How to Qualify for Chapter 13 Bankruptcy in Wisconsin

How to Qualify for Chapter 13 Bankruptcy in Wisconsin

Chapter 13 bankruptcy is a reorganizational bankruptcy option available for individuals in Wisconsin who want to repay their debts over time while protecting their assets. To qualify for Chapter 13 bankruptcy, individuals must meet certain criteria. Understanding these qualifications is essential for anyone considering this financial strategy.

Eligibility Criteria for Chapter 13 Bankruptcy

To qualify for Chapter 13 bankruptcy in Wisconsin, you must meet the following criteria:

  • Regular Income: You must demonstrate a consistent source of income, which can include wages, self-employment income, or other reliable income sources. This is crucial as Chapter 13 involves a repayment plan that requires you to make regular payments to creditors.
  • Debt Limits: Your unsecured debts (like credit cards and medical bills) must be less than $465,275, and secured debts (like mortgages and car loans) must be less than $1,395,875. It’s important to stay within these limits, as exceeding them can disqualify you from filing for Chapter 13.
  • Credit Counseling: Before filing, you must complete a credit counseling course from an approved provider. This helps you understand your financial situation and explore other options before proceeding with bankruptcy.
  • Filing Status: You must not have had a bankruptcy case dismissed for failure to comply with court orders or if you did not appear in court within the last 180 days prior to filing.

The Chapter 13 Filing Process

Once you determine your eligibility, the next step is to file your Chapter 13 bankruptcy petition. This involves:

  1. Completing Bankruptcy Forms: You’ll need to gather financial information regarding your debts, income, assets, and expenses to fill out the required forms accurately.
  2. Filing with the Bankruptcy Court: Submit your completed forms to the U.S. Bankruptcy Court for Wisconsin. Be aware that filing fees apply, which may vary depending on the district.
  3. Plan Proposal: You’ll propose a repayment plan to pay back your creditors over a period of three to five years. This plan must be feasible and based on your income levels.
  4. Meeting of Creditors: After filing, a meeting of creditors (341 meeting) will be scheduled where you’ll answer questions about your financial situation and repayment plan.

Benefits of Chapter 13 Bankruptcy

Choosing Chapter 13 bankruptcy offers several advantages:

  • Asset Protection: Under Chapter 13, you can keep your property and avoid foreclosure on your home by repaying arrears over time.
  • Debt Repayment: The repayment plan is typically more manageable, allowing you to pay a portion of your debts while still meeting daily living expenses.
  • Credit Score Recovery: Although filing will impact your credit score, completing a Chapter 13 plan can help improve your credit over time.

Conclusion

Qualifying for Chapter 13 bankruptcy in Wisconsin requires meeting income and debt criteria, completing credit counseling, and following the filing process. If you're struggling with debts and looking for a manageable way to regain control of your finances, Chapter 13 may be a viable option for you. Consider consulting with a qualified bankruptcy attorney to guide you through your options and ensure a smooth filing process.