Attorney at Debt Advisors Law Offices
Practice Areas: Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, Stop Foreclosure
Most people never imagine they will face the question of bankruptcy. Yet in Wisconsin, financial stress from medical bills, credit cards, or job changes can make repayment feel impossible. Bankruptcy is one legal tool designed to help individuals and families regain stability, but it is not the only option.
This guide explains what bankruptcy can and cannot do, clears up common myths, and introduces alternatives available under Wisconsin law so you can make an informed choice.
Bankruptcy is a federal legal process that either eliminates some unsecured debts or restructures payments under court supervision. The two most common forms for individuals in Wisconsin are Chapter 7 and Chapter 13.
Chapter 7 is often called “liquidation.” It discharges most unsecured debts such as medical bills or credit card balances. Certain property may be exempt, meaning you can keep essentials like your car, home equity within limits, and household items.
Chapter 13 allows you to repay debts over three to five years based on income. It is useful if you have steady wages and want to protect assets like your home from foreclosure.
Wisconsin also has a unique alternative known as Chapter 128 repayment plans. This state-specific law allows you to consolidate debts into a structured three-year payment plan without discharging them. Unlike bankruptcy, it does not appear on your credit report in the same way, though you must complete all payments.
A frequent worry is whether being employed disqualifies someone from filing. It does not. Eligibility depends on income, debt type, and which chapter you consider, not whether you have a job.
Some people fear their employer may fire them after filing. Federal law, 11 U.S.C. § 525, makes it illegal for employers to terminate or discriminate against employees because they filed for bankruptcy.
Another misconception is that you lose everything. In reality, both federal and Wisconsin exemptions protect necessities like modest home equity, retirement accounts, and personal belongings.
Concerns about credit are also widespread. Bankruptcy will affect your credit report for seven to ten years. Yet many people seeking bankruptcy already struggle with poor credit. Once debts are discharged or reorganized, it can actually be easier to rebuild. New credit offers often appear within a couple of years because lenders see you no longer carry overwhelming unpaid debt.
According to 11 U.S.C. § 525, employers cannot fire or discriminate against an individual solely because they have filed for bankruptcy.
Bankruptcy does not eliminate all financial obligations. It is important to understand the difference so expectations are realistic. Debts that are generally dischargeable include credit card balances, unsecured loans, payday loans, and most medical bills.
Debts that are generally non-dischargeable include student loans (except in very rare hardship cases), child support, alimony, certain taxes, and secured loans such as mortgages or car loans if you want to keep the property.
If you are behind on mortgage or car payments, bankruptcy may stop foreclosure or repossession temporarily, but you will need to continue payments to keep the asset. For more details, you can review consumer bankruptcy protections explained by the U.S. Courts.
The most immediate benefit is the automatic stay. This stops wage garnishments, foreclosures, repossessions, and debt collection calls. For people facing lawsuits from creditors, this protection offers immediate relief.
Bankruptcy also helps by restructuring or eliminating unsecured debts. With fewer obligations, you may finally be able to cover essential expenses like housing, food, and utilities. This makes it a path toward regaining financial balance, not an admission of failure.
Another benefit is emotional. Constant calls from creditors and the fear of losing basic assets take a heavy toll. Bankruptcy can bring peace of mind and space to rebuild.
Filing bankruptcy will typically remain on your credit report for seven to ten years, but many individuals begin rebuilding credit within one to two years.
Bankruptcy is not the only tool. Wisconsin residents have access to Chapter 128 repayment plans, which allow courts to oversee structured repayment without discharging debts. This option is best for individuals who can repay but need protection from lawsuits and interest accumulation.
Credit counseling or debt management plans are another route. These involve nonprofit agencies helping negotiate lower interest rates with creditors. While not legally binding like bankruptcy, they can provide relief for moderate debt levels.
Debt settlement is sometimes offered by private companies, but it carries risks. Creditors are not required to accept settlements, and your credit can be further damaged if payments are missed during negotiations.
Choosing bankruptcy is rarely simple. It may be considered if unsecured debt has become overwhelming, creditors are suing, or wages are already being garnished. For others, especially those with steady income and manageable debt, alternatives like Chapter 128 or counseling may be more appropriate.
Bankruptcy is a legal process with lasting consequences, but for many it provides a financial reset that no other option offers. Discussing your situation with an experienced bankruptcy attorney in Wisconsin can clarify whether Chapter 7, Chapter 13, or Chapter 128 is the right step for you.
|
Option |
Eliminates Debt? | Stops Creditor Harassment? | Affects Credit Score? |
Notes |
| Chapter 7 Bankruptcy | Yes (most unsecured) | Yes | Yes (7–10 years on record) | Quick discharge; not all debts qualify |
| Chapter 13 Bankruptcy | Restructures | Yes | Yes (7 years) | 3–5 year repayment plan |
| Chapter 128 Repayment Plan | No | Yes | Moderate | Wisconsin-specific alternative; debts repaid in 3 years |
| Debt Settlement / Counseling | Partially | Sometimes | Yes | Negotiated but not court-protected |
No. Employment does not disqualify you. Eligibility depends on income, debts, and which chapter you file, not whether you currently have a job.
Bankruptcy remains on your credit report for 7–10 years. Many individuals begin rebuilding their credit within one to two years of receiving a discharge.
No. Bankruptcy eliminates most unsecured debts but not obligations like student loans, child support, alimony, or certain taxes. Secured debts must still be paid to keep property.
No. Federal law prohibits employers from terminating or discriminating against employees because of bankruptcy, protecting you from job loss for this reason.
It is a state program allowing residents to consolidate debts into a court-supervised repayment plan. It provides protection from creditors but does not eliminate debts.
If debts are overwhelming, lawsuits or wage garnishments are pending, or repayment is impossible, bankruptcy may be considered. Otherwise, alternatives might work better.
Bankruptcy is not a decision anyone takes lightly. For some in Wisconsin, it provides relief from crushing debt and a pathway toward financial stability. For others, repayment plans or counseling may be a better fit. The best option depends on your unique circumstances, your type of debt, and your financial goals.
If you are struggling with unmanageable debt, exploring all available options is the smartest step. An experienced Wisconsin bankruptcy attorney at Debt Advisors Law Offices can help you evaluate Chapter 7, Chapter 13, or Chapter 128 and guide you toward the choice that protects your future.
Learn about bankruptcy protections, types of bankruptcy, how to get started, what to expect, and who to trust. Filing bankruptcy is the ONLY way to completely eliminate debt. If bankruptcy is right for you, it offers powerful protections that cannot be achieved through alternative solutions such as hardship relief, loans, or debt settlement.
