A Great Bankruptcy Alternative For Wyoming Residents
Wyoming’s debt per capita is relatively low compared to other states, at around $2,400 per resident. However, it’s worth noting that Wyoming has a small population compared to many other states. According to data from the American Bankruptcy Institute, Wyoming had a total of 483 bankruptcy filings in 2021, which is a rate of 1.3 filings per 1,000 people.
Bankruptcy Laws in Wyoming
Bankruptcy laws in Wyoming are primarily governed by federal law, specifically the United States Bankruptcy Code. However, there are also some state-specific rules and exemptions that may apply in Wyoming bankruptcy cases. In Wyoming, bankruptcy cases are filed in the U.S. Bankruptcy Court for the District of Wyoming, which has locations in Cheyenne, Casper, and Jackson. Most individuals file either Chapter 7 or Chapter 13 bankruptcy, which are the two most common types of bankruptcy for individuals. Chapter 7 bankruptcy involves liquidating non-exempt assets to pay off debts, while Chapter 13 bankruptcy involves creating a repayment plan to pay off debts over a period of three to five years. Both types of bankruptcy can provide relief from overwhelming debt and can help individuals get a fresh start financially. In Wyoming, some of the state-specific exemptions that may apply in bankruptcy cases include homestead exemptions, personal property exemptions, and wage garnishment exemptions. These exemptions may allow individuals to protect certain assets from being seized by creditors during the bankruptcy process. It’s important to note that bankruptcy can be a complex and nuanced process, and it’s always a good idea to consult with an experienced bankruptcy attorney if you’re considering filing for bankruptcy in Wyoming. An attorney can help guide you through the process and ensure that you understand your options and your rights under the law.
What Are The Types of Individual and Business Bankruptcies?
For individuals or consumers, there are two main types of bankruptcy under the U.S. Bankruptcy Code:
- Chapter 7 Bankruptcy: This is often referred to as a “liquidation bankruptcy” and involves the liquidation of non-exempt assets to pay off creditors. The remaining unsecured debts, such as credit card or medical bills, are then discharged, which means the debtor is no longer legally obligated to pay them.
- Chapter 13 Bankruptcy: This is often referred to as a “reorganization bankruptcy” and involves the creation of a repayment plan to pay off creditors over a period of three to five years. At the end of the repayment plan, any remaining unsecured debts may be discharged.
For businesses, there are several types of bankruptcy under the U.S. Bankruptcy Code:
- Chapter 7 Bankruptcy: Similar to individual Chapter 7 bankruptcy, this involves liquidating the business’s non-exempt assets to pay off creditors.
- Chapter 11 Bankruptcy: This is often referred to as a “reorganization bankruptcy” and involves the creation of a plan to reorganize the business’s debts and operations, with the goal of emerging from bankruptcy as a viable and profitable entity.
- Chapter 13 Bankruptcy: Although Chapter 13 is typically used for individuals, it can also be used for certain small businesses that meet certain eligibility requirements.
- Chapter 12 Bankruptcy: This is a special type of bankruptcy specifically for family farmers or fishermen, which provides certain debt relief and restructuring options.
Considering Business Bankruptcy?
If you’re considering business bankruptcy in Wyoming, there are several things you should keep in mind:
- Understand your options: There are several different types of bankruptcy available to businesses, each with its own advantages and disadvantages. It’s important to understand the different options and choose the one that best fits your business’s needs.
- Consult with an experienced bankruptcy attorney: An attorney can help guide you through the bankruptcy process and ensure that you understand your options and your rights under the law. They can also help you navigate the various legal and financial issues that arise during the bankruptcy process.
- Consider the impact on your employees: Bankruptcy can have a significant impact on your employees, particularly if you’re considering Chapter 7 bankruptcy, which may result in the closure of your business. It’s important to consider the impact on your employees and work to minimize any negative effects.
- Be prepared for the process: Bankruptcy can be a complex and time-consuming process. It’s important to be prepared for the process and to work closely with your attorney and any other professionals involved in the process.
- Understand the potential consequences: Bankruptcy can have significant consequences for your business, including damage to your credit rating and the potential loss of assets. It’s important to understand these consequences and to weigh them against the potential benefits of bankruptcy.
Are All Debts Discharged?
While bankruptcy can provide relief from many types of debts, there are some debts that are generally not dischargeable in bankruptcy. These include:
- Certain taxes: While some types of taxes may be dischargeable, others, such as income taxes that are less than three years old or taxes that were assessed within the past 240 days, are typically not dischargeable.
- Student loans: In most cases, student loans are not dischargeable in bankruptcy, unless the debtor can demonstrate that repaying the loans would cause undue hardship.
- Child support and alimony: Debts related to child support and alimony are not dischargeable in bankruptcy.
- Debts arising from fraudulent or illegal activity: Debts arising from fraud, embezzlement, or other illegal activity are not dischargeable in bankruptcy.
- Fines and penalties: Debts arising from fines or penalties imposed by government agencies are not dischargeable in bankruptcy.
- Debts incurred after the bankruptcy filing: Debts incurred after the bankruptcy filing are not typically dischargeable.
What Happens To Your Credit Score After Bankruptcy? Can You Get A Loan?
Bankruptcy in Wyoming can have a significant impact on your credit score and future ability to get a loan. Your credit score is a numerical representation of your creditworthiness and is used by lenders to determine your risk as a borrower. Filing for bankruptcy can have a negative impact on your credit score, as it signals to lenders that you may have difficulty repaying your debts. The exact impact on your credit score will depend on a variety of factors, including the type of bankruptcy you file, the amount of debt you have, and your credit history prior to filing. In general, a Chapter 7 bankruptcy will remain on your credit report for up to 10 years from the date of filing, while a Chapter 13 bankruptcy will remain on your credit report for up to 7 years from the date of filing. In addition to the impact on your credit score, bankruptcy can also make it more difficult to obtain credit in the future. Many lenders view bankruptcy as a red flag and may be hesitant to extend credit to someone who has filed for bankruptcy. If you are able to obtain credit, you may be subject to higher interest rates and less favorable terms.
How Does Bankruptcy in Wyoming Affect Tax Debt?
Bankruptcy can have a complex impact on tax debts in Wyoming. In general, the dischargeability of tax debts in bankruptcy will depend on a variety of factors, including the type of tax, the age of the tax debt, and whether or not the debtor has filed tax returns. Here are some general rules regarding tax debts and bankruptcy in Wyoming:
- Income taxes: Income tax debts may be dischargeable in bankruptcy if they meet certain criteria. For example, the tax debt must be for a tax year that is at least three years old, the tax return for that year must have been filed at least two years prior to the bankruptcy filing date, and the tax debt must have been assessed at least 240 days prior to the bankruptcy filing.
- Payroll taxes: Payroll tax debts are generally not dischargeable in bankruptcy. However, if the debtor is a sole proprietor, the IRS may consider the payroll tax debt to be a personal income tax debt, which could potentially be dischargeable.
- Property taxes: Property tax debts are typically not dischargeable in bankruptcy, although there may be some exceptions.
Will You Lose Your Assets During Bankruptcy?
Whether or not you will lose your home or car in bankruptcy in Wyoming will depend on a variety of factors, including the type of bankruptcy you file, the amount of equity in your home or car, and whether or not you are current on your mortgage or car payments. In a Chapter 7 bankruptcy, your non-exempt assets may be sold to pay off your creditors. However, Wyoming law provides for a homestead exemption, which may allow you to keep your home in bankruptcy. Under Wyoming law, you may be able to exempt up to $20,000 in equity in your primary residence. If you have less equity in your home than the exemption amount, you may be able to keep your home. If you have more equity than the exemption amount, you may be required to sell your home in order to pay off your creditors. Similarly, in a Chapter 7 bankruptcy, your car may be sold to pay off your creditors if it is not fully exempt. Wyoming law provides for a vehicle exemption of up to $7,500, which may allow you to keep your car if you have less equity in it than the exemption amount. If you have more equity in your car than the exemption amount, you may be required to sell your car in order to pay off your creditors. In a Chapter 13 bankruptcy, you may be able to keep your home and car by making payments through your bankruptcy plan to pay off your debts over a period of three to five years. As long as you stay current on your mortgage and car payments, you should be able to keep your home and car.
Statute of Limitations for Collections in Wyoming
In Wyoming, the statute of limitations for collections depends on the type of debt in question. The statute of limitations is the time period during which a creditor can legally sue you to collect a debt. Once the statute of limitations has expired, the creditor can no longer sue you to collect the debt. Here are the statute of limitations for collections for various types of debt in Wyoming:
- Written contracts: The statute of limitations for collections on a written contract in Wyoming is 10 years. This includes credit card debt, personal loans, and other types of debts that are based on a written agreement.
- Oral contracts: The statute of limitations for collections on an oral contract in Wyoming is 8 years. This includes debts that are based on a verbal agreement.
- Promissory notes: The statute of limitations for collections on a promissory note in Wyoming is 10 years. This includes debts that are based on a written promise to pay.
- Open accounts: The statute of limitations for collections on an open account in Wyoming is 8 years. This includes debts that are based on an ongoing credit account, such as a store credit card.
Cons of Bankruptcy in Wyoming
While bankruptcy can provide relief from overwhelming debt, there are several potential downsides or “cons” to consider before deciding to file for bankruptcy in Wyoming. Here are a few:
- Impact on credit score: Filing for bankruptcy can have a significant negative impact on your credit score. Bankruptcy can remain on your credit report for up to 10 years, making it difficult to obtain credit or loans in the future. Additionally, even after the bankruptcy is discharged, lenders may view you as a higher risk borrower, which may result in higher interest rates on loans.
- Loss of assets: Depending on the type of bankruptcy you file and the exemptions available to you, you may be required to liquidate certain assets to pay off your creditors. This could include selling your home, car, or other valuable possessions.
- Limited types of debt relief: Bankruptcy may not discharge all types of debt. For example, certain tax debts, student loans, and debts owed to family members or friends may not be dischargeable in bankruptcy.
- Public record: Filing for bankruptcy is a matter of public record, which means that anyone can access the information. This could impact your personal and professional reputation.
- Cost: Filing for bankruptcy can be expensive, with court fees and attorney fees adding up quickly. Additionally, depending on your income and assets, you may be required to pay back a portion of your debts through a Chapter 13 bankruptcy repayment plan.
Compare the Pros and Cons of Bankruptcy: Pros and Cons of Filing Bankruptcy
Why People Regret Filing Bankruptcy
While filing for bankruptcy in Wyoming can provide relief from overwhelming debt and a fresh financial start, some people may regret their decision to file for bankruptcy for a few reasons:
- Emotional toll: Filing for bankruptcy can be emotionally difficult, as it may feel like a failure or admission of financial mismanagement. Additionally, the process of gathering financial records and working with an attorney can be stressful and time-consuming.
- Impact on credit: As mentioned earlier, bankruptcy can have a significant negative impact on your credit score, making it difficult to obtain credit or loans in the future. This can have a lasting impact on your ability to achieve financial goals, such as buying a home or starting a business.
- Loss of assets: Depending on the type of bankruptcy you file and the exemptions available to you, you may be required to liquidate certain assets to pay off your creditors. This can be a difficult decision, particularly if you have a sentimental attachment to the asset or if it is critical to your livelihood.
- Limited debt relief: While bankruptcy can provide relief from certain types of debt, such as credit card debt and medical bills, it may not discharge all types of debt. Certain tax debts, student loans, and debts owed to family members or friends may not be dischargeable in bankruptcy.
- Public record: As mentioned earlier, filing for bankruptcy is a matter of public record. This can impact your personal and professional reputation, particularly if you are in a field that requires financial responsibility and trust.
Don’t Qualify For Bankruptcy in Wyoming? Don’t Panic
If you do not qualify for bankruptcy in Wyoming you may want to explore other alternatives for managing your debt. An alternative to consider is debt settlement. Debt settlement involves negotiating with creditors to settle your debts for less than the full amount owed. This can be a good option if you have a significant amount of debt but cannot qualify for bankruptcy. There are some potential benefits to debt settlement over bankruptcy that may make it a more favorable option for some individuals.
- No bankruptcy on your credit report: Filing for bankruptcy shows on your credit report for up to 10 years. On the other hand, debt settlement does not show as a bankruptcy.
- Cost: Filing for bankruptcy can be expensive, with filing fees, attorney fees, and other costs adding up quickly.
- Emotional Impact: People report horror stories of the negative emotional impact of BK.
- With a bankruptcy for the rest of their life: Employers or lenders can ask if someone has filed BK for the rest of their life. It is much less likely to be asked if one ever used debt settlement to pay back an agreed to amount.
- Control: With debt settlement, you may have more control over the process and negotiations with your creditors, whereas with bankruptcy, a court will make the final decision.
- Less severe consequences: Filing for bankruptcy can have significant consequences, such as the liquidation of your assets, whereas debt settlement may allow you to negotiate a more manageable repayment plan while keeping your assets.
CuraDebt – An Alternative To Consider
CuraDebt, a professional debt settlement firm, is a great alternative to bankruptcy. We have a team of debt professionals who are ready to help you better understand and potentially eliminate your debts. Contact us today for your free consultation. 1-877-850-3328