What are the Nondischargeable Debts in Chapter 7 Bankruptcy?
If you’re a resident in Milwaukee and thinking of filing for Chapter 7, you have to take note of the non-dischargeable debts in Chapter 7 bankruptcy in WI. This type of bankruptcy is perceived to be the most common and straightforward one. While Chapter 7 bankruptcy is known to be a “debt-forgiveness bankruptcy,” many debtors are unaware that filing for it won’t wipe clean every form of debt they have. With the help of an experienced bankruptcy attorney, you will learn and understand more.
With a strong dedication to assisting individuals facing insurmountable debts, Miller & Miller Law, LLC is the seasoned bankruptcy firm in Wisconsin that you can rely on. We provide personalized, transparent, and accurate bankruptcy counseling. With more than two decades of legal experience, we guarantee your case will be handled with diligence and care. Get a free case evaluation and let’s discuss your case today!
What is Chapter 7 Bankruptcy?
Chapter 7, also known as the liquidation chapter of the Bankruptcy Code, allows individuals, corporations, or partnerships to file for bankruptcy. In a Chapter 7 case, a trustee is appointed to gather and sell all non-exempt property and use the proceeds to pay off creditors. Individuals filing for Chapter 7 can claim certain property as exempt. In return for this, they receive a discharge, which relieves them from the obligation to repay certain types of debts.
However, corporations and partnerships do not receive discharges, so individuals who are legally responsible for their debts will still be held liable. Consequently, both individual bankruptcies and corporate/partnership bankruptcies may be necessary.
What Properties Can You Keep In Chapter 7 Bankruptcy?
In Wisconsin, bankruptcy filers have the option to choose between state and federal exemptions. The state exemptions tend to be more generous, so most individuals in Wisconsin use the state exemptions. The following are some of the commonly used exemptions under Wisconsin state law:
- Homestead Exemption: You can exempt up to $75,000 of equity in your primary residence if you are under 62 years old, or up to $150,000 if you are 62 or older. However, this exemption is subject to certain limitations and qualifications.
- Motor Vehicle Exemption: You can exempt up to $4,000 of equity in one motor vehicle.
- Personal Property Exemption: You can exempt various types of personal property, such as clothing, household goods, appliances, furnishings, jewelry (up to $5,000), books, and musical instruments, up to a certain value.
- Retirement Accounts: Qualified retirement accounts, such as 401(k)s, IRAs, and pension plans, are generally exempt from bankruptcy proceedings.
- Public Benefits: Certain public benefits, including Social Security, unemployment compensation, and disability benefits, are typically exempt.
What Can Chapter 7 Bankruptcy Do?
Chapter 7 bankruptcy, also known as liquidation bankruptcy, is a legal process that provides individuals or businesses with a fresh financial start by eliminating most of their debts. Here are some key things that Chapter 7 bankruptcy can do:
- Discharge Debts: This means that once the bankruptcy process is complete, you are no longer legally obligated to repay those debts. Common types of dischargeable debts include credit card debt, medical bills, personal loans, and certain types of business debts.
- Stop Creditor Actions: When you file for Chapter 7 bankruptcy, an automatic stay goes into effect. This automatic stay halts most collection actions by creditors, such as lawsuits, wage garnishments, and harassing phone calls. It provides immediate relief and protects you from further creditor actions while the bankruptcy case is ongoing.
- Liquidation of Assets: In Chapter 7 bankruptcy, a bankruptcy trustee is appointed to evaluate your assets and determine if any non-exempt property can be sold to repay your creditors. However, many states have exemptions that allow you to keep certain property up to a certain value. If your assets are primarily exempt or have little value beyond the exemption limits, you may be able to retain most, if not all, of your property.
- Financial Fresh Start: Chapter 7 bankruptcy is often seen as a fresh start because it allows individuals or businesses to eliminate overwhelming debt and start rebuilding their finances.
- Speedy Process: Compared to other bankruptcy chapters, Chapter 7 bankruptcy is usually a quicker process. It typically takes around three to six months from the time of filing to the discharge of debts, allowing you to move forward more rapidly.
What Are Nondischargeable Debts in Chapter 7 Bankruptcy?
In Chapter 7 bankruptcy, certain debts are generally not dischargeable, meaning they cannot be eliminated through the bankruptcy process. These non-dischargeable debts remain your responsibility even after the bankruptcy case is concluded. In Wisconsin, as in other states, some common examples of nondischargeable debts under Chapter 7 bankruptcy include:
- Certain Taxes: Generally, income taxes that are less than three years old or that have not been properly filed within the last two years are not dischargeable. Additionally, any taxes resulting from fraudulent returns or tax evasion are not eligible for discharge.
- Student Loans: Student loans are generally not dischargeable unless you can demonstrate “undue hardship,” which is a difficult standard to meet in most cases.
- Child Support and Alimony: Debts related to child support and alimony obligations are not dischargeable. Chapter 7 bankruptcy does not relieve you of these ongoing responsibilities.
- Debts Arising from Fraud or False Pretenses: Debts obtained through fraud, false pretenses, or willful and malicious acts cannot be discharged. This includes debts incurred by fraudulent activities, such as writing bad checks, committing identity theft, or incurring debts while knowing you couldn’t repay them.
- Debts from Intentional Injury or Wrongful Death: Debts arising from intentional acts that caused injury or death to another person, such as debts resulting from a car accident caused by drunk driving, are typically not dischargeable.
- Government Fines and Penalties: Debts owed to government entities for fines, penalties, or restitution are generally not dischargeable. This includes traffic fines, criminal restitution, and certain court-ordered obligations.
- Debts Resulting from Willful or Malicious Property Damage: If you have intentionally damaged someone else’s property, debts arising from that damage may not be dischargeable.
Why Do I Need a Chapter 7 Bankruptcy Attorney in Milwaukee, Wisconsin?
When filing for Chapter 7 bankruptcy, it is also crucial to know how you should choose your bankruptcy lawyer. Keep in mind that in Chapter 7 bankruptcy, you and your attorney will work together for three to six months. That’s why it is imperative to keep the following characteristics in mind when choosing your lawyer:
- Experienced – When choosing a bankruptcy attorney, make sure they have relevant experience that your circumstances require, and knowledgeable about the current bankruptcy laws, and knows how to handle complex situations
- Reputable – A reputable bankruptcy attorney can only become one if they demonstrate excellent abilities to navigate the legal system, protect debtors’ rights and interests, and negotiate with creditors. Furthermore, a reputable bankruptcy attorney is likely to have built professional relationships with judges, trustees, and other stakeholders in the bankruptcy process.
- Personalized – Your financial situation, as well as other influencing factors of your bankruptcy case, are unique. You deserve a bankruptcy attorney who will attentively listen to your concerns before providing legal advice.
With over 20 years of legal experience, Miller & Miller Law, LLC has gained a strong reputation within the legal community of Wisconsin. We provide personalized legal services to ensure that your needs are specifically met. When you choose us, our legal team will guide you throughout the entire bankruptcy process, and your questions and concerns will be answered with respect and accuracy.
Call our Wisconsin Bankruptcy Attorney Now!
In Chapter 7 bankruptcy, it is crucial to get familiar with the debts that are non-dischargeable because it is where you can decide whether or not to file Chapter 7 bankruptcy. While non-dischargeable debts in Chapter 7 cannot be forgiven, your experienced bankruptcy attorney can still look for other ways to address these debts.
At Miller & Miller Law, LLC, we provide the highest standards of legal services to ensure that you can overcome your debts. Your present and future financial situation is important to us. With our experience, knowledge, and reputation, we can guarantee that your case will be in good hands. Get a free case evaluation today!
We also offer Wisconsin the following services:
