Federal Bankruptcy | Chapter 7 | Chapter 13 | Chapter 128 – Horizons Law Group is also a Debt Relief Agency
Chapter 7 is a personal bankruptcy to liquidate (discharge) your unsecured consumer debts such as credit cards and medical bills. This is sometime referred to as wiping out your debts. In some cases, you can retain your home, your vehicle, and usually your personal belongings. In some cases, you may not qualify for a Chapter 7 bankruptcy and may want to consider a Chapter 13 bankruptcy. Please also see our Bankruptcy Information page.
Chapter 13 is a wage earners bankruptcy. You are required to have a steady flow of income and are committing to pay all disposable income into a plan for a period of three to five years to repay your debts. This bankruptcy can allow for the repayment of mortgage payments that you have fallen behind on or car payments. Car payments are made through the bankruptcy plan to pay for your vehicle in full. If you decide to surrender a vehicle or your home it must be clearly stated when you file your plan. Based on your income level you will pay a percentage of your unsecured debts through the plan. You are required to make monthly payments to the Chapter 13 Trustee appointed to your case each month during your plan. Failure to make payments or requirements of the plan will result in the dismissal of your case.
A Chapter 128 is a is NOT a bankruptcy. It DOES allow you to repay your unsecured debts with NO interest over a period of time not to exceed 36 months. It DOES stop garnishments, and interest and penalties. It is allowed under Wisconsin state laws (Chapter 128).It is a nice option if your debt could be manageble if it weren’t for the interest or garnishments. Please contact our office to learn more about this process. Generally, it is faster, cheaper, and requires no court appearances.
Prior to Filing
MANDATORY CREDIT COUNSELING You must get credit counseling from an approved nonprofit budget and credit counseling agency within 180 days prior to filing bankruptcy. There are a few exceptions.
GATHERING INFO A monthly budget (living expenses), monthly income for the last six months, and full disclosure of all personal property, assets and debts are required. Forms are generally provided to complete this information. A credit report can also be obtained for free from www.annualcreditreport.com Once the information is gathered; the property bankruptcy tests are run and forms completed. The forms are then reviewed for accuracy and signed under oath (sworn, penalty of perjury) prior to filing.
PAYMENT OF DEBTS Generally you should not pay more than a usual monthly payment to any one creditor within 90 days prior to filing bankruptcy, including loans from family members. If more than $600 is paid in the 90-day period prior to filing for any one creditor, the Trustee can request that money back into the bankruptcy estate to be paid to all creditors in proportion (fair treatment to all creditors). Exceptions are things like your usual mortgage or vehicle payment. Repayment of family loans within 4 years prior to filing bankruptcy will be reviewed by the Trustee and may be owed back.
RETAINING/KEEPING ASSETS Due to the financial aspects of bankruptcy, assets are also thoroughly scrutinized. Many assets can be protected (kept by you) when you file bankruptcy as they are exempted under certain state or federal laws. Any assets transferred or given away will be reviewed and may be owed back, up to four years prior to filing the case. Fraud in bankruptcy is very serious and results from several ways, including not disclosing assets or transferring of assets to avoid inclusion in the bankruptcy estate.
Bankruptcy Forms Provided by Horizons Law Group, LLCBankruptcy Checkist – View and Print
MANDATORY DEBTOR EDUCATION After filing, you must complete an approved education course in personal financial management before your debts will be discharged (wiped out).
TAX RETURNS Tax returns (through the most recent tax year) must be provided (or a transcript) at least 7 days before the §341 meeting of creditors or the case will be dismissed. The tax return(s) must also be provided to any creditor who requests it. All tax returns must be filed for a plan to be confirmed in Chapter 13. The debtor must file all returns for the last 4 years prior to the Chapter 13 filing.
Other Information Regarding Bankruptcy Procedures
MEANS TESTING If your income is above the state median income ($42,356 to $80,530 for Wisconsin, depending on the size of your household), you must pass the means test or your case may be dismissed. If your income exceeds the state median income, you may still qualify to file chapter 7 if you pass the means test. If you fail the means test, your attorney could still argue for an exemption, or you may also consider a Chapter 13 Bankruptcy.
FRAUD EXCEPTION TO DISCHARGE FOR LARGE RECENT DEBTS Under both the old and new law, debts incurred through fraud are not discharged (i.e., wiped out) if the creditor files an Adversary Proceeding before the deadline and proves fraud. A debt totaling $500 or more to single creditor incurred within 90 days of filing for luxury items are presumed fraudulent, as well as cash advances of $750 or more within 70 days before filing.
WAITING PERIOD FOR PRIOR FILERS You cannot receive a chapter 7 discharge if you previously filed a chapter 7 and received discharge unless 8 years has passed since the filing of the first case to the filing date of the new case. You cannot receive a chapter 13 discharge if you received a chapter 7 discharge within 4 years of the filing date of the new case. You cannot receive a chapter 13 discharge if you received a chapter 13 discharge within 2 years of the filing date of the new case.
REAFFIRMATIONS You will not be allowed to reaffirm a debt if your monthly expenses, including the reaffirmed debt, exceed your monthly income. In addition, the automatic stay terminates if you fail to file your statement of intentions within 30 days of filing and carry out those intentions (i.e., reaffirm, redeem surrender, etc.) within 30 days after the first date set for the §341 meeting of creditors. Failure to either reaffirm or redeem the property within 45 days after the §341 meeting results in termination of the automatic stay and allows the creditor to exercise whatever remedies it has under applicable non-bankruptcy law.
NO AUTOMATIC STAY IN SERIAL FILINGS The automatic stay terminates after 30 days if you file a chapter 7 or 13 within 1 year after a prior bankruptcy case was dismissed. There is an exception for a case re-filed in another chapter after a dismissal of a Chapter 7 case based on the means test).
NON-DISCHARGABLE DEBTS The following debts will not be dischargeable: Debts for trust fund taxes (i.e., sales, withholding taxes, etc.); Taxes for which returns were never filed or filed within two years of filing bankruptcy; Taxes for which the debtor made a fraudulent return or evaded taxes; Debts incurred through fraud or false statements; Debts not listed in the bankruptcy; Defalcation by a fiduciary; Domestic support payments; Student loans; Drunk driving injuries; Criminal restitution; Fines and penalties; Civil restitution; and Damages awarded for willful or malicious personal actions causing personal injury or death.
EVICTION PROCEEDINGS The automatic stay will no longer prevent an eviction if the debtor failed to pay rent after filing.