We’ve written a series of blog posts answering common questions regarding bankruptcy in Wisconsin, and how it can impact your finances. Call (262) 827-0375

Bankruptcy and Credit Card Debt

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Bankruptcy has become an increasingly popular option for debtors in the past decade, with experts crediting this rise to the increasing instability of the economy and low-income families. While bankruptcy has traditionally been pursued by those who have lost their job and fallen into overwhelming debt, recent statistics show that it is now an option for those struggling with accumulated credit card debt. It’s important for you, as a consumer, on this issue to be informed before making any decisions that could have serious repercussions. This is why you should try to avoid accumulating too much debt in the first place by making conscious decisions about how you spend money.

What is Bankruptcy?

Bankruptcy is a legal process that allows debtors to withdraw from their debts by declaring bankruptcy. The filing typically occurs before the defendants’ assets are liquidated to pay the creditors. Borrowers retain property ownership and see their income, salary, or Social Security payments garnished. Jurisdictions of law broadly vary relative to the types of debts that can be included in bankruptcy. In the United States, each of the fifty states has laws regarding what debts can be discharged through this process. It allows individuals earning some income to create a repayment plan that gives them up to five years to repay their debts.

A chapter 7 bankruptcy case is a liquidation bankruptcy case that typically takes four to five months to complete. Chapter 7 bankruptcy petitions are filed under federal law and are governed by the federal Bankruptcy Code. The court in which you file your petition will determine whether you qualify for this type of bankruptcy and if it is approved, it is usually effective within four months. There are two types of chapter 7 bankruptcies, a straight chapter 7 bankruptcy and a chapter 13 reorganization. Those who qualify file under a straight chapter 7 bankruptcy in Wisconsin because it requires no repayment plan. To file for chapter 7 bankruptcy, the steps are as follows:

1. Credit Counseling

Complete pre-file bankruptcy counseling sessions before filing. This is a mandatory step that happens before filing for bankruptcy. It will help you to better decide on what type of bankruptcy you need, determine your liabilities, and understand how debt consolidation, debt settlement, and personal finance can work for you. The class is designed to provide an overview of various options and strategies and help you determine what type of bankruptcy would work best for you. Both federal and state law requires credit counseling as a means to educate individuals about their options before filing for bankruptcy and as a way to avoid defaulting on debts.

2. Find an Attorney

If you are a high-class professional, you must find an attorney specializing in bankruptcy who can help you navigate the process. A qualified bankruptcy attorney will use their knowledge and experience to guide the client through the process and ensure they can successfully file and be protected under the laws in place. An attorney can help you understand the process, help you make a plan, and negotiate with your creditors to file a bankruptcy petition on your behalf. Finding an attorney who can counsel you on all your options is important. If filing for chapter 7 bankruptcy, contact legal aid or pro-bono attorneys who can help with fees or payments.

3. File Paperwork

Once you have found an attorney and decided on what type of bankruptcy you will file, you can begin filling out paperwork. The paperwork needed varies by state, but the forms required to start the case usually include a petition, schedules, and the codebtor information. You will also need to complete credit counseling. The chapter 13 bankruptcy wisconsin petition is the most difficult to file, and certain steps must be followed to file a schedule of assets and liabilities. If you decide to file for chapter 13 bankruptcy wisconsin, it will stay in effect for three to five years and keep you from having your debts discharged.

4. Trustee Takes Over

Once forms have been submitted to start the case, the debtor will be assigned a bankruptcy trustee, who will act on behalf of the debtor. They are responsible for ensuring that creditors receive payments and that all court orders are followed. This means paying all debts and fulfilling any other official duties as they are required.

5. Meeting of Creditors

After completing the education course, a meeting of creditors must be conducted. The meeting is mandatory and will allow you to meet with your creditors before filing for bankruptcy to prepare for this next step. This is when all of the creditors are made aware of your intentions and will also be able to tell you about their rights and those of their respective attorneys. Your lawyer will represent them at the meeting and help make any questions or concerns known.

6. Education Course

The second step is to take an education course. This will help prepare you for the next step, filing for bankruptcy. The course covers what to expect from a bankruptcy case and information about credit counseling and budgeting options. The education course is an important step in the pre-filing process. This is when you hear about opportunities and strategies to help you through your difficult financial situation. The class will also help you determine what will be best for you in the long term by explaining the basics of debt management and personal finance.

7. Your Eligibility is Determined

If you have completed the requirements for chapter 7 or chapter 13 bankruptcy, your petition will be filed by the bankruptcy trustee, and your eligibility will be determined. You may have to appear in court if your case needs to be reviewed. Your attorney will help you prepare the required documents and ensure everything is complete, correct, and up-to-date. This meeting aims to determine what type of bankruptcy you qualify for. This is how the court system becomes aware of your intention to file for bankruptcy, informing them of what kind of bankruptcy you will be filing. This also begins the necessary credit counseling sessions before you can start the case.

Chapter 7 bankruptcy in Wisconsin allows individuals to begin again after financial troubles have become too much to handle. The basic process starts with finding an honest and reputable attorney to help you work through the case. Once that is determined, the next step is completing the credit counseling class and filing paperwork with the court system. During this time, it’s important to learn as much as possible about your options and what type of bankruptcy would suit you.

Bankruptcy & Car Repossession

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For many people, their car is essential to their daily life. It gets them to work, school, and other essential places. However, if you’re struggling with debt and facing bankruptcy, you may be worried about losing your car through repossession. Fortunately, bankruptcy may help you keep your car and even reduce debt.

What is Bankruptcy?

Bankruptcy is a legal process designed to help people struggling with debt. It’s a way to get a fresh financial start by wiping out some or all of your debts, depending on the type of bankruptcy you file. There are two main types of bankruptcy that individuals can file Chapter 7 and Chapter 13.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy, or “liquidation” bankruptcy, involves selling off some of your assets to pay off your debts. However, certain property types are exempt from liquidation, including a certain amount of equity in your car. In Wisconsin, the car exemption is $4,000. If you own your car outright and it’s worth less than $4,000, you can keep it in a Chapter 7 bankruptcy.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy, on the other hand, is a reorganization bankruptcy. It involves creating a repayment plan that lasts between three and five years. You’ll pay a bankruptcy trustee to distribute the funds to your creditors during this time. Chapter 13 can be a good option if you need to catch up on car payments and want to catch up while keeping your car.

Car Repossession

Vehicle repossession occurs when you default on your car loan, and the lender takes back the car. This can happen if you miss payments or violate the terms of your loan agreement. Sometimes, the lender can repossess your car without giving you any notice. However, most states require lenders to provide a certain amount of notice and allow you to bring your payments up to date before repossessing your car.

If your car is repossessed, the lender will sell it at auction to recoup the amount you owe on loan. If the sale price doesn’t cover the full amount you owe, you may be responsible for paying the difference, known as a “deficiency balance.” This can worsen your financial situation, as you’ll still owe money on a car you no longer have.

How Can Bankruptcy Help with Car Repossession?

If you’re facing vehicle repossession, bankruptcy can help. When you file for bankruptcy, an automatic stay goes into effect. This court order prevents creditors from taking any further collection action against you, including repossession. If your car has already been repossessed, the automatic stay can stop the lender from selling it and allow you to get it back.

You can keep your car in a Chapter 7 bankruptcy by reaffirming the debt. This involves signing a new agreement with the lender that allows you to keep the car and continue making payments. However, if you need to catch up on your car payments and can’t catch up, the lender may still be able to repossess your car, even if you’ve reaffirmed the debt.

In a Chapter 13 bankruptcy, you can include your car loan in your repayment plan. This means you’ll make regular payments to the bankruptcy trustee, who will then pay your car lender. If you make your payments on time, the lender cannot repossess your car.

Tips for Dealing with Car Repossession

If you’re struggling with debt and facing vehicle repossession, there are a few things you can do to protect yourself:

1. Communicate with your Lender: If you need help making your car payments, contact your lender as soon as possible. They may work with you to devise a repayment plan or defer your payments.

2. Know your Rights: As mentioned, most states have laws requiring lenders to provide notice and an opportunity to catch up on payments before repossessing a car. Make sure you know what your state’s laws are and what your rights are as a borrower.

3. Consider Bankruptcy:Bankruptcy may be a good option if you’re facing vehicle repossession and can’t afford to catch up on your payments. It can help you keep your car and reduce your debt.

4. Get Legal Help:If you’re facing car repossession or bankruptcy, consulting an attorney specializing in these law areas is a good idea. They can help you understand your options and make the best decision.

5. Consider Refinancing: If you have equity in your car, you can refinance your loan and lower your monthly payments. This could make it easier to keep up with your payments and avoid repossession.

6. Look into a Car Loan Modification: Some lenders may be willing to modify your car loan to make your payments more manageable. This could include extending the loan term, lowering the interest rate, or reducing the monthly payments. Be sure to ask your lender about any loan modification options that may be available to you.

If you’re struggling with debt and facing car repossession, bankruptcy can help. Several options are available, including Chapter 7 and Chapter 13 bankruptcy. By filing for bankruptcy, you can stop vehicle repossession and keep your car while reducing your debt and getting a fresh financial start. However, it’s essential to understand your options and work with an experienced attorney to make the best decision. With the proper guidance, you can get back on track and build a brighter financial future.

How much debt is needed to file bankruptcy?

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If you are wondering how much debt you need to get the ball rolling with bankruptcy, it might come as a surprise. You see, if your debt is less than $10,000 U.S., then you have what is called “non-dischargeable debt.” This means that even if you are successful in discharging most of your debts through bankruptcy proceedings, these outstanding debts will not be wiped off the books.

What about those people with more than $10k in outstanding balances? Well, there is hope for them yet! If your total amount of non-dischargeable debt across all credit cards and loans exceeds $10k U.S. (and there are a few exceptions), then you will be able to discharge your debts through avoidance procedures. Some of these procedures include the following:

1. Live Below Your Means (LBM)
2. Payment Plans
3. Make-A-Wish Foundation (if debt results from an illness or accident) and
4. Auto Financing Protection Plan (this is for automobiles only, not for homeowners).

The good news is that if you have credit card balances with balances that are less than 31% of your total credit limits or for which you make timely and consistent payments, then it could take just a couple of years before you hit the $10k U.S. limit.

The sad part about this is that if you are like most people, then your credit profile will be damaged and it can remain damaged for years.

This is due to how the lending industry keeps tabs on you. Essentially, they buy your credit report from the three major bureaus (Experian, Trans Union, and Equifax) each time you are approved for a new loan. This is done via a purchase order (PO). The purpose of this purchase order is to collect information on you and to make sure that they are getting their money’s worth by making sure you repay them in full at all times.

Chapter 7 bankruptcy vs. Chapter 13 bankruptcy

Chapter 7 bankruptcy, or “wage earner’s” bankruptcy, is a great way to get rid of debt and start fresh. In case you have never heard of a Chapter 7 filing, then here is a quick explanation of what it is all about.

Chapter 7 Bankruptcy allows total unsecured debts to be wiped off the debtor’s credit report once they pay off secured debts if they choose to do so. This can be accomplished by means of things like payment plans, but that is not the primary route used to recover from this type of bankruptcy filing.

Rather, the debtor will normally liquidate (sell off) whatever assets they can and take a lump sum of cash from the sale in order to pay off their outstanding debts. This is a great solution for those persons who find themselves in deep financial ruts, but the one downside is that most secured debts are not covered by this type of bankruptcy.

Chapter 13 bankruptcy is sometimes referred to as “reorganization” bankruptcy. This type of filing will lower monthly auto payments or give you extra time to pay off your mortgage if that is necessary. The good news about Chapter 13 filings is that they do not have to be made by businesses but can be handled on an individual basis. The bad news is that a credit report will reflect this type of filing for 7 to 10 years after the fact.

Due to the length of time that your financial history will be associated with a Chapter 13 filing, most people find this type of filing completely unacceptable, if not completely undesirable. This is because seven years from now, you might find yourself struggling financially again and need another solution to get rid of your debt problems. This means that you could lose out on a second chance at getting out from under your debt load if you use Chapter 13 filings to solve your financial problems today.

Just remember that Chapter 7 bankruptcies only erase unsecured debts, not secured debts. Secured debts are things like mortgages, car loans, and credit card balances that are backed (or secured) by assets such as real estate or collateral of some sort. If you have these types of assets and have a large debt pile to work through, then Chapter 13 is probably the best route for you to take in order to get rid of your debt load once and for all.

Chapter 13 bankruptcies allow people with large amounts of non-dischargeable debt to reduce the amount of money needed to pay off their non-dischargeable debt through repayment plans set up with their creditors. If you have a large amount of non-dischargeable debt, then this would be the best option for you to choose when filing bankruptcy because it will not leave your credit score tarnished for years.

If you are concerned about the reputation of your financial history once the bankruptcy is over, then Chapter 13 filings are not for you. If it is possible to get rid of all your non-dischargeable debt using a Chapter 13 filing and still having enough money to pay off secured debts, then that might be what you need to do. The good news is that there are people who can help guide you in this decision process so that you are aware of all your options.

You need to consider a lot of things prior to filing for bankruptcy. This is why it is always best to let an expert guide you through the process. Bankruptcy should be the final resort and not the first thing you try. It might seem like a good idea to file for it at first, but you will regret it later if you do.

If you are really struggling financially, then Chapter 7 bankruptcy is probably your best bet for getting rid of your debt so that you can start over with a clean slate. This is why most people who have used Chapter 7 filings have found that their credit scores improved after the bankruptcy was over, and this allowed them to get approved for loans on more favorable terms.

Discharge in Bankruptcy – Bankruptcy Basics

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A discharge in bankruptcy is the release of one or more debts by the bankruptcy court. A discharge means that all debts, including any discharged debt obligations, are legally forgiven. There are two types of discharges: general and special. General discharges are any debts belonging to one or more people who can be held liable for the debts, such as cosigners on mortgages and guarantors of student loans. Unusual discharges are not personal debts a debtor has, such as a wage earner’s retirement plans. The courts determine which debts are discharged and which are not by appointing a trustee (or “trustee” in the original, unadorned type of a discharge order). A trustee holds the money owed to creditors and transfers it to the court. The court then distributes the money to creditors on their filed claims.

A general discharge wipes out an individual’s outstanding debts with no remaining liability for those debts. An available shot eliminates the repayment of all debts that would otherwise have been paid through a chapter 13 bankruptcy repayment plan or a chapter 7 liquidation. A particular discharge will only reduce or eliminate debts owed to a creditor, such as credit card debt incurred within the last year.

When does the discharge occur?

After the court has ruled that a debtor is bankrupt and discharged its debts, the debtor is no longer liable for any outstanding debts. The discharge date will be on the court’s bankruptcy order, but if a discharge has not occurred when a debtor has completed all repayment plan requirements, she may request that the court issue an order to make her eligible for release.

The effect of a discharge order

After the granting of a discharge, there are no conditions for filing past-due income taxes and no filing of an “Adversary Proceeding” that stops an IRS audit. The court may also require the debtor to reapply for Federal Deposit Insurance Corporation (FDIC) membership. A debtor must file a tax return yearly during his bankruptcy until he obtains a final discharge. If a debtor receives any income under Chapter 13 or 7 bankruptcy protection, they must disclose this to their trustee.

Individuals can receive chapter 7 or 13 protection only once every eight years. Once an individual files Chapter 7, he cannot file again for seven years. Similarly, if a debtor files for chapter 13 relief within 3½ years of receiving chapter 7 bankruptcy relief, they must wait another three and one-half years before filing again.

For individuals who have committed fraud in their bankruptcy case(s), it is suggested that the copy be resolved before the completion of their bankruptcy discharge. It is always best to consult with an attorney specializing in bankruptcy law so that your intentions and the facts regarding your situation can be thoroughly evaluated and any actions can be taken accordingly.

Chapter 7 in Wisconsin is also a more popular option than chapter thirteen in Wisconsin because of the extra protection that it provides from creditors. It means a bankrupt can be discharged without paying back taxes and interest due on their investment accounts and real property such as their homes.

How does the debtor get a discharge?

After the bankruptcy was filed, a notice was sent to each creditor listed in the petition. The message informs creditors of the bankruptcy petition and provides them with information about the case, including when the plan should be received. A debtor must also file a list of creditors with all required debt and creditor information to the court.

Are all of the debtor’s debts discharged or only some?

Under chapter thirteen, all but secured creditors are discharged. Under chapter seven, all debts are removed. However, a debtor may choose to pay some debts ahead of others, so there is not always a complete discharge of all debts in the first case.

What happens if the creditor disagrees with the discharge?

Creditors have 60 days from being served notice of the bankruptcy to object and state their reasons for objecting to the order discharging their debts. Suppose a creditor needs to file an objection within 60 days of being notified of the bankruptcy petition. In that case, he cannot later object that he was unaware that you filed for bankruptcy or that he was never told of your claim, even if you lied about helping him.

What about taxes?

Federal and Wisconsin income taxes are automatically waived for persons who have filed for bankruptcy relief. However, the creditor may object if a debtor fails to file a federal or state income tax return. Similarly, if a debtor owes state or FHA-insured mortgage loans, the trustee may object to a discharge of those debts and then counterclaim against the debtor in an attempt to collect on the debt. Suppose a debtor fails to pay FICA or ERISA withholding tax owed on wages such as Social Security or Medicare benefits. In that case, his creditors may object to the discharge of those debts and then counterclaim against him in an attempt to collect on these debts. Once the trustee has collected the withheld amounts, he forwards the funds to the Internal Revenue Service for distribution.

What about non-tax debts, such as credit card debt?

Under chapter 7, non-tax debts such as credit card debt and medical bills are discharged. The debtor will also be relieved of liability for student and automobile loans secured by real property. Generally speaking, under chapter 7, all debts are discharged other than those specifically identified on the bankruptcy petition. But a debtor may choose to pay some debts ahead of others so that there is not always a complete discharge of all debts in the first case.

Clear that a person in a bankruptcy proceeding can begin to discharge any debts not listed on the petition. However, if you are ever unsure of your options, consult an experienced bankruptcy attorney. In chapter 7 and chapter 13, the trustee(s) is appointed by the court and given complete control over all debtor’s assets. The proceeds of any sale or transfer of property will then be split between the creditors according to their claims.

DOES BANKRUPTCY COVER MEDICAL DEBT?

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Don’t look now but the cost of medical care in the United States continues to rise and there is no clear relief in sight – certainly not in 2023 – as companies, organizations and individuals navigate through an unstable economy. That’s according to the current Mercer’s National Survey of Employer-Sponsored Health Plans.

The survey reported by Businesswire and the Society for Human Resource Management found that employers in the U.S. can expect medical plans per employee to rise 5.6 percent on average in 2023. The cost-increase forecast is based on the first 864 employers with 50 or more employees responding through August 4.

Many, many people struggle with paying their medical bills. The rising costs of healthcare and patients’ inability to cover themselves and their families with sufficient health insurance has driven people to search for ways that they can be free of their medical debts.

Which brings us to the question: Can filing for bankruptcy help you wipe out debt from your medical bills here in Wisconsin? The answer is a resounding YES! Under Chapter 7 bankruptcy in the Badger State medical debt can be completely cleared.

Under Chapter 7 bankruptcy there are four classifications of debt. These include:

  • Secured debts
  • Unsecured debts
  • Priority debts
  • Nonpriority unsecured debts

Medical debts fall under the last category, nonpriority unsecured debts. Further, there is no cap on how much of your debt can be erased if you file for Chapter 7 bankruptcy. Once you relieve medical debt through Chapter 7 you relieve all of it. If you are overwhelmed by your medical bills and need a fresh start, declaring medical bankruptcy will stop creditors from pursuing you for medical debt repayment.

Chapter 13 bankruptcy treats unsecured debts like medical debt differently than Chapter 7. Although unsecured debts will still be wiped away at the end of your plan, it’s usually necessary to repay a small percentage of these debts during your plan depending on how much disposable income you have and the amount your unsecured creditors would have received if you had filed for Chapter 7 bankruptcy.

Before you file for bankruptcy to rid yourself of medical debt under Chapter 7 or under Chapter 13, there are several things you need to understand:

  • Costs – In Wisconsin in 2022 it costs $335 to file for Chapter 7 bankruptcy and $310 to file for Chapter 13 bankruptcy
  • Filing Without a Lawyer (Pro Se) – This is not a good idea. You will need expert counseling to guide you through the filing process. An attorney can help you qualify for Chapter 7 even when you thought you couldn’t. You’ll want legal representation when you meet with creditors and, by law, only a licensed attorney can provide this service. Filing for Chapter 7 improperly may force you to file for Chapter 13 and pay off a percentage of your unsecured debts. It may also force you to lose assets you didn’t know how to protect. You will need help filling out the forms and paperwork. Finally, if you miss a deadline it could mean delays or even dismissal of your case.
  • Bankruptcy and Your Credit Report – Bankruptcy, even when due to medical bills, hurts your credit score. It can stay on your credit history report between 7 and 10 years depending on which type of bankruptcy you choose.
  • Lending Risk – Filing for bankruptcy typically also increases your lending risk in the eyes of lenders. This will make it harder for you to get financing for big purchases including homes and car loans.

No matter which avenue you choose, filing for bankruptcy will be a very stressful, frustrating and exhausting period in your life. There will be an overwhelming amount of information you will need to understand before you decide to file. This is where you will need assistance from an experienced professional bankruptcy attorney to help you sort things out, guide you through the filing process and restore your financial peace of mind.

For more information about bankruptcy and how we can help you, call Milwaukee Bankruptcy attorney Michael Burr and the experts at the Burr Law office at (262) 827-0375 or visit www.burrlawoffice.com.

CAN YOU FILE FOR BANKRUPTCY WITHOUT AN ATTORNEY?

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CAN YOU FILE FOR BANKRUPTCY WITHOUT AN ATTORNEY?

“He who represents himself has a fool for a client.”

Abraham Lincoln has often been credited with imparting this sage legal advice over the years but researchers have also credited others before Lincoln including William De Britaine in 1682 and Roger L’ Estrange in 1692. The quote has even been cited as an ancient Italian proverb.

Regardless of who first authored the phrase, the point is crystal clear. Sure, you can certainly file pro se for bankruptcy. But why would you? Seeking the advice of a qualified attorney is strongly recommended because filing for bankruptcy has long-term financial and legal consequences.

When filing for personal bankruptcy under Chapter 7 or Chapter 13 your attorney must thoroughly prepare and have a clear understanding of legal issues. Misunderstandings about the law or making mistakes in the process can affect your rights. The law also prohibits court employees and bankruptcy judges from offering legal advice.

There are many ways that your lawyer can help you with your case including giving you advice on whether to even file a bankruptcy petition and, if so, under which chapter you should file. He or she can also advise you on whether your debts can be discharged and whether you will be able to keep your home, car or other property after you file.

Your lawyer can also:

– Advise you of the tax consequences of filing
– Advise you on whether you should continue to pay your creditors
– Explain and help you understand bankruptcy law and procedures
– Assist you in completing and filing forms
– Assist you with most aspects of your bankruptcy case

Those who choose to be pro se litigants need to follow the rules and procedures in federal courts and should be familiar with the Federal Rules of Bankruptcy Procedure and the local rules of the court in which the case is filed. Local rules, along with other useful information, are posted on the court’s website and are available at the local court’s intake counter. Court employees and bankruptcy judges are prohibited by law from offering legal advice.

Bankruptcy Forms are available to the public free of charge.

You will need to use the forms that are numbered in the 100 series to file bankruptcy for individuals or married couples. If you plan to file a bankruptcy on behalf of a nonindividual such as a corporation, partnership, or limited liability company (LLC) you will need to use the forms that are numbered in the 200 series. Sole proprietors must use the forms that are numbered in the 100 series. In addition, many courts require local forms so you should check your court’s website before filing any documents.

So you’re still thinking about going it alone without an attorney? Consider this. If you file bankruptcy pro se you may be offered services by non-attorney petition preparers. By law, these preparers are only allowed to enter information into forms. They are prohibited from giving you legal advice, explain answers to legal questions, or assisting you in bankruptcy court. Further, the petition preparer must sign all documents they prepare for you as well as print their name, address and social security number on the documents. They must also provide you with a copy of all documents and they cannot sign documents on your behalf or receive payment for court fees.

If you need help finding a bankruptcy lawyer here are a couple of resources that may help. If you can’t afford an attorney, you may qualify for free legal services.
– American Bar Association’s Legal Help
– Legal Services Corporation

FILING FOR BANKRUPTCY – THE COST FACTOR

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Bankruptcy.

The very word can send chills up your spine. Many people fear filing for bankruptcy because they dread the thought of being ruined financially. What will this mean for my family? How will it affect my employment or business opportunities moving forward?

As is with so many things in life, two more burning questions come to mind: “How much does bankruptcy cost?” And “Will I have to give up all of my assets?” The answers to these last two may surprise you.

First, bankruptcy may not cost as much as you might think. While the cost factor will vary depending on the situation, the idea that you will lose all of your assets is just a myth. Under Chapter 7 bankruptcy law you may have to liquidate some of your assets but you will also find that many of your assets are exempt. Not only that, filing for bankruptcy under Chapter 13 requires zero asset liquidation!

Filing for bankruptcy is not as financially destructive as you might imagine. However, there are some costs you will need to consider.

Attorney Fees

Under Wisconsin law you don’t actually have to hire an attorney to file for bankruptcy. This is called filing pro se. However, one of the big downsides to taking this route is that you might find yourself vulnerable to push-back from creditors and other issues. This is where an experienced attorney can help guide you through the process efficiently and help you avoid obstacles along the way while keeping creditors at bay at the same time.

At the end of the day, hiring an attorney might end up saving you money. Each time you have a setback in the process that kicks you back to the starting line will cost you more money lost in interest and late payments that you will have to deal with in bankruptcy.

Filing Fees

Again, the price of filing fees vary depending on the type of bankruptcy but if you file Chapter 7 bankruptcy that fee is $335. If you file Chapter 13 bankruptcy the fee is $310. These fees are the same whether you are filing alone or jointly with your spouse and the fees are subject to change. Sometimes the court will allow you to pay the fees in installments.

Credit Counseling Fees

When filing for bankruptcy the state of Wisconsin requires you to take a credit counseling session beforehand. Then, before you are discharged you must take an additional debt management course. The cost for each of these services will depend on who is offering them. The classes are available online or you can take them over the phone and, under Wisconsin law, the providers are required to offer reduced rates or fee waivers in certain situations.

Additional Fees

During the bankruptcy process you may incur a variety of other fees. For example, if you miss a creditor in the initial filing and need to add it in there may be an extra fee. Should you need to file a motion may also require a fee. By hiring an experienced attorney you can save yourself a lot of headaches and cut your risk of extra fees because your attorney will very carefully review your particular situation to make sure that nothing is missed from the very start.

For more information about bankruptcy and how we can help you, call Milwaukee Bankruptcy attorney Michael Burr and the experts at the Burr Law office at (262) 827-0375.

Bankruptcy Myths

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Financial difficulties are a huge burden to thousands of people. Many continue to struggle long past the point that they should. Oftentimes, people resist the obvious option of bankruptcy because they have misconceptions about it, or fear its implications. In this post, we’ll explore some of the most prevalent myths about bankruptcy and how much truth they actually contain.

History of Bankruptcy

Before and shortly after the creation of the United States, businesses and persons owing money could be consigned to debtors’ prison and have all their property confiscated. Bankruptcy was involuntary; it was something done TO you, not a choice you made. In 1841, bankruptcy became voluntary. As the legal system for bankruptcy developed, bankruptcy changed from a quasi-criminal act, to one focused on resolving financial issues in the best way possible. A Congressional Act in 1978 made major changes, and another in 1984 confirmed the function and scope of the free-standing bankruptcy courts. Subsequent amendments to the system have made it easier for family farmers, small businesses, and consumers to pursue bankruptcy. So our legal system has worked consistently over the last 180 years to make bankruptcy a viable option for people in financial straits. Given this history, let’s examine some of the myths still associated with bankruptcy.

Filing Bankruptcy Makes You A Failure

You may believe that bankruptcy comes with the stigma of failure. That could not be further from the truth. It is designed to be a tool that individuals and businesses can employ when necessary. And both individuals and businesses do so on a regular basis without qualms. Think about some of the major companies that have gone through bankruptcy or restructuring; think about some of the famous people that have done so. Many successful people have bankruptcy in their pasts, and in fact, may not have achieved current success without pursuing bankruptcy.

You Will Lose Your Possessions

You may think that declaring bankruptcy will automatically mean that you lose your house, your car, and your most valuable possessions. Bankruptcy is not meant to punish you, but to ameliorate the situation in the most reasonable way. Bankruptcy law includes exemptions, and Wisconsin is one of only 16 states where you can choose whether to take advantage of the federal or state exemptions. Your retirement accounts will not be drained; you will not lose your vehicle. Working with specialist bankruptcy attorneys will ensure that you protect your most important assets.

It Will Ruin Your Family Life

This fear is perhaps the most insidious and the most easily debunked. If you’re constantly worrying about overwhelming debt, you likely feel depressed and act distracted. Ignoring your situation can cause mounting family issues in innumerable ways. When you’re being hounded by debt collectors, it’s impossible to enjoy a happy family life. One you file for bankruptcy, all collection activity has to cease. Working with the experts at Burr Law, you can relax. Your desperate financial situation will be dealt with, and you will feel not only relief, but satisfaction that you are taking action. Once again, you can start to enjoy your family life.

Bankruptcy Will Haunt You Forever

Bankruptcy stays on your credit report for 10 years; that’s true. But if you are behind on all kinds of payments, your credit score is probably already quite low. It’s entirely possible for you to qualify for a mortgage after bankruptcy. There are ways to rebuild your credit and the professionals at Burr Law can guide you through that process as well. There is absolutely no need to believe that bankruptcy will affect the rest of your life.

Many people don’t declare bankruptcy when it makes sense for them to do so because they believe these myths about bankruptcy. Delaying can exacerbate the problem. Don’t allow your decisions to be based on misperceptions. Know the facts about bankruptcy. Contact Burr Law, and we can advise you about the best way forward in your particular circumstances.

Applying for Credit Cards After Bankruptcy

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You may feel awash in debt, but reluctant to declare bankruptcy because you fear losing all your credit cards. It is true that you will lose access to your credit cards, and will likely have them shut down. But does that mean it’s impossible for you to get new credit cards after bankruptcy? No. You can apply (and get) credit cards after bankruptcy, and rebuild your credit. This post lays out what you need to know to apply successfully for credit cards after bankruptcy

Discharged Bankruptcy

First of all, it’s important to know that your bankruptcy must be discharged before you can make an application for a credit card. If you are pursuing Chapter 7 bankruptcy, that discharge usually happens within 4 to 6 months. With Chapter 13 bankruptcy, though, you may think the bankruptcy is done when all the paperwork is complete and been approved, but it is not. You aren’t officially discharged until the 3 to 5 year plan is complete. If you would like to apply for a credit card before that time, you will need the court’s approval to do so.

New Credit Cards

Although your current credit cards will be unavailable to you once you declare bankruptcy, there are credit cards specifically designed for those working to re-establish creditworthiness. These credit cards fall into two categories: secured and unsecured credit cards. Once you demonstrate your ability to make monthly credit card payments, other institutions will begin to offer you credit cards as well.

Secured Credit Card

A secured card is one where you place a certain amount of money on deposit with the credit card company. This kind of credit card is usually successful even with a fresh bankruptcy. With a secured card, the credit limit you receive is typically equal to the amount of the security deposit you put down. You may think that a secured credit card is rather pointless; however, using it wisely re-establishes creditworthiness. Another benefit is that most secured credit cards shift to regular ones after you have demonstrated an ability to pay your monthly charges for a specified period of time.

Unsecured Credit Cards

A small number of unsecured card issuers will not check your credit score or may be willing to extend a line of credit to you after your bankruptcy is discharged. Such cards typically come laden with fees and sky-high interest rates, so be warned. These kinds of credit cards may cause you to end up in financial distress again.

Re-establishing Creditworthiness

Having a credit card gives you the opportunity to re-establish your creditworthiness. Once you do that, you will begin to receive other credit card offers. Here is the best way forward:
*Be sure to pay your credit card bills on time every month. Payment history is the single biggest factor affecting your credit, accounting for approximately 35% of your FICO credit score.
*Make a plan to pay off your credit card charges. The amount of total credit you use as a percentage of your credit limit also weighs in at 30% of your score.
*Sign up for programs that count alternative payment behavior. There are programs that report your payment of regular monthly bills like your cell phone, utilities, or streaming services from your checking account.

Pursuing bankruptcy will almost certainly mean that you lose access to your current credit cards; but it doesn’t mean that you’ll never have credit cards again. The experts at Burr Law can guide you through the whole bankruptcy process, including how to rebuild your credit afterwards.

What Happens in Foreclosure & Bankruptcy?

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When you’re having financial problems, it is likely that all of your household bills are affected, including your mortgage payments. While shelter is a basic survival requirement, you may have prioritized immediate needs like food, etc., and neglected your mortgage payments. When you fall behind on mortgage payments, your home may be foreclosed on, and suddenly, the possibility of losing your home looms large. There are ways to save your home. In this post, we’ll explore the interplay between foreclosure and bankruptcy.

Timing is crucial

Under federal law, your mortgage lender cannot officially begin foreclosure proceedings until you have missed four months of mortgage payments. Within that time period, you can take the initiative by filing for bankruptcy before any foreclosure begins. If you have received notice of your lender’s intent to begin foreclosure, you can still forestall it by filing your bankruptcy petition. Even after the foreclosure has begun, filing bankruptcy will interrupt it.

Automatic Stay

Whenever you file bankruptcy, all collection efforts of all types are automatically halted. That means that even if foreclosure proceedings have been initiated, they must be paused. This gives you valuable time to develop a strategy that may save your home. The experienced attorneys at Burr Law can negotiate on your behalf and work with your specific circumstances to preserve your most valuable assets, including your home.

Chapter 13 Bankruptcy

In Chapter 13 bankruptcy, you devise a repayment plan that will clear your secured debts over a three to five year period. This plan will include your past-due mortgage payments, and your continuing mortgage payments. Because your attorneys work with you to create the plan, it ought to be one that you can achieve. Again, the experts at Burr Law can work with your particular circumstances to help you make a realistic plan. As long as you make all of the required payments for the length of the repayment plan, you will avoid foreclosure and be able to stay in your home.

Importantly, if you have a second or third mortgage on your home, Chapter 13 bankruptcy may well serve to eliminate those debts. Typically, Chapter 13 entitles bankruptcy courts to recategorize second and third mortgages as unsecured debt. Unsecured debt receives the lowest priority in Chapter 13 bankruptcy, and usually does not have to be repaid at all.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is also known as liquidation bankruptcy. It eliminates debt completely by selling your assets. So it sounds as though it would mean that you would lose your home. However, that is not usually the case, especially if your home is your only or primary residence. There are exemptions in Chapter 7 bankruptcy, and one of the most important is your home, known as your homestead. The law in Wisconsin allows an individual filer an exemption of up to $75,000 in value in a homestead, and a couple filing together would have an exemption of $150,000. Other exemptions can also be applied to your home. The experts at Burr Law can make sure that you receive all exemptions possible.

Chapter 7 bankruptcy also forgives the homeowner for tax liability for losses the mortgage or home-improvement lender incurs as a result of the homeowner’s default. This may be debt that you have not even considered, but is important in determining which bankruptcy type to pursue. This law initially applied to the years 2007-2010, but has been extended five times and now applies to debts forgiven in the years between 2007 to 2020. Again, this is an aspect of bankruptcy that your attorneys can advise you about.

If you are concerned that your property may be foreclosed upon, or if foreclosure proceedings have already been initiated against you, contact the professionals at Burr Law. We can guide you to the best solution so you and your family can stay in your home.