Milwaukee Bankruptcy Attorney Blog by Miller & Miller Law, LLC » Chapter 7

I’ve had to use my credit cards recently, can I still file a bankruptcy?

Jason S. Crye — Sat, 04 Feb 2012 22:36:02 +0000

There is no perfect time to file for bankruptcy. Ideally, you should wait to file at a point when you have not touched your credit cards for several months and your credit card charges over the past year have not taken a big jump. Further there is less chance that you will face any objection if you have made at least the minimum payment over the past 6 months or longer.

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.

Saving on Your Childrens’ Needs

Jason S. Crye — Mon, 30 Jan 2012 15:59:13 +0000

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!

Be Safe Shopping Online

Jason S. Crye — Mon, 23 Jan 2012 17:18:34 +0000

All too often, clients come into our office, review their credit report, and are shocked to see what is listed. Sometimes this is because there are old items that have been forgotten, but another culprit is identity theft.

As the web has evolved, so have criminals and their tactics. With websites that look similar to name brand sites, con artists can pluck information as consumers enter what they believe is a legitimate site. Once someone has stolen your identity and injured your credit score, it can be challenging to repair the damage.

“Everything is done online these days,” says Identity Theft Resource Center Social Media Coordinator Nicki Junker. “Most of the time the victims of cyber-savvy criminals won’t be able to trace where the identity theft — a crime that has seen double-digit increases in the last five years — happened.”

Identity theft often goes unnoticed until it’s too late and the damage has already been done. In 2010, around 8.6 million households had at least one person who was a victim of identity theft, up from 6.4 million households in 2005, according to a recent study by the U.S. Bureau of Justice Statistics. Identity theft cost U.S. households about $13.3 billion in 2010, with the average loss being about $2,200.

Consumers can, however, take precautions to safeguard themselves and their identities while shopping online. Junker offers five ways to protect yourself online:

1. Confirm the site is legit: Before giving any personal information, check the URL to make sure that you’re still on the same site where you plan to make your purchases and that you haven’t been moved over to a fake one. Junker said sometimes consumers are switched over to a “cyber squatter’s” site that looks similar to a retailer’s site. It’s easy to be tricked into giving up credit card and other personal information.

2. Shop securely: When you start to check out and get ready to pay for your purchases, the URL should start with “https,” which means the site is secure. A secure site uses security technology to encrypt the information you send to the site, meaning computer hackers are stopped from collecting the data as it crosses the Web. You can also look for a closed yellow padlock at the bottom of the screen. If you see an open lock, you can assume that the site is not secure.

3. Use credit cards: Federal credit laws limit the amount a con artist can take on a credit card. Debit cards don’t have the same protections. “If they have a debit card, they can clear you out,” Junker explains. “You’re much better protected using a credit card than a debit card.”

4. Google the retailer: Before buying from a website, type in the retailer’s name and the word “scam” or “complaint” into a search engine. It’s a way to check out a retailer to see if the business is legit or not.

5. Explore the site: Can you find where the company’s office is located? Does the site clearly state a refund policy? Does it promise too much? “If it sounds too good to be true, it isn’t,” Junker warns. Take your time and make sure nothing seems out of whack or iffy.

Shopping online is a convenient way to avoid store crowds and traffic. By following these web-savvy tips, your shopping experience can be safe and convenient. If you are living in Milwaukee-Waukesha-Racine area, the attorneys at Miller and Miller can help you to repair and rebuild your credit if you think there are errors. Call us at 414-277-7742 today!

College Graduates Move Home and the Economy Feels the Impact

Jason S. Crye — Fri, 18 Nov 2011 16:01:54 +0000

Here’s an article from the New York Times providing a pretty bleak picture of one aspect of our current economic crisis. From the article: As of last month, just 74% of Americans between the ages of 25 and 34 are working, and 14.2% of yound adults are living with their parents.

Read the full story here.

Attorney Miller quoted in Journal Sentinel regarding decline in Bankruptcy Filings

Jamie Miller — Tue, 26 Jul 2011 15:31:13 +0000

Bankruptcies ease in U.S., state

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By Paul Gores of the Journal Sentinel

July 25, 2011 |(1) Comments

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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.

We can Lower your car payment through bankruptcy

Jamie Miller — Tue, 12 Jul 2011 17:07:33 +0000

In you own a car that you owe more than it is worth, our lawyers may be able to help lower your car payments. Our lawyers can use a Chapter 7 bankruptcy redemption to lower your payment. Many people are forced into bankruptcy because a car loan company has over-financed a vehicle. A high car payment can make it impossible to afford your car. We may be able to force your car lender to accept a payoff on your vehicle for only the value of your vehice.

In a Chapter 13 bankruptcy we can “cram down” or reduce what you owe on the car to what the car is worth. Our experienced lawyers will help you figure out if this is a solution for you.

We can even get your car back and reduce your car payment if your car has already been repossessed.

Medical Costs often cause the need to file bankruptcy

Jamie Miller — Sat, 18 Jun 2011 16:25:39 +0000

Bankruptcy doesn’t usually happen in a vacuum. There is usually some type of personal crisis going on when folks enter into bankruptcy, something that tips them over the edge and makes bankruptcy unavoidable.

While many bankruptcies are caused by uncontrolled spending, divorce, job loss, or unexpected disasters, probably the biggest cause of bankruptcy is burdensome medical expenses, according to a Harvard University study. Another recent study by the American Society of Clinical Oncology, which examined data from a Washington state bankruptcy court records and a National Cancer Institute registry over a 14-year period, found that bankruptcy rates among those diagnosed with cancer were almost twice as high after one year than they were among the general population.

According to the study, 2.1 percent of individual cancer patients sought personal bankruptcy protection in the years following a cancer diagnosis. Those diagnosed with lung and thyroid cancers, and leukemia and lymphoma were most likely to file for bankruptcy one year, two years, or five years after their diagnosis. 7.7 percent of lung cancer patients eventually filed for bankruptcy, according to the study. Cancer patients least likely to file for bankruptcy were those over 65, who typically have Medicare coverage.

The recent study was not the only one to have looked at the connection between According to a Harvard study of personal bankruptcies filed in 2007, 62 percent of filings are caused by costly medical problems. Perhaps more interesting, though, is that 78 percent of filers in 2007 had medical insurance at the beginning of their illness, 60 percent being covered by private coverage.

Credit Unions and Cross-Collateralizing

Jason S. Crye — Wed, 25 May 2011 19:59:14 +0000

A majority of credit unions and some banks use what are called Loanliner documents for their lending transactions. These agreements are standard loan documents developed for and sold to financial institutions. Included in the standard Loanliner lending agreements is a provision in which the borrower agrees that all other loans with the lender are cross-collateralized.
Cross-collateralization is the use of collateral from one loan to secure other loans. The cross-collateralization clause from such an agreement might read,

the security interest also secures any other loans, including any credit card loan, you have now or receive in the future from us and any other amounts you owe us for any reason now or in the future.

Credit unions will often use this type of clause in vehicle loan agreements to secure all other credit union debts with the vehicle. This often rears its ugly head when an unsuspecting credit union member tries to trade-in his car and discovers that the debt on the vehicle includes a personal loan, a line of credit, and credit card balances.

There are options if you are faced with a cross-collateralized auto loan.

For example, you can file a Chapter 13 bankruptcy and cram-down the loan to match your vehicle’s value. Any remaining debt is discharged at the end of the Chapter 13 case. During a Chapter 13 case, you can pay a cram-down value over three to five years.

In a Chapter 7 bankruptcy, you or your attorney have the option of asking the credit union to draft a reaffirmation agreement for the vehicle without regard to other debts. This is just asking the credit union to voluntarily strip off the cross-collateralized loans. If the credit union refuses to do so, there are two options: (1) surrender the vehicle and discharge all debts to the credit union; or (2) redeem the vehicle.

Redemption is a process exclusive to a Chapter 7 bankruptcy case where the debtor keeps a vehicle by paying the value of the vehicle, not the total debt that is owed. While it sounds similar to a Chapter 13 cram-down, redemption differs in that the payment to the secured creditor must be in a lump sum. Payments plans are not allowed.

If you have an auto loan through your local credit union, review the loan paperwork and look for a cross-collateralization clause. The attorneys at Miller and Miller can discuss your options with you and help arrive at the best financial decision for you and your family.

Stop WE ENERGY from disconnecting your utility!!!

Jamie Miller — Mon, 16 May 2011 16:47:02 +0000

The filing of a chapter 7, chapter 13 or a chapter 128 will prevent WE Energy from disconnecting your utilities. Call us today 414-277-7742 if you are facing disconnection or if you have been disconnected. We can help immediately.

Chapter 7 Bankruptcy Trustee

wyanow — Wed, 02 Jun 2010 16:20:55 +0000

In a Chapter 7 Bankruptcy the role of the trustee is limited. In most Chapter 7 cases, the debtor does not have assets available but in cases where there are assets, the trustee is responsible for the liquidation of the assets and the payments of such monies to the creditors. The trustee evaluates the bankruptcy, looks at exemptions and schedules. The trustee also participates in the meeting of the creditors (341 hearing) and oversees the process of selling any assets. The trustee also has the power to deny a discharge to the debtor if there is any evidence of fraud, perjury or ineligibility is discovered. The U.S. Trustee appoints the Chapter 7 trustee to a panel for a period of one year (renewable).