 should dismiss most of the debts you owe, but there are some fixed debts that can’t be discharged in Chapter 7.
Non-dischargeable debts include:
- Child support
- Tax liens
- Court fees and penalties
- Personal injury debts owed due to an accident while you were intoxicated
Chapter 13 Bankruptcy
Chapter 13 bankruptcy allows those with enough income to repay all or part of their debts as an alternative to a Chapter 7 liquidation bankruptcy. It’s for those whose biggest problem is dealing with creditors’ demands for immediate payment, not lack of income.
Under Chapter 13, people under the median income have 3 to 5 years to resolve their debts while applying all their disposable income into their plan of reorganization. The option allows applicants to eliminate some, if not all, unsecured debts while catching up on missed mortgage payments or retaining a vehicle or both.
Prior to June 21, 2022 and after June 21, 2024, to be eligible to file for Chapter 13 bankruptcy, an individual must have no more than $465,275 in non-contingent unsecured debt, which includes, in part, credit card debt, student loans, medical debt and personal loans. They also can’t have more than $1,395,875 liquidated, non-contingent secured debts, which includes, in part, mortgages, car loans, title loans, mechanics liens and UCC statements. These figures are scheduled to adjust again on April 1, 2025.
Cases filed between June 21, 2022 and June 21, 2024 are subject to The Bankruptcy Threshold Adjustment and Technical Corrections Act (the “Act”). The Act increases the aggregate (combining secured and unsecured) debt limit of all non-contingent, liquidated debt to $2,750,000.
Wisconsin State Law Chapter 128
Chapter 128 gets its name from the Wisconsin state statute it falls under, 128.21. The main purpose of Chapter 128 is to repay debt without filing bankruptcy. It’s not a consumer credit counseling program but rather a voluntary court ordered debt amortization repayment plan that lowers the immediate debt obligation by spreading out (amortizing) the payments over a period of three (3) years interest-free.
A Chapter 128 is the opposite of bankruptcy in that you are not discharging debts, you get to pick and choose which debts to include, you can file successive and concurrent cases, you can add creditors and you can even dismiss or pay your plan off early. A Chapter 128 proceeding may be a much more attractive option if you do not qualify or want to file for bankruptcy.
The following is a partial list of the advantages of a Chapter 128:
• It is unique to the State of Wisconsin and is open to all Wisconsin residents.
• Unlike bankruptcy, you’re not required to list your assets or appear at a hearing.
• Unlike bankruptcy, you do not need to list all the debts you owe.
• Stops garnishments, bank account levies, and other collection activities.
• If creditor files a lawsuit, they must remove it after you successfully complete your plan.
• If a creditor files a lawsuit, they must remove it when you complete your plan.
• Easy and inexpensive to file.
We love to solve problems,
and we aren’t intimidated by
Stop Collector Harassment
You’ve fallen behind on your bills and now creditors and collectors are calling. We can put an end to those harassing collection calls once you hire Burleson Legal Group.
Pursuant to the federal Fair Debt Collection Practices Act (FDCPA) the collectors must stop calling you and call us. Creditors typically stop calling you when they recognize we represent you, however, filing a bankruptcy or Chapter 128 will require them to stop contacting you.
Stop Wage Garnishment
When a creditor sues you and receives a judgment, then they can garnish your wages. Most likely the reason you were sued is because you didn’t have the money to pay just that one creditor. Wage garnishment could, and often does, jeopardize one’s ability to pay their mortgage, rent or vehicle loan.
A bankruptcy automatic stay and a Chapter 128 filed on that creditor stops wage garnishment.
Too often we get the call when a soon-to-be client is standing outside of their place of employment or grocery store and their car is gone. We can get that vehicle back if you act fast. In Wisconsin, you have up to 15 days from when the vehicle was taken to either pay it off or refinance or obtain a workout or to file a bankruptcy. If acted upon quickly, we can get your car back.
Unfortunately, bad things happen to good people. This could be a period of unemployment, unexpected medical crisis, divorce, or even a pandemic, but the last thing you want is to lose your home.
The attorneys at Burleson Legal Group have the expertise to stop the foreclosure process or at a minimum delay it long enough for you to get back on your feet. Timing is everything, so act fast.
Frequently Asked Questions & Answers
What Is Bankruptcy?
What Can Bankruptcy Do for Me?
Bankruptcy may make it possible for you to:
- Eliminate the legal obligation to pay most or all of your debts. This is called a discharge of debts. It is designed to give you a fresh financial start.
- Stop foreclosure on your house or mobile home and allow you an opportunity to catch up on missed payments. Bankruptcy does not, however, automatically eliminate mortgages and other liens on your property without payment.
- Prevent repossession of a car or other property, or force the creditor to return property even after it has been repossessed.
- Stop wage garnishment, debt collection harassment, and similar creditor actions to collect a debt.
- Restore or prevent termination of utility service.
- Allow you to challenge the claims of creditors who have committed fraud or who are otherwise trying to collect more than you really owe.
What Can't Bankruptcy Do?
Bankruptcy cannot, however, cure every financial problem. Nor is it the right step for every individual. In bankruptcy, it is usually not possible to:
- Eliminate certain rights of “secured” creditors. A “secured” creditor has taken a mortgage or other lien on property as collateral for the loan. Common examples are car loans and home mortgages. You can force secured creditors to take payments over time in the bankruptcy process and bankruptcy can eliminate your obligation to pay any additional money if your property is taken. Nevertheless, you generally can not keep the collateral unless you continue to pay the debt.
- Discharge types of debts singled out by the bankruptcy law for special treatment, such as child support, alimony, certain other debts related to divorce, most student loans, court restitution orders, criminal fines and some taxes.
- Protect cosigners on your debts. When a relative or friend has co-signed a loan, and the consumer discharges the loan in bankruptcy, the cosigner may still have to repay all or part of the loan.
- Discharge debts that arise after bankruptcy has been filed.
What Different Types of Bankruptcy Cases Should I Consider?
There are four types of bankruptcy cases provided under the law:
- Chapter 7 is known as straight bankruptcy or liquidation. It requires a debtor to give up property that exceeds certain limits called exemptions, so the property can be sold to pay creditors.
- Chapter 11, known as reorganization, is used by businesses and a few individual debtors whose debts are very large.
- Chapter 12 is reserved for family farmers and fishermen.
- Chapter 13 is called debt adjustment. It requires a debtor to file a plan to pay debts (or parts of debts) from current income.
Most people filing bankruptcy will want to file under either chapter 7 or chapter 13. Either type of case may be filed individually or by a married couple filing jointly.
If your income is above the median income for a family the size of your household in your state, you may have to file a chapter 13 case (the median family income for a family of 4 as of April 2007 was approximately $73,359). A higher-income consumer must fill out means test forms requiring detailed information about income and expenses. If, under standards in the law, the consumer is found to have a certain amount left over that could be paid to unsecured creditors, the bankruptcy court may decide that the consumer cannot file a chapter 7 case, unless there are special extenuating circumstances.
What Does It Cost to File for Bankruptcy?
There are two elements to this answer. There are attorneys’ fees that you will pay as well as the filing fee. Some law offices combine these rates, others do not, so it’s important if you’re looking for a quote to understand whether or not the quote includes the filing fee. The current filing fee is $338 to file for bankruptcy under chapter 7 and $313 to file for bankruptcy under chapter 13, whether for one person or a married couple.
What Must I Do Before Filing Bankruptcy?
You must receive budget and credit counseling from an approved credit counseling agency within 180 days before your bankruptcy case is filed. The agency will review possible options available to you in credit counseling and assist you in reviewing your budget. Different agencies provide the counseling in-person, by telephone, or over the internet. If you decide to file bankruptcy, you will need to file with the bankruptcy forms in your case a certificate from the agency stating that you received the counseling.
If you decide to go ahead with bankruptcy, you should be very careful in choosing an agency for the required counseling. It is extremely difficult to sort out the good counseling agencies from the bad ones. Many agencies are legitimate, but many are simply rip-offs. Being an approved agency for bankruptcy counseling is no guarantee that the agency is good. It is also important to understand that even good agencies won’t be able to help you much if you’re already too deep in financial trouble.
Some of the approved agencies offer debt management plans (also called DMPs). This is a plan to repay some or all of your debts in which you send the counseling agency a monthly payment that it then distributes to your creditors. Debt management plans can be helpful for some consumers. For others, they are a terrible idea. The problem is that many counseling agencies will pressure you into a debt management plan as a way of avoiding bankruptcy whether it makes sense for you or not. It is important to keep in mind these important points:
- Bankruptcy is not necessarily to be avoided at all costs. In many cases, bankruptcy may actually be the best choice for you.
- If you sign up for a debt management plan that you can’t afford, you may end up in bankruptcy anyway (and a copy of the plan must also be filed in your bankruptcy case).
- There are approved agencies for bankruptcy counseling that do not offer debt management plans.
It is usually a good idea for you to meet with an attorney before you receive the required credit counseling. Unlike a credit counselor, who cannot give legal advice, an attorney can provide counseling on whether bankruptcy is the best option. If bankruptcy is not the right answer for you, a good attorney will offer a range of other suggestions. The attorney can also provide you with a list of approved credit counseling agencies, or you can check the website for the United States Trustee Program office at http://www.usdoj.gov/ust/
What Property Can I Keep?
In a chapter 7 case, you can keep all property which the law says is exempt from the claims of creditors. In many states, you can choose between state or federal law exemptions. Attorneys at Burleson Legal Group will help you understand how these exemptions apply to your situation, so that you may keep everything you are entitled to under the law.
Keep in mind, while your exemptions allow you to keep property even in a chapter 7 case, they do not effect the right of a mortgage holder or car loan creditor to take the property to cover the debt if you have fallen behind.
What Will Happen to My Home and Car if I File for Bankruptcy?
In most cases, you will not lose your home or car during your bankruptcy case as long as your equity in the property is fully exempt. Even if your property is not fully exempt, you will be able to keep it, if you pay its non-exempt value to creditors in chapter 13.
However, some of your creditors may have a security interest in your home, automobile or other personal property. This means that you gave that creditor a mortgage on the home or put your other property up as collateral for the debt. Bankruptcy does not make these security interests go away. If you don’t make your payments on that debt, the creditor may be able to take and sell the home or the property, during or after the bankruptcy case.
There are several ways that you can keep collateral or mortgaged property after you file bankruptcy. You can agree to keep making your payments on the debt until it is paid in full. Or you can pay the creditor the amount that the property you want to keep is worth. In some cases involving fraud or other improper conduct by the creditor, you may be able to challenge the debt. If you put up your household goods as collateral for a loan, other than a loan to purchase the goods, you can usually keep your property without making any more payments on that debt.
Can I Own Anything After Bankruptcy?
Yes! Many people believe they can not own anything for a period of time after filing for bankruptcy. This is not true. You can keep your exempt property and anything you obtain after the bankruptcy is filed. However, if you receive an inheritance, a property settlement, or life insurance benefits within 180 days after filing for bankruptcy, that money or property may have to be paid to your creditors if the property or money is not exempt.
Will Bankruptcy Wipe Out All My Debts?
Yes, with some exceptions. Bankruptcy will not normally wipe out:
- money owed for child support or alimony, fines, and some taxes.
- debts not listed on your bankruptcy petition.
- loans you got by knowingly giving false information to a creditor, who reasonably relied on it in making you the loan.
- debts resulting from willful and malicious harm.
- most student loans, except if the court decides that payment would be an undue hardship.
- mortgages and other liens which are not paid in the bankruptcy case (but bankruptcy will wipe out your obligation to pay any additional money if the property is sold by the creditor).
Will I Have to Go to Court?
In most bankruptcy cases, you only have to go to a proceeding called the meeting of creditors to meet with the bankruptcy trustee and any creditor who chooses to come. Most of the time, this meeting will be a short and simple procedure where you are asked a few questions about your bankruptcy forms and your financial situation.
Occasionally, if complications arise, or if you choose to dispute a debt, you may have to appear before a judge at a hearing. If you need to go to court, you will receive notice of the court date and time from the court and/or from our office.
What Else Must I Do to Complete My Case?
After your case is filed, you must complete an approved course in personal finances. This course will take approximately two hours to complete. We will provide you with a list of organizations that provide approved courses, or you can check the website for the United States Trustee Program office at www.usdoj.gov/ust.
You should sign up for the course soon after your case is filed. Once you have completed the course you will receive a certificate of completion. This certificate must be received by our office within 30 days following your meeting of creditors. You will not be granted a discharge of your debts unless we file the certificate of completion in a timely manner with the court.
Will Bankruptcy Affect My Credit?
There is no clear answer to this question. Unfortunately, if you are behind on your bills, your credit may already be bad. Bankruptcy will probably not make things any worse.
The fact that you’ve filed a bankruptcy can appear on your credit record for ten years. But because bankruptcy wipes out your old debts, you are likely to be in a better position to pay your current bills, and you may be able to get new credit.
We recommend you pull a copy of your credit report from each of the three credit bureaus approximately two (2) months following receipt of your discharge in bankruptcy. You should carefully check these reports to see that all of your debts are listed correctly. If not, there is a procedure to correct the error. Rebuilding your credit is your responsibility and more information regarding credit repair and reporting violations can be found on the Federal Trade Commission’s website at http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre21.shtm.
My Friend Went Through Bankruptcy, but He Told Me Something Different.
You have probably already received or will receive advice on what to do from well-meaning friends and relatives who have themselves experienced financial problems. Just like no two people are alike, no two bankruptcies are alike. Take the advice of your well-meaning friends and acquaintances with the proverbial grain of salt. If you have a specific question about anything related to your bankruptcy, make it your rule to ask your attorney, and he or she will try to provide you with an answer that applies to your special situation.
May I Repay Some of My Creditors and Not Others under the Bankruptcy?
You cannot selectively pick and choose some particular creditors and decide to pay them outside of your bankruptcy proceedings. All of your debts must be dealt with through the court. Any payments which you make to a creditor must be paid under the authority of the court, by the terms of the law, and not by any personal desires. If you want to pay creditors, you must do so through a Chapter 13 plan.
Are Student Loan Debts Dischargeable?
Most student loans are not discharged in bankruptcy. You should refer more specific questions to your attorney.
Will My Employer Find Out About My Bankruptcy?
The bankruptcy court does not contact your employer when your case is filed. Your payroll department may be contacted to stop garnishment, but most times they are told to stop without a reason why. Though anyone may be able to go to the courthouse and find out if you’ve filed for bankruptcy, this rarely happens.
Who Is the United States Trustee and What Is Its Function?
The Office of the U.S. Trustee is an Executive Branch agency that is part of the Department of Justice. The U.S. Trustee is responsible for appointing trustees to administer bankruptcy cases and setting the First Meeting of Creditors (§341 Meetings) dates and times. The staff also monitors the bankruptcy cases to see if bankruptcy fraud has occurred. They are prohibited from providing legal advice. In all chapter 7, 12, 13 and in some chapter 11 cases, a case trustee is assigned by the court to administer the bankruptcy proceedings.
Contact Burleson Legal Group Today
The first step toward your financial fresh start is to call or email us today. You will speak with a down-to-earth and experienced debt relief attorney who will lay out your options in an easy-to-understand manner. The consultation itself doesn’t take long and it is free. We look forward to hearing from you today!