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Bankruptcy/Collections

Loberg Law Office provides legal services for clients seeking representation in bankruptcy and collections proceedings.

Bankruptcy laws are designed to assist the debt-ridden individual (or farmer or business) to either liquidate and dissolve his or her debts or fashion a plan to repay creditors.  Bankruptcy is a serious, final solution to financial difficulties.  Many alternate techniques and plans may first be used to reshape one’s finances.  Where bankruptcy is the debt elimination/reduction method chosen, it generally takes one of two forms.

The first is simple or straight bankruptcy, which is filed under Chapter 7 of the Act.  Under this method, all debts are extinguished and non-exempt property of the bankrupt is used to pay creditors pro-rata.  Secured creditors, such as a bank holding a mortgage on your home, are paid to the extent of the value of the security they hold (the value of the house).  Often the debtor will reaffirm secured debts, that is, agree to continue paying the bank on the home mortgage, car loan, etc., thereby keeping the secured property.

The bankrupt/debtor may generally keep exempt property.  Exempt property includes such items as basic household furnishings, an automobile, certain livestock, the home, jewelry, tools used in a business and the like.  However, dollar amount limitations apply.  For instance, the homestead, under Wisconsin Law, is exempt up to $40,000.00 of the total equity.  Either state or federal exemptions may be chosen.  They differ, and careful examination must be made to determine which set of exemptions provides the most benefit for the bankrupt as non-exempt property is seized by the trustee and distributed to creditors pro-rata.

The second type of bankruptcy is that under Chapter 11, 12 or 13.  Under this method, the bankrupt formulates a plan for repayment of debt to both secured and non-secured creditors.  Each case is different.  A plan might call for repayment of non-secured debts at a rate of $.10 on the dollar over a five-year period.  Secured debt, such as a farm mortgage may be reamortized with new interest rates and payment schedules. The plan must be one reasonably certain to rehabilitate the bankrupt, i.e., get the bankrupt back on his or her feet.

General Questions

  • Who can file Bankruptcy?  
    Any individual, sole proprietor, business, or corporation.
  • Will all debts be discharged? No, certain taxes, child support, alimony, fines, fraudulent debts, and certain other debts are not dischargeable.
  • Does your spouse have to file with you?
    No, but generally it is advised.
  • May you own anything after Bankruptcy?
    Yes.  What you acquire is not subject to the claims of creditors, except that certain property (inheritances, property settlements, insurance proceeds) received within six months of Bankruptcy may be available to your creditors.
  • How does Bankruptcy affect your credit?
    It may hamper your ability to get credit for a time, but, on the other hand, it may improve your ability to get credit because you now have less debt and should thus be in a better position to repay your loan(s).
  • How do you know if Bankruptcy is right for you?
    Consult within an attorney to evaluate your assets, income, and debts.
 
     
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