Legal Question in Bankruptcy in Wisconsin

Liens are not automatically satisfied after bankruptcy. In fact, the general rule is that properly perfected voluntary liens survive bankruptcy, particularly if the are PMSI (purchase money security interest) liens, which occur when the lender actually finances purchase of the collateral for the debtor. At least to the extent that the collateral has any value, the debtor will normally need to either pay them off before they are satisfied, or at least pay the creditor the agreed value or the court determined value (if the debtor brings an adversary lawsuit in order to have a judge decide such issues). If the debtor settles with a creditor, the creditor should agree to issue a satisfaction document which can be recorded or filed. However, depending upon how liens come to existence, some of them can be satisfied by virtue of a bankruptcy filing only under certain conditions. The most common ones which are relatively easily satisfied are judgment liens, which are usually considered involuntary liens. If they impair any of the debtor's exemptions, both State courts and the bankruptcy court have the ability to issue satisfactions (actually avoidance orders in bankruptcy court) up to certain dollar limits on available exemptions claimed by the debtor. I do not know of any preprinted forms for such lawsuits, which are a totally new case brought after conclusion of the bankruptcy. Every one used in my practice is custom drafted depending upon the individual facts of each case. However, most debtor's attorneys will provide this service for a minimal additional fee which can be as low as a few hundred dollars per each lien which the client wishes satisfied. In the case of very small liens, it is often cheaper to pay them than to rehire your attorney to get them satisfied. My comments here are intended as educational content and are not legal advice. You should consult with your own attorney for that purpose.

The only contractual limitation on the amount of interest which you can be charged will be set forth in the security agreement which you signed. However, as a practical matter it does not make sense for you to pay anything in excess of the value of the vehicle. If the lender refuses to limit its demand to that amount, you would be better off simply surrendering the vehicle to them. Although you may have a contractual obligation to pay the actual computed interest, such an obligation is easily discharged in a bankruptcy proceeding, assuming that you are otherwise eligible for bankruptcy. A chapter 7 filing usually allows one to surrender a vehicle or other collateral on a loan and "walk away clean" from it if it any time that it ceases to be worthwhile for you to pay the full amount demanded. My comments here are not intended as legal advice but are instead offered only for public educational purposes.