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 Bankruptcy


 Chapter 7 bankruptcy
 Chapter 13 bankruptcy
 General FAQ's

What is a Chapter 7 bankruptcy?

Chapter 7 - or "total bankruptcy" - is the proceeding most people think about when they consider filing bankruptcy. Chapter 7 is available to consumers and businesses. For consumers, the bankruptcy court allows an individual or married couple to eliminate (discharge) all unsecured debts owed to creditors with some limited exceptions.

Generally, all unsecured debts are discharged in a Chapter 7 except for family support, child support, debts based upon fraud, student loans and most taxes. Secured debt - such as a mortgage or a car loan - can be "reaffirmed", meaning that the debtor can agree to continue paying those debts in order to keep the home or the car that secures the debt.

The discharge order issued by the court at the conclusion of a Chapter 7 bankruptcy is a permanent federal injunction which prohibits the creditors listed in the bankruptcy schedules from ever pursing any collection action again on those debts that were incurred before the date of the bankruptcy filing.

Will I lose my home if I file a Chapter 7 bankruptcy?

Any individual in Wisconsin that files a Chapter 7 bankruptcy can automatically claim up to $40,000 of equity in their home as exempt and keep it, even though they have filed a bankruptcy. Exempt property is property in which the debtor is entitled to keep and which is exempt from any collection action by creditors.

Will I lose personal possessions or my automobile if I file a Chapter 7 bankruptcy?

Single individuals and married couples are entitled to claim personal property and automobiles as exempt under the bankruptcy code. The exemptions available for persons in Wisconsin are very liberal both under the federal and state exemptions.

Therefore, very few people have property that exceeds the available exemptions and it is highly unusual for anyone to lose any property when they file a Chapter 7 bankruptcy. The experienced bankruptcy attorneys at the Hanson Law Office will maximize the use of these exemptions to protect your property.

What effect will a Chapter 7 bankruptcy have on tax liabilities?

Income taxes owed that are over three years old may be discharged in a Chapter 7 bankruptcy under certain circumstances. If the tax liability is dischargable, the individual filing a Chapter 7 bankruptcy will never have to pay that tax liability. In order to be dischargable, the tax return that resulted in the debt must have been filed over two years before the person files the bankruptcy proceeding.

Income taxes owed that are less than three years old or in which the returns were not filed more than two years ago in all likelihood will not be discharged.

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