There are several chapters of bankruptcy, which can help you and/or your business address different situations. The chapter that works best for you will depend on your unique financial situation and the goals you wish to achieve.
Follow these links to learn more about the different types of bankruptcy available to individuals and businesses:
- Chapter 7 is a “liquidation bankruptcy”, which is most commonly used by individuals who are eligible from an income perspective, and who don’t stand to lose any property through the process. For a business, Chapter 7 would most commonly be filed as a means to wind up the business affairs when discontinuing operations.
- Chapter 11 is most commonly used to reorganize a business by restructuring its debts, and continue operations in a stronger financial position than the business was in before declaring bankruptcy. Chapter 11 is also available to high income individuals who exceed the income limitations for Chapter 7 and Chapter 13.
- Chapter 12 is specifically designed for Debtors meeting the “family farmer or fisherman” definition, and provides expanded options to reorganize, beyond what is available in Chapter 11.
- Chapter 13 is designed to help individuals restructure debt and reorganize their finances. Entities (like LLCs or Corporations) are not eligible to file Chapter 13, but many sole proprietors or small business owners may benefit from the options Chapter 13 offers.
A bankruptcy is public record. However, most newspapers no longer publish bankruptcy information. While they still publish foreclosures and court actions, bankruptcy is a federal action and is generally only available on the Public Access to Court Electronic Records (PACER) system. PACER requires a subscription and payment of a fee to retrieve records, and is separate and distinct from Wisconsin Circuit Court Access (WCCA, formerly CCAP) that shows Wisconsin State Court cases.
a. You must go to what is called a Section 341 hearing. This All debtors must appear at the Section 341 Meeting of Creditors (named after section 341 of the Bankruptcy Code). Generally, these are held by telephone or Zoom, and you will meet with the bankruptcy Trustee for five to 10 minutes. Your attorney will be with you and, as the name implies, creditors can attend and ask questions. The trustee will verify that you are who you say you are and put you under oath to answer questions concerning the information in your bankruptcy filing. In a Chapter 7 case, this is generally where the trustee determines whether a case is an “asset case” or a “no-asset case.” Most Chapter 7 cases are determined to be no-asset cases, which means the trustee determines that there is no property that can be sold for the benefit of the creditors. In Chapter 11, 12, and 13 cases, there is typically also discussion of any concerns the Trustee may have regarding the Plan that has been filed, or the Debtor’s efforts to reorganize in a case where a Plan has not yet been filed.
b. In the vast majority of cases, the Section 341 Meeting is the only hearing, but depending on the specifics of your case, there may be additional hearings, which your attorney will prepare you for ahead of time.
If you have a loan secured by your vehicle and are up-to-date on your payments, your bank and the court may allow you to reaffirm the original contract on the vehicle. If you are behind on payments, you will need to get them up-to-date or possibly enter into Chapter 13 bankruptcy to cure any defaults.
Many factors, including your bankruptcy filing, go into determining your credit score. A person’s credit score and credit report can fluctuate within the course of a week. Once you have filed for bankruptcy and obtained your fresh start, a lot of negative information (delinquent debts, collection amounts, etc.) will be removed, but rebuilding your credit will be a lot like starting from scratch. You will want to be proactive to rebuild it, being mindful of the following factors that influence your credit score:
- Payment history: This has the largest impact on your credit score. Missing higher payments has greater impact than missing lower payments. Delinquencies in the past two years have a greater impact as well.
- Always pay on time to improve and maintain your payment history.
- Outstanding credit balances: The ratio between outstanding balance and available credit is one-third of your credit score. Keep the ratio under 10 percent.
- Always pay on time and in full for the greatest benefit.
- Credit history: This is the length of time a credit line was established. A long record of consistent payments on older accounts is positive, while there are small penalties for closing old accounts.
- You can seek out a credit card or secured credit card after your bankruptcy discharge is entered, to re-establish credit and build the length of time, but remember to pay the balance in full when it comes due to prevent future problems or extra interest payments.
- Type of credit: Auto loans and mortgages will have the highest impact on your score. A mixture is best, and store cards have minimal impact compared with bank credit cards.
- Reaffirming on a home or car debt in a bankruptcy can help give your credit a jump start, but keep in mind that not all creditors report reaffirmed debts, and consult with your attorney on whether a reaffirmation is advisable for you.
- Inquiries: The number of inquiries on a consumer’s credit report within a six-month period will affect the score. The most a score can be reduced is by 50 points, which happens with 10 inquiries or more.
- Don’t generate excess inquiries in a short period of time.
Generally speaking, outside of bankruptcy, you could be held liable for the deficiency or remaining debt. However, these deficiencies are discharged in bankruptcy, and you will not be responsible for repaying them.
It is illegal to fire or discriminate against a person because he or she has filed bankruptcy.
You are required to disclose all your personal and real property and make a reasonable inquiry into the value of those items. There are federal and state exemptions that your attorney will go over with you to protect most, if not all, of the equity in your personal and real property.
Chapter 12 bankruptcy is a debt relief option that is only available for family farms and family fishing operations, It provides an opportunity for farmers and fisherman to restructure debts and reduce payments so they can get their financial house in order while continuing to make a living for their family in agriculture or commercial fishing.
Be extremely cautious if you decide to work with one of these businesses. There are reputable ones out there, but most are frauds. Check with the Better Business Bureau and consumer protection agency in your state before sending them money. Our attorneys can also help you assess whether a debt consolidation plan makes sense in your particular situation, and review other non-bankruptcy options with you.
You have two options:
- Do nothing and ignore the papers. The court will eventually proceed with your divorce by default, and you will not have a say in the matter going forward.
- Enlist an attorney and respond to the papers. Your lawyer can include information regarding grounds for divorce, child custody, child support, property division and more as a starting point for either negotiations or litigation.
While the fees to file for divorce in Wisconsin are under $200, the average cost of a divorce including lawyers’ fees is over $8,500. However, it is important to choose the right attorney for you who will provide information about costs upfront.
We are a debt relief agency. We help people file for relief under the Bankruptcy Code.