Archive for the ‘Debt Settlement’ Category
Karen Blumenthal recently published an article in the Wall Street Journal entitled, New Ways Bankers are Spying on You, which discusses how in these difficult economic times, banks are doing much more than simply looking at your credit score when deciding whether or not you are worth lending to.
This brings to mind the client who comes to my office and tells me that even though they are hopelessly in debt, they are worried about filing a bankruptcy because their credit score is still high. I always remind these clients that your credit score is supposed to be one of many barometers of your financial health, not an absolute indication of financial health. Unfortunately, many people are encouraged to misuse credit based upon the erroneous assumption that all is well because their credit score is still above 700, and they slowly fall into financial hardship.
The definition of financial health includes living within a budget, controlling debt, using credit responsibly, working towards short and long-term financial goals, and saving. It is challenging to manage any of these things when you are struggling to make minimum payments on your monthly obligations.
The federal bankruptcy laws provide a solution for those who are overwhelmed with debt. Bankruptcy can restructure or eliminate certain debts while protecting assets like your car, your home, and your 401(k). If you have more debt than you can handle, and feel like you aren’t getting ahead, don’t be fooled by a high credit score. It might be time to consult with one of the experienced attorneys at Miller and Miller, who can advise you of your options on how to get back on the road to financial health.
Here’s an article by Paul Gores of the Milwaukee Journal Sentinel revealing some unfortunate statistics about foreclosures in Milwaukee County last month:
Foreclosure filings spike in August
After slowing down this year, foreclosure filings spiked in Milwaukee County in August, setting the pace for an overall 34% increase in foreclosure actions in southeastern Wisconsin from July.
Court records show there were 970 foreclosure filings in August after 725 were recorded in July in Kenosha, Milwaukee, Ozaukee, Racine, Walworth, Washington and Waukesha counties. July had fewest filings of any month this year.
In Milwaukee County, foreclosure filings jumped to 543 after totaling only 367 filings in July. August was the first time that Milwaukee County topped 500 foreclosure filings in a single month in 2011. In 2010, Milwaukee County monthly totals exceeded 500 filings nine times.
Kenosha and Racine also posted relatively big jumps in filings from July to August. Kenosha’s rose to 107 from 80, while Racine’s went to 107 from 78.
Economists say foreclosure numbers generally track with unemployment trends.
While foreclosure filings rose on a month-to-month basis, August’s total of 970 still was down about 6.5% from 1,037 in August 2010. Foreclosure filings in southeastern Wisconsin totaled 7,080 through August, compared with 8,175 in the first eight months of last year.
Other July-to-August county results: Ozaukee, 18, up from 16; Walworth, down to 60 from 64; Washington, unchanged at 38; and Waukesha, 97, up from 82.
If you need help with foreclosure proceedings call Miller & Miller today at 414-277-7742. You have options.
The Basics of Chapter 13 Bankruptcy
Chapter 13 is very effective at helping filers get a fresh financial start while being able to keep valuable assets like homes and cars Federal bankruptcy laws exist to give debtors an escape from overwhelming debt when they find themselves in an unworkable financial situation. The protections offered by a bankruptcy filing have only rarely been more important than they are in our country’s current economic situation. Stock market woes, the burst housing bubble and chronically high unemployment rates have left record numbers of Americans in financial trouble and looking for more information about debt relief options like credit counseling, loan modification, debt consolidation and bankruptcy.
Types of Bankruptcy
There are several different types of bankruptcy filings that a debtor might consider. Eligibility for these programs are based upon an analysis of the debtor’s unique financial condition and whether the filer is an individual, a business entity, a farming enterprise, a fishery, a railroad or a municipality.
- Businesses — depending upon the industry — might be able to file under Chapters 11, 12 or 15 of the U.S. Bankruptcy Code.
- Municipalities like cities, towns, villages and school districts can seek the protections offered by Chapter 9.
- Individual debtors, however, have two choices: Chapter 7 or Chapter 13.
What Is Chapter 7?
Consumer bankruptcy is the blanket legal term for a bankruptcy filed by a single individual (or by a married couple) instead of a by a business or other entity. Consumer bankruptcies are covered by Chapters 7 and 13 of the Bankruptcy Code.
Chapter 7 is better known as “liquidation bankruptcy.” It involves the literal liquidation (selling) of the debtor’s assets in order to raise money that will be used to pay debts. Secured creditors — those whose debts involve a tangible collateral like a house, car or appliance — are given priority, so they are paid first. Any debts not payable through the proceeds of a liquidation are discharged at the end of the proceeding, except for certain debts (student loans, taxes, child support and alimony) that are non-dischargeable. Chapter 7 does include myriad exemptions that will protect various types of property from being liquidated, however, so filers do get to keep the majority of their essential assets.
Because it is more inclusive and involves the discharge of all or most debts, it is more difficult to qualify for Chapter 7 bankruptcy protection than it is for Chapter 13. Potential filers must undergo what is known as a “means test” to determine eligibility. Most people who do not qualify to file under Chapter 7 are able to bring a Chapter 13 filing instead.
What is Chapter 13?
Chapter 13 bankruptcy involves the reorganization / consolidation of all the filers debts into one amount that is repaid over a period of three to five years. People filing under Chapter 13 do not have to pass a means test, but they do have to prove to the bankruptcy court that they have an income with which to make regular payments on their debt. Some debts — the like student loans, taxes, child support and alimony mentioned above — cannot be included in the repayment plan and are not subject to discharge.
Chapter 13 is very effective at helping filers get a fresh financial start while being able to keep valuable assets like homes and cars without seeking exemptions. There is not the immediate discharge of debt like there is in Chapter 7 bankruptcy, but if the debtor fulfills the obligations of the repayment plan, remaining debt is discharged at the end of the agreed-upon time.
Why File a Chapter 13 Bankruptcy?
Most people choose Chapter 13 bankruptcy filings to protect themselves from foreclosure, repossession or wage garnishment. Filing for bankruptcy protection activates something called an “automatic stay.” That means that while the filing is pending, creditors cannot pursue lawsuits, garnishments, repossessions or foreclosures. In fact, they cannot even contact the debtor while the automatic stay is in place — all harassing phone calls and threatening letters must stop once the filing process has begun. Past due amounts on mortgage or car payments can be rolled into the consolidated debt and paid back over the life of the repayment plan, so as long as the debtor remains current.
In addition to the protections offered by the automatic stay, Chapter 13 is also a relatively inexpensive way to get a fresh financial start. Yes, filers have to commit to making payments on their debts for a period of time, and the bankruptcy will have a long-lasting impact on their credit rating, but they can also start to rebuild credit not long after filing. Furthermore, the negative impact of a bankruptcy filing is still less significant than that resulting from a foreclosure, repossession or garnishment.
If you want to learn more about filing for Chapter 13 consumer bankruptcy, contact an experienced bankruptcy attorney in your area.
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A bankruptcy has an effect on many parts of one’s life and therefore people like your accountant, financial advisor, etc. might end up giving you some advice or sharing a story about someone they know who has filed. While these confidants are usually trying to be helpful, beware: their advice isn’t always accurate, and it is always best to discuss your situation with a knowledgeable bankruptcy attorney to get the right answers.
Attorney Cathy Moran recently posted the following story on her blog covering California bankruptcy topics:
The terrified client in my office was told by her accountant that if she filed Chapter 13 to save her home, the court would not allow her to buy prescription dog food for an ailing 16 year old pet! Further, the accountant went on to declare that in Chapter 13, the debtor could pay only for housing, food and gas: nothing more. No maintenance for the house, no insurance, no clothes, no medical care.
Of course, the accountant was dead wrong. Articulate but wrong. So I explained the operation of Chapter 13, how the means test works, and the balance between the debtor’s reasonable living expenses and the claims of creditors. And assured the client that she can provide for her treasured pet for the balance of its life. Then I fumed.
One of the great things about the age in which we live is that there is a lot of information available about anything you might want to learn about at the click of a mouse. However, there is a lot of bad information on the web. Before you eliminate bankruptcy as an option because of a horror story your favorite bank teller told you call us today at 414-277-7742. The attorneys of Miller & Miller can help you to understand your options and empower you to get the fresh start you need.
Bankruptcies ease in U.S., state
By Paul Gores of the Journal Sentinel
July 25, 2011 |(1) Comments
Bankruptcy filings in Wisconsin and the nation are running behind last year’s pace, but attorneys say it’s too soon to know whether the wave of filings triggered by the economic downturn has crested.
Still, at least in some lawyers’ offices, the number of people coming in to declare themselves insolvent has slowed slightly. And more of those filing for bankruptcy today are people who at one time were higher on the economic scale. That compares with many of those who filed earlier in the recession – people who were living paycheck to paycheck and folded quickly when their income was cut, lawyers said.
“I think those that we’re seeing now are those who were able to survive the downturn – people who were self-employed, people who had higher-paying jobs, were able to tap into retirement accounts and use the credit card but make the minimum payments,” said James Miller, of Miller & Miller in Milwaukee. “There is just not that same mass of people as those who fit into the first category.”
U.S. Bankruptcy Court records show bankruptcy filings fell 8.4% in the first half of 2011 in Wisconsin, to 14,682 from 16,024 in January through June 2010. About 80% were Chapter 7 filings, which wipe out debt on things such as credit cards, medical expenses and utility bills.
The Wisconsin numbers mirror a decrease in consumer bankruptcies nationally. There were 709,303 filings in the United States in the first six months of 2011, an almost 8% decrease from 770,117 during the same span in 2010, according to American Bankruptcy Institute.
“What we’re seeing is still high filings, but off the peak,” said David Leibowitz, founder and managing member of LakeLaw in Milwaukee and Kenosha. “I don’t think we can take a great deal of comfort in it. But I do think that there’s a direct correlation between the economy and unemployment on one hand and the bankruptcy statistics on the other hand.”
Madison bankruptcy attorney Claire Ann Resop of von Briesen & Roper said people who had been making at least midlevel incomes are among those she sees more frequently. Among those on the list: teachers, nurses, sales people, tradesmen, homebuilders and truckers.
“They had higher income and they had more resources to try to keep up for a while,” she said.
Milwaukee attorney Robert Waud said he was “kind of surprised” to hear the number of filings in the state declined.
“It’s pretty steady coming in the door,” he said.
Small-business owners, trades people and land developers are common bankruptcy filers, he said.
Waud, of Todd C. Esser & Associates, isn’t convinced bankruptcy filings have peaked, even if the half-year trend is down from a year ago.
“I think it’s too soon to say,” he said.
Miller said restraints on credit since the start of the recession and financial crisis have cut the likelihood of people charging huge debts that end up in bankruptcy.
“Credit companies aren’t taking as many risks on people, so there are not as many credit-related defaults,” Miller said.
Lawyers said issues that historically have led to bankruptcy remain the big factors – uninsured major medical costs, divorce and job loss.
“The problem still, as far as I’m concerned, is there are not enough people working,” Waud said.