Chapter 7 Bankruptcy
Your Madison Wisconsin Bankruptcy Attorney can help you erase your debts with a Chapter 7 bankruptcy. Meet with a Bankruptcy Lawyer in Dane County or Janesville.
Erase your Debt
A Chapter 7 bankruptcy is a type of bankruptcy that is governed by laws set forth in Chapter 7 of the United States Bankruptcy Code. People sometimes refer to a Chapter 7 bankruptcy as a “complete bankruptcy,” “straight bankruptcy,” or “liquidation.” Some people also use the terms “credit card bankruptcy” or “medical bankruptcy.” All of these terms refer to the exact same thing, a bankruptcy filing under Chapter 7 of the Bankruptcy Code. Many people considering bankruptcy have experienced a significant life event such as a serious illness or injury, a divorce, or a change in employment. Others simply find that their incomes have not kept pace with the rising cost of living in this harsh economy. As a result, foreclosures, repossessions, lawsuits, threatening letters, and of course, harassing phone calls have become all too common. Bankruptcy offers a way out and a fresh start. Under Chapter 7 of the Bankruptcy Code, individuals seek to eliminate or “wipe out” all of their allowable debts. These debts frequently include credit card bills, medical bills, utility bills, judgments, and monies owed on a house or car that has since been taken back by the lender.
Chapter 7 Bankruptcy Versus Chapter 13 Bankruptcy
A Chapter 13 bankruptcy is a type of repayment plan or financial reorganization where a person repays a portion of his or her debts over a designated time period, usually 36 to 60 months. A chapter 7 bankruptcy does not involve a repayment plan. A Chapter 7 “discharges” the debts upon completion of the case. The term “discharge” is the legal term for what most people call having the debt “wiped out” or “eliminated.” It takes approximately 120 days for a Chapter 7 case to go through the bankruptcy court system. A Chapter 13, because of the repayment plan, takes between 36-60 months. As such, a Chapter 7 bankruptcy is the quickest way for people to get out of debt and get a fresh start.
Chapter 7 Bankruptcy Eligibility
The most significant factor that affects a person’s eligibility to file under Chapter 7, is household income level. Chapter 7 bankruptcy has a “means test,” or a test of income. Effective May 2017, the income limits are as follows:
- Household of 1: $48,407
- Household of 2: $62,914
- Household of 3: $76,179
- Household of 4: $89,245
- Household of 5: $93,245
- Household of 6: $97,245
However, even if your income is higher than the above limits you may still qualify to file a Chapter 7 bankruptcy. The “means test” allows you to take certain deductions that reduce your counted income. Examples of these deductions include state and federal income taxes, child support, and secured debt payments (mortgage, car, and 401k loan repayments). Attorney Zaleski can advise you in the first consultation about where you fall on the “means test,” which deduction you might be eligible to claim, and whether you qualify to file under Chapter 7. If you do not qualify for Chapter 7, you will usually be eligible for a Chapter 13 Bankruptcy.
- $75,000 in home equity.
- $12,000 worth of household goods, furnishings, clothing, keepsakes, jewelry, appliances, books, musical instruments, firearms, sporting goods, animals or other personal property.
- $15,000 worth of equipment, inventory, farm products and professional books used in a trade or business.
- One motor vehicle worth up to $4,000, plus any unused amount of the personal property exemption.
How A Chapter 7 Bankruptcy Works
Required Credit Counseling And Personal Financial Management Courses.
Before filing either a Chapter 7 or Chapter 13 bankruptcy, you are required underthe new Bankruptcy Code to participate in an approved credit counseling class. This is generally a one-session class available on-line or over the telephone. Attorney Zaleski will be able to refer you to a credit counselor who is approved by the bankruptcy court. Prior to discharge, the Bankruptcy Code also requires that you participate in a personal financial management course. This is also a one-session class that is typically taken on-line or over the telephone between the time that you file your case and the time that you attend the meeting of creditors. Attorney Zaleski again can refer you to a credit counseling agency where you can easily and quickly fulfill this requirement.
The Bankruptcy Paperwork
A chapter 7 case starts with Attorney Zaleski filing the appropriate paperwork with the bankruptcy court serving the area where you live. This will most likely be in either Madison, WI or Milwaukee, WI, depending on the county of your residence. The basic paperwork consists of (1) a voluntary petition; (2) schedules of assets and liabilities; (3) a schedule of current income and expenditures; (4) a statement of financial affairs; and (5) a schedule of executory contracts and unexpired leases. Other documents that you must file generally include a credit counseling certificate and any pay stubs received from an employer during the 60 days preceding the date you filed your bankruptcy petition. You must also be prepared to present a copy of your most recent federal income tax return. If you have not filed a federal income tax return for several years or if have not received pay stubs within the 60 day period, there are other specific forms that you will have to file. If you do not file the proper documents, your case could be dismissed. There are of course specific time deadlines that apply to the filing of these documents.
In order to complete the official bankruptcy paperwork that makes up the petition, statement of financial affairs, and schedules, you should be prepared to certain information to Attorney Zaleski:
- A list of all creditors including names, addresses, account numbers and balances; this information will be used to prepare the Official Bankruptcy Schedules E, F, and G.
- Income information including where you work, how much you get paid, and how often you get paid; this information will be used to prepare the official Official Bankruptcy Schedule I;
- A list of all of all of your personal property; this information will be used to prepare the Official Bankruptcy Schedule B; and
- A detailed list of your monthly living expenses, i.e., food, clothing, shelter, utilities, taxes, transportation, medicine, etc. this information will be used to prepare the Official Bankruptcy Schedule J.
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Another important document that Attorney Zaleski will prepare and file with the bankruptcy court is the Official Bankruptcy Schedule C. This document is essentially a list of your statutorily protected property, property that by law is protected from your creditors. The formal, legal term for such property is “exempt” property. Most people considering bankruptcy are concerned that they may lose certain property by filing bankruptcy. People are understandably most concerned about their homes, vehicles and financial assets. The Bankruptcy Code, as well as certain state statutes, itemizes property that is “exempt” or protected from the claims of creditors. Property that is accurately characterized and listed as exempt on the Schedule C is property that a person will not lose in bankruptcy. In Wisconsin, a person can use the Wisconsin state exemptions to protect his or her property, or the person can use the exemptions set forth by the Bankruptcy Code. In other states, a person can only use the state exemptions. The federal and Wisconsin state exemptions are quite generous and generally serve to protect all of the average person’s property. It is the rare case where a person has property that is not considered “exempt” or protected. The question of whether certain property is exempt or “protected” is an important issue which should be fully analyzed before you file your Chapter 7 bankruptcy. As such, Attorney Zaleski reviews with you how the bankruptcy exemptions will apply to your property.
The “Automatic Stay”
The filing of a petition under chapter 7 automatically stops most collection actions against you and your property. For this reason, the filing of a chapter 7 bankruptcy creates what is known as an “automatic stay.” There are certain types of actions that are not automatically stopped and certain instances where the “stay” may only be effective for a short time period. But generally, as long as the stay is in effect, creditors may not initiate or continue lawsuits, wage garnishments, or even telephone calls demanding payments. Your creditors will receive notice of the bankruptcy filing from the bankruptcy court clerk who sends out written notices to all of the creditors listed on your bankruptcy schedules.
The Meeting of Creditors
In approximately 20-40 days after the petition is filed, the bankruptcy trustee holds what is called the meeting of creditors. During this meeting, the trustee questions you, under oath, regarding the bankruptcy paperwork and matters contained in it. Your creditors are also allowed to appear and ask questions. You are required to attend the meeting and answer questions regarding your paperwork, financial affairs and property. Attorney Zaleski meets with you in advance of this meeting to advise you of the questions that will be asked and to thoroughly prepare you for all aspects of the meeting. Attorney Zaleski of course attends the meeting of creditors with you and represents you during such meeting.
The Discharge Order
In approximately 60-90 days after the meeting of creditors, the bankruptcy court issues what is known as the “discharge order.” This is basically the official court order indicating that the bankruptcy has successfully gone through and the appropriate debts have been “discharged.” Some debts by law cannot be discharged. These include debts for alimony and child support, certain taxes, debts for certain educational benefit overpayments or loans made or guaranteed by a governmental unit, debts for willful and malicious injury by the debtor to another entity or to the property of another entity, debts for death or personal injury caused by the debtor’s operation of a motor vehicle while the debtor was intoxicated from alcohol or other substances, and debts for certain criminal restitution orders.
Chapter 7 Bankruptcy Will Help You Rebuild Your Credit.
Many people considering bankruptcy are afraid that they will never obtain credit, car loans or mortgages again. It is true that a bankruptcy filing will adversely affect your credit rating. However, most clients who meet with Attorney Zaleski indicate that their credit is already damaged by late payments, high debt to income ratios, lawsuits, judgments and other collection actions. In fact, the Zaleski Law Firm receives referrals from credit counselors and lenders who recommend bankruptcy to their clients as a preferred option to struggling with unsecured debt that can never realistically be repaid. The bankruptcy filing will “wipe the slate clean” and allow for a fresh start. Instead of perpetuating bad credit, you will then begin to restore a solid credit rating and qualify for loans. You may not initially be in the “A-1” lending category, but you will be able to qualify for credit in the future. The truth is that upon getting a fresh start, you will in the future qualify for credit, mortgages, and car loans.
Emergency Bankruptcy…24 Hours A Day/7 Days A Week.
If you are a day away from having a house foreclosed upon or car repossessed, you may have to have your case filed ASAP. You will be impressed to learn that the Zaleski Law Firm offers state of the art computer software which enables bankruptcy cases to be electronically filed 24 hours a day, 7 days a week. If you absolutely need to meet with an attorney after hours or on the weekend, Attorney Zaleski will be there, prepared and able to file your case.
The Zaleski Law Firm has offices in Madison and Janesville, and represents residents in Dane, Rock, Columbia, Green, Sauk, Grant, Lafayette, Richland, Adams, Jefferson and all other adjacent counties.
If you need a fresh start, contact the Zaleski Law Firm today. We offer free consultations and evening or lunch hour appointments. Payment plans are also offered to pay for attorney’s fees.