Many Americans have low credit scores and are struggling to overcome a vicious debt cycle. Filing bankruptcy can help you overcome excessive debt. There are two categories of personal bankruptcy. These include
Chapter 13
Chapter 7
There are two categories of personal bankruptcy Chapter 13 & Chapter 7
Many people do not understand that the features of these chapters cover beyond erasing debt. Families and individuals can use chapter 13 and chapter 7 to stop repossession of a car, foreclosure of a home and garnishment of their wages. It is important to understand that there are certain types of debts which cannot be erased even if you file for bankruptcy. These debts include
parking fees
alimony
child support
back taxes and anything else owed to the government such as library fees
Bankruptcy is governed by the federal law; each state has specific bankruptcy rules that they create themselves to govern their lending practices. Exemptions are rules which specify a value for certain objects which can be protected from liquidation when you are filing your bankruptcy. In Wisconsin, there are homestead exemptions which will protect the borrower more than $75,000 and $75,000 equity of your home. This means that unless your home equity is valued more than $75,000, then you are not at risk of losing it. Wisconsin exemptions cover the following
Automobiles up to $4,000
Household furnishings and goods
Keepsakes
Wearing apparel
Jewelry
Appliances
Books
Musical instruments
Firearms
Sporting goods
And animals up to $12,000.
The state of Wisconsin is categorized into two bankruptcy districts the western and eastern. The eastern district covers the following cities
Kenosha
Milwaukee
Western districts cover these cities
Eau Claire
Madison
It is imperative to note that when filing for bankruptcy, you should find an attorney who will understand your situation. Read all the terms and conditions included in the agreement before you agree to anything.
It is imperative that you understand the process of hiring a bankruptcy attorney before you go looking for a lawyer. There are certain calculations and forms that must be filled out accurately before you can proceed to ensure that you have filled your papers correctly in tandem with the court requirements. Some of the advantages of hiring a bankruptcy attorney include
You have a legal guidance in filling out the forms
You avoid re-filing
You can consult anytime in case you face difficulties
Features that you should put into consideration include
Attorney fees
The most essential part in looking for a bankruptcy attorney is to negotiate attorney fees for filing your case. Attorney fees depends on
The kind of chapter you are filing
Amount involved in the case
The amount of work the attorney will do to complete your case
Once you have agreed on the payment schedule and the fees involved in the bankruptcy case. Your attorney will guide you on the documentation which you are required to fill uot and from there you can begin the entire process. Documents that are commonly required during the process include
Bank statements
Pays stubs
Lease or mortgage information
Tax returns
Vehicle loan paperwork
Once your attorney has all the right documents, the petition will be prepared and he will explain to you the terms and conditions. Once you have completed all the essential aspects, you can file the petition to the petition court. 30-45 days after filing your petition, you are required to attend a short hearing at a local bankruptcy court. Your attorney should accompany you to the meeting and prepare for the questions that you are required to answer from the trustee.
This is the second type of bankruptcy that is offered to families or individuals in America. Chapter 13 bankruptcy is not as popular as chapter 7, although they are considerably filed by a number of people. Chapter 13 bankruptcy has the following attributes
between 3 and 5 years of repayment plan
Limited debt
Filing chapter 13 bankruptcy involves a process where you agree on a repayment plan of between 3 and 5 years. Here the court will allow you to repay some of the unsecured debt. Because of the complexity of calculations involved in creating the repayment plant, it is essential that you hire an attorney to help you through the process. Over this period, you have to completely clear all debts as well as secured debts such as mortgage and car.
Chapter 13 bankruptcy is a unique feature because this is the only loan type which limits the debts that the borrower can have. The limits set currently to $1,081,400 for secured debt and $360,475 for unsecured debt. These figures have been set forth by the lending authorities because the courts believe that you can repay your loan within that period.
Chapter 7 is the most popular bankruptcy filed in the United States. The main reason is because it reflects the situation of most American people. Filing chapter 7 bankruptcy is beneficial to families or individuals with low assets and high unsecured debts such as
Credit card debts
Medical bills
Payday loans
Credit card debts
If you are unable to repay a loan for the legally accepted reasons, then filing a chapter 7 bankruptcy could help you clear the debt, giving you a fresh start. In most cases, you are eligible for chapter 7 bankruptcy which involves evaluation of the debt amount and your income amount. In most scenarios, where the income is lower than the state median for your household, then you will qualify for chapter 7 bankruptcy. The median income for a household of 2 is $57,428 and $43,202 for a household of 1. In case your income exceeds these income thresholds, then the court will rule that you can repay some of your creditors. In such a case, you can file chapter 13 bankruptcy.
