The Wisconsin Bankruptcy Process for Individuals

Filing for bankruptcy can be a complex and emotional decision for many individuals. In Wisconsin, understanding the bankruptcy process is vital for those seeking relief from financial distress. Here, we will outline the key steps involved in the Wisconsin bankruptcy process for individuals.

Types of Bankruptcy

Individuals in Wisconsin can primarily file for two types of bankruptcy: Chapter 7 and Chapter 13.

Chapter 7 Bankruptcy: This type allows individuals to discharge most unsecured debts, such as credit card bills and medical expenses. It involves a liquidation process where a bankruptcy trustee may sell non-exempt assets to repay creditors.
Chapter 13 Bankruptcy: This option is designed for individuals with a steady income. It lets debtors create a repayment plan to pay back all or part of their debts over three to five years, allowing them to keep their assets.

Eligibility Requirements

Before filing, individuals must determine their eligibility for the chosen bankruptcy chapter.

For Chapter 7: Debtors must pass the means test, which assesses income, expenses, and family size to ensure they meet the income thresholds set by Wisconsin law.
For Chapter 13: Individuals must have a regular income and unsecured debts that do not exceed $419,275 and secured debts that do not exceed $1,257,850 (as of April 2023).

The Filing Process

Once eligibility is determined, the next step is filing the bankruptcy petition.

Complete the Required Forms: Individuals must fill out a series of detailed forms, including a petition, schedules of assets and liabilities, and a statement of financial affairs.
Credit Counseling: Before filing, individuals must complete a credit counseling course from an approved agency and include the certificate of completion with their bankruptcy filing.
Filing the Petition: Submit the completed forms to the U.S. Bankruptcy Court for the Western District of Wisconsin. Filing fees apply, but individuals may request a fee waiver if they meet certain criteria.

The 341 Meeting of Creditors

After filing, a 341 meeting will be scheduled, typically within 20 to 40 days. During this meeting, debtors meet with the bankruptcy trustee and creditors may also attend to question the debtor about their financial situation.

Completion of Bankruptcy

The timeline for completing bankruptcy varies by chapter:

Chapter 7: Discharge typically occurs within three to six months after filing, provided that there are no complications.
Chapter 13: The repayment plan lasts three to five years, after which remaining eligible unsecured debts may be discharged.

Post-Bankruptcy Considerations

After successfully discharging debts, rebuilding credit becomes crucial. Individuals should aim to manage finances wisely and consider obtaining secured credit cards or loans to begin re-establishing their credit history.

Understanding the Wisconsin bankruptcy process can significantly ease the stress and confusion that comes with financial struggles. Individuals considering this route should seek advice from qualified legal professionals to ensure they navigate the process effectively and make informed decisions regarding their financial futures.