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?

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?

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.

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

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.

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

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.

How to Cope with Bankruptcy and Divorce

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.

Tips to Avoid Financial Troubles During the Holidays

As you head into the holidays, it’s important to keep a close eye on your financials and spending habits. Many people tend to go a bit overboard because of parties and other obligations and find themselves in trouble after the holidays have ended. Milwaukee bankruptcy Attorney Michael Burr has a few tips to help keep your spending under control this season.

Shop with a plan.

Just as you bring a list when you grocery shopping, it’s important to make a list when buying gifts. Before you go to any stores, decide how much you are able to spend on each person and stick to that amount. It’s helpful to jot down a few gift ideas, too. If you find yourself wanting to purchase things that aren’t on your list, hold on to them but give yourself time to look around and really think about whether or not it’s a necessary purchase. Note: Don’t forget about extra expenses like wrapping materials, host gifts, etc. when making your list!

Retail isn’t the only place to shop.

In this day and age, there are tons of opportunities to find lower prices on gifts for the holidays. Don’t feel as though you need to purchase every gift from the mall or other retail stores. Many sites offer free shipping and other discounts during the holidays.

Pay in cash as often as possible.

The biggest mistake people make during the holidays is racking up enormous charges on their credit cards that they aren’t able to pay back after the holidays. Try to pay for as many purchases with cash as you can. If you don’t feel comfortable carrying cash and don’t have a debit card, use one credit card and keep close tabs on your purchases by writing each one down.

Don’t wait until the last minute.

Rushing to the store the day before (or worse, the day of) a party can cause you to impulsively buy the first thing you see. When you don’t have time to think about your purchase, you’re more likely to overspend or convince yourself that the cost is not important. Plus, if you’re an online shopper, waiting until the last minute will generally lead to massive shipping fees to get things on time.

The best advice we can give is to make a budget plan and stick to it. There’s no need to go out of your means to impress anyone. Enjoy the holidays with friends and family and keep your finances in check. Our Milwaukee bankruptcy team at Burr Law Office is here to answer any questions you may have about shopping during the holidays!

Importance of a Lawyer

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.

Dangers of Debt Settlement Companies

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.

Don’ts: Things Not To Do Before Filing for Waukesha Bankruptcy

If you find yourself in a situation where filing for bankruptcy is your best option, there are a few things you should keep in mind before doing so. Due to the fact that your debts will soon be reorganized and put into someone else’s control, it’s important that you abide by rules and regulations associated with bankruptcy. The last thing you would want is for new problems to arise. Here are a few helpful tips to consider, from Waukesha bankruptcy lawyer Michael Burr.

Don’t: Acquire new debt.

Creditors may attempt to object to a discharge if you’ve increased your debt within up to 90 days before filing. They may argue that it’s a case of fraud, saying that you acquired the debt with no intention of paying it back. Additionally, you shouldn’t cash out or take loans from your 401(k), pension, or any other retirement plan or take out an equity line of credit against your home. Doing any of these things can cause issues in your bankruptcy.

Don’t: Provide inaccurate, dishonest, or incomplete information.

Completely the paperwork for a bankruptcy filing must be taken very seriously. Lying or providing falsified information can lead to serious consequences in addition to putting an immediate stop to your bankruptcy filing. Be sure to provide all information correctly and do not hide any information.

Don’t: Skip filing your income tax returns.

Filing for bankruptcy is, in essence, impossible if you haven’t filed all of your income tax returns for at least two years prior to filing. These documents play a very important role in determining your earnings and asset holdings. Be sure to provide all tax related information to your Waukesha bankruptcy attorney before proceeding.

Don’t: Lie about or hide assets.

It is very important that you do not hide any assets in a bankruptcy filing. Some people may be tempted to sell or transfer assets in hopes that they will be protected during your bankruptcy proceedings. If you do this, there is a strong chance that you would be denied a discharge and could face criminal charges. There are exceptions to this, of course, in that some people sell things hoping to help pay off their debts on their own. The important thing to note if you’ve done so is to let the trustee know. They’ll generally ask if you’ve sold, transferred, or given away any assets up to a year before filing.

Nobody wants to be presented with issues in addition to what they’re already dealing with. If you’ve already done one of these things or want to learn more things to avoid before filing, talk with Waukesha bankruptcy Attorney Michael Burr. He can help you determine the best solution for your situation and get you on the path to being debt-free.

Tips for a Successful Chapter 13

Before getting started with a Chapter 13 Milwaukee bankruptcy, it’s important to know a few things about the process and how to make it work for you. If everything is done correctly, accurately, and in a timely manner, the process can go quite smoothly.

Filing for Chapter 13 requires you to make a promise to yourself (and the courts) that you will change your habits when it comes to handling your finances. The process requires that you live with a strict budget during a three to five year period, which can be very difficult. Sticking to the changes will help you come out of the bankruptcy with a fresh start. Here are a few tips that will help your bankruptcy go well.

Budget

The single most important part of a successful Milwaukee Chapter 13 bankruptcy is creating and sticking to a budget plan. The bankruptcy cannot work if you don’t make your payments. Your budget will likely be a reality check of sorts for you. You must stay committed to making your payments and not fall behind. Doing so will make the process much easier in the long run.

Communication

Another important aspect is effective communication. You will likely receive mail, e-mail, or phone calls from your attorney, trustee, or creditors. It’s important that you tend to these and not ignore them. Ignoring these contacts can only complicate and lengthen the process. If creditors are harassing you, it could mean they are unaware of your filing for Chapter 13. If that’s the case, you need to contact your attorney and get things straightened out.

Paperwork

There is a lot of work that goes into preparing and completing paperwork for your bankruptcy. It’s extremely important that you gather and organize all of your financial records and obtain any missing pieces. It is critical that the paperwork be completed honestly, accurately, and thoroughly. The paperwork is difficult and can be frustrating at times, but your attorney will work with you.

Having a successful Chapter 13 Milwaukee bankruptcy requires hard work, persistence, and sacrifice. Throughout the process, you will likely become smarter with your finances and come out with a fresh new outlook on financial planning. The process is tough, but effective. If you’d like more information about filing for Chapter 13 bankruptcy, contact bankruptcy lawyer Michael Burr at Burr Law Offices to schedule a free consultation.