Financial stability is something that every person wants to reach. Reality is that not so many people can actually achieve that. In today’s economy, sustaining a stable financial state is almost impossible for many people. Not only those who are out of a job, but also to those with stable jobs and monthly income. Working hard is simply not enough these days, as the bills grow higher and higher. With so many things to take care of, it is easy to lose track of what you can actually afford and what you cannot.
Of course, having a stable job really helps your budget, but sometimes that stable job is not there for lots of people. You can also be used to a certain lifestyle and then you get fired, then you are in big trouble. Many people who experience trouble with their finances often use the service of the loan lending industry to pay for bills and emergency expenses. And usually, once you start taking out loans, putting an end to it is much harder than you might think. Of course, paying for monthly bills and emergency expenses are not the only reasons for a person to get in debt. You may want to make an investment in yourself for a brighter career path by taking out a student loan.
The thing with student loans is that many people repay their student loans their whole lives. No matter what the reason for being in debt is, you need to find a solution as fast as you can. Many people try all kinds of debt relief programs to get rid of their debt. While some of them reach the desired goal, there are many who stay stuck in the same place. If you are reading this, you are probably experiencing financial difficulties. Maybe you have tried different methods to free yourself from your debt, but somehow it did not work out. You still have an option available to you, that may be exactly what you need and that is bankruptcy. Below, we are going to explain what bankruptcy is and how to file for bankruptcy in Wisconsin.
What is bankruptcy?
Bankruptcy is a way for businesses and individuals to get rid of their debt and to be able to start a fresh, debt-free life. Bankruptcy does not have the best possible reputation, but that is due to what bankruptcy has been represented in the past. Nowadays, bankruptcy can be an amazing financial tool if used correctly and for the right reason and situation. In bankruptcy, the business or the person declares himself unable to pay off his debts.
Depending on the specific case and type of field, an appointed judge determines the payment schedule or bankruptcy discharge of all debt, or most of it. When a business declares bankruptcy, it can either mean that this business will continue to conduct its operations with reduced payment to the debtors or that this business will close. The most common type of bankruptcy is called Chapter 7 bankruptcy. Other bankruptcy types include Chapter 13 and Chapter 11 bankruptcy.
How to File Bankruptcy in the state of Wisconsin
Bankruptcy Credit Counseling Act of 2005
According to the 2005 Bankruptcy credit counseling act, every individual debtor filing for bankruptcy after October 17, 2005 is required to go through credit counseling for a period of six months prior to his bankruptcy relief filing. Also, that individual is required to complete an instructional financial management course after he files for bankruptcy.
2005 Bankruptcy Means Test Act
According to the Bankruptcy Means Test Act of 2005, your expenses and income are going to be analyzed to determine whether you can qualify for a Chapter 7 bankruptcy or if you need to file for a Chapter 13 bankruptcy. In order to apply the test, the courts will examine your average income for 6 months before filing for bankruptcy to compare it to the median income in the state of Wisconsin. If your income for the 6 months before filing for bankruptcy is below the median in the state of Wisconsin, you will be allowed to choose Chapter 7 bankruptcy. If your income, however, is above the median, you will have to wait for the other steps of the means test to be applied in order to determine whether you can qualify for Chapter 7 bankruptcy or not.
Gathering the necessary paperwork
In order to start the bankruptcy process, you need to itemize your income sources. That includes – monthly living expenses, major money transactions for the past two years, all debts (unsecured and secured), as well as all of your property (not just real estate but also your every asset and possession). You will also need to collect your tax returns for the period of the last two years, vehicles titles, deeds to all of the real estates that you own, as well as all the documentation for each and every one of the loans that you may have.
Filing for bankruptcy
After you have collected all the needed information, either with the help of a bankruptcy lawyer or all on your own, it is then time to determine which of your property you believe to be exempt from seizure based on the Wisconsin exemptions. In order to actually file for bankruptcy, either your bankruptcy lawyer or you will have to file a petition of 2 pages as well as some other forms at your district bankruptcy court in the state of Wisconsin.
Those forms are referred to as the schedules collectively and require you to describe the financial status you currently have, as well as all recent financial transactions (usually within the period of the last two years). If the judge or your creditors find out or feel that you have not really been absolutely forthcoming in the filing of your bankruptcy, that could very well jeopardize the whole outcome of your petition.
If you are filing for a Chapter 7 bankruptcy, that filing in the state of Wisconsin will cost you $306. This fee will stay and cannot be waived but you could have the option to pay it in installments. The fee for filing a Chapter 13 bankruptcy case in the state of Wisconsin is $281 and also cannot be waived.
Requirements for Chapter 13 bankruptcy
In case you file for a Chapter 13 bankruptcy, there must also be a submission of a proposed repayment plan. After you have paid most of the reasonable monthly expenses, what is going to be the amount of money that you will have left to pay for your outstanding bills? And how is this amount going to be divvied up among the creditors you owe.
Priority claims (such as back child support and taxes) need to be paid in full, unsecured debts (such as medical bills and credit card debt) are normally partially paid. Unsecured debts may be paid off for just 10 cents on the dollar. That depends on the judgments of the parties that are involved with your case.
These requirements, however, are not all that is needed to file for a Chapter 13 bankruptcy. Your repayment plan must also pass each of the following steps:
- The plan needs to be delivered in good faith
- Unsecured creditors have to be paid at least as much as what they would have been in case of a Chapter 7 bankruptcy filing. This is normally the value of all of your nonexempt property.
- Each and every one of your disposable income needs to be paid into the repayment plan for a period of no less than 3 years
In case you have already filed for Chapter 13 bankruptcy, you need to start making your repayment plan payments. These payments will generally be withdrawn from your wages directly and you or your bankruptcy lawyer should make an arrangement with the court for those payments to be deducted from your wages.
When you have filed the needed paperwork with the bankruptcy court, an automatic stay will go into effect straight away. This action is designed to prevent creditors from contacting you directly or making a claim on any property that you owe from the day of filing for bankruptcy. This will make any foreclosure proceedings impossible.
Bankruptcy in Wisconsin Trustee
When filing for bankruptcy, the court will get legal control on all your debts and any property you owe that is not covered by the Wisconsin exemptions. The court will then appoint a trustee to your case. A trustee’s job is to make sure that your creditors are paid as much as possible. The trustee will thoroughly review your paperwork, especially all the assets that you possess and all the exemptions that you wish to claim, and that can challenge any part of your case.