We’ve written a series of blog posts answering questions regarding credit cards and bankruptcy and their financial impact. Call (262) 827-0375

Overwhelmed with Debt?

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.

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

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.

Consumer Credit Bankruptcy

What Is Consumer Credit?

Although any type of personal loan could be labeled consumer credit, the term is usually used to describe unsecured 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–are all examples of revolving credit. Installment loans are another kind of consumer credit, and the most common installment credit example is an auto loan. Consumer credit is not usually used to describe the purchase of a house; that’s considered a long-term investment and is usually purchased with a secured mortgage loan.

Consumer Credit Causing Financial Distress

If you find yourself struggling every month to pay each of your credit cards as well as your department store cards, your gas cards, and make your car payments (not to mention continuing to live), your 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 Can Offer Relief

If your consumer credit obligations are driving you to the breaking point, then bankruptcy may be your wisest option. In Chapter 7 bankruptcy, consumer credit 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 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 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. 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.

Consumer credit obligations can be crushing, but they don’t have to be. Reach out to the professionals at Burr Law to discuss your financial situation. It may be that bankruptcy can entirely clear your consumer credit debt, or that it can be made into something manageable. You won’t know how close you are to relief unless you call now.

How Will Bankruptcy Change Your Life? 7 Ways . . .

Filing for bankruptcy is a major decision. The circumstances that lead to the decision are usually not very pleasant either. Whether it’s the loss of a job, a major medical procedure, or simply overspending, overwhelming debt can be a major stressor on you and your family. And once you’ve filed for bankruptcy, your life will change. Here are seven ways that bankruptcy will change your life, and what you can expect.

Waukesha bankruptcy attorneyWhile the final outcome of filing for Chapter 7 or Chapter 13 is intended to be positive, there are negatives that come with it. If you decide to file, here’s the bad news that you can expect:

The Bad

  1. Credit Score
    According to Experian, one of the major crediting companies in the U.S., filing for bankruptcy drops credit scores by an average of 80 points. However, it could be much more depending on your specific situation. This reduction in credit rating leads to less trust from future creditors, which ultimately leads to you paying higher interest rates and fees. The bankruptcy will also remain on your credit report for 7-10 years. However, all is not lost. With a newfound emphasis on paying your bills on time, you may be able to establish a more favorable credit rating in as little as two years.
  2. Credit Cards
    Milwaukee bankruptcy no credit cardsYou may be wondering, how or why you’d get a credit card after bankruptcy. As for how, once you file for bankruptcy there’s a good chance you’ll receive new offers for credit cards. While it may seem odd that credit card companies offer credit to people who’ve previously filed for bankruptcy, there are actually creditors who target this high-risk pool. Why? Because they charge higher interest rates and fees, and with these higher fees it’s profitable for them.While the higher rates can seem overwhelming, the opportunity to reestablish your credit rating is actually a plus. If you’re able to consistently pay off your credit card bill each month, it can help improve your credit rating. However, the last thing you want to do is get caught up in more debt. But if you have the money and commitment to paying your bills in full each month, this can be a good option.
  3. Housing
    Once again, we’re going back to your credit rating… Once you’ve filed for bankruptcy, and your credit rating has taken a hit, it can be difficult to find housing. Simply put, you’re seen as a higher risk. So whether you’re trying to rent a new apartment, or applying for a mortgage to buy a new home, expect that you’ll pay higher fees. That may be in the way of a higher interest rate for a new home loan, or a larger deposit for a rental. Yes this is annoying, but it’s important to understand that creditors are merely trying to protect themselves against potentially not being paid.
  4. Employment
    It’s true that it is illegal for employers to ask you about your credit during an interview. However, employers can legally run a background and credit check on you. This may not be an issue in some industries, but in others, such as the financial services industry, it’s common practice. If you are subject to a credit check, and you sign a release letting a prospective employer review your credit, your prior bankruptcy and lower credit score may make it difficult to land the position. Right or wrong, some employers view low credit as a sign that you’re not very responsible.

This may all sound overwhelming. But now that we’ve got the negatives out of the way, let’s look at how bankruptcy can have a positive impact on you and your family.


The Good

  1. Debt eliminated and stress reduced
    No longer having to carry burdensome debt is a huge relief. Over the years we’ve had clients tell us that after their debt was eliminated, they slept better, were less anxious, were happier, and their family life improved. And despite some the aforementioned downsides of bankruptcy, life following bankruptcy was significantly better. With both Chapter 7 and Chapter 13 bankruptcy, your unsecured debt will be discharged. This includes credit cards, car payments, and medical bills. (However, it does not include some debt, such as alimony, child support, and student loans.)
  2. No more collection calls or lawsuits
    Milwaukee bankruptcy don'tsConstant calls from collection agencies can be extremely stressful. If you’ve ever received these calls, you may have noticed that the collection agents can be very harsh, and even threatening. And the longer you owe creditors, the longer the calls go on for.However, the good news is that once you file for bankruptcy, creditors are no longer legally allowed to make such calls. In addition, creditors are no longer able to sue you, or repossess your possessions.
  3. No one has to know
    Many of our clients come to us with lots of embarrassment about their financial situations. And yes, in some instances, this may be justified. We won’t sugarcoat it. But in many cases, especially in cases involving medical bills and job loss, there’s no reason to be embarrassed. Life happens. Still, most of our clients are concerned about privacy. They don’t want people they know to find out about their bankruptcy.The good news is that your finances are your business. Your family, friends, and co-workers don’t need to find out. You can keep it private. The only time your bankruptcy filing would come out would be if you file for a new loan or credit line.

So there you have it, the good and the bad of filing for bankruptcy. Just remember, bankruptcy isn’t forever. After 7-10 years it’s wiped from your record. If you pay your bills on time following your bankruptcy, you’ll be well on your way to reestablishing your credit.  And in the meantime, you’ll get a fresh start financially and, in all likelihood, be much happier once you file bankruptcy, stop the credit harassment, and have a clean slate for you and your family.

And of course, if you live in the Milwaukee / Waukesha area, and need someone to talk to regarding your financial situation, don’t hesitate to give Burr Law Office a call at (262) 827-0375.

Common Reasons Why Seniors File for Bankruptcy

Between 1991 and 2007, the number of Americans age 65 and older who filed for bankruptcy more than tripled. Today, senior citizens are the fastest growing group of adults to initiate Chapter 13 and Chapter 7 filings. Here are some of the reasons why older Americans have found themselves overwhelmed by their expenses.

Medical Bills

Major medical expenses can be hard on anyone’s pocketbook, but aging men and women often face additional health concerns. If a senior citizen doesn’t have health insurance, even doctor’s checkups can quickly become unaffordable. Sadly, without proper medical attention, illnesses that go untreated can quickly develop into serious or even chronic conditions. Seniors who must pay thousands of dollars to physicians, hospitals, and specialists are often faced with bankruptcy.

Credit Card Debt

Elderly Americans most often file for the same reason as their younger counterparts: credit card debt. In fact, approximately two-thirds of debtors age 65 and older cite overwhelming credit card debt, interest, and fees as their primary reason for declaring Chapter 13 or Chapter 7. Experts have found that seniors are more likely to feel embarrassed about their mounting bills and frequently simply take out more credit cards to avoid their inevitable financial problems. But when they fail to make minimum credit card payments, filing is usually the only option available.

Inadequate Preparation

If you have been neglecting your nest egg for more pressing financial obligations, you are not alone. Thousands of elderly Americans report being late on rent or mortgage payments, and many even go without required medication or food in an effort to pay off mounting debts. Unfortunately, returning to the workforce is simply not an option for some seniors who failed to anticipate the economic downturn.

Whether you are drowning in medical debt or face insurmountable credit card fees, you have legal options. To speak to a Milwaukee bankruptcy attorney about whether filing may be your best option, call Burr Law Office at (262) 827-0375 to schedule a free consultation today.

See also “Top 5 Reasons People File for Bankruptcy

MasterCard Gold Credit Card debt bankruptcy

Bankruptcy and the Credit Card Debt Crisis

Millions of Americans struggle with debt. This is nothing new, but in modern times, we face a problem that previous generations never had. People are drowning in credit card debt.

Are you struggling with credit card payments? Filing for credit card debt bankruptcy may be the best choice. Here’s how the process works and why getting a Wisconsin bankruptcy attorney might help.

Bankruptcy and Credit Card Debt

The many bankruptcy laws in the U.S. are divided into chapters. Each chapter describes a specific kind of bankruptcy.

Chapter 7, or liquidation, bankruptcy lets you sell, or liquidate, your assets to raise enough money to pay off the creditors.

Chapter 13, or reorganization, bankruptcy is where you work with your creditors to come up with a repayment plan.

Choosing Your Debt Strategy

Which bankruptcy chapter is best for handling credit card debt? The size of your overdue bill, your employment status and other factors might force you to pick one or the other.

The laws can make things confusing. For instance, Chapter 13 is designed for people with enough income to repay their liabilities gradually. At the same time, it’s restricted to people whose debts fall below maximum limits.

Chapter 7 is the most common form of bankruptcy. As with Chapter 13, there are eligibility limits, but they apply to your income. Talking to a lawyer could make it easier to navigate these rules properly.

Putting Credit Card Debt Into Perspective

How big is the U.S. credit card debt epidemic? In late 2018, NerdWallet reported that these liabilities topped out at more than $420 billion. That’s a lot of money to owe, and almost 10 percent of people surveyed thought they’d be stuck with credit card debt for the rest of their lives.

Credit card debt that balloons out of control isn’t uncommon. The NerdWallet study also found that households with credit card debt typically had an average of $6,929 in revolving balances. Combined with the huge interest rates that most credit cards charge, these sums have the potential to ruin people’s lives.

Is Bankruptcy the Best Option? Dispelling Common Myths

Filing for bankruptcy under Chapter 7 or Chapter 13 doesn’t mean losing all of your possessions. Most necessities are exempt, and the idea isn’t to fill your life with hardships anyway. Instead, it’s all about making it easier for you to bounce back.

Credit card debt bankruptcy doesn’t ruin your credit either. If you’re considering filing, then it’s likely that the credit rating damage has already been done. Petitioning the bankruptcy court to help you resolve your credit card debts is the most logical option. It wipes the slate clean and moves you toward greater financial responsibility.

To talk with a local bankruptcy lawyer experienced in clearing away burdensome credit card debt, call Burr Law Office today at (262) 827-0375.

Credit Card Mistakes that Recent Milwaukee Graduates Make

Recent college graduates often find themselves facing new responsibilities, including managing their own finances. Not only do graduates have to find a job and a place to live, but they also need to start building up their credit histories. For most college graduates, the easiest way to start establishing a credit history is to use a credit card and avoid common mistakes that many new credit card owners make, including:

Milwaukee bankruptcy after collegeMaxing out credit cards

A credit card can help you build up a credit history and make large purchases. However, while you may now have access to thousands of dollars in credit, you should not spend up to your limit. When you begin using your new credit card, make sure you only charge what you can pay off immediately. Otherwise, you can easily become trapped in cycles of owed credit card debt and interest rates for years to come.

Failing to check a credit report

The stage of life following college graduation can be busy, as you may find yourself engrossed in a new career or enjoying an active social life. No matter how busy your life becomes, be sure to check your credit report periodically. As soon as you graduate, you should pull your credit history and start looking for any errors.

Not confirming all new addresses

In college, you likely grew accustomed to moving to a new house or apartment each year. You may have also returned home for the summer or during a certain semester. When you move to a new city or address to begin your professional career, you need to make sure that your mail follows you. Submit a change of address form and notify any important institutions of your new address so that your utility companies, bank, and credit issuers know where to send your billing information.

The Milwaukee bankruptcy attorneys of Burr Law Office focus on helping clients achieve affordable bankruptcy solutions. If you need debt consolidation assistance, you can schedule a consultation at our office by calling (877) 891-1638. You can also learn more about our range of services by visiting our helpful website.

Consumer Credit Cards & Bankruptcy

Since the recession began in 2008, millions of Americans have had to cope with limited financial resources and growing debt obligations. Faced with medical bills, home foreclosure proceedings, and mounting credit card debt, many people have turned to a bankruptcy lawyer to achieve a fresh financial start. In addition, the credit card industry has seen several notable changes in the way that consumer credit cards are used.

Credit card use among young Americans declines

According to a June 2013 Forbes article, twice as many young Americans are living without credit cards since the recession. Approximately 16% of consumers between the ages of 18 and 29 hadn’t used a single credit card at the end of 2012. As expected, credit card debt among this age group declined by a third, dropping from an average of $3,073 to $2,087 per person. Researchers believe this new trend in credit card use is the result of young Americans watching their parents cope with debt following the recession.

Credit card delinquencies decline

More and more consumers are beginning to pay their credit card bills on time. As a result, credit card issuers are writing off considerably fewer accounts. The delinquency rate is the percentage measurement of credit card accounts that are at least 30 days past due, and between April and May 2013, delinquency rates declined among the six top credit card issuers.

Credit card reinvestment among banks increases

Since 2011, five major domestic midsize banks began increasing investment in credit card programs. The consolidation of credit card businesses coupled with numerous bank combinations has drastically changed the credit card market’s competitive landscape. As current legislation requires credit card pricing practices of large card issuers to be consistent with those of small and midsized financial institutions, more and more midsized banks have begun to enter the market.

Burr Law Office understands the stress that accompanies debt problems. We provide affordable bankruptcy lawyer services to help clients eliminate or consolidate their debt. For more information, give us a call at (877) 891-1638.

How to Live Without Credit Cards in Milwaukee

Milwaukee credit card debt is common among Americans—a recent Fox Business article estimates the average American owes $2,720 in credit card debt. Even though some people don’t plan on using a credit card regularly, they often issue a card in the event of an emergency situation or for expenses like renting a car. Though it’s true that credit cards can serve as useful financial instruments, it’s not impossible to live without them.

Build an emergency fund

Credit cards can come in handy if you run into a financial emergency like needing to pay for expensive car repairs or costly medical bills. If you’re considering living without credit cards, you should first build up an emergency fund. This way, if an emergency does occur after you’ve given up your card, you will be able to pay for these unexpected expenses.

Keep current accounts open

If you already have credit card accounts open in your name, don’t cancel them. Cancelling these accounts can have a negative impact on your credit score. The second you cancel your accounts, all the credit you’ve built up over the years will be eliminated. This can make it more difficult for you to qualify for a mortgage or car loan in the future. You may even have trouble qualifying to rent an apartment.

Diversify your credit portfolio

Your credit score isn’t just based on your credit cards, so you can improve a poor credit score without using a credit card by diversifying your credit portfolio. A diversified credit portfolio typically includes a mortgage, auto loan, or any other type of loan. You may also want to consider using a secured credit card. Unlike traditional credit cards, secured cards have a lower credit limit and require you to put a deposit down upfront. As a result, using a secured card can help improve your score while diversifying your credit portfolio.

Call (262) 827-0375 to schedule an appointment with Burr Law Office. We offer affordable bankruptcy services, including help with filing petitions. Our goal is to help you eliminate or consolidate your debt obligations so you can achieve a fresh financial start.

How Credit Card Debt Affects All Income Levels

Milwaukee bankruptcy credit card debtBankrate.com’s 2013 February Financial Security Index revealed that nearly 24 percent of the country has more credit card debt than money saved in the bank. In addition, 16 percent of people claim to have neither credit card debt nor emergency funds saved up. This means that nearly 40 percent of the population is just a financial emergency or an illness away from financial trouble.

Even though average credit card balances have dropped since 2007, most American’s fundamental spending behaviors haven’t changed. The trouble with credit card debt is that it can affect every consumer, no matter his or her income level. People of varying income levels can accumulate credit card debt by spending more than they can pay off in the foreseeable future. According to Bankrate.com’s survey, approximately a quarter of all income levels admitted to owing more in credit card debt than they had saved.

Burr Law Office offers clients in affordable bankruptcy services to help them manage their debt obligations. Call us at (262) 827-0375 or visit our website to schedule a consultation.