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I have $100,000 equity in my home, $50,000 unsecured debt and income of only about $20,000. Can i do a chapter 13 bankruptcy??

Sturgeon Bay, WI |

With my small income- plus I have an $80,000 mortgage- I won't be able to pay much on my unsecured debt. Should I look into chapter 13 (to protect my home) or will i not even qualify because i can't see how i can pay much on the debt? If bankruptcy isn't an option- and i just stop paying on the credit cards (which are half my ex's in the divorce decree, but he doesn't pay at all...stupid girl; they are all in my name only) will there be liens put on my house? The two largest cards are $14,000 and $13,000.

Please help. Drowning and not sure which is the lesser of evils.


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Attorney answers 3


I'm going to urge you to talk to an experienced bankrutpcy attorney in your area. There is an important change in Wisconsin's exemptions coming soon which may have a huge impact on you. You NEED to dicsuss your specific situation with an attorney.


You have not provided sufficient information to answer your question. Consult with a competent bankrutpcy attorney in your area. Just guesiing, but I suspect you'd be able to keep your home in Ch 7 as long as you can afford to make the monthly payments on it going forward. You might need a Ch1 3 if you have an arrearage. See someone immediately!


A recent bill that the governor signed into law increased the Wisconsin homestead exemption from $40,000.00 to $75,000.00 per spouse. If you are currently unmarried and your ex wife does not live with you (pretty safe assumption), then your exemption on the equity in your house would be limited to a maximum of $75,000.00. That puts you in a ballpark that may fit into a Chapter 7, which generally provides you with a more favorable result than Chapter 13. Depending on how the house is currently titled and what the divorce decree and MSA in your divorce say, you may have little trouble protecting your house in a Chapter 7.

The short answer to your question, however, is yes. Chapter 13 would provide you with a shield from your creditors while you repay some percentage of what you owe them over the term of your chapter 13 plan. Generally speaking, the monthly payment you are required to make over the term of your plan is determined by your ability to pay. Accordingly, if your income is relatively low at the moment, you may be able to present a Chapter 13 plan that proposes to pay a nominal monthly payment for 36 months, with the unpaid balances of your debts discharged upon the completion of your chapter 13 plan.

Meet with a bankruptcy lawyer and see whether you are a good candidate for Chapter 7, and if not, your bankruptcy attorney can give you a good idea as to what your monthly Chapter 13 payment would be.