Chapter 7 vs. Chapter 13 Bankruptcy
You must decide between Chapter 7 and Chapter 13 when declaring personal bankruptcy. You can eliminate your debt through either sort of bankruptcy, but each will do so differently. This implies that the property you can keep after filing for bankruptcy will depend greatly on your selected chapter.
When you mention bankruptcy, most people immediately picture Chapter 7 bankruptcy. In a “liquidation bankruptcy,” all of the property that an exemption cannot protect may be taken by the bankruptcy trustee and sold to satisfy your creditors.
You will almost certainly be able to exit Chapter 7 debt-free in exchange for releasing your non-exempt property. There are tight procedures to prevent people who could otherwise pay their obligations from filing under Chapter 7 because most creditors only receive a small portion of what they are due in such cases.
The “reorganization” bankruptcy, known as Chapter 13, enables persons with stable incomes to restructure the majority of their obligations such that they are paid off in three to five years. The payments are made per a court-approved repayment plan, and certain creditors may be required to accept less money as a result of the plan.
Due to the likelihood that they will maintain their houses, homeowners frequently select Chapter 13 over Chapter 7.
The Automatic Stay Offers Creditor Protection
When you file for bankruptcy, the court will award you an automatic stay, a strong instrument that will shield you from creditors while you work through your debt issues.
The stay is imposed whether you file under Chapter 7 or Chapter 13. It prevents creditors from taking action to collect debts you owe, including making harassing phone calls, foreclosing on your home, and attempting to garnish your wages.
The delay will allow you breathing room to assess your financial condition and choose the best course of action for filing for bankruptcy. If a creditor contacts you or takes any other action that breaches the stay, the court may order the creditor to pay damages, including legal costs.
Does Wyoming Allow Bankruptcy Filings?
Chapter 7 bankruptcy is not available to everyone who faces financial difficulties. To qualify, you must first demonstrate that your income is too low. Typically, one of two means tests are used for this.
You need to demonstrate that your household’s income is lower than Wyoming’s median income for households of the same size to pass the first means test.
For instance, according to U.S. Census data, a three-person household in Wyoming made an average income of $83,878 in November 2020. If your household’s annual income is under $83,878, you may be eligible to file under Chapter 7.
Though you can convince the court that you have little to no income left over after paying your bills, you can still be eligible even if your household’s income is higher than the Wyoming median.
Although there is no upper-income restriction for Chapter 13 filings, having too much debt is a possibility. Only those with debts totaling less than $419,275 in unsecured debt and $1.26 million in secured debt are eligible for Chapter 13.
Bankruptcy Exemptions in Wyoming
In Wyoming, you are required to use the exemptions allowed by state law while filing for bankruptcy. If you have a property that qualifies for one of the exemptions, you can utilize it to start over after bankruptcy by shielding it from creditors in a Chapter 7 case.
If both spouses jointly own the property, married couples who file for bankruptcy are each eligible to receive a full exemption. For most couples, this practically doubles the size of the exemption.
The homestead exemption in Wyoming allows you to retain up to $20,000 of your home’s equity. Married couples can have up to $40,000 of their equity excluded.
The homestead exemption covers any real estate on which you now dwell, whether a house, mobile home, or house trailer.
Exemption from Pay
Depending on which is higher, you can keep up to 75% of your discretionary weekly income or 30 times the federal minimum wage. Members of the National Guard are completely exempt from paying taxes on their wages. Last but not least, all prisoners, including those on work release, are not paid.
In Wyoming, you are permitted to exclude up to $5,000 of your auto equity.
No Exemption for Wild Cards
Wyoming hasn’t adopted the “wildcard” exemption, which several states have adopted, permitting bankruptcy filers to use an exemption to any of their assets.
Exemptions for Personal Property
In Wyoming, the following personal property is exempt:
- Furnishings, home goods, bedding, and food up to $4,000
- Required attire and wedding bands worth up to $2,000
- Weapons worth up to $3,000 and 1,000 rounds of ammo
- A bible, books for education, and images
- Prepaid funeral plans with a burial plot
Trade Equipment Exemption
- Tools, equipment, books, and stock utilized in your trade, business, or profession are exempt from up to $4,000.
Benefits from Insurance Exemption
The majority of life insurance benefits and some annuity benefits are exempt in Wyoming, including:
- Profits from individual life insurance policies
- The insurer holds proceeds from a life insurance policy, but only if the policy has a provision that forbids creditor payments.
- Profits from group life or disability insurance
- Proceeds from annuity contracts up to $350 monthly
Exemption from Pension and Retirement
The following pension and retirement benefits are excluded:
- 401(k), IRA, and other tax-exempt retirement accounts, as well as defined benefit pension schemes
- Plans for public employees, such as plans for wildlife and fish wardens
- Plans by a firefighter and a police officer
- Plans by a highway patrol officer and a criminal investigator
Exemptions from Public Benefits
In Wyoming, the majority of public benefits, including:
In Wyoming, How Do I File for Bankruptcy?
Every person who declares bankruptcy must complete a credit counseling program within 180 days of the petition’s filing. The course should aid your decision regarding whether bankruptcy is your best option. A repayment plan is frequently required to be written and submitted to the court if you file under Chapter 13 as part of the process.
When you choose a lawyer to file for bankruptcy, they will often handle the filing for you.
However, if you are filing on your own (often referred to as filing “pro se”), you will start the procedure by downloading the appropriate forms for the bankruptcy court in Wyoming. You may need to provide additional documents listed in the guidelines, depending on your financial condition and the bankruptcy type you select.
What Is the Cost of Bankruptcy in Wyoming?
Whether you file for bankruptcy on your own or with a lawyer, the fees are the same. The filing costs for Chapters 7 and 13 are $338 and $313, respectively. If you cannot pay the cost in full, you may ask the court to accept it in 120-day installments. The court may waive the charge if your income is less than 150% of the poverty level.
Most people who file for bankruptcy opt to have legal representation because it can be a complicated procedure. Unfortunately, it is challenging to provide “average” costs for Wyoming bankruptcy attorneys’ fees because they vary greatly based on where you live and how complicated your case is.
For a straightforward Chapter 7 case, most lawyers would charge between $650 to $1,200, although they typically charge more for Chapter 13 cases.
Need Assistance with Bankruptcy Filing in Wyoming?
Suppose you are filing for bankruptcy in Wyoming and have questions about how to move forward with the process. In that case, you may wish to consult a Wyoming bankruptcy lawyer who can offer guidance about state law and help you keep some of your property and other assets.