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CHAPTER 7 & 13 BANKRUPTCY

During these tough economic times, many people in Green Bay, Wisconsin are finding it difficult to pay debts owed to their creditors.

There are often a variety of reasons why people seek bankruptcy relief.  Usually it is due to some change in their circumstances such as an unexpected loss of job which causes a loss in income or health related concerns which causes substantial medical bills.  Either way, the bankruptcy code was established for people in those type of situations to enable them to recover from such hardships and move forward with their lives with debt relief.

Individuals who file for bankruptcy relief typically file either a Chapter 7 or 13 bankruptcy case.   There are substantial differences between the two types of bankruptcy cases.

CHAPTER 7 BANKRUPTCY
A Chapter 7 bankruptcy action is typically referred to as a liquidation bankruptcy.  In a Chapter 7 case, a person’s non-exempt assets are sold by the trustee and the proceeds from the sale of those assets are used to pay your creditors.  Most people who do file a Chapter 7 bankruptcy case are able to exempt all of their assets, which means they will be able to keep all of the assets that they own even after the bankruptcy case is concluded.  There is also an income test that the person must pass in a Chapter 7 bankruptcy.  In other words, you are not allowed to earn too much money and still be able to receive a Chapter 7 discharge.  In most cases, you will receive a discharge of your debts at the conclusion of the bankruptcy case.  You will not be personally liable for those debts that are discharged other than the debts that you may have reaffirmed, such as a home mortgage or car loan, and other unusual debts such as student loans, tax debt, and spousal support.

CHAPTER 13 BANKRUPTCY
A Chapter 13 bankruptcy case is also referred to a wage earner’s plan.  Chapter 13 cases are typically utilized by people who have substantial non-exempt assets that they do not want to lose or by people who make too much money and are not eligible to file for a Chapter 7.  In a Chapter 13 bankruptcy case, you will pay a monthly amount of money to a trustee who will pay your creditors over the course of three to five years.  The monthly payment amount is typically determined by the amount of your disposable income.  After the three to five year payments have been made, you will receive your bankruptcy discharge.

This is just a broad overview of the bankruptcy law and the differences between a Chapter 7 and Chapter 13 bankruptcy case.  If you have more questions about bankruptcy law or would like to file for bankruptcy, contact local bankruptcy attorney Greg Babcock of our office to schedule a free initial consultation.  Call our firm at 1-920-437-8191.

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