Foreclosure-Stop Debt Collectors
The most common type of bankruptcy for individuals is Chapter 7. Chapter 7 bankruptcy stops debt collectors in their tracks, and allows individuals to wipe out their debt. .Bankruptcy relief under chapter 7 is available only once every eight years.
To be eligible for filing a chapter 7 bankruptcy petition in Wisconsin, a debtor must first pass the “means test." In 2005 the United States Congress made amendments to the Bankruptcy Code and established the “means test” for chapter 7 eligibility. The test requires that your monthly disposable income be less than the median income for your household size in your state.
If you do not qualify under chapter 7, the debtor may have to file for bankruptcy relief under chapter 13, or otherwise. Once you pass the means test you are ready to file the petition and get immediate protection from debt collectors. Learn more about the "means" test.
Southside Law Office has helped thousands of individuals file for Chapter 7 and get the relief they deserve.
During your free consultation, one of our attorney’s will help you:
Protection from Creditors – the “automatic stay”
Once a debtor files a petition for bankruptcy under Chapter 7, a protective restraining order is sent to all creditors and a stay of all debt collections and financial legal proceedings goes into effect. This “automatic stay” is a legal injunction which prevents creditors from pursuing collection on debts, including harassing phone calls and letters. If a creditor intentionally violates the automatic stay, they are subject to penalties that include contempt of court and money damages.
Exemptions under Chapter 7 Bankruptcy
In most cases, individuals in financial distress own mostly exempt property. Some common exempt property includes household items, clothing, and an older vehicle. In such cases property will not be surrendered. Each state sets limitations on the amount of property that a debtor may claim as exempt. Certain debts like spousal and child support, student loans, and some taxes cannot, and will not be discharged.
Even though property qualifies as an exemption, the right of secured creditors to their collateral continues despite the legal effect of bankruptcy. For example, if a debtor still owes money on a vehicle and their debt is discharged in a chapter 7 bankruptcy, the debtor has one of two choices. Either surrender the vehicle to the creditor, or reaffirm the debt with the creditor. Absent some arrangement with the creditor that holds a security interest in the vehicle, it may be repossessed.
How Chapter 7 Bankruptcy Works
Under Chapter 7 of the U.S. bankruptcy code, a debtor works with one of our skilled bankruptcy lawyers and a bankruptcy trustee that is assigned to the case. Our bankruptcy attorney will run a credit report, and the debtor and attorney assemble a list of all creditors. The debtor completes an inventory of all personal property and assets and agrees to voluntarily forfeit certain non-exempt property.
Once the non-exempt property is determined, the bankruptcy trustee liquidates the forfeited property. The proceeds of the forfeited property are then distributed to any unsecured creditors who are owed money. In exchange for forfeiting non-exempt property, the debtor is permitted to discharge debt owed to creditors and start off with a clean slate.
Liquidation of non-exempt Property
We understand that the term “liquidation” sounds very unpleasant and leaves you thinking that all of your possessions will be sold. It's not that bad. The state and federal governments have promulgated schedules of property that debtors can keep when filing for bankruptcy under chapter 7. These are known as exemptions, and discerning these exemption schedules properly before you file is critical.
Generally, debtors filing under Chapter 7 get to keep their vehicle and home if mortgage and payments are current at the time of filing the bankruptcy petition Similarly, most debtors will be able to keep all furniture, retirement accounts, clothing, and even a small savings and checking account. In most cases debtors get to keep everything they own.
No matter what your situation may be, the bankruptcy experts at Southside Law Office can help you make the decision that’s best for you.
"I treat each of our clients as individuals. I study their financial situation and come up with creative and specific solutions to their problems."
Attorney Denise Morris
Call us for a free- in person consultation at 414-482-8000