Posts Tagged ‘Discharge of Debts’

Bankruptcies ease in U.S., state

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.

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.

*Criminal fines or restitution or drunk driving injury claims

*Guaranteed Educational Loans

*Fine or penalty owed to governmental unit

*Damages arising from willful injury to person or property

*Spousal or child support, or ex-spouse attorney fees for obtaining support

*Income taxes less than three years old

*Income taxes over three years and tax return not filed more than two years ago

*Income taxes not assessed at least 240 days

*Payroll taxes and sales taxes

1.  All debts must be listed.  It is illegal to pick and choose when listing your creditors.  All creditors must be listed even the ones you intend to pay after filing i.e. your mortgage

2.  You may have to turn over tax refunds to the bankruptcy trustee.  Part or all of any tax refunds due for the tax year a bankruptcy case is file may be required to be turned over to the trustee.

3.  You must list all business information if you are self-employed.  You must list all personal and business debts, assets and income.

4.  You need to refrain from incurring new debts before filing. Intentionally incurring debts with the intent not to pay may be a crime.

5.  Keep making your house and car payments if you intend to keep the property.

6.  Lying can get your case thrown out of court.  The Court may disallow a bankruptcy if a client misrepresents any facts or otherwise lies on the papers filed in the bankruptcy.

7.  Bankruptcy stops all bill collectors.  The creditors including tax collectors are barred from attempting to collect any debt from you the instant the petition is filed.  Bankruptcy does not stop any criminal proceeding or government regulatory proceeding.

Most people are aware that there are three main debts that are non-dischargeable; (1) Student Loans, (2) money owed to IRS or state taxing agency, and (3) back child support. However, that is not the end of the list. Here are other non-dischargeable debts that are less common, but still important to note:

(1) A judgment against you for a willful and malicious injury (i.e., assault & battery)

(2) An obligation arising from auto accident that involved alcohol

(3) If a creditor alleges false pretenses, false representations, or actual fraud

(4) If a debt is based on a false (or falsified) financial statement (i.e., a lie on a loan application)

(5) Cash advances of $750 or more taken within 70 days of filing

(6) Debts arising while acting as a fiduciary (i.e. embezzlement or larceny)

(7) Fines or penalties owed to a governmental unit

(8) Condominium dues (if the condominium is not surrendered)

LAST – AND MOST IMPORTANTLY

(9) Any debts not originally listed on your bankruptcy petition