Benefits of Filing Bankruptcy
Many Americans struggle with debts annually and the amount reach limits that they can no longer access loans and credit facilities from conventional lending institutions. Although it is often considered as the last resort, filing bankruptcy is inevitable once you feel that you are unable to pay your debt considering the income and expenses. If you are in a situation where debts accrued cannot be paid within the next one or two years, then filing bankruptcy is the ultimate solution for you. Filing bankruptcy is a legal process that may involve a business or an individual. In some cases, filing bankruptcy is inevitable and it could offer an alternative route to wipe away all your debts without exceeding your loan limits.
However, it is imperative to note that filing bankruptcy will give you a poor reputation among lenders because your lender will see it as a way of running away from the commitments you signed to repay the loan on time. The most integral part that you should consider is that when you file bankruptcy, the report will be on your files for seven to 10 years. This can negatively damage your credit history.
Classes of Bankruptcy
There are two main categories of personal bankruptcy available for married or unmarried individuals based on the level of debt struggle you are facing currently. Personal bankruptcy includes chapter 13 and chapter 7. In summary, chapter 7 bankruptcy is the most common type of bankruptcy and people who want to stop car repossession, wage garnishment, and foreclosure of their homes file it. However, there are debts that cannot be erased even when you file bankruptcy these include:
- Parking fees
- Back taxes and anything owed to the government and
- Child support
Understanding Chapter 7 Bankruptcy
Chapter 7 is the most filed type of bankruptcy in United States. The sole reason is that it reflects the majority of the American in huge debts. Filing chapter 7 bankruptcy is a good choice for individuals and families who have few assets and have large unsecured debts like payday loans, medical bills and credit card debts. In case you are unable to settle all your loans and you see no chances of settling them, then filing chapter 7 bankruptcy is the solution for you. Since it is a legal process, it will involve a thorough scrutiny of your income amount against your debt amount. In many instances, where your cycle of debts are greater than your income, then filing chapter 7 is an option for you. The median income for a house of 1 is $43,202 while that of two is $57,428. If your income exceeds the median house income, the judge or court personnel will then rule that you have the ability to repay the loan. In such cases, it is recommended that you file chapter 13 bankruptcy.
What Is Chapter 13 Bankruptcy?
This is the second category of bankruptcy and it is offered to individuals and families in the United States of America. However, it is not as popular as chapter 7 bankruptcy although it is considered as an option for many people. Features of chapter 13 include:
- Limited debt
- 3-5 repayment plan
Filing chapter 13 incorporates a situation where you agree on a 3-5 year repayment plan. Once you have negotiated with your lawyer or attorney and you are given the leeway, the next step you are given a chance to payback a percentage of the unsecured debt. Because it is a complex type of bankruptcy, it involves a wide array of calculations aimed at creating a plan that will allow you to repay the loan without living on the edge. Over the agreed period, you are required to clear all secured debts such as car and mortgage as well as unsecured debts.
Chapter 13 is a different type of bankruptcy because it limits the number of the debts that you as the borrower can have. Currently, the limits are set at $360,475 for unsecured debt and $1,081,400 for secured debt. The figures were put in place by lending authorities and lending institutions in different states and it is believed that the borrower can repay the loan.
Why You Should Hire a Bankruptcy Attorney
It is important that you know the entire process of hiring a bankruptcy attorney in Milwaukee before you go looking for an attorney. There are forms and calculations that must be considered when filing for bankruptcy and you should find a lawyer who will put your interest first. Moreover, you should ensure that all court required documents are in place. There are several benefits of hiring a bankruptcy attorney. These include:
- No need of re-filing
- You are legally represented
- You can make sound financial judgment as per rules and regulations
When choosing a bankruptcy attorney it is imperative that you consider the experience and the legal fees involved during the process. The most integral aspect is to negotiate your fees before you settle for an attorney. These fees usually vary from one lawyer to another based on:
- Amount on the case
- Work required in the case and
- The type of chapter you are filing
Once you have agreed on a repayment schedule and the fees involved during the case, your lawyer will give your further guidance on the documents required and begin the filing. Common documents required include:
- Pay stubs
- Bank statements
- Vehicle loan paperwork
- Tax returns
- Mortgage or lease information
Once your lawyer has all the documentation required, he or she would file a petition on your behalf and give you details on the terms and conditions involved. You will be required to attend a court hearing a month or a month and a half later once you have filed the case.
Bankruptcy Laws in Wisconsin
Bankruptcy is governed by federal laws and each state has its own rules and regulations on bankruptcy. You should have a clear understanding on lending practices rules and regulation in your state. In Wisconsin, homestead exemption will protect the borrower for more than $75,000 and equity of the same amount. In essence, unless you home is worth more than $75,000, then you are at no risk of losing it. Some of the exempted commodities include keepsakes, automobiles worth four thousand dollars, jewelry, apparel, books, firearms, sports goods, household goods and furnishings, and animals worth $12,000.
The state of Wisconsin is classified into two districts the Eastern that has Milwaukee and Kenosha, while the Western district has Madison and Eau Claire. It is essential that you understand where to file your bankruptcy and the laws around it.
Milwaukee Bankruptcy Lawyers
Debt Advisors Law Offices Milwaukee
2600 N Mayfair Rd #700