Bankruptcy FAQ

Almost anyone can file for some type of bankruptcy. However, folks with high income or large debts may have fewer choices. Christianson & Freund attorneys can help you maximize your debt relief options.

There is no waiting period to file a bankruptcy. And sometimes filing right away makes sense. Other times filing too soon can result in disaster. So you should plan any bankruptcy to get the most benefit.

If you have recently lived in or moved to another state then you may need to file in that state. Or you may have to file in Wisconsin. Or you may have a choice. Our lawyers can help you determine where to file if doing a bankruptcy is right for you.

Of course, to say that you can declare bankruptcy does not mean that you should file a bankruptcy. Read more about that decision in the next F.A.Q.

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A bankruptcy protects you from creditors, but it can also affect your credit rating, employment, and insurance costs. So you and your Christianson & Freund attorney will look at non-bankruptcy options first. Turning to bankruptcy, there are different types and the law limits the number of times a person can file. So after deciding to do a bankruptcy you then have to determine the right type to file and the right time to file.

So what is your best debt relief strategy? Beware of free consultations, telephone sessions, and cheap, cookie-cutter answers. At a Christianson & Freund debt relief consultation in Eau Claire your attorney will take the time to meet with you and get to know your unique situation. Then and only then will that attorney recommend a course of action tailored to your personal circumstances.

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The quick answer is “yes.” When you file a bankruptcy a temporary “stay” protects your paycheck and possessions from almost all collection efforts. If you receive a discharge – and all but a few folks do – then the stay becomes permanent. However, if you stop making payments on a house, car, or other secured loan then the judge may allow the creditor to proceed with foreclosure or repossession even while you are in bankruptcy. On the other hand, a Chapter 13 bankruptcy may allow you to refinance a secured debt.

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The quick answer is “probably yes.” But, sorry to say, if you have a loan on your car or home then you’ll most likely still have to pay on that loan.

If you have equity or own the asset outright then the law has a list of exempt items you can keep even when you do a bankruptcy. Actually, there are two lists in Wisconsin: a state list and a federal list. The person filing a bankruptcy gets to choose which list to use.

Both lists have a homestead exemption. That exemption is $75,000 per person using the state list and $23,675 per person using the federal list. If you are behind on mortgage payments then the lender can foreclose. This is true even if you declare bankruptcy and even if you claim the home as exempt. However, even if it is in foreclosure, you might save your home with a Chapter 13 bankruptcy. And you may qualify to get rid of a second mortgage altogether.

Both the federal and state lists have a motor vehicle exemption, which can be as much as $16,000 depending upon your other assets. If you are behind on car payments then the lender can repossess. This is true even if you declare bankruptcy and even if you claim the vehicle as exempt. However, you may be able to redeem your vehicle for a lump sum in a Chapter 7 bankruptcy or refinance it in Chapter 13 bankruptcy.

A lawyer with a full picture of your income, expenses, debts and assets can make a recommendation regarding how best to protect your home and motor vehicle.

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Most people file bankruptcy to wipe out (“discharge”) debts. However, bankruptcy does not discharge all debts. Debts that can be discharged include:

▪ Credit Card Debts, Medical Bills, and Judgments. Yes, you can file a bankruptcy even if you have a judgment against you. And, thanks to a special Wisconsin law, you can eliminate a judgment altogether if the underlying debt is subject to discharge.

▪ Certain taxes. Surprisingly, you can discharge some taxes in bankruptcy. Which ones? The law relating to taxes is quite complex. If you have tax debt you should consult with an attorney regarding your particular situation.

▪ Some divorce debts. A Chapter 13 (payment plan) bankruptcy allows you to eliminate non-support divorce debt.

▪ SBA and other government loans. Bankruptcy automatically discharges SBA and other government loans (except for student loans, more about those here).  However, bankruptcy will likely not remove a mortgage or other lien. That means the government would still have the right to sell the property to pay the discharged debt.

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Courts have set a very high bar for student loan discharges. But we’ve recently seen a small shift toward more openness – if not for a full debt wipe out then for (1) a discharge of part of the loan or (2) changes to loan terms to make them more affordable. Further, requesting a discharge may bring the lender to the table to negotiate. Be warned, these cases are expensive. If your debt is substantial and you find it impossible to repay you should consult with a Christianson & Freund attorney regarding your student loan bankruptcy options.

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Bankruptcy prevents creditors from collecting from you. It does not prevent you from paying creditors. So, in many cases, if you are current on car payments or house payments, you can simply keep on paying. Later, if the car blows an engine or something else goes wrong, then you can stop paying, hand the item over to the creditor, and owe nothing more.

Or you could “reaffirm” the debt and owe the creditor no matter what happens to the collateral. Why would you do this? The risks of not reaffirming include: A creditor taking collateral after a bankruptcy even if you are current. A creditor refusing to tell credit reporting agencies about your good payment record. And a creditor refusing to modify or refinance the debt.

Christianson & Freund attorneys can help you understand the benefits and risks of reaffirming any particular debt.

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Christianson & Freund attorneys seek the very best debt relief solution for each client. We’ll begin your consultation by taking a snapshot of your debts and assets. Then we’ll dig into the factors that led to your current problems, and we’ll probe for past events that might cause difficulty in the future. After that we’ll get a feel for your income and family situation. Next, we’ll explain what your creditors can do to collect from you, and the many options you have to stop collection. Finally, we’ll recommend a custom-made plan to resolve your unique debt issues.

Unless you have an emergency you will not need to make any decisions on the day of the consultation. In fact, we’ll encourage you to take your time and consider your options.

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This simple question does not have a simple answer. There are several different types of bankruptcy. And some people have more complex problems than others, which results in more complex – and more expensive – bankruptcies. Finally, a case that looks easy at the start may turn out to be difficult later on. And keep in mind that bankruptcy might not be your best debt solution. For example, if you have a low income then non-bankruptcy laws may already protect you. Or you might qualify for legal aid.

We can give you an estimate of our charges as part of your debt relief consultation. At that time we can discuss payment plans and other ways to make your path to debt relief affordable.

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You can expect your credit score to fall as the result of a bankruptcy. How much depends on your situation at the time you file. If you have a low score now then bankruptcy may be the first step toward rebuilding your credit.

Regardless of your score, immediately after declaring bankruptcy you will likely qualify for a secured credit card. Over time lenders will be more and more willing to give you credit, even for a car or home. After 10 years the bankruptcy falls off your credit report altogether.

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The most common types of bankruptcy under federal law are –

▪ Chapter 7 (“fresh start” for individuals, liquidation for companies)
▪ Chapter 11 (debt restructuring for individuals and companies; often used for small business and corporate reorganizations)
▪ Chapter 12 (farm debt restructuring for individuals and companies)
▪ Chapter 13 (payment plan for individuals)

Read more about bankruptcy chapters here. In addition to bankruptcy, Wisconsin state law offers “Chapter 128” (a payment plan for individuals, a liquidation for companies). At your Eau Claire debt relief consultation a Christianson & Freund bankruptcy lawyer will help you decide whether any of these options is best for you.

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The simple answer: “yes.” However, you have to wait before the court will give you another discharge. How long? That depends on what type of bankruptcy you filed and how it turned out. For example, if you filed a Chapter 7 and received a discharge then you have to wait (a) four years to file a Chapter 13 and get discharge and (b) eight years to file a Chapter 7 and get another Chapter 7 discharge. You can read more here.

Even if you don’t qualify for a second discharge, you may benefit from a second bankruptcy. At your debt relief consultation you and your attorney can consider whether that option makes sense for you.

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The law allows a married person to file a separate bankruptcy. And a single-spouse filing may solve certain financial problems. Indeed, under certain circumstances the spouse who didn’t run up the bills should file alone!)

However, one spouse filing alone presents very real risks. For example, Wisconsin marital property laws result in all of the couple’s assets ending up in a single spouse bankruptcy. If the spouse who files does not have enough exemptions then the couple may lose assets that they could have protected if they had filed together. In other words, you should have the advice of an experienced bankruptcy lawyer if you are thinking about a single-spouse bankruptcy.

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A joint bankruptcy can simplify a Wisconsin divorce. And filing together can save money by getting “two for the price of one.” So a joint bankruptcy is often a good idea if you both have more debt than you can pay and you both have bright financial futures.

But if your spouse ran up all the debt then you may not need to file at all. Or if you can expect new debts after your divorce then you may want to save your right to file bankruptcy for a later day. Finally, if your family income prevents you from filing a joint bankruptcy while you’re married then you may find it possible to structure things in the divorce so you each can file separately after the divorce. For more about these issues see the Wisconsin Bankruptcy Guide.

So, should you file a joint bankruptcy before your final divorce hearing? An attorney can answer that question for you only after reviewing your particular circumstances.

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When you file a bankruptcy the court sends out notices to all of your creditors. The law does not require that you or the court publish a notice of your bankruptcy. However, a bankruptcy is a matter of public record. So your local newspaper may choose to print a list of those who have filed.

Fortunately, like most gossip, the fact that you filed a bankruptcy will soon become yesterday’s news. Just as it did for Abraham Lincoln, Henry Ford, and Walt Disney – all of whom went bankrupt before going on to success and fame.

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The federal courthouse in Eau Claire houses the bankruptcy clerk of court office that serves all of west central and northwest Wisconsin. This area stretches from La Crosse to Superior, and from Hudson to Wausau. So, as technical matter, you file a bankruptcy in Eau Claire. However, attorneys can use the Internet to file bankruptcies from their offices.

The more important question is where you will go for your trustee meeting. You can find that information here.

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As preliminary matter, keep in mind that the critical period for most folks is the time before the bankruptcy. That’s when you –
(a) determine whether and, if so, when to file,
(b) prepare complete and accurate bankruptcy documents, and
(c) do any necessary exemption planning.

A typical Chapter 7 bankruptcy case in northern or western Wisconsin begins with the debtor filing a petition with the bankruptcy court in Eau Claire. At that time, or shortly thereafter, the debtor must also file documents listing all of their debts and assets, and giving other financial information.

A month or so later the debtor meets with a trustee. Trustee meetings in northern and western Wisconsin take place in Eau Claire, La Crosse, Superior, and Rothschild (near Wausau). At the meeting the trustee will ask questions about the debtor’s debts and assets. Creditors have a couple of months after the trustee meeting to ask the judge for the right to collect their debts after the bankruptcy (this rarely happens). The bankruptcy court then issues a “discharge” of debt.

All told, the typical Chapter 7 case runs about four and a half months from the date of filing to the date of discharge. More complicated Chapter 7 cases can run much longer. Chapter 13 payment plan cases last three to five years.

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The quick answer: almost certainly not. During your bankruptcy you must list all your assets. Unless you have expensive collectibles or similar valuables, it will be clear from your documents that your assets are exempt. So the trustee won’t bother to send an appraiser to your home. That said, the federal government does do random audits of debtor disclosures. But this happens very rarely.

Of course, all this changes if you don’t tell the whole truth about your assets. A creditor or personal enemy may tell the authorities. Then you will be dealing with a very suspicious trustee. And you could face federal criminal charges.

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Three factors determine the amount of your monthly Chapter 13 payment –

▪ First, your income and expenses. For most debtors this is the only factor that applies. You propose a budget based on your particular circumstances. If the court accepts that budget then your payment will be your income minus your expenses.

▪ Second, whether you have non-exempt assets. Creditors in Chapter 13 cases must receive as much as creditors in Chapter 7 cases. Most creditors receive nothing in Chapter 7 because most debtors do not have non-exempt assets. What if you have non-exempt assets? You may need to stretch your budget to pay more than required under the simple “income minus expenses” factor.

▪ Third, whether you must pay a minimum amount under the means test. This factor only applies to higher income debtors. Most folks thinking about bankruptcy are low income, so they don’t need to worry about this factor. Those affected by the means test should work with an attorney to minimize its effect.

Notice that none of these factors look at your debts. Your payment will be the same whether you owe your creditors $30,000 or $300,000.

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Contact a local credit counselor if you just need more time to pay your debts. We recommend Family Means and Catholic Charities for folks in Eau Claire and western and northern Wisconsin. If you have home mortgage issues we suggest the Home Ownership Preservation Foundation.

Avoid Internet and TV debt consolidation, debt settlement and debt management companies. And think twice before borrowing against your home or taking out a retirement account loan. These “solutions” only shift the problem from the present to the future. The result will almost always be even greater economic distress down the road. For more bad ideas for avoiding bankruptcy click here.

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Consider a Wisconsin state law “Chapter 128” if you can pay your debts but creditors won’t voluntarily accept a payment plan. Using this statute, Christianson & Freund attorneys can help you force creditors to take payments over three years without interest. Chapter 128 doesn’t work with creditors that have a lien on your car or other property. For more about Chapter 128 click here.

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The law allows you to file your own bankruptcy. It also allows you to do your own dentistry. The bankruptcy process involves –

▪ determining whether bankruptcy is your best debt relief solution,
▪ selecting the right type of bankruptcy,
▪ making strategic decisions regarding when to file,
▪ planning before filing to legally protect your assets,
▪ completing complex forms,
▪ meeting numerous deadlines,
▪ applying aspects of both federal and Wisconsin law, and
▪ navigating arcane legal issues and risks.

No matter what type of bankruptcy you file, you will have to answer to a trustee with legal training. And if your creditors get involved they will likely have attorneys.

Maybe you need to declare bankruptcy. Maybe you don’t. Maybe you have a truly simple situation and can do a bankruptcy on your own. Maybe you don’t and can’t. To quote Dirty Harry, “feel lucky?”

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The Chippewa Valley has many first-rate attorneys. What sets Christianson & Freund apart?

Experience. Eau Claire bankruptcy attorneys Dan Rislove, Josh Christianson, and Dan Freund have decades of experience working with debtors and creditors in bankruptcy and state courts. The result is an in-depth understanding of debt relief, debt collection, and bankruptcy law.

Creativity. Experienced Christianson & Freund bankruptcy lawyers take the time to get to know each client’s unique situation. They then craft customized, cost-effective strategies to achieve their clients’ goals.

Client focus. Our lawyers and paralegals know that stress comes hand in hand with legal problems. So they make it a point to keep in touch with clients throughout the process. That’s why we say “You have a friend at Christianson & Freund.”

Excellence. Christianson & Freund’s experience, creativity, and client focus have earned it a reputation for superior legal craftsmanship.

Location. The bankruptcy court in Eau Claire serves the entire northern and western portions of Wisconsin – including Hudson, La Crosse, Superior, and Wausau. Our offices are just four blocks from the bankruptcy courthouse. So we can make emergency appearances if and when necessary.

Add it all up and you have a U.S. News & World Report first-tier law firm.

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In most bankruptcy cases you only go to court once and meet with a trustee. The bankruptcy trustee holds meetings in Eau Claire for the following counties:

Barron, Buffalo (Alma), Burnett (Siren), Chippewa (Chippewa Falls), Clark (Neillsville), Dunn (Menomonie), Eau Claire, Jackson (Black River Falls), Pepin (Durand), Pierce (Ellsworth), Price (Phillips), Polk (Balsam Lake), Rusk (Ladysmith), Sawyer (Hayward), St. Croix (Hudson), Taylor (Medford), Trempealeau (Whitehall), Washburn (Shell Lake).

If you live in any of these counties your attorney will travel to Eau Claire for the trustee meeting. And if you have a more complicated case then you may appear before a judge. The federal judge in Eau Claire handles bankruptcy cases for the listed counties. So, again, your attorney will need to travel to Eau Claire for any hearing, trial, or other appearance.

The bottom line: Hiring an attorney in Eau Claire will save you the cost of attorney travel time.

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Christianson & Freund lawyers provide business and consumer bankruptcy and debt relief services to individuals, farmers, and businesses throughout western and northern Wisconsin, including Eau Claire, Chippewa, Dunn, St. Croix, Clark, Pierce, Jackson, Trempealeau, Buffalo, Taylor, Rusk, Polk, Barron, Pepin, Sawyer, Price, Bayfield, and surrounding counties. Our office is in Eau Claire, less than four blocks from the bankruptcy court.

The communities our lawyers serve include Abbotsford (54405), Alma (54610), Alma Center (54611), Altoona (54720), Amery (54001), Arcadia (54612), Augusta (54722), Balsam Lake (54810), Barron (54812), Black River Falls (54615), Blair (54616), Bloomer (54724), Boyceville (54725), Boyd (54726), Buffalo City (54622), Cadott (54727), Chetek (54728), Chippewa Falls (54729), Cochrane (54629), Colby (54421), Colfax (54730), Cornell (54732), Curtiss (54422), Dorchester (54425), Downing (54734), Durand (54736), Eau Claire (54701, 54703), Elk Mound (54739), Eleva (54738), Ellsworth (54011), Ettrick (54627), Fairchild (54741), Fall Creek (54742), Fountain City (54629), Galesville (54630), Granton (54436), Greenwood (54437), Hayward (54843), Hudson (54016), Hixton (54635), Independence (54747), Knapp (54749), Ladysmith (54848), Lake Hallie (54729), Loyal (54446), Medford (54451), Melrose (54642), Menomonie (54751), Merrillan (54754), Mondovi (54755), Neillsville (54456), Nelson (54756), New Auburn (54757), New Richmond (54017), Osseo (54758), Owen (54460), Park Falls (54552), Pepin (54759), Phillips (54555), Pigeon Falls (54760), Rhinelander (54501), Rice Lake (54868), Ridgeland (54763), River Falls (54022), Stanley (54768), Stockholm (54769), Strum (54770), Taylor (54659), Thorp (54771), Trempealeau (54661), Unity (54488), Washburn (54891), Wheeler (54772), Whitehall (54773), and Withee (54498).

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