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 After Lockdown?

/in , , , /by

The last year has been challenging for all of us in many ways. Americans have lost jobs at a rate not seen since the Great Depression. Industries–especially those in retail, tourism, and hospitality–have experienced crushing lockdowns. The government has passed a number of COVID-19 bills to mitigate the worst of these effects, beginning in March of 2020 with the CARES Act and most recently with the American Rescue Plan on March 11, 2021. The direct payments to the majority of Americans and the assistance provided to businesses have been beneficial. But they cannot eliminate all the damage done. And they cannot continue indefinitely.

Now is the Time to Act

Bankruptcy filings are low just now, but experts anticipate that they will rise significantly. That means that the bankruptcy court will be flooded with cases, and delays due to packed court schedules may result. Bankruptcy judges may feel pressured to rush through cases, making snap decisions detrimental to those involved. Now is the time to take a long, hard look at your financial situation and decide what the best way forward will be.

Personal Bankruptcy

More than 22 million people lost their jobs during this pandemic, and Moody’s predicts that those jobs will not be recovered until 2024. If you’re one of those who have suffered this loss, you may well benefit from declaring bankruptcy. While the additional unemployment benefits have been extended, they will not last forever, and unemployment benefits rarely compare positively with actual employment. The moratorium on evictions goes until June 30, 2021, but what happens on July 1? Perhaps you are one of the 7.7 million people who lost their employer-sponsored medical insurance; you don’t need to have had COVID to have incurred significant medical debt. Whatever your situation, you should consider your bankruptcy options now rather than later.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is the one most commonly used by individuals (or couples). It is often called ‘Liquidation’ bankruptcy, but the experts at Burr Law can make sure that you get the exemptions you’re entitled to, and you will almost certainly keep your house and vehicle. Chapter 7 completely eliminates your unsecured debt, and it takes between four and six months to complete. It is means tested; your income must be equal to or below the median household income of your state. For Wisconsin, that is $67355 as of 2019 (the last year for which we have figures).

Chapter 13 Bankruptcy

Chapter 13 bankruptcy is often called ‘Wage-Earners’ bankruptcy since it functions more like a partial debt-repayment plan. The bankruptcy court assigns a trustee who examines your entire financial situation, negotiates the elimination or reduction of your debt with your creditors and establishes a realistic monthly payment plan. The whole process lasts between three and five years. While this option is not means tested, there are indebtedness restrictions. To be eligible to file for Chapter 13 bankruptcy, you must have less than $419,275 in unsecured debt, like credit cards or medical bills, and you also can have no more than $1,257,850 in secured debts, which includes mortgages and car loans.

Business Bankruptcy

Chapter 11 Bankruptcy

Most businesses choose to file Chapter 11 bankruptcy; it is a reorganization of the business that allows it to continue to trade in the marketplace while repaying creditors. Generally, the business itself proposes the reorganization plan. It is also possible to file for Chapter 11 bankruptcy more than once, without an onerous waiting period. This is informally called Chapter 22 bankruptcy. When you file for Chapter 11 relief in bankruptcy court, no trustee is appointed. Instead, you become the Debtor in Possession (DIP). You have the exclusive right to propose a reorganization plan for at least 4 months and up to 18 months. Once you do so, your creditors need to agree to the plan, and the court needs to approve it. That is called confirmation and in doing so, the court will decide whether the plan demonstrates 4 factors: feasibility, good faith, best interests of the creditors, and fairness. The whole thing usually takes between 6 months to 2 years.

Chapter 12 Bankruptcy

Chapter 12 bankruptcy is specifically designed for family farmers and family fishermen. It recognizes the greater debt burden that family farmers and fishermen carry but treats them more like individuals than business bankruptcies. The process is more streamlined and less expensive than Chapter 11, for instance. If you’re a farmer, in order to qualify for Chapter 12, your total debts must not exceed $4,153,150, and 50% of them must come from the farming operation. If you’re a fisherman, your total debts must not exceed $1,924,550, and 80% of them must be associated with your fishing enterprise. In both cases, more than 50% of your gross income should come from your farming or fishing. This bankruptcy pays off all or a portion of your debts over 3 years, though that can be extended to 5 years if necessary. You continue operating your farm or fishing business during the bankruptcy process.

Call the professionals at Burr Law to help guide you through the decision-making, and if necessary, the bankruptcy process itself. You’ll be glad you did.

Worried About Utility Shutoff?

/in , /by

The moratorium stopping utilities from disconnecting power went into effect on March 24, 2020, but it is ending April 15, 2021. If you have utility bills that you have been unable to pay and cannot see how you will be able to pay them, then you are once again facing the possibility of a utility shutoff. There are a number of options that you can pursue to avoid this, including declaring bankruptcy.

Negotiate Agreement With Company

You can try to negotiate a payment plan with the utility company. Wisconsin Energy (WE) should be able to arrange a Deferred Payment Agreement with you. Wisconsin law requires them to offer you such an agreement if you can’t pay your bill in full. Of course, this means that you need to be able to adhere to the payment plan. That’s difficult if you’re out of work, or have other financial obligations demanding your attention.

Access Government Programs

The Wisconsin Home Energy Assistance Program (WHEAP) administers the federally funded Low Income Home Energy Assistance Program (LIHEAP) and Public Benefits Energy Assistance Program. The goal of WHEAP and its related services is to help Wisconsin households reduce their energy burden. Because of COVID-19, it is now available throughout the year. For more information on WHEAP, call 1-866-HEATWIS (432-8947).

Appeal to Charities and Nonprofits

There are a number of charities that you can turn to for help with your utility bills. Catholic Charities and the Salvation Army are good places to start. There’s also a nonprofit organization dedicated to this work called Keep Wisconsin Warm/Cool Fund (KWW/CF) that is available throughout the state to low-income households. Finally, there are a number of community partnerships that you could explore.

Bankruptcy

Filing for bankruptcy is a big decision and if your primary concern is your utility bills, it is likely that a less radical solution can be found. When you have mounting medical debt, credit card debt, and other obligations along with your utility bills, then bankruptcy may be your best option. You can always consult with the professionals at Burr Law to clarify your situation. As far as utility shutoffs are concerned, here are some facts and resources for you.

Bankruptcy Filing Has Immediate Effect

As soon as you file a petition to begin the bankruptcy process, your utilities cannot be shut off for 20 days. It’s best if you complete all the bankruptcy paperwork at the same time that you submit the petition, but if you can’t, then be sure to do it within 14 days. That 20 day utility shutoff prevention period gives you almost 3 weeks of breathing room, and the professionals at Burr Law will be there to help you strategize your next moves.

Your Utilities During Bankruptcy

The utility company (WE Energies) will send you a deposit letter approximately 20 days after filing the bankruptcy petition. You are required to pay this deposit. If you do not pay it, then the utility company will shut you off. You need to pay the deposit and pay your gas and electric bill on time and in full for the next twelve months. At the end of that 12-month period, the utility company will refund your deposit with interest.

Your Utilities And Bankruptcy Discharge

A Chapter 7 bankruptcy takes anywhere from 3 to 6 months and at the end of it, all your unsecured debts will be discharged. That means that any back money you owe to your utility company will be eliminated (along with credit card debt, for instance). So bankruptcy will definitely prevent your utilities from being cut off for 20 days; and it can provide you a way to get rid of the debt you owe.

For questions about utility shutoff or any other topic related to bankruptcy, contact the experienced bankruptcy attorneys of Burr Law Office today.

Overwhelmed with Debt?

/in , , , , , /by

The COVID-19 pandemic has had dire economic consequences for many people, and there have been protections put in place to help people survive this difficult time. Those aren’t going to last forever, though, and you may be looking at your financial situation and wondering just how you’re going to manage. If you feel overwhelmed with debt, it’s important to think things through now and have a plan in place while you still have a number of options. There are basically three different approaches you can take: debt consolidation, debt management, and bankruptcy. This post explores each of them.

Debt Consolidation

Debt consolidation is just what it sounds like: you gather all your debts into one place so that you’re making one payment a month. There are several ways to consolidate your debt. If most of your debt is unsecured credit card debt, you can take out another credit card that offers 0% interest for a period of time (often 12 to 18 months) and then transfer your other credit card debt onto that new card. You then have that given time to pay down the principal. This method only works if all or most of your debt is credit card debt. If you have other sources of debt, you may need to take out a consolidation loan. These loans are financed by banks, and the main concern here is that you trade your unsecured debt for secured debt, as most will require collateral. Even if your consolidation loan doesn’t require specific collateral, it may well have a cross-collateralization clause. That means that if you get a consolidation loan from the same bank that financed your auto loan, and you fall behind on your consolidation loan payments, the bank can repossess your car. So debt consolidation can certainly work, though it has some important limitations, and poses some significant risks.

Debt Management

There are a number of debt management companies that will act on your behalf to manage your financial situation. The debt management company negotiates with the credit card companies on your behalf, and establishes a repayment plan for you. 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.

Bankruptcy

Individuals usually file either Chapter 7 or Chapter 13 bankruptcy. Chapter 7 bankruptcy is known as “liquidation” bankruptcy, and in order to qualify for it, you must not make more than your state’s median household income. In Wisconsin, that amount is $67,355 (as of 2019, the latest available figures). Although the word liquidation sounds threatening, the truth is that there are exemptions and you will almost certainly keep your home (if you have a mortgage) and your car. If you have a second home or other luxury item, those may be sold to pay your debt. Chapter 7 bankruptcy is quick, usually taking three to four months, and it eliminates all your unsecured debt. Chapter 13 bankruptcy is also known as “wage-earner’s” bankruptcy. It functions a lot like the debt management plan; a trustee appointed by the court drafts a plan, you and your creditors agree to it, and then the trustee administers the plan. It lasts between 3 and 5 years. There is no means test like Chapter 7 bankruptcy, but there is a cap on how much you owe. To be eligible to file for Chapter 13 bankruptcy, you must have less than $419,275 in unsecured debt, like credit cards or medical bills, and you also can have no more than $1,257,850 in secured debts, which includes mortgages and car loans.

If you’re overwhelmed by debt and considering your financial future, you have options. Contact the experts at Burr Law to talk through your specific situation, and have them help you chart the best course forward.

Most Common Types of Bankruptcy

/in , , /by

This past year’s double catastrophe (the pandemic and its subsequent economic impacts) have brought many people to the brink of financial disaster. Whether it is unanticipated medical expenses, loss of income, or a combination of other factors, you may be emerging from the COVID-19 disaster to discover just how dire your money situation is. If that’s the case and you are considering bankruptcy as an option, it’s important that you know what kinds of bankruptcy are open to you. This post will explore three of the most common types of bankruptcy open to individuals: Chapter 7, Chapter 13, and Chapter 12.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is also called Liquidation Bankruptcy, but don’t let that name scare you off. While it is designed to repay a portion of your debts through the sale of your assets, there are exemptions, and the experts at Burr Law can make sure your car and your home remain yours. The truth is that using exemptions to their fullest, you can derive the benefit of totally eliminating unsecured debt while retaining your most valuable possessions. There is no minimum or maximum amount of debt needed to file a Chapter 7 bankruptcy. There is an income status requirement, though. Your income needs to be equal to or below Wisconsin’s median income, $67,355 as of 2019 (the latest figures available).

Chapter 13

Chapter 13 bankruptcy functions more like a reorganization. A trustee assigned by the bankruptcy court draws up a plan whereby you repay a portion of your debts over the course of 3 to 5 years. Your creditors then need to agree to the plan, and the bankruptcy court approves it. With this type of bankruptcy, you will retain your car and your house as well. There is no income status requirement, though there is a maximum debt level. To be eligible to file for Chapter 13 bankruptcy, you must have less than $419,275 in unsecured debt, like credit cards or medical bills, and you also can have no more than $1,257,850 in secured debts, which includes mortgages and car loans.

Chapter 12

Chapter 12 bankruptcy is specifically designed for family farmers and family fishermen. It recognizes the greater debt burden that family farmers and fishermen carry but treats them more like individuals than business bankruptcies. The process is more streamlined and less expensive than Chapter 11, for instance. If you’re a farmer, in order to qualify for Chapter 12, your total debts must not exceed $4,153,150, and 50% of them must come from the farming operation. If you’re a fisherman, your total debts must not exceed $1,924,550, and 80% of them must be associated with your fishing enterprise. In both cases, more than 50% of your gross income should come from your farming or fishing. This bankruptcy pays off all or a portion of your debts over 3 years, though that can be extended to 5 years if necessary. You continue operating your farm or fishing business during the bankruptcy process.

These are the most common kinds of bankruptcy for individuals in Wisconsin. For businesses, other bankruptcy options apply. If you’re wondering how you’re going to resume your life after the pandemic, bankruptcy may give you a positive way forward. Consult the experts at Burr Law today to find out more.

What Happens If You Become Bankrupt?

/in , , /by

“Bankrupt” can have lots of scary connotations. You might imagine that you will be forced out of your home, have your car repossessed, and lose all your valuables. You might believe that you will never again be able to acquire a credit card or any type of loan after bankruptcy. Those fears arise from a lack of information. In this post, we will look at what bankruptcy is and its effects.

Two Types of Bankruptcy

The two primary forms of bankruptcy that individuals (and couples) file are Chapter 7 and Chapter 13. They each have advantages and disadvantages, and it’s important to consult with an expert to determine which one is the best for you. Chapter 7 bankruptcy takes about 3 to 6 months from time of filing; Chapter 13 has a plan that lasts between 3 to 5 years.

Chapter 7

Chapter 7 bankruptcy is also called Liquidation Bankruptcy, but don’t let that name scare you off. While it is designed to repay a portion of your debts through the sale of your assets, there are exemptions, and the experts at Burr Law can make sure your car and your home remain yours. The truth is that using exemptions to their fullest, you can derive the benefit of eliminating consumer credit debt while retaining your most valuable possessions. There is no minimum or maximum amount of debt needed to file a Chapter 7 bankruptcy. There is an income status requirement, though. Your income needs to be equal to or below Wisconsin’s median income, which in 2019 (the last official figure) was $67,355.

Chapter 13

Chapter 13 bankruptcy functions more like a reorganization. A trustee assigned by the bankruptcy court draws up a plan whereby you repay a portion of your debts over the course of 3 to 5 years. Your creditors then need to agree to the plan, and the bankruptcy court approves it. With this type of bankruptcy you will retain your car and your house as well. There is no income status requirement, though there is a maximum debt level. To be eligible to file for Chapter 13 bankruptcy, you must have no more than $394,725 in consumer credit debt and you also can have no more than $1,184,200 in secured debts, which includes mortgages and car loans.

Bankruptcy And Your Credit Report

Generally speaking, bankruptcy stays on your credit report in Wisconsin for about 10 years. Remember, though, that even if you don’t file bankruptcy, your creditors can obtain a judgment against you for your debt, and that judgment would appear on your credit report. A judgment can remain on your credit report for seven years or until the statute of limitations expires, whichever is longer. In Wisconsin, the statute of limitations on a judgment can be up to 20 years! So a bankruptcy may well fall off of your credit report before a particular judgment.

Bankruptcy And Your Credit Score

Bankruptcy will mean a drop in your credit score immediately after filing. However, you may already have a poor credit score due to your debt-to-asset ratio (your debt is high compared to your available credit) and delinquent accounts; in that case, the decrease in your credit score may be less than you suppose. If your credit score was good before filing bankruptcy, the drop may be more pronounced.

Bankruptcy And Obtaining Credit Cards

When you file for bankruptcy, whether it is Chapter 7 or Chapter 13, you usually lose access to your credit cards. That doesn’t mean that you will never again have a credit card. There are credit cards specifically designed for those with poor credit and the experts at Burr Law can advise you on how best to reclaim your creditworthiness through measured use of particular credit cards.

The professionals at Burr Law can answer all of your bankruptcy questions. With all of the information, you can make an informed decision about bankruptcy.

Tax Debt – Filing for Bankruptcy in 2021

/in , , , /by

With more and more people free-lancing and the gig economy in full swing, it’s becoming more common for people to owe the IRS for back taxes. And unpaid taxes can add up to a huge financial burden, especially on top of all your other expenses. If you’re feeling overwhelmed by your financial situation, you may be considering bankruptcy. Bankruptcy is a good way to clear unsecured debt, but what about tax debt? This post explores the question of what happens with tax debt when you file for bankruptcy.

Automatic Stay

The moment that you file for bankruptcy, whether it is Chapter 7 (most commonly) or Chapter 13, all your creditors must stop harassing you for payment. That includes the IRS. So no more threatening letters, phone calls, etc. The automatic stay also applies to property. The IRS can’t touch your more valuable assets. So no matter what stage the IRS collection effort is in, the automatic stay stops it completely. But remember, this is just a pause. And as you’ll see, knowing when to file for bankruptcy is especially important if you’re trying to eliminate unpaid taxes as well as other debts.

Conditions for Tax Debt to be Discharged

As you probably already know, IRS rules and regulations can be like an impenetrable maze. There is a regulation for pretty much everything. So, it should be no surprise that there are specific rules for bankruptcy discharge. And you should expect that the IRS will object to eliminating your tax debt if it can find any reason to do so. The main bankruptcy discharge rules have to do with time.

Income Taxes

Chapter 7 bankruptcy only discharges income tax debt. Your 1040 taxes are definitely income taxes, but other taxes aren’t. For instance, property taxes and trust fund taxes are definitely not income taxes. So the kind of taxes you owe the IRS makes all the difference. If you do owe unpaid income taxes, then you’ve cleared the first hurdle.

Taxes Filed for Last 2 Years

You have to have filed your taxes for at least the last 2 years (if you were required to file). At the time you file for bankruptcy, the IRS needs to have your tax filings for the previous 2 tax years, and that applies even if you filed those taxes on time. If you didn’t file and the IRS prepared substitute returns to determine what you owed, those do not count as taxpayer-filed returns.

Tax Debt Must Be at Least 3 Years Old

Your income tax debt must be at least three years old. And it’s crucial to remember that Tax Day is not always April 15. Some years, it could be the 16th, 17th, or even 18th. Last year (2020) it was July 15 because of the pandemic. IRS lawyers have been known to object to discharge over one or two days. So, make sure you file the petition on the correct day, or else you will have to start over.

240 Day Rule

Your tax assessment can’t be more than 8 months old, or must not have been assessed yet. If the IRS has not assessed the debt within the last 240 days, the income tax debt is not dischargeable. It’s almost impossible to tell if the IRS has assessed the debt or not, because this process is an internal accounting tool. But generally, if you’ve not received a bill which breaks down the amount due by tax years, it’s probably not assessed the debt yet.

Burr Law Helps with Complexities

At Burr Law, our professionals have years of experience dealing with bankruptcy law. We understand the complicated IRS rules around bankruptcy, and will work with them to make sure your tax debt is included in your bankruptcy. Don’t leave something this important to chance.

Does Bankruptcy Clear All Debt?

/in , , /by

The reason you choose to file bankruptcy is to get rid of your debt, so it’s important to know whether or not it actually does. Does bankruptcy clear all debt? The short answer is probably not. That “probably” is there because it does eliminate a lot of debt, and it’s possible that it will take care of all your debt, though that’s unlikely. Let’s take a closer look.

Different Bankruptcy Options

The two most common forms of bankruptcy are Chapter 7 and Chapter 13. You can file Chapter 7 if your median household income is equal to or below a certain level. For the state of Wisconsin, that amount is $67,355 (as of 2019). This type of bankruptcy takes between 3 to 6 months. Or you can file Chapter 13 bankruptcy, which has no income status requirement, but does have a cap on the amount of debt. To be eligible to file for Chapter 13 bankruptcy, you must have no more than $394,725 in consumer credit debt and you also can have no more than $1,184,200 in secured debts, which includes mortgages and car loans.

Unsecured Debt

Whatever method of bankruptcy you choose to use, your unsecured debt will almost certainly be eliminated. Unsecured debt is debt you have incurred without having to put up collateral. So, for instance, all credit card debt is unsecured debt. So is medical debt. And any other obligation you have that you got simply through agreeing to pay it back. That gym membership that you can no longer afford, but that’s due to run another 2 years? That’s unsecured debt.

Secured Debt

Your mortgage, your car payment, your home equity loan, these are all examples of secured debt. That doesn’t mean that you will lose your home and your car, however. Each type of bankruptcy has provisions to protect your most important assets. The professionals at Burr Law will be able to help you retain these kinds of essential items.

Money Owed to the Government

It’s extremely difficult to eliminate tax debt. There are a number of conditions that must be met in order for some tax debt to be included in those cleared through the bankruptcy process. The experts at Burr Law can work with your specific situation to see if it is possible to clear some of your tax debt. Any debt relating to tax fraud would not be exempt. It is virtually impossible to eliminate student loan debt. If your student loans are from the federal government or guaranteed by the federal government, you should be prepared for the likelihood that they will still be there once your bankruptcy is complete. Even money owed to local governments are difficult to clear through bankruptcy. If you’ve accumulated a hefty amount in traffic tickets, you’ll still need to pay that back.

Specific Personal Obligations

There are some particular personal obligations that bankruptcy will not eliminate. For instance, bankruptcy will not clear your child support payments or your alimony obligations. Similarly, if you have been involved in a personal injury or death as a result of DUI case as the defendant and are obligated to pay a settlement, that will still remain.

Bankruptcy is a great way to deal with most of your debt. However, it is unlikely to eliminate all of it. It’s crucial to work with experienced professionals in the field, like those at Burr Law, so that you can clear as much of your debt as possible.

Credit Card Debt: Can Credit Card Companies Repossess My Items If I Don’t Pay?

/in , , , /by

Credit Card Debt is Unsecured Debt

Unsecured debt refers to any kind of debt that is taken on to buy everyday goods and services. Credit cards issued by banks or other financial institutions, department store cards, gas cards–all are examples of revolving credit. Credit card debt is unsecured because you haven’t had to offer any kind of collateral in order to get it. Unlike your auto loan, where the vehicle itself functions as the collateral, credit card companies offer you short-term loans that you agree to repay with the stated interest. You can pay for your groceries with your credit card just like you can buy a computer with your credit card. In either case, the credit card company cannot come and take the food out of your refrigerator, or the computer off your desk. Since there is no collateral with credit cards, there can be no repossession.

Credit Card Debt Can Spiral

It’s easy to purchase things with credit cards, and almost without you noticing, you find your credit cards maxed. With all of the economic disruptions caused by the pandemic, you may have had to rely more heavily on credit cards, as well. The minimum payment due only pays the interest, and when even that becomes difficult, you need to consider your options. This situation is not unusual. The average American had a credit card balance of $6,200 in 2019, according to Experian. And revolving credit with its high interest means disaster for those who can’t pay the balance in full every month. That means you continue to accrue additional interest charges from month to month. The average annual percentage rate on all credit cards was 20.21% as of August 2020. Department store credit cards averaged 24.22%. A single late payment can boost your interest rate even higher.

Bankruptcy Deals With Credit Card Debt

If your credit card obligations are driving you to the breaking point, then bankruptcy may be your wisest option. In Chapter 7 bankruptcy, credit card debt can be entirely eliminated. You also have the option of filing for Chapter 13 bankruptcy where you enter into an agreement with your creditors to repay a portion of your debt over 3 to 5 years.

Chapter 7

Chapter 7 bankruptcy is also called Liquidation Bankruptcy, but don’t let that name scare you off. While it is designed to repay a portion of your debts through the sale of your assets, there are exemptions, and the experts at Burr Law can make sure your car and your home remain yours. The truth is that using exemptions to their fullest, you can completely eliminate your credit card debt while keeping your most valuable possessions. There is no minimum or maximum amount of debt needed to file a Chapter 7 bankruptcy. There is an income status requirement, though. Your income needs to be equal to or below Wisconsin’s median income, which in 2018 was $62,629.

Chapter 13

Chapter 13 bankruptcy functions more like a reorganization. A trustee assigned by the bankruptcy court draws up a plan whereby you repay a portion of your debts over the course of 3 to 5 years. Your creditors then need to agree to the plan, and the bankruptcy court approves it. Credit card debt is often, but not always, eliminated. Even when it is not entirely written off, you will end up having to repay only a small portion of your credit card debt. With this type of bankruptcy, you will retain your car and your house as well. There is no income status requirement, though there is a maximum debt level. To be eligible to file for Chapter 13 bankruptcy, you must have no more than $394,725 in consumer credit debt and you also can have no more than $1,184,200 in secured debts, which includes mortgages and car loans.

Credit card debt can be overwhelming, but you don’t have to worry about your personal possessions being repossessed. If you’re interested in getting out from underneath crushing credit card debt, you might be wise to consider bankruptcy. Reach out to the professionals at Burr Law to discuss your financial situation. It may be that bankruptcy can entirely clear your credit card debt, or that it can be made into something manageable. You won’t know how close you are to relief unless you call now.

With COVID-19 Raging, How to Manage Medical Debt

/in , , , /by

The COVID-19 pandemic has hit the whole world hard. For those who have contracted the disease, the primary concern is treatment and recovery. Once you have surmounted that challenge, another awaits: medical debt. In Wisconsin, almost 20,000 people have been hospitalized with COVID-19 (19,785 as of December 17, 2020 according to the Wisconsin Department of Health Services) and over 4000 have died. That means that more Wisconsinites are facing massive medical debt than ever before. What can you do when you find yourself in a financial crisis because of your medical crisis? In this post, we look at some of your options.

What Not To Do

Before examining what you should do, here’s something you should NOT do: transfer your medical debt to credit card debt. When you pay your medical bills with your credit cards, you are shifting your debt obligations from an interest-free creditor to a high-interest creditor. Most consumer credit cards charge 18 – 24% interest while medical debt is almost always interest-free. So resist the urge to pay your medical bills with your credit cards unless you are absolutely certain that you are able to pay off the credit card before accruing the interest payments.

Medical Bill Itself

Many people never really look at the itemized medical bill that they receive. That’s understandable. It’s often long, complicated, and uses technical vocabulary, both medical terms and insurance jargon. However, carefully examining the medical bill is absolutely essential. Here is information from the American Academy of Family Physicians that can help with that https://familydoctor.org/understanding-your-medical-bills/. If you have questions or concerns about particular items, use the established process to dispute the charge. If you cannot resolve a disputed charge, you can turn to the Wisconsin Department of Agriculture, Trade and consumer Protection for assistance.

Payment Plan

When are you certain the bill is correct, you can set up a payment plan with the hospital or medical provider. As long as the payment is reasonable, medical providers are usually happy to accommodate you. And you won’t be accumulating interest while you pay off your medical debt. The important thing here is to contact the medical provider right away and negotiate an agreement that you can actually maintain.

Medicaid and/or BadgerCare Plus

If you were uninsured when you went into the hospital, you can still manage to get Wisconsin Medicaid or BadgerCare Plus to cover your hospitalization costs. These programs are retroactive up to three months. That means that if you were eligible for Wisconsin Medicaid or BadgerCare Plus when you went into the hospital, you can apply for and receive that insurance and it will cover the time that you were there. However, if you became eligible for these programs subsequent to your hospitalization, your Medicaid or BadgerCare Plus coverage will not be retroactive.

Bankruptcy

Bankruptcy is a viable option when you are facing thousands of dollars of medical debt. The average cost for a Wisconsinite hospitalized with COVID is $14,573, and sustaining that level of debt, along with your usual obligations may not be feasible. Bankruptcy can completely clear medical debt. There are different options in bankruptcy, and if you are thinking about it at all, you should contact the experts at Burr Law. Chapter 7 bankruptcy completely eliminates unsecured debt; that includes medical debt and credit card debt. A professional bankruptcy attorney can make sure that you get the exemptions you’re allowed, so you keep your house and car. The whole thing takes between 3 and 6 months. Chapter 13 bankruptcy can also eliminate medical debt, though it’s a different process that lasts from 3 to 5 years.

Medical Debt Shouldn’t Be Another Crisis

When you’ve survived a medical emergency like COVID, you shouldn’t need to succumb to a financial emergency. Working with the experts at Burr Law can give you the information and options you need to make sure that you are making the right choices. When it comes to dealing with medical debt, contact Burr Law.

Pros and Cons of Chapter 13 Bankruptcy

/in , , /by

When your financial situation is difficult and you can see no way out of the spiraling debt, you may be considering bankruptcy. There are two common forms of personal bankruptcy: Chapter 7 and Chapter 13. Filing for Chapter 7 is means tested. In Wisconsin, you must not make more than $67,355 as a household (2019 statistics). Chapter 13 doesn’t have those restrictions, but it does have limitations on the amount of debt you have. To be eligible to file for Chapter 13 bankruptcy, you must have no more than $394,725 in consumer credit debt and you also can have no more than $1,184,200 in secured debts, which includes mortgages and car loans. This post outlines the pros and cons of Chapter 13 bankruptcy.

PRO – Protects Your Assets

Filing Chapter 13 causes all collection actions to stop, including home foreclosure. Chapter 13 bankruptcy preserves your secured assets, so you don’t have to worry about losing your home or car. Unlike Chapter 7 bankruptcy, which is also known as Liquidation Bankruptcy, Chapter 13 bankruptcy is also called Wage-Earner’s Bankruptcy. The objective is reorganization of debt rather than liquidation of assets.

PRO – Unsecured Debt

Unsecured debt includes credit card debt, medical bills, and other debts that don’t depend on collateral. Chapter 13 bankruptcy results in unsecured debt being discharged entirely or diminished significantly. If the debt is not completely eliminated, you will be paying off a small portion of what you owe over the course of three to five years.

PRO – Attorney Fees Become Part of Plan

Often, people delay filing for bankruptcy because they fear incurring additional debt through attorney fees. Yet expert guidance is necessary to navigate bankruptcy law. When you file for Chapter 13, your attorney fees can be included in the reorganization plan and paid over the three to five year time frame.

PRO – Other Debt Included in Reorganization

A professional bankruptcy attorney may be able to help you incorporate debts not usually available for reorganization. For instance, while domestic support obligations (DSO) like child support remain due and payable, past-due amounts can be worked into the reorganization plan and paid over three to five years. Likewise, if you owe back taxes, there are some situations where some amounts of tax debt can be incorporated into the reorganization plan too.

PRO – Second Mortgage as Unsecured Debt

If your home’s second mortgage is worth less than what you owe on your first mortgage, then you can motion the court to have your second mortgage become an unsecured debt. Upon completion of your debt repayment plan, your second mortgage may be reduced greatly or discharged. Again, this is a situation where the guidance of the experts at Burr Law can make the difference.

CON – Length of Reorganization Plan

As indicated above, the typical Chapter 13 reorganization plan lasts from three to five years. That’s a long time. Many debtors find it impossible to maintain, though they are contractually and legally obligated to do so. Again, seeking professional advice from attorneys dedicated to bankruptcy law makes a tremendous difference here. Crafting a reorganization plan that anticipates periodic extra expenses and realistically assesses your earning potential over the next five years makes the length of the reorganization workable.

CON – Credit Implications

Like all bankruptcies, Chapter 13 bankruptcy is part of the public record and remains on your record for 10 years. It will decrease your credit score by 100 to 200 points. While Chapter 13 bankruptcy doesn’t immediately deprive you of all of your credit cards, it will affect your ability to acquire new ones, and sometimes how you are able to use the ones you already have.

Bankruptcy May Become An Option

The state and federal programs designed to diminish the negative economic impacts of COVID-19 have generally worked very well. In Wisconsin, there were 8,272 consumer bankruptcy filings (Chapter 7 and Chapter 13) from January through August 2020; that’s 28% fewer than through August of 2019, according to American Bankruptcy Institute data. However, almost all of those programs end December 31, and Wisconsin’s seasonal prohibition on utility cutoffs ends April 15. So if you’re barely making it now, you should consider whether you may need to declare bankruptcy in the spring.