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Find a Lawyer in WisconsinAbout Bankruptcy Law in Wisconsin, United States
Bankruptcy is a legal process designed to help individuals and businesses in Wisconsin who are unable to repay their debts. It offers a way for qualified debtors to either wipe out (discharge) certain debts or establish a repayment plan under the protection of the bankruptcy court. The main types of consumer bankruptcy in Wisconsin are Chapter 7 (liquidation) and Chapter 13 (reorganization). Both federal and state laws affect how bankruptcy is handled, but Wisconsin provides its own set of exemptions and specific rules that can impact your case.
Why You May Need a Lawyer
Bankruptcy law is complex and procedural, so many people benefit from hiring a qualified bankruptcy attorney. You may need a lawyer if:
- Your debts are overwhelming and you are unsure what legal options you have.
- You are facing foreclosure, repossession, garnishment, or collection lawsuits.
- You want to protect your home, car, or other assets while resolving debt.
- You are unsure how to complete bankruptcy forms or navigate the federal court system.
- You have income, assets, or business interests that make your case more complicated.
- You need guidance on the impact bankruptcy may have on your credit and future finances.
- You are worried about how bankruptcy may affect joint debts, co-signers, or family members.
Local Laws Overview
While the foundation of bankruptcy law is federal, Wisconsin applies its own exemptions and rules in bankruptcy cases. Here are some key points:
- Wisconsin Exemptions: Debtors can choose between Wisconsin's exemptions and the federal bankruptcy exemptions. Wisconsin exemptions may allow you to keep certain property, like equity in your home, vehicles, personal belongings, retirement accounts, and some public benefits.
- Chapter 7 vs. Chapter 13: Chapter 7 is available to those who pass the means test (based on income), while Chapter 13 is a repayment plan that may allow you to keep more property but requires regular income.
- Marital Property: Wisconsin is a marital property (community property) state, meaning most assets and debts acquired during marriage are jointly owned. This can affect how bankruptcy impacts both spouses, even if only one files.
- Automatic Stay: Filing for bankruptcy typically stops collection actions, foreclosures, and garnishments through an "automatic stay" order.
- Dischargeable Debts: Most unsecured debts (like credit cards and medical bills) can be discharged, but some debts-such as child support, most taxes, and student loans-are not automatically cleared.
Frequently Asked Questions
What is the difference between Chapter 7 and Chapter 13 bankruptcy in Wisconsin?
Chapter 7 bankruptcy involves liquidating non-exempt assets to pay creditors, with most debts discharged. Chapter 13 involves reorganizing debts into a three-to-five-year repayment plan, often allowing debtors to keep more assets.
Can I keep my home or car if I file for bankruptcy in Wisconsin?
You may be able to keep your home or car if you can protect the equity with exemptions and stay current on payments. Chapter 13 can help you catch up on overdue payments.
How do Wisconsin bankruptcy exemptions work?
Wisconsin law provides a list of property you can protect, such as a portion of home equity, personal property, retirement accounts, and certain income. You must decide whether to use state or federal exemptions.
Will filing bankruptcy stop foreclosure or garnishments?
Yes, when you file any type of bankruptcy, an automatic stay goes into effect that generally stops foreclosure, wage garnishments, creditor lawsuits, and collection activities-at least temporarily.
Does my spouse have to file bankruptcy with me in Wisconsin?
Not necessarily. However, due to Wisconsin’s marital property law, your spouse's income, assets, and some debts may be affected even if only one spouse files.
Will all my debts be eliminated if I file bankruptcy?
Most unsecured debts can be discharged. However, certain debts-such as child support, alimony, certain taxes, and most student loans-cannot usually be wiped out in bankruptcy.
Who qualifies for Chapter 7 bankruptcy in Wisconsin?
You must pass a means test based on your household income and expenses. If your income is below the state median or your disposable income is limited, you may qualify.
How will bankruptcy affect my credit score?
Bankruptcy will be reported on your credit report for up to 10 years for Chapter 7 or 7 years for Chapter 13. It will significantly lower your score initially, but some people are able to rebuild credit over time.
Will I lose everything if I file bankruptcy?
No, you will likely keep exempt assets. Most debtors who file Chapter 7 keep all their property by using available exemptions. Chapter 13 often allows you to retain more property while making payments to creditors.
How do I start the bankruptcy process in Wisconsin?
You begin by gathering financial documents, completing bankruptcy forms, credit counseling, and filing your petition in the appropriate U.S. Bankruptcy Court. Speaking with a bankruptcy attorney is often the first step to ensure the process goes smoothly.
Additional Resources
Several organizations and agencies can help answer bankruptcy questions and guide you through the process in Wisconsin:
- United States Bankruptcy Court - Eastern District of Wisconsin: Provides local forms, instructions, and filing information for residents in the Milwaukee area and surrounding counties.
- United States Bankruptcy Court - Western District of Wisconsin: Serves Madison and regional counties with court information and resources.
- Wisconsin Bar Association: Offers lawyer referral services and legal information about bankruptcy and consumer rights.
- Legal Action of Wisconsin and Wisconsin Judicare: Provide free or low-cost legal assistance for qualified low-income individuals.
- Credit Counseling Agencies: Nonprofit organizations approved by the U.S. Trustee Program can provide the mandatory pre-filing credit counseling session and advice on managing debt.
Next Steps
If you are considering bankruptcy, take the following steps:
- Assess your financial situation-gather your bills, income records, and a list of assets and debts.
- Consult with a qualified bankruptcy attorney who understands Wisconsin law. Many offer free initial consultations to discuss your options.
- Complete the mandatory credit counseling course from an approved provider.
- Decide whether Chapter 7 or Chapter 13 (or possibly another chapter) is best for your situation and whether to use Wisconsin or federal exemptions.
- Prepare and file your bankruptcy petition and supporting documents in the appropriate U.S. Bankruptcy Court in Wisconsin.
- Attend your court hearings and cooperate with the bankruptcy trustee as required.
By educating yourself and seeking qualified legal advice, you can make informed decisions and work toward a fresh financial start.
Disclaimer:
The information provided on this page is for general informational purposes only and does not constitute legal advice. While we strive to ensure the accuracy and relevance of the content, legal information may change over time, and interpretations of the law can vary. You should always consult with a qualified legal professional for advice specific to your situation. We disclaim all liability for actions taken or not taken based on the content of this page. If you believe any information is incorrect or outdated, please contact us, and we will review and update it where appropriate.