Nobody expects to file for bankruptcy, but when life hands you unexpected and uncontrollable circumstances filing for bankruptcy can be a good way to protect yourself from creditors taking further action against you.
Many people do not know that you can file for two different types of bankruptcy: Chapter 7 bankruptcy and Chapter 13 bankruptcy. Before you file for bankruptcy, it is important to understand which option may be better for you.
Similarities Between Chapter 7 and Chapter 13 Bankruptcy
While Chapter 7 and Chapter 13 bankruptcy are different, they do have some commonalities. First, they are available to you if you need to discharge certain kinds of debt. Second, upon filing for either, they immediately implement a protective stay which prevents creditors from pursuing debt payment enforcement options against you. This affords you a safe harbor in which you can file for bankruptcy and determine a path forward without worrying about having to fend off additional legal actions. Where Chapter 7 and Chapter 13 bankruptcy differ is the income level necessary to qualify to use either chapter, as well as how they treat certain kinds of debts and assets.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is available to individuals who can pass the income level test. Essentially, you qualify for this option if your income is lower than the median family income in Wisconsin. There are some circumstances in which you can qualify if your income is higher, so if your income is higher than the median for Wisconsin families you should consult an experienced Wisconsin bankruptcy lawyer to see if you can qualify.
Most Wisconsin residents who need to eliminate a heavy debt burden choose the Chapter 7 option. With Chapter 7 bankruptcy, you get a fresh start and the only debts you owe after your bankruptcy is discharged are secured assets of your choosing. Additionally, there is no minimum debt required to use this option, and any wages and property you acquire after filing belong to you. Finally, Chapter 7 bankruptcy cases are usually finalized in about six months.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is the only option available to you if you are behind on your mortgage or business payments, and you still want to keep your property at the end of the bankruptcy process. With Chapter 13 bankruptcy, you make up your overdue payments over time and the original mortgage agreement can remain in effect. Additionally, Chapter 13 is the only option for people who have too much income to qualify for Chapter 7 bankruptcy.
With Chapter 13, your debt payments can be reduced under a payment plan and your co-signers are immune from creditor debt collection efforts. You generally have more time to pay off your debts, and you can file for Chapter 13 repeatedly.
Filing for Bankruptcy in Wisconsin?
At Hanson & Payne, LLC, we know that filing for bankruptcy can be a scary, complicated, and emotionally difficult process. Our experienced bankruptcy attorneys will treat you with respect and professionalism and will work with you to help you find the best bankruptcy option to get you on sound financial footing as quickly as possible. If you need to file for bankruptcy, contact the Wisconsin bankruptcy attorneys at Hanson & Payne, LLC, today.