Downsides to Filing Chapter 13 Bankruptcy

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Filing Chapter 13 bankruptcy is a humongous decision that no one ever wants to face. After all, nobody wants to deal with financial problems that force them to take extreme measures. However, while this decision can be challenging, there are instances where filing Chapter 13 with a professional bankruptcy attorney is the best decision for you.

While most bankruptcy processes always have negativity attached to them, sometimes it’s the best solution. It’s also normal to be concerned about your financial situation, credit, self-image, and reputation after filing for bankruptcy.

This segment highlights what Chapter 13 bankruptcy is and the downsides of filing you should consider.

How Does Chapter 13 Bankruptcy Work?

Chapter 13 bankruptcy allows people with regular income to repay a portion of or all their debts over a specified time limit, usually between 3 and 5 years. The filer works with a bankruptcy lawyer to devise a court-approved repayment plan for the debts owed. The repayment plan must show how the filer plans to repay the debt to creditors over the specified period.

Upon filing Chapter 13, all collection efforts against the filer will be prohibited throughout the debt repayment period. In simpler terms, Chapter 13 allows the filer to stretch out, modify, or reduce payments, helping make repayments more manageable during this time of financial distress. It also allows the filer to save their assets, such as cars from repossession and homes from foreclosure.

The amount repaid primarily goes toward priority debts like car loans, mortgages, support obligations, and taxes first. The remaining amount pays off some of the lower-priority debts, including medical bills, credit card debts, and utilities.

Usually, balances on some types of unsecured debts may be discharged when the court-approved repayment plan has been met at the end of the plan. That’s to say, the filer will no longer be personally liable to make any further payments on these debts.

Downsides of Chapter 13 Bankruptcy

While there are several positives to filing Chapter 13 bankruptcy in Wisconsin, filers should also consider the negatives, which include the following:

  • The filer will have to agree to a 3 to 5-year debt repayment plan, during which any extra income they earn will go into repaying the debt. This means that other than their basic necessities, there won’t be anything left over for buying luxury items. Consequently, even missing specified payment dates risks dismissal, leaving the filer with no bankruptcy protection. Unfortunate events, such as medical issues, job loss, and address expenses, can strain this plan.
  • The filer will have to agree to a 3 to 5-year debt repayment plan, during which any extra income they earn will go into repaying the debt. This means that other than their basic necessities, there won’t be anything left over for buying luxury items. Consequently, even missing specified payment dates risks dismissal, leaving the filer with no bankruptcy protection. Unfortunate events, such as medical issues, job loss, and address expenses, can strain this plan.
  • Chapter 13 bankruptcy doesn’t discharge certain debts, such as alimony, student loans, child support, and certain tax debts. These debts are also not dischargeable when filing a Chapter 7 case. Similarly, any debts the filer incurs after filing won’t be covered. Their obligations will continue even after the filer completes the court-approved repayment plan.
  • The filer should expect a significant drop in their credit score and credit report if they file for Chapter 13. The bankruptcy report can also stay on the filer’s credit report for up to 10 years from the filing date. These are not desirable figures, but they’re better than the alternative of defaults, repossessions, multiple defaults, and other collection processes on record.
  • The filer can’t file for Chapter 7 bankruptcy if they previously filed Chapter 13 proceedings within the past 6 years.
  • Unless the filer already has a mortgage, it will be difficult for them to acquire one in the future after filing for Chapter 13.
  • The filer can’t file for Chapter 13 bankruptcy if they had a Chapter 7 or Chapter 13 request dismissed within the last 180 days because they violated a court order or requested the dismissal.
  • The filer will have to surrender their credit cards when filing.

Hire an Attorney to Help With the Chapter 13 Bankruptcy Process

Filing for Chapter 13 can seem daunting, but it may also provide a real solution for a fresh financial start for individuals struggling with debt. Hiring a professional bankruptcy lawyer to review available options during the initial consultation process is invaluable. Filing Chapter 13 can be the answer for individuals with a steady income to handle debt payments and want to keep their assets.

Evaluate priorities and seek legal counsel from a professional attorney when filing Chapter 13 bankruptcy in Milwaukee. You don’t need to go through this complicated process alone. Contact our bankruptcy attorneys today to schedule a consultation.

Can Tax Debt Be Forgiven?

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Owing money to the Internal Revenue Service (IRS) can put an immense amount of stress on you, but you don’t need to get depressed when there are options available. While the IRS has a reputation for being strict when it comes to their money, even the biggest and most delinquent debtor has a variety of ways to address the problem. As a governmental agency, the IRS knows that people do face genuine financial hardships. Some people may not be able to fork over an exorbitant amount of money; others may be sick and unable to work. As such, the IRS offers a plethora of options for taxpayers who are struggling with debt.

Bankruptcy Protection

Chapter 7 and 13 bankruptcy are two viable options if you’re concerned about the debt you owe to the IRS. If you declare bankruptcy, you should weigh all of your options before deciding. The IRS has specific criteria that apply to chapter 7 bankruptcy. First, the tax debt must be at least three years old. In addition, you need to be current with the rest of your tax filings. If these apply to you, bankruptcy may be your best option. Before deciding, you should weigh your other options.

Innocent Spouse

You also have options under the innocent spouse protection program. If your spouse ran up a tax bill without your knowledge, you may be able to have this debt forgiven. To apply for innocent spouse relief, you must request Form 8857 from the IRS. Certain conditions apply to innocent spouse protection. In addition to not knowing about the error, you may have to demonstrate that a reasonable person in the same situation would not have known about the mistake. However, if you are the victim of domestic abuse, the IRS can overlook the knowledge aspect of the innocent spouse protection program.

Offer In Compromise (OIC)

One of the chief ways that people renegotiate their tax debt without bothering to file for chapter 7 bankruptcy is the OIC. An OIC occurs when you make a deal with the IRS. Simply stated, you agree to pay less than the amount you actually owe. You can estimate the most that you can reasonably pay. Then, you offer to pay the IRS this amount. If the IRS accepts, the rest of your debt will be forgiven. If you’re considering an OIC, there are a few things that you should know. Before the IRS will approve your OIC, your taxes need to be current. Everything needs to be filed, up to the latest year’s tax returns. You can make an offer and pay a lump sum, or you can make payment arrangements and pay your bill in monthly installments.

Currently Not Collectible (CNC)

If you apply for CNC, your tax debt will not go away. Your debt is still there, but the IRS recognizes that you’re dealing with a financial hardship. To get approved for CNC status, you’ll need to fill out one of the appropriate 433 forms. You’ll also need to prove your financial status. The major drawback to the CNC protection is that you will incur interest and late penalties until the debt is satisfied.

If you’re dealing with an oppressive tax debt, you should know that you have several options. While chapter 13 bankruptcy is one choice, it’s not the only one. You should carefully evaluate your financial situation before deciding. If your spouse is responsible, you may be better off filing for the innocent spouse protection program. When you’re certain you can’t pay, the OIC may be the better choice. Either way, you should deal with the problem proactively. Late fees and interest charges will continue to grow your debt until it’s resolved.

How Long Does Chapter 7 Bankruptcy Take?

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The short answer to the question is it takes anywhere between four to six months for a Chapter 7 bankruptcy to close after the petition has been filed. The reason for the variation in the time table comes down to the complexity of the assets you own, the creditors that you owe, and if corrections are necessary while the Chapter 7 filing is in progress. Here’s a look at the process of filling for bankruptcy, and how it affects the timeline after the petition has been submitted.

How a Chapter 7 Bankruptcy Works

The basic concept of bankruptcy is that of asking the federal bankruptcy court to review your debts against your ability to pay them, and ask for a discharge of what you owe. The court has to make an attempt that your creditors get something from your bankruptcy estate, which means it performs an investigation into your debts and assets during the process. It also informs your creditors of your bankruptcy and bars them from making collection attempts while your petition is active.

Chapter 7 is known as a liquidation bankruptcy because it requires you to surrender your valuable assets to the trustee and see them sold off for debt repayment. However, if you don’t have assets with value, and your income is below the median, you can still file a Chapter 7 bankruptcy and have it accepted by the court.

Chapter 7 Bankruptcy vs. Chapter 13 Bankruptcy

Consumers tend to file under Chapter 7 or Chapter 13, depending on their assets and income. Chapter 13 is seen as being less desirable because it can last up to five years and requires a repayment plan to partially repay creditors before a discharge is granted. In contrast, a Chapter 7 bankruptcy is completed in a few months, has no repayment program, and you can start rebuilding your financial life in less time.

How to Get Started Filing a Chapter 7 Bankruptcy

In order to start filling for bankruptcy, you need to gather all of your financial paperwork together and create a list of your assets. Once you’ve collected all of your papers, you fill out the means test that determines which chapter of bankruptcy you can file under. After you’ve determined that you can file under Chapter 7, you can fill out the petition.

You’re required to take a credit counseling course by an approved provider before you can file your petition. After you’ve successfully completed the course, you’ll receive a certificate of completion that needs to be included with your petition.

It’s worth noting that a bankruptcy filing is a complex process, and it’s a good idea to work with a bankruptcy lawyer. The lawyer has experience with the bankruptcy process, and makes sure that your petition is correct, helps you with exemptions, and represents you during the 341 hearing.

Filling for Bankruptcy

Upon completion and review of your petition, you can file it with the bankruptcy court. Bankruptcy is a legal action that’s done at the federal level as this ensures no creditor can claim they’re exempt from your petition. You’ll file your petition with the local branch of the federal bankruptcy court.

The Automatic Stay

Once the court accepts your petition for review, the automatic stay goes into effect. The automatic stay prevents creditors from contacting you while the bankruptcy is active, and is essentially a temporary restraining order. If you receive a discharge, the automatic stay becomes permanent.

The 341 Meeting With the Trustee

When you file for bankruptcy, your assets are called an estate for various reasons. The trustee has the role of overseeing your estate and investigating your assets. This is why it’s important to list all of your assets as the trustee is capable of finding anything that’s been left off the petition, and threaten your ability to achieve a discharge of your debts.

Retaining a bankruptcy lawyer helps you learn about protecting your assets legally, while satisfying the trustee that your need for debt relief is genuine. You’ll have a better outcome with legal assistance at your side.

Reaching the Discharge Date

The court sets a discharge date after you’ve filed for bankruptcy, and this is typically set for a period of time after the 341 hearing. The waiting period is to give creditors a chance to object to your bankruptcy, or file a claim against your estate.

If no objections or claims are filed, your Chapter 7 bankruptcy is complete and discharged on the date that the court set. The automatic stay becomes permanent, and no creditor can attempt to collect on their debt going forward. If a creditor does make an attempt, they can be held liable in court and pay you a fine for their behavior.

Once the discharge date has passed, you are free from your old debts, and can start rebuilding your financial picture and credit score.

FILING FOR BANKRUPTCY – THE COST FACTOR

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Bankruptcy.

The very word can send chills up your spine. Many people fear filing for bankruptcy because they dread the thought of being ruined financially. What will this mean for my family? How will it affect my employment or business opportunities moving forward?

As is with so many things in life, two more burning questions come to mind: “How much does bankruptcy cost?” And “Will I have to give up all of my assets?” The answers to these last two may surprise you.

First, bankruptcy may not cost as much as you might think. While the cost factor will vary depending on the situation, the idea that you will lose all of your assets is just a myth. Under Chapter 7 bankruptcy law you may have to liquidate some of your assets but you will also find that many of your assets are exempt. Not only that, filing for bankruptcy under Chapter 13 requires zero asset liquidation!

Filing for bankruptcy is not as financially destructive as you might imagine. However, there are some costs you will need to consider.

Attorney Fees

Under Wisconsin law you don’t actually have to hire an attorney to file for bankruptcy. This is called filing pro se. However, one of the big downsides to taking this route is that you might find yourself vulnerable to push-back from creditors and other issues. This is where an experienced attorney can help guide you through the process efficiently and help you avoid obstacles along the way while keeping creditors at bay at the same time.

At the end of the day, hiring an attorney might end up saving you money. Each time you have a setback in the process that kicks you back to the starting line will cost you more money lost in interest and late payments that you will have to deal with in bankruptcy.

Filing Fees

Again, the price of filing fees vary depending on the type of bankruptcy but if you file Chapter 7 bankruptcy that fee is $335. If you file Chapter 13 bankruptcy the fee is $310. These fees are the same whether you are filing alone or jointly with your spouse and the fees are subject to change. Sometimes the court will allow you to pay the fees in installments.

Credit Counseling Fees

When filing for bankruptcy the state of Wisconsin requires you to take a credit counseling session beforehand. Then, before you are discharged you must take an additional debt management course. The cost for each of these services will depend on who is offering them. The classes are available online or you can take them over the phone and, under Wisconsin law, the providers are required to offer reduced rates or fee waivers in certain situations.

Additional Fees

During the bankruptcy process you may incur a variety of other fees. For example, if you miss a creditor in the initial filing and need to add it in there may be an extra fee. Should you need to file a motion may also require a fee. By hiring an experienced attorney you can save yourself a lot of headaches and cut your risk of extra fees because your attorney will very carefully review your particular situation to make sure that nothing is missed from the very start.

For more information about bankruptcy and how we can help you, call Milwaukee Bankruptcy attorney Michael Burr and the experts at the Burr Law office at (262) 827-0375.

Ways You May Be Hurting Your Credit Score

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Your credit score is important for all financial matters. When you want to get a credit card, finance a car, or take out a home equity loan, your lender will always consider your credit score before agreeing to a loan. And the terms of that loan will also depend on your credit score. If your credit score is near perfect, you may find that your lender will charge much less for closing costs, for instance. Finally, some employers are now checking prospective employees’ credit scores before finalizing job offers. Your credit score means a lot, so it’s crucial that you know how to maintain a positive one. In this post, we explore ways that you may be hurting your credit score.

Missing Payments

Late payments are the most common factor that hurts people’s scores. It’s so easy to miss a payment if your life is busy, and paying a little late may seem harmless. However, it has a disproportionate impact on your credit score. Your credit report indicates any payments that are late, and the length of time. Even one 30-day late payment can have a substantial negative effect. If at all possible, set up direct payments for your credit card payments and other monthly obligations. That way, you won’t unintentionally miss a payment due.

Balance to Credit Ratio

Your balance-to-limit ratio is also called your credit utilization. Here is a simple way to calculate it: add up separately all of your credit card balances and then all of the limits on your credit cards. Then divide the total balances by the total limits. This is your balance-to-limit ratio. As a general rule, a lower ratio means a better credit score. As a rule, you should try to keep your credit card utilization rate below 30%. However, it is also a bad idea to completely pay off your credit cards every month. You could be hurting your credit score without realizing it, even if you never make any late payments on those accounts. It’s a bit of a tightrope to walk; doing the calculation twice a year should keep you in the golden zone.

Hard Inquiries

Each time a lender requests your credit reports, a hard inquiry is recorded in your credit file. These inquiries stay in your file for up to two years. A hard credit pull can cause your score to go down slightly for a short period. Lenders look at the number of hard pulls to gauge how much new credit you are requesting. Too many inquiries in a short period of time can signal that you are potentially slipping toward financial problems by suddenly taking on a lot of new debt. Be aware when applying for new loans, and do not crowd applications together.

Timing of Closing Credit Card Accounts

Closing a credit card account can cause your overall balance to credit ratio to increase, which is a sign of risk. As a result, your credit scores may drop. Generally, a brief dip in your credit score won’t matter one way or the other, but If you are planning to make a major purchase (like a house or a car) in the next three to six months, it’s better to forego closing any open credit card accounts.

Beware of Cosigning Loans

You probably know that when you cosign for a loan, you are promising that if the person you are cosigning for doesn’t pay the debt, you will. What you may not know is that the loan will appear on both of your credit reports along with the payment history. If the primary debtor doesn’t pay their loan on time, that late payment will hurt your credit too.

These are some of the ways that you may be hurting your credit scores without really knowing it. Keeping in mind the tips above and maintaining an awareness of your financial situation should help you attain and keep a good credit score. Of course if you default on your financial obligations that will damage your credit score as well. For more advice particular to your personal situation, contact the professionals at Burr Law.

Debt Consolidation vs Debt Settlement

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When you’re in debt, it can seem like there’s no way out. Credit card payments, rent or mortgage payments, car payments, student loan payments . . . you may feel like you’re being bled dry. If it’s just impossible to keep juggling all your financial obligations, it’s time to think seriously about your debt management problems. In this blogpost, we will explore the options of debt consolidation, debt settlement, and bankruptcy.

Debt Consolidation: What Is It?

In its most basic form, debt consolidation works by combining multiple debt payments into one monthly payment through obtaining either a secured or unsecured loan. That monthly payment is sometimes lower than the individual payments combined, and the interest you pay is sometimes lower as well. You will maintain your access to credit, though incurring more debt increases the likelihood of the debt consolidation failing. One of the easiest ways to consolidate your debt is to obtain a new credit card that offers 0% interest for a period of time (usually 6 to 12 months). Once you get the card, you can transfer the balance from other credit cards where you are paying high interest to the new card and use the 6 to 12 months to pay down the principal. Of course, that only consolidates your credit card debt. Alternatively, you can take out a debt consolidation loan; most are secured loans though, and you risk losing your collateral, usually your car or other significant tangible property.

Cross-Collateralization

Sometimes you may risk losing collateral that you aren’t aware you have placed in jeopardy. That can happen when your debt consolidation loan has a cross-collateralization clause that lets the lender take other property it has financed if you default on the debt consolidation loan. For example, if you get your debt consolidation loan through the same bank that financed your car, under the cross-collateralization clause, if you default on the debt consolidation loan, the bank could repossess your car—even if the car payments are current.

Debt Management Plans

Some people go to an agency that creates a debt management plan for them and negotiates with the credit card companies on your behalf. It’s important for you to know that agreeing to a debt management plan comes with a number of hidden costs – monetary and otherwise. You will be expected to pay an enrollment fee as well as a monthly fee for each credit card on the plan. Also, most credit card companies will require that an account entering into a debt management plan be closed, so you lose your access to credit. And the fact that you’re engaged in a debt management plan will be noted on your credit report. Most debt management plans run for three to five years, and at least half of clients do not successfully complete the plan.

Negative Tax Consequences

Depending on your financial condition, any money you save from debt relief services such as debt consolidation may be considered income by the IRS, which means you pay taxes on it. Credit card companies and other creditors may report settled debt to the IRS, which the IRS considers income.

Bankruptcy

There are two types of bankruptcy you can pursue: Chapter 13 and Chapter 7. Chapter 7 is means tested, so you need to make no more than your state’s median household income ($67,355 for Wisconsin in 2019). If you qualify for Chapter 7 bankruptcy, your unsecured debt can be completely eliminated. The whole process takes about four months, and then you can start over with a clean slate. Chapter 13 bankruptcy lasts between three to five years, similar to debt consolidation. With Chapter 13 bankruptcy, the moment you file, there is an automatic stay on all collection actions, and you will almost certainly retain possession of your home and vehicle.

If you’re experiencing significant debt management problems, it would be a good idea to talk to one of the experts at Burr Law.

Pros and Cons of Chapter 13 Bankruptcy

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When your financial situation is difficult and you can see no way out of the spiraling debt, you may be considering bankruptcy. There are two common forms of personal bankruptcy: Chapter 7 and Chapter 13. Filing for Chapter 7 is means tested. In Wisconsin, you must not make more than $67,355 as a household (2019 statistics). Chapter 13 doesn’t have those restrictions, but it does have limitations on the amount of debt you have. To be eligible to file for Chapter 13 bankruptcy, you must have no more than $394,725 in consumer credit debt and you also can have no more than $1,184,200 in secured debts, which includes mortgages and car loans. This post outlines the pros and cons of Chapter 13 bankruptcy.

PRO – Protects Your Assets

Filing Chapter 13 causes all collection actions to stop, including home foreclosure. Chapter 13 bankruptcy preserves your secured assets, so you don’t have to worry about losing your home or car. Unlike Chapter 7 bankruptcy, which is also known as Liquidation Bankruptcy, Chapter 13 bankruptcy is also called Wage-Earner’s Bankruptcy. The objective is reorganization of debt rather than liquidation of assets.

PRO – Unsecured Debt

Unsecured debt includes credit card debt, medical bills, and other debts that don’t depend on collateral. Chapter 13 bankruptcy results in unsecured debt being discharged entirely or diminished significantly. If the debt is not completely eliminated, you will be paying off a small portion of what you owe over the course of three to five years.

PRO – Attorney Fees Become Part of Plan

Often, people delay filing for bankruptcy because they fear incurring additional debt through attorney fees. Yet expert guidance is necessary to navigate bankruptcy law. When you file for Chapter 13, your attorney fees can be included in the reorganization plan and paid over the three to five year time frame.

PRO – Other Debt Included in Reorganization

A professional bankruptcy attorney may be able to help you incorporate debts not usually available for reorganization. For instance, while domestic support obligations (DSO) like child support remain due and payable, past-due amounts can be worked into the reorganization plan and paid over three to five years. Likewise, if you owe back taxes, there are some situations where some amounts of tax debt can be incorporated into the reorganization plan too.

PRO – Second Mortgage as Unsecured Debt

If your home’s second mortgage is worth less than what you owe on your first mortgage, then you can motion the court to have your second mortgage become an unsecured debt. Upon completion of your debt repayment plan, your second mortgage may be reduced greatly or discharged. Again, this is a situation where the guidance of the experts at Burr Law can make the difference.

CON – Length of Reorganization Plan

As indicated above, the typical Chapter 13 reorganization plan lasts from three to five years. That’s a long time. Many debtors find it impossible to maintain, though they are contractually and legally obligated to do so. Again, seeking professional advice from attorneys dedicated to bankruptcy law makes a tremendous difference here. Crafting a reorganization plan that anticipates periodic extra expenses and realistically assesses your earning potential over the next five years makes the length of the reorganization workable.

CON – Credit Implications

Like all bankruptcies, Chapter 13 bankruptcy is part of the public record and remains on your record for 10 years. It will decrease your credit score by 100 to 200 points. While Chapter 13 bankruptcy doesn’t immediately deprive you of all of your credit cards, it will affect your ability to acquire new ones, and sometimes how you are able to use the ones you already have.

Bankruptcy May Become An Option

The state and federal programs designed to diminish the negative economic impacts of COVID-19 have generally worked very well. In Wisconsin, there were 8,272 consumer bankruptcy filings (Chapter 7 and Chapter 13) from January through August 2020; that’s 28% fewer than through August of 2019, according to American Bankruptcy Institute data. However, almost all of those programs end December 31, and Wisconsin’s seasonal prohibition on utility cutoffs ends April 15. So if you’re barely making it now, you should consider whether you may need to declare bankruptcy in the spring.

As Pandemic Programs Begin to Expire, Personal Bankruptcies Are Expected to Rise

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A Debt Tsunami Is Coming

As legislation designed to cushion the effects of the COVID pandemic expires after Christmas, filings for personal bankruptcy will undoubtedly soar. Congress was unable to agree on extending stimulus payments, and nobody has received that money in several months. Main Street has been harder hit than Wall Street so far, and deferments on payments for borrowed money–mortgages, student loans, automobile loans and credit card debt–are all due to expire just after Christmas. Bah! Humbug!

So far, many lenders have been flexible about calling in their debts, but they won’t stay that way for long, and when these debt deferment grace periods end, a lot of them will be competing for a lot less money than the total accumulated debt. It’s only at this point that most of us will get an idea of just how costly the COVID pandemic and our responses to it have been. And at this point, too, the competition among debtors to recover as much of what they are owed as they can will have begun.

What Does This Mean for You?

It means that it pays to be realistic and proactive about your prospects for paying back your debt. One portion of our economy that will certainly not lack for business will be the courts and law firms. In many cases, dockets have become backlogged, because COVID has kept lawyers, court employees, and juries at home out of caution. But although financial proceedings don’t typically require juries, the courts that deal with litigating debt settlements will be absolutely swamped.

If you have debt obligations that you feel have gotten beyond your control, you are not alone. In fact, you are one of a great many who have been swept up in circumstances beyond their control. A lot of people ended up ringing up credit card debt at high rates of interest, just to get by. As lenders crack down, people who’ve put off filing for bankruptcy will also begin filing in large numbers. It’s best to get out in front of events if you can. The folks at Burr Law can help you decide whether to file, and taking into consideration your circumstances and the laws of your state, under what chapter to file.

Chapter 7

Most bankruptcies are filed under Chapter 7. Chapter 7 bankruptcy eliminates all unsecured personal debt, such as credit card debt, personal loans, and medical bills. Auto loan debts, mortgage debts, and tax debts still remain. Personal property may be sold to satisfy obligations, though what gets liquidated depends on the state. On the other hand, many people are surprised at what they may be allowed to keep, and sometimes funds are available to help meet the costs of filing. A Chapter 7 filing will remain on your credit report for 10 years, but programs exist to minimize the effects, and it is possible to rehabilitate credit more rapidly if you are strategic and disciplined about it.

Chapter 13

Under Chapter 13, you reorganize and consolidate your debt payments. In this case, your personal property may be protected so long as you meet your newly renegotiated debt obligations. it is typically significantly more expensive to file for Chapter 13 protection, but depending on your situation, it may be the best approach. Chapter 13 filings will remain part of your credit history for 7 years.

Get Professional Advice

Let the folks at Burr Law help you. They’ve seen everything there is to see in bankruptcy, and they’ve helped thousands of clients move on as painlessly as possible. The one thing they haven’t seen before, though, is the sheer magnitude of cases that are likely soon to hit the courts. They are here to help. Make up your mind to call them now, so that you’re not stuck waiting for an enormous number of cases to make their way through the courts prior to yours.

Would Bankruptcy Affect My Partner?

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The short and not very helpful answer is maybe. If you file to discharge joint debts, that will likely appear on your spouse’s credit report. Creditors will be notified of your filing, and will likely come after your spouse for payment of debts. Whether and how much one spouse’s filing for bankruptcy will affect the other’s credit also depends on whether you file under Chapter 7 or Chapter 13, and also on what the laws of your particular state of primary residence are.

Property owned outright by your spouse may be protected, particularly if they were acquired prior to marriage, but jointly owned properties and debts are another matter. A bankruptcy trustee may sell any jointly owned property to pay off debts, but how property is treated depends largely on whether you reside in a Common Law Property State or a Community Property State.

If you live in a Common Law Property State and you file for bankruptcy, your assets and those you own jointly with your spouse are liable to be sold to satisfy debt obligations, whereas those held outright by your spouse are to some degree protected. Still, a bankruptcy trustee may sell an entire property jointly owned if it is not clearly divisible under a Chapter 7 bankruptcy. He would then reimburse your spouse for their portion in funds.

If you live in a Community Property State, virtually everything acquired during the time of the marriage is liable to be seized. It is very important, therefore, to declare bankruptcy early if you have significant debts that you think you will be unable to discharge. Because you are jointly liable for all property held in common, a bankruptcy declaration is liable to have a significant impact on your spouse’s property and credit. This liability covers income as well as assets acquired during the course of marriage. Once you have discharged your debts through Chapter 7 bankruptcy, creditors may be able to come after your spouse’s property, but only for debts for which they are personally liable. Because your spouse is jointly responsible for all mutually owned property, which includes all income and assets acquired during the marriage, the spouse also is discharged from debt obligations at the time of settlement, in what is commonly known as a phantom discharge.

A Chapter 13 Bankruptcy filing can sometimes help to protect a spouse, by way of a codebtor stay that prohibits creditors from going after a codebtor (in this case, your spouse), but debtors may request that a court lift a codebtor protection.

As you can see, there are a variety of different scenarios, which can seem quite complicated and daunting. The expert team at Burr Law know all the ropes, and will take the tack that best suits your particular situation, so that you can get back on track as quickly and as painlessly as possible. You’re not just discharging your debts. You’re discharging a great weight off your mind. Reach out to Burr Law. They can help.

Can You File Chapter 13 After Chapter 7?
Multiple Bankruptcies

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There is nothing prohibiting a person from undertaking multiple bankruptcies. If you have already gone through bankruptcy and find yourself in financial difficulties again, you already know some of the advantages that filing bankruptcy brings. While there are no limits on the number of bankruptcies you can file, there are time frames you need to be aware of. It’s also important to know that these time frames apply to bankruptcy cases that have been discharged, not those that have been dismissed.

Successive Same Chapter Filings

A Chapter 7 bankruptcy can be done and dusted in three to six months with all unsecured debt eliminated. If you have previously filed Chapter 7, eight years must elapse from the date of filing in order for you to file another Chapter 7. In Chapter 13 bankruptcy your unsecured debt may be eliminated or substantially reduced. It is possible for you to file another Chapter 13 bankruptcy after two years. Given that the first Chapter 13 plan would still be in place, it would be wise to consult with one of the experienced bankruptcy attorneys at Burr Law before doing so.

Chapter 13 Then Chapter 7

Typically, you can file a Chapter 7 bankruptcy six years after the filing date of your Chapter 13. That time frame can be shorter if you paid your unsecured creditors in full or if you paid at least 70% of the claims and it represented your best efforts. You will need to meet the income status requirement for Chapter 7 as well.

Chapter 7 Then Chapter 13

Four years after the filing date of your Chapter 7 bankruptcy, you can file for Chapter 13. This is sometimes known informally as a Chapter 20, though that can refer to filing a Chapter 13 immediately after a Chapter 7 (or while it is still pending). When you file a Chapter 13 after a Chapter 7 without waiting four years, you cannot receive a discharge in the Chapter 13 but there are some advantages. In Wisconsin, though, courts rarely allow the filing of Chapter 13 earlier than the four year time limit. If the four years has elapsed, then it is perfectly acceptable to file Chapter 13. That will protect your home and car, eliminate or significantly reduce unsecured debt, and give you time to deal with nondischargeable debts.

Multiple Bankruptcies and Automatic Stays

It’s important for you to know that if your initial bankruptcy case is dismissed rather than discharged, there are implications for the next bankruptcy you file (whatever Chapter it is under). If you file within a year of the filing of the first bankruptcy, and that first bankruptcy was dismissed, the automatic stay that prevents creditors from pursuing all collection action will be limited to 30 days only. Usually it is for the duration of the bankruptcy proceedings. The time limit is based on the assumption that the second filing is done in bad faith, so it is possible to request the bankruptcy court to extend it beyond the 30 days. You would need to demonstrate your good faith to the court for that to happen. In the event that you file three bankruptcies within a year, the automatic stay is voided in the third instance.

Bankruptcy is a complicated legal situation. Multiple bankruptcies present even more intricacies. If you are considering a subsequent bankruptcy, it is vital that you have expert advice. With Burr Law, you have access to the finest bankruptcy attorneys, all of whom are experts on Wisconsin bankruptcy law.