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

How Can I Manage My Debt During the Coronavirus Crisis?

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In order to combat the COVID-19 pandemic, all but three states have ordered all non-essential businesses to close. Most of the country’s people are in lockdown in their homes, and millions have therefore lost their jobs. Since March 15, nearly 10 million people have filed first-time jobless claims. All of this means that for millions of Americans, managing their debt has suddenly become unmanageable. If you find yourself in this situation, don’t despair. You still have options. In this blogpost, we will look at ways of dealing with different kinds of debt, and explore bankruptcy options.

Student Loans

The Coronavirus Aid, Relief, and Economic Security (CARES) Act that President Trump signed on March 27, 2020 suspends payments on federal student loans for six months, until September 30, 2020. During that time, interest will not accrue, either. This suspension is automatic, so you don’t need to fill out any forms or formally request it. The CARES Act also stops collection actions, wage garnishments, and treasury offsets; and it prohibits negative credit reporting due to your student loans. The payment pause and interest waiver includes Federal Parent PLUS loans in addition to Federal Stafford Loans, Federal Grad PLUS loans and Federal Consolidation Loans. It is important to remember that this only applies to loans owned by the federal government. It does not apply to private student loans, student loans acquired from state lenders, or, if you have consolidated your student loans through a third-party lender.

Mortgage, Rent Payments, and Foreclosures

The CARES Act provides for forbearance of mortgage payments. It also provides for a 60-day foreclosure moratorium for federally backed mortgage loans like Fannie Mae and Freddie Mac, as well as FHA-insured, VA-insured or guaranteed loans, and FDA guaranteed loans. This covers almost all household mortgages; many banks and mortgage companies have suspended all foreclosure proceedings as well. In the state of Wisconsin, Governor Tony Evers issued an emergency order on March 27, 2020 banning all evictions and foreclosures for 60 days, thereby including any mortgages not covered by the CARES Act and extending protection to renters. If you are a renter, you are still responsible for your monthly rental, but if you cannot pay it, your landlord cannot begin eviction proceedings. The best course of action is to talk to your landlord to see if you can work out some kind of agreement. Wisconsin has also instituted a moratorium on utility shutoffs.

Credit Cards and Other Loans

Many credit card issuers are offering assistance to consumers during the COVID-19 outbreak in various forms. Available help includes credit line increases, collection forbearance, and skipped payments. You should check the website of your credit card companies to see what help you could possibly receive. Banks, credit unions, and other financial institutions are offering loan extensions and deferred payment options, among other things, if you’ll have trouble making payments on a personal loan or small business loan. A number of auto loan companies are offering payment delays as well.

Bankruptcy

Another option to consider right now is bankruptcy. The CARES Act modified the Bankruptcy Code making it easier for individuals to file for Chapter 7 bankruptcy, as well as making changes to Chapter 13 bankruptcy. If you are a sole proprietor or self-employed person, the Small Business Reorganization Act that went into effect in February 2020 could also be a source of relief for you. It extended the amount of secured and unsecured debt you could have in order to qualify for the streamlined bankruptcy offered

in Chapter 11. If you have ever considered filing bankruptcy, now may be the time to follow through on it. Contact one of the experts at Burr Law to discuss your situation.

The COVID-19 pandemic is changing all of our lives in significant ways. The ways in which you have always managed your debt may no longer work for you. There are options available to you, though. If you are concerned about your debt situation, you should contact the professionals at Burr Law. We’re here to help your finances survive this coronavirus.

It’s the Economy!

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When working for the Bill Clinton campaign in 1992, political strategist James Carville came up with three key campaign talking points to keep staffers on message and hung them up for everyone to see in Clinton’s Little Rock, Arkansas campaign headquarters. They were:

  1. Change vs. more of the same
  2. The economy, stupid
  3. Don’t forget health care

Though these talking points were really only ever intended for campaign staffers and other insiders, they kind of leaked their way outside and became key themes the public started to associate with the Clinton campaign. Number two especially resonated with people, and soon Clinton supporters all over were saying, “It’s the economy, stupid!” The Clinton campaign and his supporters truly understood how important the issue of having a robust economy was to the majority of Americans. They decided if they could make the best case about ultimately taking care of the pocketbooks of the people of the U.S., they could win the election. In short, they understood money has the power to motivate people.

Even though quite a bit of time has passed since 1992, poll after poll still shows voters most often say the economy is the number one factor they consider when casting their votes. Needless to say, there are many different opinions about how to go about creating a strong economy, and it’s certainly not our place here to weigh in on policy, but since 2016 is a presidential election year, we know the state of the economy will certainly be discussed more and more as November approaches. In all reality, the candidate who convinces the American public he or she will do the best job handling the economy may very well be the winner of the White House and become our next president.

So now that we’ve established “It’s the economy” people care about, what do you think? When people stop and think about it, the state of the economy really does often times have a huge, direct impact on the lives of many Americans. For example, a poor economy may mean the loss of a job. The loss of a job has a huge, immediate effect on a family. Or maybe it’s not the loss of a job altogether, but it’s a stagnate salary or wages while cost of living prices continue to climb.

Conversely, when the economy is strong and people are making more money, they’re often spending more, saving more, and are better able to pay their bills. Perhaps the need to finance items or borrow on credit cards isn’t as strong as it is in times of financial hardship. To be sure, every person and every family is different; however, I think it is safe to say most Americans prefer the economy be strong and that all working Americans are able to make ends meet.

When we discuss bankruptcy and indebtedness, it’s important to remember the economy can often have a huge impact on the trends we see in our office as Milwaukee bankruptcy attorneys at Burr Law Office LLC. From this standpoint, we understand why so many people see the economy as the number one issue. No one likes going through financial hardships, and, when a weak economy makes getting out of a financial hole even harder, it’s no wonder people want to see it given top (or near top) priority by our elected officials.

Needless to say, there are a variety of different political issues that good-intentioned citizens can debate and disagree about. And, for some voters, there may be issues that are more important to them than the economy. But when we look at the profound impact the American economy has in the lives of individuals and families, it is quite easy to understand why this one issue seems to be pretty high on the priority list for most American voters.

So whether the economy is struggling or humming along, we understand that sometimes people need the help of experts and the help of bankruptcy laws to help them out during a troubling financial situation. At Burr Law Office LLC, we always work with the best interests of our Milwaukee area clients in mind, and we work to protect the future and the financial well being of you and your family. In all types of economic climates, we’re here to serve you. Give us a call today and find out how we can help you.

Exploring the Relationship Between Bankruptcy Reform, Recession, and Bankruptcy Filing Rates

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Four years ago, the United States was hit with the largest recession since the Great Depression. Today, many economic analysts are still scratching their heads, desperately trying to uncover all of the contributing factors. In addition to dishonest lending practices and a lack of regulation on Wall Street, some have said that the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 must share some of the blame. Here’s a brief look at how bankruptcy reform affected the recession and total bankruptcy filing rates:

2005 Bankruptcy Reform

Before 2005, creditors complained that too many people were escaping their debts by filing. At that time, people of all income levels could liquidate their debts by filing for Chapter 7. That’s why the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) added provisions that made it more difficult for debtors to file for Chapter 7 – provisions that included a higher filing cost and fewer dischargeable debts.

Global financial crisis

In the years following BAPCPA, consumers could no longer rely on bankruptcy in the same way. Instead, many people took money out of their home equity to pay off outstanding debts. Once the equity ran out, many homeowners faced foreclosure—in fact, one study found that mortgage defaults increased by 14% each year after the reform passed. This in turn led to a housing market collapse that further fueled the recession.

Number of filings

Once the recession hit, millions of people lost their jobs and were forced to file for bankruptcy. Even though the 2005 reform supposedly made it more difficult to file for bankruptcy, the number of filings went up from around 150,000 in the third quarter of 2006 to nearly 400,000 in the same quarter of 2009.

If you have any questions about bankruptcy reform and how it affects you, contact Burr Law Office. Milwaukee bankruptcy attorney Michael Burr is always up to date on the latest changes and will use his knowledge to help you get through your tough financial times. Call our office to at (877) 891-1638 to get started.