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Chapter 7 Bankruptcy
Under Construction
 
What is Chapter 7 Bankruptcy?
This is a filing for "liquidation" (i.e. the sale of nonexempt property and the distribution of the proceeds to creditors).
 
One of the primary purposes of bankruptcy is to discharge certain debts to give an honest individual debtor a "fresh start". The debtor has no liability for discharged debts. In a Chapter 7 case, however, a discharge is only available to individual debtors, not to partnerships or corporations. Although an individual Chapter 7 case usually results in a discharge of debts, the right to a discharge is not absolute, and some types of debts are not discharged. Moreover, a bankruptcy discharge does not extinguish a lien on property.
 
A Chapter 7 bankruptcy case does not involve the filing of a plan of repayment as in Chapter 13. Instead, the bankruptcy trustee gathers and sells the debtor's nonexempt assets and uses the proceeds of such to pay holders of claims (creditors) in accordance with the provisions of the Bankruptcy Code. Part of the debtor's property may be subject to liens and mortgages that pledge the property to other creditors. In addition, the Bankruptcy Code will allow the debtor to keep certain "exempt" property; but a trustee will liquidate the debtor's remaing assets. Accordingly, potential debtors should realize that the filing of a petition under Chapter 7 may result in the loss of property.
 
How do I know if I qualify?
Federal bankruptcy laws provide for a "means test" which will determine wheather you're eligible to file Chapter 7 bankruptcy. This test is used to limit Chapter 7 to those people who truly can't relay their debts. If your income is below the median income for families in your state, based on the Census Bureau statistics, you'll be eligible.
 
If you don't qualify for a Chapter 7 bankruptcy your only option would be a Chapter 13 bankruptcy. If you make more than the median income for families in your state, it must be determined wheather your disposable income will cover your debts. Expenses, such as mortgage and car payments, are deducted from your average monthly income to determine your monthly disposable income. This amount is then multiplied by 60 to determine the amount you could pay over 5 years.
 
Wisconsin state median family income by family size (for cases filed after April, 2010)
  • Household of 1 = $42,205
  • Household of 2 = $57,201
  • Household of 3 = $67,881
  • Household of 4 = $80,243
  • Add $7,500 for each person in excess of 4

 

You must also obtain approved credit counseling before you can file bankruptcy and file any overdue tax restursn within weeks of filing a Chapter 7 bankruptcy. Law Advisors, S.C. can help you arrange this counciling.

 

CLICK HERE FOR A FREE BANKRUPTCY EVALUATION

 

For more informantion please contact us
Toll Free: 866.235.7100
Headquarters: 608.242.9700
Fax: 608.242.8788
Email: info@chooselawadvisors.com