CHAPTER 13 BANKRUPTCY

With Chapter 13 bankruptcy, debts are consolidated into installments that can be paid over time, usually in 3-5 years.

During that time it is illegal for creditors and debt collectors to send payment reminder notices or verbally harass you over the phone.

In this process, your only responsibility is to the trustee appointed to oversee your payment collection.

Upon completing your debt reconciliation plan, remaining debts are discharged. Receiving a full Chapter 13 bankruptcy discharge, however, can be a very complicated process that requires legal counseling.

What is Chapter 13 bankruptcy in Wisconsin?

Chapter 13 bankruptcy in Wisconsin is a specific section of the Bankruptcy Code that deals with debt repayment. It is designed for individuals who have a steady income and want to create a structured plan to pay off their debts over time. Unlike other forms of bankruptcy, Chapter 13 does not involve liquidating assets to repay creditors. Instead, it focuses on formulating a repayment plan based on the debtor's disposable income.

Under Chapter 13 bankruptcy, debtors work with a court-appointed trustee to develop a repayment plan that spans three to five years. The repayment plan outlines how the debtor will use their income to make regular payments to creditors. The goal of this plan is to prioritize and satisfy the debts owed while still allowing the debtor to meet their basic living expenses.

If the debtor successfully completes their repayment plan according to the agreed terms, any remaining dischargeable debt can be released. Dischargeable debts typically include unsecured debts like credit card bills, medical bills, and personal loans. However, certain types of debts, such as student loans and tax obligations, may not be dischargeable under Chapter 13 bankruptcy.

Chapter 13 bankruptcy offers several advantages to debtors in Wisconsin. It allows individuals to retain their property, such as homes and vehicles, while still addressing their debt obligations. It also provides a means for debtors to catch up on missed mortgage or car payments, preventing foreclosure or repossession.

Overall, Chapter 13 bankruptcy in Wisconsin offers individuals the opportunity to reorganize their debts, create a manageable repayment plan, and work toward achieving financial stability while keeping their assets and meeting their daily living expenses.

What other specific debts do you have to pay in a Chapter 13 bankruptcy?

Another debt that you are obligated to pay in a Chapter 13 bankruptcy is the balance of alimony and child support payments. There may be instances where you can try to catch up on these payments before including them in the repayment plan.

Can tax debts be discharged in a Chapter 13 bankruptcy?

While taxes can sometimes be discharged, they still need to be paid in a Chapter 13 bankruptcy. However, the benefit is that you will not have to pay interest or penalties on the tax debt.

What types of tax debts do you have to pay in a Chapter 13 bankruptcy?

In a Chapter 13 bankruptcy, you are typically required to pay tax debts owed to the IRS, state, or local government.

How are personal assets collateralized by loans treated in Chapter 13?

Chapter 13 bankruptcy, also known as the "Adjustment of Debts of an Individual with Regular Income," offers individuals the opportunity to manage their debts while retaining the majority of their assets. This includes personal assets that may be collateralized by loans, such as a car or a home. Unlike Chapter 7, Chapter 13 allows individuals to keep these assets even if a collector has a lien on them.

In addition to the ability to retain personal assets, Chapter 13 also provides a unique opportunity to address certain debts that may not be dischargeable under Chapter 7. For instance, past due child support payments, which can accumulate and become overwhelming, can be included in the repayment plan. This allows individuals to not only get a fresh start financially but also fulfill their obligations towards their children.

It's important to note that Chapter 13 allows individuals to make affordable payments towards their debts. Rather than paying the full amount owed, individuals may only be required to pay a fraction of the original debt. For example, if you purchased a new living room set for $5,000 and its current value is only $500, you may only need to pay the reduced amount. Furthermore, these payments are made at a low-interest rate, making the repayment process more manageable.

By providing a comprehensive understanding of Chapter 13 bankruptcy, it becomes evident that this option allows individuals to retain their personal assets, address certain debts not dischargeable under Chapter 7, and make affordable payments towards their obligations. This balanced approach empowers individuals to regain control of their finances and pave the way towards a brighter financial future.

How can Chapter 13 lower your car payment in Wisconsin?

Chapter 13 bankruptcy in Wisconsin offers several ways to lower your car payment and make it more affordable. One way is through the reduction of the principal balance and interest rate on your car loan. By including your car loan in your Chapter 13 reorganization plan, you have the opportunity to negotiate with your creditors and potentially lower the interest rate you are currently paying. This can result in significant savings over the life of the loan.

Additionally, Chapter 13 allows for the restructuring of the terms and conditions of your car loan. This means you can adjust the repayment plan, extending the duration of the loan, and reducing your monthly payment. By spreading out the payments over a longer period, you can potentially lower the amount you need to pay each month, making it more manageable within your budget.

Moreover, the option to change the repayment term is available through Chapter 13. Typically, Chapter 13 reorganization plans span 3 to 5 years. By extending the repayment period for your car loan, you can further reduce your monthly payment. This can be especially beneficial if your current financial situation makes it challenging to meet the full payment amount each month.

Overall, Chapter 13 bankruptcy in Wisconsin provides multiple avenues to lower your car payment. By negotiating the interest rate, restructuring the terms, and extending the repayment period, you can work towards a more affordable monthly payment that suits your financial circumstances.

How can a Chapter 13 bankruptcy lower your interest rate in Wisconsin?

Chapter 13 bankruptcy in Wisconsin provides a potential solution for lowering your interest rate on outstanding debts, including car loans. By working closely with a Chapter 13 bankruptcy attorney, such as Credit Solutions S.C., you can develop a repayment plan that is submitted to a bankruptcy trustee for approval.

A crucial factor in reducing your interest rate lies in the landmark Till vs. SCS Credit Corporation case, decided by the United States Supreme Court in May 2004. This ruling established that a reasonable interest rate must be determined to repay a creditor in Chapter 13 bankruptcy cases involving car loans. The objective of this ruling is to ensure that the interest charged is fair and compensates the creditor adequately for the vehicle.

Under the influence of the May 2004 ruling, car loan lenders can now charge 1-3% interest on top of the prevailing prime interest rate. This is a significant benefit for individuals petitioning for Chapter 13 bankruptcy because it allows them to secure a lower interest rate compared to their original loan terms. For instance, if your current car loan carries an interest rate of 18% and the current prime interest rate is 8.0%, the maximum interest rate that the lender can charge in a Chapter 13 bankruptcy case is 9.5%.

It is important to note that despite any potential objections from the lender, as a petitioner in a Chapter 13 bankruptcy case, you have the legal right to negotiate a lower interest rate for your car loan. This right provides a means to obtain a more manageable repayment plan and alleviate the burden of high interest payments.

By leveraging the benefits of Chapter 13 bankruptcy and the guidelines established by the Till vs. SCS Credit Corporation case, individuals in Wisconsin can effectively lower their interest rates on outstanding car loans. Collaborating with an experienced Chapter 13 bankruptcy attorney will ensure proper navigation of the legal process and increase the chances of achieving a favorable outcome.

Who is eligible to file for Chapter 13 bankruptcy in Wisconsin?

To be eligible to file for Chapter 13 bankruptcy in Wisconsin, there are certain requirements that must be met. Firstly, you must have a reliable source of income to demonstrate your ability to make payments under a repayment plan. Additionally, your total debts cannot exceed a certain amount. This limit is further divided into secured debts, which are debts backed by collateral such as a car or a house, and unsecured debts, which are debts without any collateral like credit card debt or medical bills.

Both individuals and sole proprietorships have the option to seek relief under Chapter 13 bankruptcy if these eligibility conditions are satisfied. It is important to note that meeting these requirements is crucial to determine if Chapter 13 bankruptcy is a feasible option specifically in Wisconsin. Our expert attorneys at Credit Solutions S.C. can go over all of these requirements with you to do determine if filing a Chapter 13 bankruptcy is right for you!

How much does filing Chapter 13 bankruptcy cost in Wisconsin?

The cost associated with filing Chapter 13 bankruptcy in Wisconsin is $313.00. This fee is required to be paid directly to the bankruptcy court at the time of filing your bankruptcy petition.

How can a Chapter 13 bankruptcy lower your interest rate?

When filing for Chapter 13 bankruptcy, you have the ability to restructure the terms of the promissory note that you previously agreed to with your creditors. This allows you to adjust the conditions and provisions of the note as part of your reorganization plan, ultimately making your car payment more affordable.

One notable advantage of this restructuring is the potential to lower the interest rate you are currently paying on your car loan. By negotiating with your creditors and proposing a lower interest rate, you can potentially save a significant amount of money over the duration of your loan. This reduction in the interest rate effectively reduces the total cost of your car loan and can potentially save you thousands of dollars in the long run.

It is important to note that this opportunity to lower your interest rate is particularly beneficial if your current interest rate is exceptionally high. By taking advantage of Chapter 13 bankruptcy, you can benefit from reduced interest rates, which can provide much-needed financial relief and make your car payments more manageable.

In summary, Chapter 13 bankruptcy allows you to restructure the terms of your promissory note, including the option to negotiate a lower interest rate. By doing so, you can lower your car payment and potentially save a substantial amount of money over the course of your loan.

• Are behind on mortgages or car payments and want to keep those assets
  
• Do not qualify under Chapter 7 because they already filed under Chapter 7 within the past 8 years
  
• Make too much money or have too many assets to qualify for Chapter 7 and want to keep those assets