Wisconsin Bankruptcy Laws: What are the Laws Regarding Bankruptcies in the State of Wisconsin
Any resident of Wisconsin who wishes to file for bankruptcy must first be aware of the bankruptcy laws that govern the state. Knowledge of the law enables him to protect his assets better and abide by the rules of the land. Individuals can file for bankruptcy through Chapter 7 and Chapter 13 – both of which will be explained in detailed.
The bankruptcy laws under Chapter 7
Simply put, this law is a liquidation law where debts are written off or discharged. All non-exempt assets are sold, and the proceeds are distributed to creditors after paying the individual any amount exempted.
To file for bankruptcy through Chapter 7, an individual must pass the Wisconsin bankruptcy means test.
If an individual’s income is less than the average income of a family (of the same size) residing in Wisconsin, he can file for bankruptcy through Chapter 7.
Any individual who has enough unused income to repay part of his debt cannot file for bankruptcy through Chapter 7.
If the individual has previously filed for bankruptcy through Chapter 7, he cannot file for bankruptcy again for eight years.
Wage garnishment (the debt collector can directly request the debtor’s employer to hold back a certain percentage of his income to pay all overdue debts) will be stopped from the date bankruptcy is filed.
Foreclosure against mortgage and other loans is only temporarily stopped. Foreclosure will still be possible if the individual has not been up to date with his loan payments.
Cosigners will be left to repay all the debt unless they file for bankruptcy as well.
All non-exempt property is lost when filing for bankruptcy through Chapter 7.
All non-dischargeable debts must be repaid even if all other debts are discharged.
A creditor has the power to challenge the debtor’s request to discharge the following:
- Debts incurred because of fraud
- Credit purchases of luxury goods over $1,150 made within 60 days of filing for bankruptcy
- Credit purchases of services over $1,150 made within 60 days of filing for bankruptcy
- Debts owed to a divorced spouse
- Debts incurred for breach of trust and embezzlement of funds
The bankruptcy laws under Chapter 13
Individuals can apply for bankruptcy through Chapter 13 when they want to:
- Retain all their property
- Fall back on mortgage payments
- Fall back on business payments
When a person files for bankruptcy under Chapter 13, he can retain both exempt and non-exempt assets as long as he has the income to pay off his debts.
Debts can be reduced – (the amount reduced will depend on the individual’s income).
The individual will get an extension on time allotted to repay the new debt.
An individual’s non-exempt assets have protection from wage garnishment and foreclosure. He is allowed to keep his property and given time to pay back an overdue mortgage to bring payments up to date.
The individual can retain valuable non-exempt assets.
All non-dischargeable debts must be included in the individual’s new repayment plan.
Regardless of whether a person files for bankruptcy through Chapter 7 or Chapter 13, some debts cannot be discharged. Regardless of his situation, an individual who files for bankruptcy must pay:
- Child support, money, and other family obligations
- Student loans
- Fines for violating the law
- Income tax and all other tax debts
- Debts for causing personal injury or death due to negligent driving and driving under the influence
- Debts not listed in the bankruptcy case (unless the creditors of that debt are aware of his plans to file for bankruptcy).