Chapter 7 is designed for people who are having financial difficulties and are not able to re-pay their debts.
Under the changes to the Bankruptcy Code that took effect October 17, 2005, you can usually qualify for a Chapter 7 if your average gross monthly income for the last six months is below Wisconsin’s Median Income, your gross income less certain expenses is below Wisconsin’s Median Income, or you can show “special circumstances” that would allow you to qualify for Chapter 7. The filing fee for a Chapter 7 is $299.00.
Under Chapter 7, you can usually exempt, or keep, most or all of your assets under Wisconsin law, or, if you have not lived in Wisconsin for the past two years, under the state’s exemption law that applies to your case. Most retirement accounts and pensions are also exempt. Secured property, normally your car and house, may not have any net equity, in which case you can keep it as well.
Once your case is over you will receive a discharge. The discharge prevents your creditors from taking any steps to try to collect their unsecured debt. They cannot call you, write you, sue you, or take any steps that could be considered an attempt to collect its debt. If you want to keep property that has a lien on it, you must keep your payments current, and may be required to reaffirm your debt. Some debts can not be discharged. Typical examples are child support, alimony, and other domestic support obligations, some taxes, student loans, criminal restitution, and debts for death or personal injury caused by operating vehicles while intoxicated with alcohol or drugs.
Pursuing Collection of Discharged Debts is Against the Law
The law is simple: when a debt has been discharged, you don’t owe it anymore.
When a creditor, collector or debt buyer attempts to collect on a debt that’s been discharged in bankruptcy, that creditor is breaking the law. Whether a debt purchasing agency is calling you and demanding payment or the original creditor or collection agent has quietly reported an outstanding balance to the credit bureaus, that action is an illegal attempt to collect, and you have remedies available to you.
