What does it mean to be “in the black” or “in the red?”

 

If you’re even slightly familiar with the world of accounting and finance, you’ve probably heard the phrases “in the red” and “in the black” before. Even if you are not in finance, you may have heard the terms anyway—they have become a part of our everyday speech and they are often used in common conversation.

For those of you not familiar with the phrases, I’ll briefly explain. The phrase “in the black” refers to being financially solvent or profitable, or sometimes more generally, just not in debt. A business that is “in the black” is usually making a profit or, at the very least, making enough to get by without having to worry about going bankrupt. Conversely, the phrase, “in the red” means to be in debt, running a deficit, or generally just not making money—being cash negative. Although cash flow cycles for businesses and people change from year to year, a business that is “in the red” for several years in a row without a plan to get out of debt often fail. Of course, the phrases aren’t always used consistently, and there are always exceptions to the rule, but in general, being “in the black” is a positive thing, and being “in the red” is usually considered to be a negative thing.

So, now that you know what both of these phrases mean, you may be wondering where the terms came from or what their origins are? After all, there aren’t really any other fields in which these colors (black and red) are used to indicate positive and negative. So if you are guessing that these color indicators are somewhat unique to the world of finance, you would be correct.

To understand where these phrases come from, we have to go back to the days before accounting was done on computers. Before computers, accountants did everything by hand and with pen and paper. In order to help them differentiate between deposits and debits, they started using different color ink for each. Because black and red ink were two readily available colors, they were chosen for the purpose. Though it’s only speculation, some say that red was chosen to denote debits/losses/debts because red is considered a harsh color and can catch one’s attention. It also subtly reinforces the idea of negativity or something “bad.” They wanted to make debts stand out and catch people’s attention. It’s the same reason that teachers often correct homework and quizzes and tests with red pens—it grabs a student’s attention and lets them focus on what they did wrong so, hopefully, they can learn from their mistake and correct the mistake on the next test or quiz or homework assignment.

And now that everything is done on computers, the history of the phrases has still stuck around. In many cases, they really are meaningless. Most software now uses parentheses to indicate a negative number or a debit. Sometimes, they also simply put a minus sign before a number or even have a separate column in a spreadsheet for debits. It is, however, interesting to note that some computer programs still do use red type for debts and debits—a nod to the history of accounting. Again, there is really no practical purpose for this, but it fits with the history of accounting.

As mentioned earlier, businesses and people too (in their personal finances) often go through cycles of “being in the black” and “being in the red.” Maybe you had an exceptionally good year at work or in your line of business and you have a year where you are really making good money. Maybe you inherited some money and it puts you in a good place for the short term, but it’s not money you can count on as reoccurring and consistent income. These would be scenarios where you would be “in the black” for a period of time, but maybe not consistently year to year.

On the other hand, maybe it’s a large but necessary purchase that puts you “in the red” for a brief period of time. The goal, however, should be that running deficits or being heavily indebted should not be standard operating mode. If you have to run in debt, it should be briefly and for a purpose with a specific plan to get back into “the black.” Many times businesses or people can fall into a pattern of consistently running in “the red” without a plan or any practical way of turning things around.

This may be a point where one needs to consider the option of bankruptcy. Bankruptcy laws are created to protect people and give them a way to turn around their finances. The expert Milwaukee bankruptcy lawyers at Burr Law Office know the laws and can help you explore your options. Contact them today to see what options are available.

Getting the Most of Your Chapter 7

Given the circumstances of filing for bankruptcy, everyone wants the process to be as comfortable as possible. There are a number of things you can do to help make make your Milwaukee Chapter 7 go smoothly. Take a look at these tips and contact Burr Law Office LLC for more information.

Stay organized

One of the most crucial elements to a successful filing is paperwork. Your legal documents like bank statements, pay stubs, tax returns, and others need to be well organized so they can be accessed at any point during the process. This also helps to ease communication and build trust with everyone involved.

Don’t be afraid to talk

You don’t need to go blabbing to anyone and everyone who will listen, but discussing your financial situation with trusted family members or friends can help you cope. Plus, they may know someone else that’s gone through something similar and have some advice to offer.

This isn’t forever

The most important thing to help ease the pain of filing for bankruptcy is this: it won’t be like this forever. The process may be difficult, and you’ll likely experience quite a bit of stress, but life will go on. If you don’t allow yourself to see the light at the end of the tunnel, you’re making it more difficult for yourself.

To learn more about Milwaukee Chapter 7 bankruptcy, contact attorney Michael Burr at Burr Law Office LLC for a free consultation. He will be happy to assist you with your case!

Legal Aid Milwaukee: Why to File at the Beginning of the Year

When you’re looking for legal aid in Milwaukee and you visit a bankruptcy attorney, they’ll like say “now is the best time for you to file,” regardless of when it is. There is some truth to this statement. If you’re in a situation of financial distress, waiting to file may only increase your risk for things like repossession of belongings, garnishment of wages, or even foreclosure on your home. However, now that we’re just into the new year, it truly is a good time to consider filing. Here’s why.

Tax debts

Income tax debt specifications state that you aren’t required to pay off income tax debt until the first day of the following year in bankruptcy. If you have a large amount of debt from taxes, a Chapter 13 bankruptcy is a popular option. In this case, waiting until after the first of the year is a good idea – that means your tax debt from the previous year is considered pre-petition debt.

Holiday debt

It’s no secret that people spend more during the holidays, and often it’s done on a credit card. After having built up additional debt from the holidays, the new year is a good time to file as it’s when this debt comes due.

As a rule of thumb, if you’re filing for bankruptcy you should stop using your credit cards right away. If you continue to use your credit cards after you’ve filed, it appears to the courts that you’re doing so with no indication of repaying the debt incurred.

If you’d like to learn more about when to file for bankruptcy, contact the legal aid experts in Milwaukee at Burr Law Offices LLC.

Is Your Tax Return Taken in Bankruptcy?

As we make our way into February, it’s time to start getting our finances in order to prepare for taxes. For those looking to file for bankruptcy in the Milwaukee and Waukesha area, the topic of tax returns often comes up. At Burr Law Office, we want to make sure you fully understand the process and feel confident in your case.

When looking to file a Chapter 7 bankruptcy, your tax return is an important consideration. People who will receive a return right before filing often wonder – will I be able to keep my return or will it be taken as part of the bankruptcy? The answer is dependent upon a number of factors (including the size of the return), but generally the person filing for bankruptcy will be able to keep the return. Under federal bankruptcy exemptions, you’re generally good to go – the exemptions are normally large enough to protect most tax refunds.

While being able to keep your return is great news, you should take precautions as to how you plan to use the money. It’s often recommended that people use their tax return money to pay for the costs and fees associated with bankruptcy. In essence, it’s best to use the money towards making the bankruptcy process easier as opposed to purchasing other things. One thing to note – you should consult your bankruptcy attorney if you plan to use the money to pay off debt you owe to a creditor or family member. Often the trustee has the ability to take the money back from whomever you paid.

If you’re unsure of your situation, the best idea is to call our bankruptcy attorney team at Burr Law Office. We’ll help make the bankruptcy process as smooth as possible for you.

Is It Time for You to File for Bankruptcy?

We all know how stressful the holidays can be on our wallet and bank account. Sometimes it can be hard to come to terms with the fact that you need to reach out to external sources for help. One of the most important things to understand is that open communication is key to successfully getting out of debt. Whether your spouse, bankruptcy attorney, or other source, open communication and willingness to cooperate will help make the process smoother and much less difficult. Here are a few ways to know if it may be time to file for a bankruptcy.

Credit Card Payments

If you’re consistently making the minimum payments on your credit card, it can mean one of two things. You may be making purchases you shouldn’t be which is more linked in irresponsible spending, or you may need help getting your credit situation figured out. If the latter is the case, contacting an experienced bankruptcy attorney may be a smart idea.

Debt Collectors

If you’ve been receiving phone calls from debt collectors, you’d be smart to consider contacting a bankruptcy attorney. One of the main reasons working with an attorney is smart is because they have the capability and knowledge to resolve issues like debt collectors.

Unsure About Debt

If you’re not sure how much money you owe, it would be in your best interest to contact a bankruptcy attorney. If you aren’t aware of your financial situation, it’s hard to determine the next steps.

For a free, no-obligation consultation, contact Burr Law Office today. Our expert Milwaukee and Waukesha bankruptcy team will help you find the best debt relief solution for your needs.

How to File for Bankruptcy

Waukesha bankruptcy adviceMany people find themselves in difficult financial situations and come to a point where they need to decide whether or not bankruptcy is the right option. The best thing to do in this situation is schedule a complimentary consultation with Attorney Michael Burr. He will help guide you through the entire process of how to file for bankruptcy, catering to your specific needs. Here are a few quick bits of information that can help you determine if you should move forward.

You won’t lose everything.

It’s a common misconception that filing for bankruptcy means you’ll lose everything. Depending on your particular situation, you are allowed to exempt a certain amount of property. You cannot, however, hide possessions or “sell” things to family or friends in attempts to keep them. There are serious penalties for such actions, as they are considered fraud. An experienced Milwaukee bankruptcy attorney, like Attorney Michael Burr, can explain how to properly list your assets to maximize your exemptions.

There are multiple types of bankruptcy.

Depending on your situation, you may only qualify for certain types of bankruptcy. Chapter 7, or “straight bankruptcy,” is quite difficult to qualify for. More common is Chapter 13, or “wage earners bankruptcy,” which reorganizes your debts into a repayment schedule. In order to qualify for bankruptcy, you will be required to complete a means test which determines your eligibility.

Work with a lawyer.

New bankruptcy laws in 2005 have made it much more difficult to file for bankruptcy. While it’s not required by law, it is highly recommended that you work with a lawyer when filing. Milwaukee Bankruptcy Attorney, Michael Burr, has over 20 years of experience in bankruptcy law and truly cares about his clients. At the very least, we recommend scheduling a consultation to learn why working with Attorney Burr can help save time, money, and pain.

These tips are by no means legal advice and should be considered a guide as to whether or not you should inquire further about how to file for bankruptcy with Attorney Burr. At Burr Law Offices, we want to give you the fresh financial start you’re looking for. Contact the best bankruptcy lawyers Milwaukee us today to schedule your consultation.

A Breakdown of the Bankruptcy Process

Bankruptcy can help solve a number of financial problems by stopping wage garnishments, foreclosures, repossessions, lawsuits, and harassment by creditors. While Chapter 7 bankruptcy differs from Chapter 13 bankruptcy, the filing process for both types is very similar.

Filing and Credit Counseling

When filing for bankruptcy, a debtor begins by filing a petition, schedule, and statement of financial affairs with the bankruptcy court. The schedule includes a listing of all creditors, property, monthly income, and monthly expenses. The filing fee for a Chapter 7 bankruptcy is $335, while the filing fee for Chapter 13 bankruptcy is $310. However, debtors must complete a court-approved credit counseling course via telephone, internet, or in person before filing for either type. These counseling services typically charge a fee between $25 and $75 based on which counseling course is taken.

Automatic Stays and Financial Management Courses

Once the filing has been completed, an automatic stay is placed on all of the debtor’s property and assets, including bank accounts, savings accounts, homes, and other personal property. An automatic stay prevents creditors from contacting the debtor in any way, putting an end to creditor harassment. After the automatic stay is in place, debtors must attend a 341 meeting with a trustee who is appointed by the bankruptcy court before participating in a court-approved financial management course. This course is similar to the credit counseling course.

Discharge of Debts

After the financial management course is complete, debtors will receive discharges wiping out most of their debts. However, some debts will still remain after the bankruptcy process is complete. This includes IRS or state taxes, student loans, secured debts, alimony, and spousal maintenance or support payments.

It is important to meet with a bankruptcy attorney prior to filing for bankruptcy. An attorney will help you understand what you can expect during the process and may also accompany to your 341 meeting to protect your legal rights when working with a bankruptcy court trustee. For more information on your Milwaukee bankruptcy options, contact Burr Law Office at (262) 827-0375. Or if you’re bored and want to learn about the history of bankruptcy, click here.

Bankruptcy Tips & Advice

While financial hardship is something everyone strives to avoid, it’s becoming an everyday reality for many. Filing for Waukesha bankruptcy may be the best option for resolving unmanageable debt. But what exactly is bankruptcy and how does it work?

This video can help you get a basic understanding of what bankruptcy is. You’ll learn about why it may be a good option for you, how your debts are managed during bankruptcy, and what happens to your assets. One of the best ways to determine whether or not bankruptcy is right for you is by speaking with an attorney. At Burr Law Office, you can schedule a free consultation with no strings attached – there’s no obligation to move forward with filing if it’s not your best option.

Attorney Michael Burr wants what’s best for you. If you don’t qualify  or don’t want to file for bankruptcy, he can offer you sound advice on alternative options that will help get you back on track and debt free.

If you’re looking for an affordable Waukesha bankruptcy attorney who can help you file for Chapter 7 or Chapter 13 bankruptcy, then contact Burr Law Office. Our attorneys specialize in helping clients just like you recover from financial hardship. Call (262) 827-0375 for a consultation or visit us online.

What is An Automatic Stay?

Bankruptcy law can be incredibly difficult to understand for the layperson. If you’re filing for bankruptcy, then you are most likely juggling a lot of concerns and obligations. The specialized vocabulary of bankruptcy law can only add pressure to the situation.

Read on for more information about understanding bankruptcy law and contact an experienced attorney for expert knowledge and advice.

Why file for an Automatic Stay?

You’re probably unfamiliar with the concept of “Automatic Stay,” which can be explained to you in detail by your bankruptcy attorney. Automatic Stay represents relief to those filing for bankruptcy, whether Chapter 7 or Chapter 13.

What does it mean?

According to the United States Courts’ glossary, an Automatic Stay is “an injunction that automatically stops lawsuits, foreclosures, garnishments, and all collection activity against the debtor the moment a bankruptcy petition is filed.” This means that creditors (with a few exceptions) cannot act to collect debts from the debtor for a certain period of time. The Stay’s purpose is to give debtors some time to figure out their situations and to establish a repayment plan, without the added pressure for resolution from the creditor.

Who can benefit from an Automatic Stay?

Automatic Stay is incredibly helpful to U.S. businesses, as it does not stigmatize business failure. The United Kingdom, for example, does not offer this period for businesses or individuals to sort out their financial situation or negotiate with creditors.

For help filing for Chapter 7 or Chapter 13 bankruptcy, call the dedicated Milwaukee bankruptcy experts at Burr Law Office. Filing for bankruptcy can be a complicated and challenging process, and an experienced attorney who can help you efficiently navigate the process is invaluable. Call Burr Law Office at (262) 827-0375 for more information.