Wisconsin Bankruptcy Law: Can It Help You Keep Your Car?
When facing overwhelming debt, many individuals in Wisconsin wonder if filing for bankruptcy can help protect their valuable assets, including their vehicles. Understanding Wisconsin bankruptcy law is crucial for those considering this option. The short answer is: yes, bankruptcy can help you keep your car, but the specifics depend on the type of bankruptcy you file and your financial circumstances.
In Wisconsin, individuals typically file for either Chapter 7 or Chapter 13 bankruptcy. Each chapter has different implications for asset retention, including vehicles.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is designed for individuals who have limited income and need to eliminate unsecured debts such as credit card balances and medical bills. Under Chapter 7, the court may liquidate non-exempt assets to pay off creditors. However, Wisconsin offers specific exemptions that may allow you to keep your car.
In Wisconsin, you can exempt up to $4,000 in equity in your vehicle if you file for Chapter 7 bankruptcy. If your car’s value is less than this exemption amount, you can keep it without any issues. For example, if your car is worth $8,000 but you still owe $6,000 on it, your equity is only $2,000. In this case, you can retain your vehicle because it falls within the exempted amount.
If the equity in your vehicle exceeds the exemption limit and you want to keep your car, you may have options. You can either pay the difference to the bankruptcy trustee or negotiate to reaffirm the car loan, allowing you to continue making payments on the vehicle.
Chapter 13 Bankruptcy
For individuals with a regular income, Chapter 13 bankruptcy allows you to reorganize your debts and create a repayment plan. This option is beneficial for those who want to keep their car while repaying debts over a three to five-year period.
In Chapter 13, you can include car payments in your repayment plan. If you are behind on your car payments, Chapter 13 may also give you the opportunity to catch up on those missed payments while retaining the vehicle. This type of bankruptcy also protects you from repossession, provided you adhere to the repayment plan.
It's important to note that if you file for Chapter 13 bankruptcy, your car loan lender may not be able to repossess your vehicle as long as you keep up with your plan's payments.
Considerations When Filing for Bankruptcy
There are important factors to consider when deciding between Chapter 7 and Chapter 13 bankruptcy:
- Current Financial Situation: Assess your income, expenses, and the total amount of debt you are facing.
- Vehicle Value and Equity: Determine the current market value of your vehicle and your equity in it.
- Type of Debt: Consider whether your debt is unsecured or secured, as it will influence the type of bankruptcy that may benefit you most.
- Reaffirmation Agreements: In Chapter 7, be aware of your options for reaffirmation if you wish to keep your car loan going.
Consult with a Bankruptcy Attorney
Before proceeding with a bankruptcy filing, it's crucial to consult with an experienced bankruptcy attorney in Wisconsin. They can provide valuable guidance tailored to your unique financial situation, help you understand your rights concerning your vehicle, and ensure that you follow the appropriate legal steps.
Ultimately, Wisconsin bankruptcy law offers mechanisms to help individuals retain their vehicles while addressing their financial challenges. Whether through Chapter 7 or Chapter 13, the right path forward can lead to a fresh start without sacrificing your means of transportation.