Wisconsin Chapter 7 Bankruptcy Explained
Chapter 7 debtors seek – and courts generally grant – a discharge wiping out debts. The title of Chapter 7 is “liquidation.” But, as we shall see, most folks who file a Chapter 7 keep all of their possessions.
This page contains general information. Contact a Chapter 7 bankruptcy lawyer for specific advice.
Table of Contents
- How does Chapter 7 work?
- Why choose Chapter 7?
- How do I file a Wisconsin Chapter 7 bankruptcy?
- Eligibility
- Preparation
- Filing
- Automatic Stay
- Trustee Meeting
- Discharge
- Administration of Estate
Looking for something else? Try our FAQ page.
How Chapter 7 Bankruptcy Works
Two things happen when you file a Wisconsin Chapter 7 case. First, creditors have a chance to ask the judge to not discharge some or all of your debts. This rarely happens. (Note: Corporations and other entities can file Chapter 7 cases but cannot receive a discharge. )
The other thing that happens in a Chapter 7 is that a trustee tries to find assets he can take away from you to make a payment to creditors. You can claim property as exempt to protect it from the trustee. In the vast majority of Wisconsin Chapter 7 cases the debtor’s property is 100% exempt and the debtor keeps all of their property.
Keep in mind that, with rate exceptions, your discharge won’t protect property secured by a mortgage, security interest, or other lien. If you don’t keep paying on a secured debt then the creditor can recover its collateral.
Why Choose Chapter 7?
Chapter 7 vs. Chapter 13. Chapter 7 bankruptcy:
- is simpler than Chapter 13;
- typically takes about four to six months, a Chapter 13 takes three to five years;
- costs less than Chapter 13; and
- requires no payments to a trustee.
So why ever choose Chapter 13 instead of Chapter 7? Three main reasons:
- You don’t qualify for Chapter 7 because of a discharge received in a previous recent bankruptcy,
- You don’t qualify for Chapter 7 because you can’t rebut the “presumption of abuse” under the means test, or
- Your house is in foreclosure because you missed payments and you want to keep your home.
This page contains general information. Contact a Chapter 7 bankruptcy lawyer for specific advice.
How Do I File A Wisconsin Chapter 7 Bankruptcy
A Chapter 7 bankruptcy in the western part of Wisconsin begins with the payment of a filing fee and the submission of a petition, a creditor mailing matrix, a statement of social security number, and a credit counselling certificate. Within 14 days thereafter you must file 8 financial information schedules, a financial questionnaire, and a form called Chapter 7 Statement of Your Current Monthly Income. You can read more about all this here.
Starting a Chapter 7 in the eastern part of Wisconsin is equally complicated. You can find the requirements here. Plus, courts in the eastern part of the state have complex rules you’ll need to follow. You can read those here.
The bottom line: filing a Chapter 7 on your own is like walking into a legal minefield while blindfolded. Protect yourself by hiring a Chapter 7 bankruptcy lawyer to guide you through the process.
Eligibility
Individuals can qualify to file a Chapter 7 by having (1) predominately non-consumer debts, (2) below median income, OR (3) sufficient allowed living expenses (using a formula developed by your friends in Congress). The second and third gateways to Chapter 7 make up the bankruptcy “means test.”
Entities, such as corporations, can file Chapter 7 without qualification. But remember, they don’t receive Chapter 7 discharges.
Preparing to File Chapter 7 Bankruptcy
Debtors can – and sometimes do – file bankruptcies quite quickly. However, planning ahead gives you and your attorney time to:
Prepare bankruptcy documents. As part of a bankruptcy you must give a complete disclosure of your financial affairs. This means filling out long and complicated forms. The more time you have to fill out these forms the greater the chances that you will list everything required. And if you do that then you greatly reduce the chances of an unpleasant surprise after you file your bankruptcy.
Act strategically. Depending upon your circumstances you may benefit by postponing your bankruptcy to, for example, reduce the chances of creditors contesting your bankruptcy.
Protect assets. You can only exempt a certain amount of property in a bankruptcy. If you have assets you can’t exempt and you have enough time then you may be able to rearrange your affairs to your maximize what you can keep. Otherwise, you’ll have to either give your non-exempt assets to the trustee or pay the value of those assets over the life of the plan.
This page contains general information. Contact a Chapter 7 bankruptcy lawyer for specific advice.
Filing
Before filing a bankruptcy you must take a brief credit counseling course. Bankruptcy begins with the filing of the financial disclosure paperwork discussed above. You file these documents with the clerk of court. Wisconsin clerks’ offices are located in Eau Claire, Green Bay, Madison, Milwaukee, and Oshkosh. You must then provide additional documents to the trustee. In addition the law requires that you (a) state your intention regarding property you’ve pledged as collateral for debts and, thereafter, (b) perform your stated intention.
Automatic stay
The bankruptcy filing creates an injunction called an “automatic stay.” The automatic stay stops almost all collection activity.
Trustee meeting
About a month after you file your bankruptcy you will meet with a trustee, in Wisconsin the meetings are in –
- Eau Claire (also for Chippewa Falls, Hudson, Menomonie, and River Falls cases),
- Green Bay (also for Appleton (Calumet County) and De Pere cases),
- Kenosha (also for Racine cases),
- Madison (also for Beloit, Janesville, and Sun Prairie cases),
- Milwaukee (also for Waukesha, West Allis, and West Bend cases),
- Onalaska (also for La Crosse, Sparta, and Tomah cases),
- Oshkosh (also for Appleton (except Calumet County) and Fond du Lac cases),
- Rothschild (also for Marshfield, Stevens Point, Wausau, and Wisconsin Rapids cases),
- Superior.
The trustee will swear you in and ask you questions about your debts, assets, and related matters. Creditors may appear and ask questions as well; however, they seldom do.
This page contains general information. Contact a Chapter 7 bankruptcy lawyer for specific advice.
Discharge
If all goes well, and in most cases all does go well, the court will issue you a discharge two to three months after the trustee meeting. The discharge will cover most debts. Examples of debts not covered in a Chapter 7 discharge include many (but not all) taxes, most student loans, and all debts arising from a divorce decree. A special Wisconsin statute allows debtors to obtain a satisfaction of discharged judgments.
If all does not go well then a creditor may file a separate lawsuit (called an “adversary proceeding“) asking the court to either (a) deny you a discharge or (b) except the creditor’s debt from your discharge.
Administration of estate
Typically, the discharge ends a Chapter 7. But in some cases the trustee thinks they can make a recovery for creditors. Then the bankruptcy may stay open for months, or even years, while the trustee “administers” the case.
This page contains general information. Contact a Chapter 7 bankruptcy lawyer for specific advice.
Wisconsin Bankruptcy Guide is provided by law firms designated as Debt Relief Agencies by the federal government because we help people file for relief under the Bankruptcy Code. We also provide other types of debt relief options.