Section 523 of the Bankruptcy Code sets out a number of situations in which credit card debt will not be discharged. Section 523(a)(2)( c) makes non-dischargeable consumer debt totaling more than $500 for luxury goods and services owed to any one creditor that are incurred within 90 days of filing, or cash advances totaling $750 or more owed to any one creditor made within 70 days of filing.

 
Section 523(a)(2) makes non-dischargeable debt owed to a creditor that was incurred by false pretenses or by fraud.

 
So to sum it up, Section 523 gives credit cards at least two arguments to challenge a Debtor:
1. Recent credit card use (within 3 months) for anything but necessities like food, clothing and shelter
2. Any credit card use in the recent past (up to a year prior to filing) if a Debtor makes charges where there is no reasonable expectation of repayment.

 
Here’s another way to think about it: If you have lost your job, and for the last year your only source of support are credit cards and cash advances, you should not expect to avoid a challenge by the credit card issuer just because you wait 91 days after your last use of your cards.

 
What, then, should you do if you need to buy food or gasoline in the weeks before you actually file?

You should recognize that shortly after you file, there is a very good chance that your credit cards will all be canceled and you are going to have to find another way to pay for your food and gasoline. A bankruptcy may eliminate old debt but it will not help you pay your current or on-going bills.

 
As a practical matter you are not going to want to spend the money litigating Section 523 dischargeability actions. Bankruptcy litigation is expensive and if you are scraping to buy food and gasoline, you will not be able to afford litigation. The fee you pay your bankruptcy lawyer will almost never include litigation.

 
If you are in Southeastern Wisconsin and are having trouble with your credit card debt, contact Miller and Miller today. We have offices in Milwaukee, Germantown, and Kenosha, making sure that whether you live in Racine or Waukesha, you have a office close to home.

Over at the MintLife Blog they recently had a great article on overpriced children’s items. After getting a fresh start through bankruptcy it is important to look for ways to keep costs down so that you are able to build a strong financial future. We all want to give the world to our children, but if you can do that while saving a buck it’s even better.

Read that article here.

Everyday people in the Milwaukee area are learning how to get out of financial trouble by meeting with one of our attorneys.  Miller and Miller has offices in Milwaukee, Kenosha, and Germantown to ensure that wherever you are in Southeastern Wisconsin, we’re close. 

Call us today at 414-277-7742 and schedule your free consultation!

If you are in the Milwaukee-Waukesha-Germantown-Kenosha area and would like to learn how to get a fresh start, call Miller and Miller today!

Historically, bankruptcy has been stigmatized. Narrow-minded people saw those filing for bankruptcy as failures, as deadbeats or as being guilty of living far beyond their means. Nowadays, though, we know that the great majority of people filing for bankruptcy protection are victims of circumstance: their debt could easily have been caused by a job loss, divorce or serious illness that racked up a mountain of medical bills.

The bankruptcy laws have undergone significant changes in recent years, and some people think it is now all but impossible to file. If anything, however, the new laws make it easier to use this legal tool for a financial fresh start. Unfortunately, there is a great deal of misinformation — both good and bad — floating around about the purpose of bankruptcy and about the process of seeking bankruptcy protection to deal with personal or business debt. This article will help dispel some of the myths and make it more approachable as a debt management option.

No More Stigma

Most people considering a bankruptcy filing fear that they will be stigmatized by family, friends and coworkers. Luckily, this is not true; unless the filer is a public figure or involved with a large company, 99 percent of the time the public will never know about a bankruptcy filing. Likewise, they may fear that lenders will forever view them as a bad risk and that they will never qualify for financing on auto or home purposes in the future. This, too, is a myth. While a bankruptcy filing does show up on the filer’s credit report, most filers can start building their credit again just a few years afterwards. For some filers, the wait is even less.

Do I Have to Sell Everything?

Some people have this abstract view of bankruptcy as being a court-ordered “rummage sale” of sorts where they will have to liquidate everything from their household furniture to their great-grandmother’s china. Yes, the court may order a filer to sell superfluous and extravagant assets (like a vacation home in Aspen that is used one week a year or an original Shelby mustang that has been under a tarp in the garage for a decade), but the majority of filers get to keep their home, clothing, household belongings, work-related items like tools, furniture and the family vehicle.

You CAN File Again

For some people, a second — or even third — bankruptcy filing is a necessity. While common knowledge may say that bankruptcy is a one-shot deal; you get a single chance to get a financial new beginning through the bankruptcy code. This simply isn’t the case. While there are waiting periods put in place to prevent so-called “serial filers” who might have a pattern of irresponsibly running up massive amounts of debt and then filing for bankruptcy again and again, the law doesn’t bar a subsequent filing if legitimate financial circumstances dictate.

Even though bankruptcy is more accessible than it has been in the past, the process can still seem overwhelming and even scary. With the help of an experienced bankruptcy attorney, though, bankruptcy can be a great way to get out from under a mountain of debt and get a fresh financial start.

At Miller & Miller we are here to help you file in Milwaukee, Kenosha, Racine, West Bend or wherever you may live.  We have convenient offices in Kenosha and Germantown if getting to our downtown office is a problem.

These citizens have critical questions about the bankruptcy process:

“Can I keep my car?”

“Do my husband and I both need to file?”

“Will my child support arrearage be discharged?”

Many turn to bankruptcy petition preparers for those answers and pay $100 to $250 to get them. But most do not realize that petition preparers are simply typists. They are not trained in the law and do not know the answers to the questions that debtors need to ask.

Some preparers answer the questions anyway, often giving the wrong information.

Some take the debtors’ money but do not complete the papers or do not file the papers or do not file the correct papers.

Milwaukee’s bankruptcy judges have grown weary of being forced to dismiss cases because the debtor paid money he or she did not have to a petition preparer who gave the debtor the wrong information, did not file all of the required documents or filled out the documents incorrectly.

People who consider filing for bankruptcy already are hurting, without losing precious dollars to someone who cannot give them the advice they need.

To make it clear that the law does not allow petition preparers to give legal advice, and that they are not qualified to do so, the Milwaukee judges have established a new policy: Beginning Jan. 1, a petition preparer may charge only $75 for completing bankruptcy papers.

If the preparer is following the law, simply filling out the papers without giving legal advice, $75 is a reasonable price for that service. If a debtor needs more than typing services – and most debtors do – the bankruptcy court has a Help Desk, where from 9 a.m. to 10:30 a.m. every Thursday morning, bankruptcy lawyers will answer questions and help debtors with their paperwork.

And it’s free of charge.

Pamela Pepper is chief judge of the U.S. Bankruptcy Court for the Eastern District of Wisconsin, sitting in Milwaukee.

Perhaps a more interesting element of this story has to do with the monthly repayment numbers borrowers are expected to pay. The USA Today article suggests that $30,000 of student loans, payable at 6.8% interest over ten years would amount to $350 per month.  At this level of debt, the average person would need to earn at least $42,000 per year.  Unfortunately, as bankruptcy attorneys we commonly see student loan debt in excess of $100,000, with monthly payments over $1,000.

From a bankruptcy perspective, student loan debt is not dischargeable except in cases of “undue hardship.” In the Eastern District of Wisconsin, the court uses a very strict three part test to determine whether student loans may be discharged. As the law stands today, debtors in the Eastern District of Wisconsin have not been successful in arguing for hardship discharge on the grounds that they cannot find a job that pays enough to support their student loan obligations.   

This issue can sometimes be very confusing.  For that reason we always suggest you set up a free consultation with one of our lawyers a Miller & Miller.   There is never a charge for an initial consultation and we are happy to meet with you to discuss all of your options.

James Miller

jmiller@millermillerlaw.com

414-277-7742

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.