We’ve written a series of blog posts answering common questions regarding advice on bankruptcy and how to improve your finances. Call (262) 827-0375

How Will the New Stimulus Bill Affect Bankruptcy?

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On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law. This follows the Small Business Reorganization Act (SBRA) that took effect in February 2020. Both of these measures have an impact on those contemplating bankruptcy, or already in the bankruptcy process. Across the United States, people have more household debt now than at the height of the recession – $14.15 trillion as of the fourth quarter of 2019 compared to $12.68 trillion during the third quarter of 2008. And now, millions of Americans are losing their jobs because of the COVID-19 pandemic. Since March 15, nearly 10 million people have filed first-time jobless claims; many of them may be looking to bankruptcy for relief.

CARES Direct Payments

Included in the CARES Act are one-time payments to qualifying individuals of $1200 for anyone making under $75,000 annually, and $500 for each dependent child. If you have made more than $75,000, but less than $99,999, you will still receive a payment, though it will be less than $1,200. The amounts of the direct payments for individuals making more than $75,000 and couples making more than $150,000 will decrease $5 based on every $100 an individual makes over $75,000. An individual with an income of $76,000, for example, would receive a $1150 payment.

CARES and Bankruptcy

Chapter 7

The CARES Act makes temporary changes to bankruptcy law. Those filing under Chapter 7 need to meet a means test; they must not make more than their state’s median household income. For Wisconsin, that is $62,629 (as of 2018). The CARES Act excludes the direct payment from that calculation. So for a debtor just on the borderline, this extra income will not count as “current monthly income” when determining eligibility to file Chapter 7 bankruptcy.

Chapter 13 – Disposable Income

For those who have filed Chapter 13 bankruptcy, these direct payments will not count as “disposable income” for purposes of Chapter 13 plan confirmation. Those debtors are also now permitted to seek modifications of their confirmed Chapter 13 plans if “the debtor is experiencing or has experienced a material financial hardship due, directly or indirectly, to the coronavirus disease 2019 (COVID-19) pandemic.” The modification can be approved after notice and a hearing.

Chapter 13 – Extended Payment Plan

Debtors experiencing such hardships because of the COVID-19 pandemic are also allowed to extend their plan payments for up to seven years after the time that the first payment under their original confirmed plan was due. So if you had a repayment plan of three years, it can be extended another four years. This means that the payments you are currently responsible for would decrease, perhaps substantially..

SBRA and Bankruptcy

The SBRA amends Chapter 11 and creates Subchapter V which applies both to small businesses and to individuals. It significantly increases the amount to qualify for the bankruptcy process. Debtors can have up to $7,500,000 in secured and unsecured debt and still qualify to proceed under this streamlined bankruptcy process. Previously, the debt limit was $2,725,625. With 38 states in complete lockdown and all “nonessential” businesses closed to the public, small business owners can be feeling desperate. For many small business owners who are facing a sudden and dramatic drop in income, this may bring some hope. Small businesses filing under Subchapter V may have a clearer way to obtain relief and maintain their ownership of the business.

The measures that the federal government has put in place to protect the economy during this COVID-19 pandemic can provide some substantial relief to those considering or in the process of bankruptcy proceedings. It’s important to remember, though, that the provisions are temporary. These changes expire precisely one year after their introduction. So as of March 27, 2021, they end. If you are experiencing financial hardship, the CARES Act and SBRA may mean that it is the best time for you to file for bankruptcy. Consult one of the experts at Burr Law for guidance.

How Can I Manage My Debt During the Coronavirus Crisis?

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In order to combat the COVID-19 pandemic, all but three states have ordered all non-essential businesses to close. Most of the country’s people are in lockdown in their homes, and millions have therefore lost their jobs. Since March 15, nearly 10 million people have filed first-time jobless claims. All of this means that for millions of Americans, managing their debt has suddenly become unmanageable. If you find yourself in this situation, don’t despair. You still have options. In this blogpost, we will look at ways of dealing with different kinds of debt, and explore bankruptcy options.

Student Loans

The Coronavirus Aid, Relief, and Economic Security (CARES) Act that President Trump signed on March 27, 2020 suspends payments on federal student loans for six months, until September 30, 2020. During that time, interest will not accrue, either. This suspension is automatic, so you don’t need to fill out any forms or formally request it. The CARES Act also stops collection actions, wage garnishments, and treasury offsets; and it prohibits negative credit reporting due to your student loans. The payment pause and interest waiver includes Federal Parent PLUS loans in addition to Federal Stafford Loans, Federal Grad PLUS loans and Federal Consolidation Loans. It is important to remember that this only applies to loans owned by the federal government. It does not apply to private student loans, student loans acquired from state lenders, or, if you have consolidated your student loans through a third-party lender.

Mortgage, Rent Payments, and Foreclosures

The CARES Act provides for forbearance of mortgage payments. It also provides for a 60-day foreclosure moratorium for federally backed mortgage loans like Fannie Mae and Freddie Mac, as well as FHA-insured, VA-insured or guaranteed loans, and FDA guaranteed loans. This covers almost all household mortgages; many banks and mortgage companies have suspended all foreclosure proceedings as well. In the state of Wisconsin, Governor Tony Evers issued an emergency order on March 27, 2020 banning all evictions and foreclosures for 60 days, thereby including any mortgages not covered by the CARES Act and extending protection to renters. If you are a renter, you are still responsible for your monthly rental, but if you cannot pay it, your landlord cannot begin eviction proceedings. The best course of action is to talk to your landlord to see if you can work out some kind of agreement. Wisconsin has also instituted a moratorium on utility shutoffs.

Credit Cards and Other Loans

Many credit card issuers are offering assistance to consumers during the COVID-19 outbreak in various forms. Available help includes credit line increases, collection forbearance, and skipped payments. You should check the website of your credit card companies to see what help you could possibly receive. Banks, credit unions, and other financial institutions are offering loan extensions and deferred payment options, among other things, if you’ll have trouble making payments on a personal loan or small business loan. A number of auto loan companies are offering payment delays as well.

Bankruptcy

Another option to consider right now is bankruptcy. The CARES Act modified the Bankruptcy Code making it easier for individuals to file for Chapter 7 bankruptcy, as well as making changes to Chapter 13 bankruptcy. If you are a sole proprietor or self-employed person, the Small Business Reorganization Act that went into effect in February 2020 could also be a source of relief for you. It extended the amount of secured and unsecured debt you could have in order to qualify for the streamlined bankruptcy offered

in Chapter 11. If you have ever considered filing bankruptcy, now may be the time to follow through on it. Contact one of the experts at Burr Law to discuss your situation.

The COVID-19 pandemic is changing all of our lives in significant ways. The ways in which you have always managed your debt may no longer work for you. There are options available to you, though. If you are concerned about your debt situation, you should contact the professionals at Burr Law. We’re here to help your finances survive this coronavirus.

When Should I File for Bankruptcy? How to Determine if Filing is Right for You

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You’re feeling overwhelmed. The credit card payments or medical bills are just too much to keep up with in addition to your car payments, student loans, mortgage/rent, and other monthly bills. You’re paying absurd monthly interest charges and never seeing the capital decrease significantly. It’s just impossible to keep juggling all your financial obligations. It’s time to think seriously about your debt management problems. In this blogpost, we will explore the options of debt consolidation and bankruptcy.

Debt Consolidation: What Is It?

In its most basic form, debt consolidation works by combining multiple debt payments into one monthly payment through obtaining either a secured or unsecured loan. That monthly payment is sometimes lower than the individual payments combined, and the interest you pay is sometimes lower as well. You will maintain your access to credit, though incurring more debt increases the likelihood of the debt consolidation failing. If the debt consolidation loan is secured, then you risk losing your collateral, usually your car or other significant tangible property.

Cross-Collateralization

Sometimes you may risk losing collateral that you aren’t aware you have placed in jeopardy. That can happen when your debt consolidation loan has a cross-collateralization clause that lets the lender take other property it has financed if you default on the debt consolidation loan. For example, if you get your debt consolidation loan through the same bank that financed your car, under the cross-collateralization clause, if you default on the debt consolidation loan, the bank could repossess your car—even if the car payments are current.

Debt Management Plans: Hidden Costs

Some people go to an agency that creates a debt management plan for them and negotiates with the credit card companies on your behalf. It’s important for you to know that agreeing to a debt management plan comes with a number of hidden costs – monetary and otherwise. You will be expected to pay an enrollment fee as well as a monthly fee for each credit card on the plan. Also, most credit card companies will require that an account entering into a debt management plan be closed, so you lose your access to credit. And the fact that you’re engaged in a debt management plan will be noted on your credit report. Most debt management plans run for three to five years, and at least half of clients do not successfully complete the plan.

Negative Tax Consequences
Depending on your financial condition, any money you save from debt relief services such as debt consolidation may be considered income by the IRS, which means you pay taxes on it. Credit card companies and other creditors may report settled debt to the IRS, which the IRS considers income.

Debt Consolidation vs Bankruptcy

There are two types of bankruptcy you can pursue: Chapter 13 and Chapter 7. Chapter 7 is means tested, so you need to make no more than your state’s median household income ($60.773 for Wisconsin).* If you qualify for Chapter 7 bankruptcy, your unsecured debt can be completely eliminated. The whole process takes about four months, and then you can start over with a clean slate. Chapter 13 bankruptcy lasts between three to five years, similar to debt consolidation. With Chapter 13 bankruptcy, the moment you file, there is an automatic stay on all collection action, and you will almost certainly retain possession of your home and vehicle.

If you’re considering debt consolidation vs bankruptcy, it would be a good idea to talk to one of the experts at Burr Law.

Should I File for Bankruptcy Before or After Christmas? How to Survive the Holidays

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When your finances are in disarray, it’s hard to enjoy let alone survive the holidays. You want to focus on your family and friends, not your financial difficulties. It’s hard to have the emotional capacity to consult an attorney about bankruptcy during this already emotionally challenging time of year. Yet, bankruptcy is a viable option, and it may be wisest for you to file before Christmas. Timing is crucial, and in this post, we look at the various factors you need to consider when making the decision to file for bankruptcy.

Two Types of Personal Bankruptcy

There are primarily two types of personal bankruptcy: Chapter 7 and Chapter 13. Chapter 7 bankruptcy takes only about four months from start to finish, and can eliminate almost all your debt. With Chapter 13 bankruptcy you retain your debt, and a way to pay off your obligations is worked out. It takes between three and five years. So the first thing to figure out when you are considering bankruptcy is whether or not you qualify for Chapter 7.

Income Matters

Filing for Chapter 7 bankruptcy is means tested; you must not earn more than the median household income for your state. In Wisconsin, the median household income was $60,773 in 2018 (according to figures released by the US Census ACS on September 26, 2019). The size of your household matters as well, and the bankruptcy experts at Burr Law can help you know definitively whether or not you qualify for a Chapter 7 bankruptcy.

Timing Matters

Importantly, “income” excludes any money received during the actual calendar month in which you file. The median household income is determined by the numbers during the six calendar months prior to the filing. So, for instance, if you generally receive a holiday bonus in December, or your parents give you a monetary gift to help with presents for the children in December, it would be a good idea to file for bankruptcy before Christmas. Filing for Chapter 7 bankruptcy in December will mean that your household income will be calculated based on the numbers from June 1 through November 30. Survive the holidays by beginning the bankruptcy procedure when the means testing will work in your favor.

Non-dischargeable Debt

If you imagine that you can charge wonderful Christmas presents on your credit cards, and have a spectacular holiday, and then file for bankruptcy, that will not work at all. Bankruptcy law states that any debt incurred during the three months before or after Christmas that exceed $600 and that are not living necessities may be non-dischargeable debt. That particular creditor could file an adversary proceeding to determine that that debt is non-dischargeable. That means that you could be responsible for any purchases made during that time. When you file for Chapter 7 bankruptcy, your credit card use will be carefully examined to determine whether or not charges were “necessary.” Those deemed unnecessary could be non-dischargeable debt, and you may remain responsible for them. So filing for bankruptcy before or after Christmas will not make any difference to the categorization of non-dischargeable debt. Other non-dischargeable debts are certain income tax owed, domestic support obligations, debts to governmental agencies, and student loan debt.

Surviving the holidays is even more difficult when your financial situation is a mess. Even though you may be reluctant to confront the situation before Christmas, it may make a big difference in what kind of bankruptcy you can file and how your income is calculated. Make the time to consult one of our bankruptcy professionals at Burr Law today.

How to Cope with Bankruptcy and Divorce

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When it comes to legal processes, bankruptcy and divorce are among the most stressful. The same goes for life in general. Unfortunately, the level of stress involved in filing bankruptcy can sometimes result in filing for divorce, or the other way around. What does this mean for you? It means it’s incredibly important to keep things organized so nothing falls through the cracks.

Which one first?

If you’re in a situation where bankruptcy and divorce are both on the table, saving money will likely be ideal. For this reason, you’d be smart to file a joint bankruptcy before getting divorced. Not only will this save you on court fees, you’ll also save on attorney fees. Something to note, however, is that it’s crucial that you divulge all information to the attorney you’re hiring, just as in any bankruptcy. In addition to cost savings, filing for bankruptcy before divorce will help to simplify any issues surrounding property division and debt, leading to lower costs during your divorce proceedings.

What type?

Not sure which type of bankruptcy is best for you? It depends on your financial situation and a number of other factors. A Chapter 7 will get rid of unsecured debts and can be completed in just a few months or so. A Chapter 13, on the other hand, lasts 3-5 years because it involves paying back your debt through a repayment plan.

If you’ve found yourself in a situation involving bankruptcy and divorce, a good idea is to contact an experienced bankruptcy attorney like Michael Burr to guide you through the process. Contact us to set up a free consultation today.

What To Look For In An Attorney

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When you make the decision to file for bankruptcy, an important next step is figuring out who to trust to guide you through the process.There are a lot of attorneys who claim to offer bankruptcy services, but your best choice is someone that specializes specifically in bankruptcy law. Here are a few things our Waukesha bankruptcy experts recommend you consider as you make your decision.

Avoid the cheapest…and most expensive

When you’re stuck in a financially difficult situation, the last thing you want to do is spend money to fix it. There are a couple different structures for payment, including hourly rates and flat fees. When you look into payment, don’t jump for the cheapest option right off the bat. The old saying “you get what you pay for” rings true, and you may find yourself wasting money on something that doesn’t help. On the other hand, some attorneys that charge per hour for their time may drag things out in attempts to get more money.

Legal know-how

The law industry as a whole is quite broad. There’s divorce law, real estate law, corporate law, etc. In a technical sense, any lawyer can help you file for bankruptcy. Your best bet is to go with someone that has a thorough understanding and experience with bankruptcy law.

Avoid scams

Some companies may offer “quick debt relief” services, promising to rid you of your debt with a snap of your fingers. Sadly, these companies take advantage of people all too often by charging insanely high rates without doing proper work.

Our bankruptcy experts are here to help guide you through this difficult time. Call Burr Law Office at 262-827-0375 to schedule a complimentary consultation. We’ll show you why we’re the right choice for your filing.

Avoiding Bankruptcy During the Holidays

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The holidays can be a difficult time of year for those on a tight budget. Sometimes it can be hard to control spending when you want to show your loved ones how much they mean to you. Christmas is generally a time of year when people hit the shopping malls and department stores hunting for the perfect gift. There are a few things to keep in mind as you venture out to keep yourself from financial trouble.

Cash Helps with Control

Especially when it comes to smaller purchases, cash helps control the amount you’re spending. It’s easier to visualize how much of your budget is going to each item when you use cash. Especially if you’re on a tight budget, setting cash aside for the amount you’re allowing yourself to spend will help you see exactly what can be spent where.

Don’t Forget Bills

As silly as it seems, sometimes people forget about their fixed expenses. Remember you still have a mortgage payment, rent, utilities, car payment, etc. Just as with budgeting for gifts, a smart idea is to set aside that money ahead of time so you know it’s covered.

Be Careful with Cards

With so many people out shopping during the holiday season, you should take extra care in protecting your identity. Debit cards don’t offer the same protection as credit cards, but it’s important to watch your spending much closer when using credit cards. It’s easy to spend more than what you budgeted for.

If you’re in need of a bit of help this holiday season, contact the Milwaukee bankruptcy specialists at Burr Law Office. We’ll help you keep yourself free of debt!

Importance of a Lawyer

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When you make the decision to file, one of the most important things on your mind is getting through the proceedings successfully. Some people approach the situation by filing on their own, but the best way to ensure a smooth ride is by working with an experienced Milwaukee bankruptcy lawyer.

There is no rule that requires someone to hire a lawyer and, yes, it is possible to do everything on your own. However, managing your case is an extremely difficult task and is best left to a seasoned professional.

Specialization is key

Bankruptcy law is very complex. With constantly changing laws, things can get confusing even for seasoned lawyers. There are many lawyers out there who claim to provide bankruptcy services. While these lawyers are certified and have the ability to take care of your case, you’re better off with a lawyer who specializes in bankruptcy and understands the ins and outs of the system.

Steer clear of scams

Too often, people find themselves in even bigger trouble than they were before they made the decision to file by using untrustworthy sources. There are a lot of companies that offer financial advising or debt settlement services and make promises they can’t keep. In order to avoid a situation like this, make sure you do your research. If they’re not accredited by the Better Business Bureau, you’d be smart to steer clear.

If you’ve found yourself in financial difficulty and are in search of a great Milwaukee bankruptcy lawyer, contact Burr Law Office today. Attorney Michael Burr personally takes on each case and works to bring you to financial freedom.

Steer Clear of Milwaukee Credit Card Debt: Tips & Tricks

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Nobody wants credit card debt. Occasionally, unforeseen circumstances make it difficult to continue best practice for credit card use. The experts at Burr Law Office have the experience necessary to help those that have fallen victim to Milwaukee credit card debt. We understand the stress that goes along with debt and work with clients to bring relief. Here are some tips to consider for safe and effective credit card use.

Don’t over-charge

Credit cards make it extremely easy to make purchases you couldn’t otherwise afford. Many often charge purchases and don’t have the means to pay it off. A good rule of thumb is to only charge things you can pay cash for. In other words, treat your credit card like cash.

Don’t miss payments

Paying off you card each month in full is the best approach. If, for some reason, you aren’t able to pay it in full, it’s crucial that you at least make the minimum payment each month. Missing payments completely will set you back and has serious consequences.

Limit the number of cards you have

People often fall victim to in-store promotions for companies that offer branded credit cards. While it’s okay to have some store cards, opening too many credit cards will hurt your credit. Try to limit the number of cards you open and only open cards you really need or will benefit greatly from.

If you’ve found yourself at risk of debt, contact the Milwaukee credit card debt experts at Burr Law Office. We’ll help you settle your debt and get back on your feet, free of financial burdens.

Dangers of Debt Settlement Companies

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If you are overwhelmed by bills but are not yet ready to declare bankruptcy, debt settlement can be a viable legal solution for your financial burdens. While some private debt settlement companies may promise to wipe out your debt for just a small fee, such guarantees are unfortunately simply too good to be true. Here are just a few of the pitfalls—and fees—associated with debt settlement firms.

Poor Information

Attorneys often recommend debt settlement for individuals who are heading toward bankruptcy but who do not qualify for Chapter 7 liquidation. Because each case is specific, an attorney analyzes each client’s finances before recommending debt settlement as an alternative to Chapter 13. But the employees of private debt settlement companies work on commission, which means they make money off of each client whom they guide toward debt settlement, regardless of whether it is the best option.

Astronomical Fees

Debt settlement companies may promise a low fee, but the contracts are often intentionally confusing and even misleading. Some companies will charge you a percentage of the total debt, while others charge a percentage of the debt savings plus an initial sign-up fee and monthly service charges. Even if you manage to navigate the confusing language, debt settlement services can be so expensive that it takes clients years to pay just the fees—before they even begin to pay off their original debt.

Unresolved Debt

Once your creditors discover that you are working with a debt settlement agency, they may actually escalate your account by either sending it into collection or suing you. Unfortunately, when a creditor files a lawsuit, your debt settlement company will drop you, because only an attorney is qualified to represent you in court.

At Burr Law Office, we are committed to helping all our clients regain their financial footing. To find out how you can affordably discharge your debts through bankruptcy or satisfy your creditors through debt settlement, call our office today at (877) 891-1638 to set up a free consultation with attorney Michael Burr.