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Wisconsin Bankruptcy FAQ

While most of these FAQs are general to bankruptcy across the country, some of the answers will be specific to Wisconsin bankruptcy laws. You should always consult with an attorney in your area to properly assess your personal situation.

What is the automatic stay?
This is an injunction that goes into effect automatically upon the filing of a bankruptcy. It strictly prohibits the commencement or continuation of any acts to collect on a debt that arose prior to filing the bankruptcy. This includes enforcement of judgments, creating or perfecting liens, and many other actions. (It does not apply to collecting alimony maintenance and support).
Does the automatic stay always apply when a bankruptcy case is filed, and if so, for how long?
Generally, the automatic stay goes into effect immediately upon filing your case and against acts taken towards you personally until you receive your discharge. Stays against actions towards property you own may last longer or shorter depending on what happens to that property during your case (e.g. it is sold by the Trustee or not, etc.). Note: For cases filed on or after October 17, 2005, there are several limits to the length of the automatic stay: 1. If you had a prior bankruptcy case dismissed under any chapter within one year prior to the filing of your present case, the automatic stay will terminate 30 days after your new case is filed, unless you obtain a court order extending it, for cause and a showing of good faith as to why the prior case was dismissed. 2. If you had more than one prior bankruptcy case dismissed under any chapter within one year prior to the filing of your present case, the automatic stay does not go into effect at all unless and until the court orders it into effect, after a noticed hearing. There are other new limitations on the automatic stay, but you should check with your attorney as to whether they will affect you.
Is it too late to file bankruptcy if I'm being sued or already have a judgment against me?
No. It's almost never too late to file bankruptcy. Assuming that it is a dischargeable debt (meaning one that isn't incurred through fraud, or a domestic support obligation, or one of the others Congress has excluded from discharge), you can still get rid of the debt even if a creditor has filed a lawsuit against you and gotten a judgment. You can even get rid of the debt if they have a lien against your property (although the lien will remain against the property unless you are able to remove it during the bankruptcy proceeding--see below).
Where Does My Case Get Filed?
Your case is filed in the District where you have resided or have your domicile (or for a business, its principal place of business) for the greater part of the 180 day period prior to the date your case is filed.
What does it mean to bankrupt or discharge a debt?
Many people refer to getting rid of their debts in bankruptcy as "bankrupting" the debt. They often ask "can I bankrupt this debt?" That is incorrect terminology. The legal term for this is "discharge". What happens in bankruptcy (assuming you are successful) is that your legal obligation to pay on your debt will be discharged. Debts are never technically eliminated. They still exist after a bankruptcy, but you no longer have the legal obligation to pay on the ones that are discharged (or, bankrupted if you prefer).
What are exemptions?
Exemptions are protected allowances for the value in certain assets. For example, a homestead exemption protects the equity you have in your home, up to a certain value. All States have different exemption laws which protect the value in certain assets. You need to check with a qualified bankruptcy attorney regarding what exemptions you are entitled to when you file your case. Which State's laws you use depends on where your domicile was located for the 2 years prior to commencing your bankruptcy case (see below).
Which state's exemption laws apply to my assets?
For cases filed after 10/17/05: The exemption laws of whatever State you were domiciled in for the last 2 years. If you lived in more than one State in the past 2 years, then it will be the exemption laws of whatever State you lived in for the 180 day period PRIOR to the start of the last 2 years and if you lived in more than one State during that 180 day period, then it will be the State where you lived for the greater part of that 180 days. Fun, huh? You can thank our Congress and President for that one.
Can I pick and choose who to list in my bankruptcy case?
Absolutely not. I don't know where people get this idea. You must list all your assets and all your debts in ANY chapter of bankruptcy. You may voluntarily repay anybody you want after your case is concluded (and you are required to repay any debts that are not discharged), but you are still required to list all your creditors.
Can you be fired or denied employment because of a bankruptcy?
No. While an employer can usually find some reason to fire anyone, they cannot use bankruptcy as a basis for doing so. This is set forth in Section 525 of the Bankruptcy Code.
Can I remove liens against my property?
Yes. Under certain circumstances, judicial liens and "nonpossessory, nonpurchase-money security interests" may be removed if, based on the value of the asset and the amount of senior liens and encumbrances against it on the date your bankruptcy case is filed, the fixing of the lien causes it to "impair" an exemption to which you are entitled under State (or other applicable) law.
Are any and all debts dischargeable in a bankruptcy case?
No. There are many debts which Congress has excluded from discharge. A few of these are:
  1. Debts incurred by fraud or false pretenses
  2. Debts incurred by a false statement in writing (such as false credit application)
  3. Debts incurred by embezzlement or larceny
  4. Spousal support or child support obligations
  5. Debts incurred by willful AND malicious injury
  6. Debts resulting from death or personal injury by debtor operating a motor vehicle while intoxicated
  7. Criminal fines and restitution
  8. Marital Equalization obligations (Ch. 7 only—these may be discharged in a Ch. 13)
  9. Income taxes for tax years less than 3 years ago
  10. Fines and penalties owed to a governmental unit
  11. Student Loans (unless you can prove "undue hardship"
These are the main types excepted from discharge, although there are others.