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

Bankruptcy and Credit Card Debt

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

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.

Options and Consequences of Debt Relief

When you have significant debt it can do so much more than eat up your income. Constant worry about finances can affect your relationships and your physical and mental health. So when you see the words debt relief, it’s easy to concentrate on the “relief.” It’s important, though, to understand all your options and what consequences come with them. In this blog, we’ll look at debt management, debt settlement, and debt consolidation. You’ll know exactly what they are and the implications of any choice you make.

Debt Management – What it is

With debt management, your financial situation is reviewed by a credit counselor, who then creates a debt management plan for you to follow. Generally these run for terms of 3 to 5 years. Some organizations may take control of your monthly payments, making them on your behalf.

Consequence – It costs money

Most places require you to pay an enrollment fee, and then there is a monthly fee for each credit card you have. Don’t be fooled by places that claim to be free; they may do the analysis of your financial situation for free, but the actual debt management will cost you.

Consequence – It decreases access to credit

Most debt management companies require you to agree not to seek any additional credit during the time that the debt management plan is in place (and 3 to 5 years is a long time not to need additional credit). Also, the fact that you’re engaged in a debt management plan will be noted on your credit report, so even if you’re allowed to access credit, it will be more difficult to get.

Consequence – It usually doesn’t work

At least half of clients do not successfully complete the debt management plan. Obviously, failing to complete a plan would have implications for your credit score, and you would find yourself right back in the same situation, but with the added negative of that failure.

Debt Settlement – What it is

Debt settlement differs from debt management in that the organization you work with negotiates with your creditors on your behalf to decrease the amount you owe. Sometimes, they offer a lower lump sum payment to the creditor; sometimes, they seek debt forgiveness or lower interest.

Debt Settlement – It costs money too

Just like a debt management plan, you will be expected to pay an enrollment fee as well as a monthly fee for each credit card on the plan.

Debt Settlement – The IRS is involved

It’s crucial that you understand that any forgiven debt is reported to the IRS and the IRS treats that as income. So while you may be barely keeping your head above water financially, you might be shocked to discover that instead of a tax refund, you end up owing money to the IRS.

Debt Settlement – Your credit score may plummet

Debt settlement companies are not concerned with your credit report. Their job is to get the current debt lowered or forgiven. Most debt settlement companies ask you to suspend payments to your creditors while they negotiate on your behalf. This strategy has a tremendously negative impact on your credit report since the most significant factor is payment history.

Debt Consolidation – What it is

In its most basic form, debt consolidation combines multiple debt payments into one monthly payment through obtaining either a secured or unsecured loan. That monthly payment is sometimes lower than the individual payments combined, and the interest you pay is sometimes lower as well. The most common ways to pursue debt consolidation are to obtain another credit card where you can transfer all your other debt; or to take out an actual loan for this specific purpose.

Debt Consolidation – You may lose possessions

If you take out a secured loan, then whatever you have put up as collateral is at risk. Sometimes you may risk losing collateral that you aren’t aware you have placed in jeopardy. That can happen when your debt consolidation loan has a cross-collateralization clause that lets the lender take other property it has financed if you default on the debt consolidation loan. So if your bank has also financed your auto loan, for example, and you fall behind on the loan payments on your debt consolidation loan, you could wake to discover your car has been repossessed.

Debt Consolidation – Access to credit decreases

If you are trying to consolidate your debt by acquiring another credit card, that will create a “hard inquiry;” if you are taking out an actual loan, it will do so as well. Hard inquiries result in lower credit report scores, so even if you are successful in acquiring a new credit card or a consolidation loan, your credit score will definitely suffer.

If you’re interested in debt relief, contact the experts at Burr Law. We’ll guide you to the best solution for your particular situation.

Key Considerations of Debt Consolidation

Do you feel like you’re being nickeled and dimed to death with all of your monthly financial obligations? Maybe you’ve seen ads about debt consolidation where you just pay one time and your debt actually decreases. In this post, we will look at debt consolidation and explore its implications.

Debt Consolidation: What Is It?

In its most basic form, debt consolidation works by combining multiple debt payments into one monthly payment through obtaining either a secured or unsecured loan. That monthly payment is sometimes lower than the individual payments combined, and the interest you pay is sometimes lower as well. You will maintain your access to credit, though incurring more debt increases the likelihood of the debt consolidation failing.

How To Do It: Unsecured

One of the easiest ways to consolidate your debt is to obtain a new credit card that offers 0% interest for a period of time (usually 6 to 12 months). Once you get the card, you can transfer the balance from other credit cards where you are paying high interest to the new card and use the 6 to 12 months to pay down the principal. Of course, that only consolidates your credit card debt. And if you’re already behind on your monthly payments to your credit cards, you are unlikely to qualify for a new credit card. Since credit cards are unsecured loans, this method of debt consolidation can decrease your indebtedness without risking collateral.

How To Do It: Secured

Alternatively, you can take out a debt consolidation loan. There are a number of financial institutions offering debt consolidation loans though almost all are secured loans. That means that you must put up assets as collateral, usually your car or home. If you do not adhere to the repayment plan, you risk losing your collateral. There is an additional danger if your debt consolidation loan comes from the same financial institution that services other loans you have, like your car loan. It’s a hidden danger called cross-collateralization.

Cross-Collateralization

You may risk losing collateral that you aren’t aware you have placed in jeopardy. That can happen when your debt consolidation loan has a cross-collateralization clause that lets the lender take other property it has financed if you default on the debt consolidation loan. For example, if you get your debt consolidation loan through the same bank that financed your car, under the cross-collateralization clause, if you default on the debt consolidation loan, the bank could repossess your car—even if the car payments are current.

Debt Management Plans

Some people go to an agency that creates a debt management plan for them and negotiates with the credit card companies on your behalf. It’s important for you to know that agreeing to a debt management plan comes with a number of hidden costs – monetary and otherwise. You will be expected to pay an enrollment fee as well as a monthly fee for each credit card on the plan. Also, most credit card companies will require that an account entering into a debt management plan be closed, so you lose your access to credit. And the fact that you’re engaged in a debt management plan will be noted on your credit report. Most debt management plans run for three to five years, and at least half of clients do not successfully complete the plan.

Negative Tax Consequences

Depending on your financial condition, any money you save from debt relief services such as debt consolidation may be considered income by the IRS, which means you pay taxes on it. Credit card companies and other creditors may report settled debt to the IRS, which the IRS considers income.

Debt consolidation sounds like the perfect solution on the surface, and it may well be your best option. However, you should be aware of all of the implications of debt consolidation before you enter into it. Contact the experts at Burr Law; they will give you the best advice for your particular situation.

Understanding Your Credit Report

Finances are complicated, and they are further complicated by your credit report. Your credit score fluctuates constantly, and knowing how various things will affect your credit report is important to your overall financial planning. Here, we’ll explore the various factors that cause your credit score to go up or down, and how long those factors will continue to affect your credit score.

Fair Credit Reporting Act

The Fair Credit Reporting Act–also known as the Consumer Credit Protection Act–was enacted on October 26, 1970. It is designed to protect the integrity and privacy of a person’s credit information. It requires credit reporting agencies, and those that report credit information to those agencies (like credit card companies), to make sure all information is fair, accurate and confidential. Information in a consumer report cannot be provided to anyone who does not have a purpose specified in the Act.

Components Of Your Credit Report

Before exploring how various actions affect your credit report, it’s important to know how your credit score is calculated. Not every action has the same impact. Here is how your credit score is determined:
Payment history – 35%
Amounts owed – 30%
Length of credit history – 15%
Credit mix – 10%
New credit – 10%
This makes up your FICO credit score, the most common method used. Obviously, payment history is crucial and it’s important to remember that even if a company does not report your usual on-time payments, they will certainly report a missed or late one.

Time Frame

Your credit report is not a static document. Your credit score changes all the time, and actions that have lowered your credit score do disappear from your credit report. The time frame varies from two to ten years. Generally, those negative actions will fall off your report after seven years. Another thing to understand is that the severity of the impact diminishes with time, too. So a bankruptcy five year ago will matter less than when freshly filed.

Credit Inquiries

One of the most insidious ways that your credit score can be lowered comes from credit inquiries. Also called “hard inquiries” or “hard pulls,” a credit inquiry of this type happens when you apply for another credit card. It’s important to know that even department store credit cards can cause a hard pull. Credit inquiries remain on your credit report for two years, and can have a negative impact on your credit score—from 5 to 20 points per pull.

Seven-Year Itch

Most negative actions will remain on your credit report for 7 years. These include debts that have gone into collection, charge-offs (where the business is no longer actively trying to collect the debt), and late payments that are over 30 days past due. The later the payment, the worse it is for your credit score. It also includes Chapter 13 bankruptcy, starting from the date of filing. Chapter 7 bankruptcy stays on your credit report for 10 years.

Credit Repair

When you have financial difficulties, your credit score will be impacted, whether or not you declare bankruptcy. This impact does not have to be devastating, and it can be mitigated. The experts at Burr Law can guide you in re-establishing your credit in ways that meet your particular situation. Remembering that payment history is crucial, and that many accounts do not typically report on-time payments, you can work to have your timely payments noted. While auto loans, mortgages, credit cards and some others are typically reported, other things like utilities, phone payments, and even streaming services can be reported. If you have a monthly expense that isn’t being reported and you want those timely payments to count toward your credit score, Burr Law can help.

Understanding your credit report can lessen your anxiety around declaring bankruptcy. When your credit score is suffering from late payments and debts in collection, bankruptcy isn’t going to make things worse. It can make things a lot better, and the professionals at Burr Law can guide you in repairing your credit too.

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.

How Does Debt Relief Affect Your Credit?

The unrelenting pressure of overwhelming debt can cause all kinds of problems outside of the financial realm. It can affect your love relationship, your familial interactions, and your physical and mental health. You know you need debt relief, but worry that pursuing it may further deteriorate your credit score. In this blog post, we will examine the different kinds of debt relief and their implications for your credit.

 

Debt Management – What Is It

With debt management, the entirety of your financial situation is reviewed by a credit counselor, who then creates a debt management plan for you to follow. Generally these are for terms of three to five years, and often you must agree not to seek any additional credit during the time that the debt management plan is in place. Some organizations may take control of your monthly payments, making them on your behalf. You will pay a monthly fee for the service.

 

Debt Management – Credit Implications

The fact that you’re engaged in a debt management plan will be noted on your credit report. If you adhere to the regime for the entire time, your credit score should not be affected. However, at least half of clients do not successfully complete the plan. Obviously, failing to complete a debt management plan would have negative implications for your credit score.

 

Debt Settlement – What Is It

Debt settlement differs from debt management in that the organization you work with negotiates with your creditors on your behalf to decrease the amount you owe. Sometimes, they offer a lower lump sum payment to the creditor; sometimes, they seek debt forgiveness or lower interest. You will be expected to pay an enrollment fee as well as a monthly fee for each credit card on the plan. Also any forgiven debt is reported to the IRS who treats that as income.

 

Debt Settlement – Credit Implications

Debt settlement companies are not concerned with your credit report. Their job is to get the current debt lowered or forgiven. Most debt settlement companies ask you to suspend payments to your creditors while they negotiate on your behalf. This strategy has a tremendously negative impact on your credit report since the most significant factor is payment history.

 

Debt Consolidation – What Is It

In its most basic form, debt consolidation combines multiple debt payments into one monthly payment through obtaining either a secured or unsecured loan. That monthly payment is sometimes lower than the individual payments combined, and the interest you pay is sometimes lower as well. Sometimes you may risk losing collateral that you aren’t aware you have placed in jeopardy. That can happen when your debt consolidation loan has a cross-collateralization clause that lets the lender take other property it has financed if you default on the debt consolidation loan.

 

Debt Consolidation – Credit Implications

Because you are taking out an additional loan, your credit report will reflect a “hard inquiry” and that will lower your credit score. Often, your credit score decreases by a relatively small amount, and that decrease is temporary.

 

The ultimate debt relief, of course, is filing for bankruptcy. The general fear that filing for bankruptcy means the end of ever acquiring new credit or home ownership is unfounded. The experts at Burr Law can talk you through the different options and the various implications for your credit.

When Does Bankruptcy Clear From Your Credit Report?

If you’re considering filing for bankruptcy in Wisconsin, you probably have a lot of bankruptcy questions. It’s important for you to have all the information you need in order to make a truly sound decision, and in this post, we will look at one of the most commonly asked bankruptcy questions: When does bankruptcy clear from your credit report?

Credit reports are simply a fact of contemporary existence, and they are consulted every time you apply for a new credit card, or an automobile loan, or any type of financial undertaking. You may not be aware that in Wisconsin credit reports are also considered by landlords, and by some employers. So concern about your credit report is absolutely reasonable when making the decision to file for bankruptcy.

Filing for bankruptcy becomes part of the public record, so if anyone is truly interested in the bankruptcy filing itself, they can access that information.

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 will mean a drop in your credit score immediately after filing, but about 12 to 18 months after you receive your bankruptcy discharge your credit score should go up because your debtor to income ratio becomes much better than when you filed the bankruptcy. 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.

The type of bankruptcy that you file may also affect how its presence on your credit report is viewed by prospective lenders. Chapter 7 Bankruptcy completely wipes out your debt by selling whatever eligible assets you have; Chapter 13 Bankruptcy sets up a three to five year plan to repay a portion of your debt. Obviously, prospective lenders would consider a Chapter 13 Bankruptcy in a more favorable light than a Chapter 7 Bankruptcy. When applying for credit after bankruptcy, you should be straightforward about the bankruptcy and your reasons for choosing that option.

Attorney Michael Burr and the Burr Law Offices can answer all of your bankruptcy questions. You concern about your credit report is certainly warranted, and we can help you understand all the implications of a decision to file bankruptcy. Consult the experts in Wisconsin bankruptcy law at the Burr Law Offices, and bring all your bankruptcy questions with you.

Bankruptcy Pros and Cons

When you’re in financial distress, it can sometimes seem like there is no way out. There are all different kinds of reasons people find themselves flailing in a sea of debt. Whatever the reason, when creditors are circling sharks, bankruptcy may be the lifeboat you need. Over 12,000 Wisconsinites have filed bankruptcy so far this year (January 1 through September 30, 2019). In the Eastern District of Wisconsin (including Milwaukee and its surrounding areas), 9,466 bankruptcy cases have been recorded
(www.wiwb.ucourts.gov, www.wieb.uscourts.gov). So bankruptcy is neither shameful nor unusual.

Filing for bankruptcy is a serious decision, though. You want to have all the information and understand all the implications before proceeding. Let’s take a look at some of the bankruptcy pros and cons.

PRO: Bankruptcy Stops All Collection Activities By Any And All Creditors. When your debt is crippling, it comes with collection agents working relentlessly to extract money you don’t have. Letters that threaten dire consequences, phone calls that badger you at all times of day or night, these tactics can make you feel hunted, haunted, or both. The moment you file bankruptcy, all collection activities must stop, including any garnishment, foreclosure or repossession.

PRO: Bankruptcy Eliminates or Decreases Debt. With bankruptcy, all your unsecured debt is either eliminated or reduced. Most people file Chapter 7 Bankruptcy, and with that type, you don’t need to worry about any sort of repayment. “The entire process takes from 3-6 months, after which your debt is cleared” (David Chandler, https://www.consumeraffairs.com/finance/bankruptcy_02.html). Some people choose Chapter 13 Bankruptcy, and with that type, you do repay a portion of your debts, determined with the court. This process lasts from 3 to 5 years. In both cases, your debts are cleared, once and for all.

PRO: Bankruptcy Avoids Draining Resources. The bill collectors don’t care where you get the money to pay them, and you may be tempted to take it from your retirement funds, social security or other protected assets. When you declare bankruptcy, not all your assets are liable for your debt repayment. Social security and retirement funds are protected. Filing bankruptcy allows you to retain those protected assets while getting rid of the debt.

CON: Bankruptcy Means No Credit Cards Until You Receive Your Bankruptcy Discharge. While bankruptcy rids you of your debt, it also rids you of your credit cards. Not having credit cards makes some things more difficult. For instance, car rental agencies usually require credit cards; hotels often do too. It also means that unexpected large expenses cannot be paid with a credit card; car repairs may need to wait. Once you receive your bankruptcy discharge you can apply for credit, including credit cards and you should receive that credit or credit card.

CON: Bankruptcy Complicates Credit/Loan Prospects. Bankruptcy remains on your credit record for 10 years, and it can make getting an auto loan or other kind of loan more difficult, but not impossible. And while you may receive credit card offers shortly after declaring bankruptcy, they often come with high interest rates. Naturally, your credit rating will drop, but will improve and be back to normal about 1 year after bankruptcy discharge. Professional advice can assist in charting a positive strategy and ways to improve your credit score.

CON: Bankruptcy Becomes Public Record. When you file for bankruptcy, it becomes a matter of public record, and anyone can request those records. Except it will not appear on the State of Wisconsin, CCAP website, which list case filed in Wisconsin.

A Wisconsin legal team that specializes in Chapter 7 and Chapter 13 bankruptcy proceedings can help you make the right decision for you and your family. If you need help with dealing with debt in Wisconsin, Burr Law Office can provide you with practical solutions that suit your needs. We can help you make the best possible decisions for yourself, your family and your future. Call us today at (262) 827-0375 to schedule a free bankruptcy evaluation. At Burr Law Office, we are here to help.

Dangers of Debt Settlement Companies

If you are overwhelmed by bills but are not yet ready to declare bankruptcy, debt settlement can be a viable legal solution for your financial burdens. While some private debt settlement companies may promise to wipe out your debt for just a small fee, such guarantees are unfortunately simply too good to be true. Here are just a few of the pitfalls—and fees—associated with debt settlement firms.

Poor Information

Attorneys often recommend debt settlement for individuals who are heading toward bankruptcy but who do not qualify for Chapter 7 liquidation. Because each case is specific, an attorney analyzes each client’s finances before recommending debt settlement as an alternative to Chapter 13. But the employees of private debt settlement companies work on commission, which means they make money off of each client whom they guide toward debt settlement, regardless of whether it is the best option.

Astronomical Fees

Debt settlement companies may promise a low fee, but the contracts are often intentionally confusing and even misleading. Some companies will charge you a percentage of the total debt, while others charge a percentage of the debt savings plus an initial sign-up fee and monthly service charges. Even if you manage to navigate the confusing language, debt settlement services can be so expensive that it takes clients years to pay just the fees—before they even begin to pay off their original debt.

Unresolved Debt

Once your creditors discover that you are working with a debt settlement agency, they may actually escalate your account by either sending it into collection or suing you. Unfortunately, when a creditor files a lawsuit, your debt settlement company will drop you, because only an attorney is qualified to represent you in court.

At Burr Law Office, we are committed to helping all our clients regain their financial footing. To find out how you can affordably discharge your debts through bankruptcy or satisfy your creditors through debt settlement, call our office today at (877) 891-1638 to set up a free consultation with attorney Michael Burr.