The Milwaukee Journal Sentinel reported last month that,”Bankruptcy filings in Wisconsin fell to their lowest level in nine years in 2016 as an improving economy and jobs climate helped more consumers keep up with their debts.” The article raises the possibility that bankruptcies may increase in 2017 because it has now been eight years since the last peak in filings. Eight years is the amount of time required to elapse between the filing of consecutive Chapter 7 cases that provide the debtor a discharge of debts.
New median income numbers for the Bankruptcy Means Test go into effect on 4/1/2017 as follows for Wisconsin: A one person household goes from $47,804 to $48,407; 2 person household goes from $62,130 to $62,914; 3 person household goes from $75,230 up to $76,179; and a 4 person household goes from $88,133 up to $89,245. Add $8,400 for each individual in excess of 4. This is not much of a change, but at least they all went up. So, this is unlikely to be significant enough to help anyone pass the Means Test who was having difficulty passing it before these changes. If your gross income is below those numbers, you pass the Means Test. If you are over those numbers, you still may be able to pass the Means Test. It just becomes more complicated. If you have questions about the Means Test feel free to give us a call at (608)718-0497.
On Nov. 1, 2016, Means Test median income numbers are going up significantly. A one person household will go up from $44,817 to $47,804. A two person household will go up from $59,668 to $62,130. A three person household will go up a whopping $5,738, from $69,492 to $75,230, and a four person household will increase from $85,961. to $88,133. If your annualized income from the past 6 calendar months is below the median income for your household size, then you are pretty much guaranteed to pass the Means Test. If your income is more than the median, then you still may be able to pass the Means Test, it just becomes more complicated. You attorney will need to help with that. Passing the Means Test allows you to file under Chapter 7, the most common and probably the most popular chapter under which to file for bankruptcy.
Exemptions are what allow you to keep your “stuff’ when going through a bankruptcy. In over 96% of Chapter 7 cases, debtors are able to keep all of their assets. In Wisconsin a debtor has the option of using exemptions found under Wisconsin law or those found under federal law. The exemptions are divided into various categories, and most of those categories have a dollar limit. The federal exemption limits have recently been raised a little and some of those are as follows. Homestead: $23,675.; consumer goods: $12,625.; 1 motor vehicle: $3,775.; wildcard: up to $13,100.; tools of the trade: $2,375.; and jewelry: $1,600. A married couple gets to double those exemptions. To learn about other exemptions available in a bankruptcy (like the $150,000 Wisconsin homestead exemption or the $1,283,025 IRA exemption!) give us a call.
There has been a major revamping of the forms that are required to be filed in a bankruptcy case, and they will be required in cases filed starting December 1, 2015. The Federal Courts’ website states, “The new forms are easier for debtors to understand and complete and are designed to work with scheduled enhancements to the federal courts’ case opening and electronic case management system.” The software companies that bankruptcy attorneys rely on to complete the forms are still scrambling to get the forms updated. Hopefully, the changes will be ready to go on time and the changeover will work seamlessly.