Milwaukee Debt Attorneys
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Practice Areas

Our Services Include:

Chapter 7 

A Chapter 7 bankruptcy is the fastest way to discharge your debt, improve your credit,  and take control of your financial situation. From filing to discharge, the process can be as short as four months.

People are often surprised to find out that a chapter 7 can actually improve your credit score.  This is because part of your credit score is based, in part, on your debt to income ratio.  After a chapter 7 eliminates all of your debt, your debt to income ratio shrinks and your credit score goes up.  In some cases, a chapter 7 can increase your credit score by 100 points or more.

Debts discharged in Chapter 7:

  • Medical bills

  • Credit and department store cards

  • Payday loans

  • Personal loans

  • Signature loans

  • Unsecured debt owed on cars and homes if surrendered

Some debts are not discharged in a Chapter 7 bankruptcy:

  • Student Loans

  • Secured debts on your home and car if you intend to keep the property

  • Certain tax debt

  • Child support and alimony

  • Municipal citations

If you are burdened by debts that are not dischargeable in a Chapter 7, then you should consider what Chapter 13 can do for you.

Chapter 13 

Chapter 13 debt reorganization is a plan where you pay back your secured debts and your non-dischargeable Chapter 7 debts over a three to five year payment plan. As in a Chapter 7, most medical bills, credit card debt, and payday loans are discharged at the end of the repayment plan.

People usually file Chapter 13 to save their home from foreclosure, save their vehicle from repossession, and because they don’t qualify for a Chapter 7 bankruptcy.

Benefits of Chapter 13:

  • Stop foreclosure in its tracks.

    • Pay your mortgage interest free over the life of the plan and become current on your mortgage.

    • Participate the Mortgage Modification and Mediation Program through the Bankruptcy Court and work toward a loan modification.

    • Force the mortgage company to start accepting payments again.

  • Stop repossession of your vehicle.

    • Reduce your car payment and interest rate.

  • Clean slate.

    • The goal of the Chapter 13 is finish your plan debt free. This means no mortgage arrears, vehicles paid off in full, taxes and child support paid in full, and all other dischargeable debt wiped clean.

  • Mortgage Modification and Mediation Program (MMMP)

    • The MMMP is a great tool for individuals looking to save their home.

    • The program was designed by a team of lawyers and judges in the Eastern District of Wisconsin.

    • How it works:

      • File a motion to participate.

      • While the motion to participate is pending, you pay back no mortgage arrears through the Chapter 13 plan and you are able to make current mortgage payments at 75% of the actual payment.

    • Common mortgage modification approval scenarios:

      • Lower monthly payment and interest rate.

      • Mortgage becomes current and any arrears get rolled into the principal.

    • Advantages:

      • The process is overseen by the court, attorneys on both sides, and a mediator.

      • Transparency. No one can say, “we never got that document” because all documents are exchanged through a web portal that the mediator, the court, and attorneys all have access to.

Requirements for a Chapter 13:

  • In order successfully file and complete a chapter 13, you must have a regular source of income.

  • You are required to pay your bills such as your rent and mortgage, food, and utilities. You cannot use pay your bills with credit during a Chapter 13.

  • You must make your monthly Chapter 13 payments.

    • Car payments and mortgage arrears will be paid through the plan.

Foreclosure Defense 

Wisconsin Foreclosure Process: All Wisconsin foreclosure actions must go through the circuit court.

  1. Default on mortgage. You are technically in default on the second day after your payment is due. Most mortgage companies, however, usually allow a grace period on making payments.

    1. The lender usually waits 90 days (3 missed payments) to send you a Notice of Default. There is some variance between different lenders but the NOD is usually accompanied by a right to cure the default prior to the start of a foreclosure action.

  2. Lender files a foreclosure. The lender files a summons and complaint in the county where the property is located to start the proceedings.

    1. Service: The lender is required to deliver to you the summons and complaint. If the lender is unable to locate you, they can complete service by publication of the action.

    2. 20 Days to Answer: This is the most important deadline in the foreclosure process. You have 20 days to file an answer to the summons and complaint.

    3. The summons and complaint will also tell you whether or no the lender is seeking a deficiency (payment of the difference between the sheriff’s sale price and the amount owed on the mortgage).

    4. You have the right to cure the default until judgment is entered.

  3. Judgment. If you do nothing, move for a default judgment after the 20 days has passed. The judge will grant the lender a default judgment of foreclosure.

    1. Redemption period. The redemption period starts when the judgment is entered. The redemption period is either 6 or 12 months depending on whether or not the lender is seeking a deficiency. The redemption period allows the borrower to pay the mortgage in full and own the property free and clear.

    2. During the redemption period, the borrower can refinance or sell the property to pay off the debt owed to the lender (the lender may even agree to a sale price that is less than what is owed on the mortgage).

    3. If judgment is entered and the redemption period ends, there will be a Sheriff’s sale.

  4. Sheriff’s Sale. The Sheriff’s sale can happen anytime after the end of the redemption period. However, notice of the sheriff’s sale must be published in the newspaper for 6 weeks prior to the sale.

  5. Confirmation of Sale. The circuit court must approve the sheriff’s sale. This happens at a hearing scheduled after the sale date. This can happen as soon as 5 days after the sheriff’s sale and you will receive notice of the confirmation hearing. After the sale is confirmed, you no longer own the home and the lender will initiate removal proceedings if you do not vacate voluntarily.

It is important that you protect your rights throughout the foreclosure process. You can challenge the foreclosure on multiple grounds:

  • Standing. You want to make sure the right lender is foreclosing on your property. This is especially important if your mortgage has been transferred to other servicers multiple times.

  • Amount of Claimed Default. You need to make sure that the claimed default is correct and that all charges and interest are allowed claims. For instance, you shouldn’t have to pay for a “drive-by” property inspection and forced place insurance if you already have homeowner’s insurance.

  • TILA. The lender must make all property lending disclosures under the Truth in Lending Act: amount financed, finance charge, APR, total payments, etc…

  • State Law Claims. There are multiple state laws, such as the Wisconsin Consumer Act, that lenders must follow when foreclosing on a home.

The bottom line is that your rights need to be protected. You shouldn’t lose your home if there are glaring deficiencies in the lender’s case.

Chapter 128 - State Action 

A Chapter 128 is not a bankruptcy. While bankruptcy is a creature of federal law, Chapter 128 was created by the State of Wisconsin to help people pay back their debts over a reasonable period of time. There are, however, some similarities between a Wisconsin Chapter 128 and a Federal Chapter 13 bankruptcy:

Like a Chapter 13 bankruptcy, a Chapter 128 provides relief from the collection efforts of creditors. If you file a Chapter 128, creditors included in the repayment plan are barred from executions, attachments, and garnishments.

A Chapter 128 is also like a Chapter 13 in that there is a plan to repay your debts over a period of time. In a Chapter 128, that period of time is always 36 months whereas in a 13 it can range from 3 to 5 years.

Advantages of 128 over bankruptcy:

  • There will not be a bankruptcy filing on your credit report.

  • You can pick and choose which creditors to include in the chapter128 case. All creditors and debts must be included in a bankruptcy filing.

  • You can add creditors to your chapter 128. If, a couple months into the repayment plan, you decide you want to add another bill before they put a lien on your property, you can do that in a 128. In a bankruptcy, you can include only pre-petition debts in your case.

Debt Negotiation 

We can settle your debts for a fraction of what you owe.  In some instances, clients pay back as little as 10% of the original amount owed.  Call today to see if you are a good candidate for debt negotiation!

Consumer Protection 

I know how awful some of these lenders and debt collectors can be:

Calling you day and night at your home, calling your family, and even calling your job threatening to “serve you with papers” to come and arrest you unless you make a payment plan NOW.

Recognizing the deceitful and downright ruthless tactics of lenders and collection agencies, the federal and state governments have enacted laws prohibiting lenders from engaging in such tactics:

  • Fair Debt Collection Practices Act
    • This Act prohibits creditors from calling you at all times of the night, threatening lawsuits, using abusive or profane language, misrepresenting or deceiving a debtor, and reporting false information credit reporting agencies, among other things. 
  • Wisconsin Consumer Act
    • This Act prohibits certain collection practices, requires judicial process in some repossessions, and can limit interest charges in some credit transactions.

Frequently Asked Questions 
  • Bankruptcy and Divorce: Which Comes First? 
    • It would be beneficial to read the section on community property before reading this section.
    • Because of the exemption issued posed by community property, it is usually best to file a joint bankruptcy petition while you are still married.
    • If, however, you have been recently divorced and need to file a bankruptcy, there some traps to watch out for:
      • Make sure that the property has been partitioned before the bankruptcy filing.  If you file a bankruptcy after the divorce decree and the property has not yet been partitioned, then that property still becomes part of your bankruptcy estate.  This could potentially create an exemption nightmare.  See In re Brassett, 332 B.R. 748.
    • Do NOT try and thwart creditors by assigning all the valuable property to one spouse and all the worthless property and debt to another spouse.  The panel trustee, United States Trustee, and creditors with a pulse will recognize this as fraud and object to your discharge.  In addition a chapter 7 panel trustee may be able to void the transfer and bring the property back into your estate, defeating the whole purpose of the transfer.
  • What Is Community Property? 
    • Community property is property that is owned jointly by both husband and wife. 
    • Because Wisconsin is a community property state, all property acquired during marriage is community property, and consequently, this also means that all debt incurred during the marriage is community debt.
    • The Determination Date:
      • The determination date is used to determine the classification of your property as either community property (marital property) or individual property.  Property acquired after the determination date is marital property.  Usually the determination date is the day you were married, if you were married in Wisconsin. 
      • If you were married outside of Wisconsin and moved here, the determination date is the date that you moved to Wisconsin.  If you moved to WI from a non-community property state, then the property you owned individually prior to moving here remains individual property unless you re-classify it as community property.
      • If you move from a non-community property state to a community property state and retain some individual property that subsequently appreciates in value,  the appreciation from the property is individual property of the person who owned it prior to the determination date.  However, if you acquire property after the determination date and don't classify it as individual property, the property is marital property and the appreciation from marital property is retains its marital property classification.
    • Co-mingling
      • Some property can be both community property and separate property:
        • Example 1: wife owns a cabin that is separate property.  Husband is a master carpenter.  Husband completely remodels the inside of the cabin, doubling it's value.  The increase in value is now community property which the husband has acquired through his labor.
        • Example 2: Husband individually owns an old beat up sports car worth next to nothing.  Wife, an avid car enthusiast, sees potential in the beat up car and pays $25,000 to have it restored.  The car, now restored, is worth $50,000.  The increase in value attributed to wife's investment is now community property. 
    • How Does Marital Property Affect My Bankruptcy?  
      • Filing a bankruptcy creates a "bankruptcy estate."  The estate includes all assets owned by the debtor.  If you file a bankruptcy and your spouse doesn't also file for bankruptcy, all of the marital property is included in your bankruptcy estate; even your non-filing spouse's share.
      • The problem with one spouse filing is that you only get one set of exemptions to cover two spouses worth of property.  
        • For example, every debtor is allowed $75,000, under WI law, to exempt their home.  If you have a home with $150,000 of equity and only one spouse files, the chapter 7 trustee will liquidate your home and distribute the non-exempt portion of the home to creditors.  Now if both spouses file, each one gets a $75,000 exemption and therefore, 100% of the equity will be exempt and the trustee will not be able to distribute anything to creditors.
    • Marital Agreements
      • The trustee is bound by marital agreements.  However, if you create a marital agreement transferring all your property to the non-filing spouse in anticipation of your bankruptcy filing, the trustee can use his or her avoiding powers to void that transaction and bring it back into the filing spouse's bankruptcy estate.  It is also fraud.
  • Will Bankruptcy Stop Creditors From Obtaining a Money Judgment Against Me? 
    • Absolutely.  Section 362 of the United States Bankruptcy Code stops all creditor actions to collect any debt upon filing.  This is called the "automatic stay" and it is one of the most powerful and widely litigated aspects of the bankruptcy code.
    • If you file a bankruptcy and a creditor, with full knowledge of the bankruptcy, sues you anyway; you can sue that creditor in bankruptcy court and get damages, attorney fees, and even punitive damages for the most egregious violations. 
  • Will a Bankruptcy Stop Creditors From Garnishing My Wages? 
    • Yes.  Any wage garnishment will stop immediately.  In addition, if a single creditor has garnished more than $600 from you in the 90 days before the filing of the bankruptcy, you can get that money back from the creditor as a preferential transfer.
    • Preferential Transfer: In an effort to treat all unsecured creditors equally, the bankruptcy code allows the trustee to recover any payment to creditor that is an unfair preference over other creditors (and if the transfer is involuntary, like a garnishment, it is recoverable by the debtor).  The idea is that no creditor should receive more than any other similarly situation creditor (meaning unsecured creditors).
    • Look back period:  The look back period for preference payments is 90 days.  This means that the trustee can recover payments made within the 90 days before filing (or the debtor in the case of garnishments).  However, for family members and close friends, the look back period is one year.  So if you've repaid friends or family within the year before filing, you should consider the ramifications of the trustee recovering those funds.
  • What is the Wisconsin Small Claims Process for Creditors to Obtain Money Judgments? 
    • Here is a Basic Guide to Wisconsin Small Claims Actions.
    • A small or large claims suit is initiated with the filing of a summons and complaint.
    • The defendant then has 20 days to respond to the complaint.  If the defendant fails to respond, the creditor will then obtain a default judgment against the defendant.
    • If the defendant responds timely, then both parties will undertake the process of discovery.
    • The judge will hold a scheduling conference outlining when discovery should be completed and set a date for pretrial and trial.
    • Most of the time, the parties will go through some form of mediation before pretrial.  If no agreement can be reached, they will proceed to trial and the judge/jury will enter a verdict.
  • Will I Be Able to Keep All of My Property, including my house and car, if I file a Bankruptcy? 
    • When you file a bankruptcy, all of your property becomes property of the bankruptcy estate.
    • Its easiest to think of it like this: you temporarily no longer own all of your property.  The bankruptcy court owns all your property.  The trustee is like the gatekeeper to your property.  You have a set of bankruptcy exemptions in your hand that function like tickets to redeem your property from the trustee.  For each exemption you hand the trustee, he gives you a piece of property that matches your ticket.
    • If you don't have enough tickets to cover all of your property, that property is then liquidated and the proceeds distributed to your creditors.
    • Most of the time there are plenty of exemptions to go around - with exemptions to spare.  Therefore, the answer to the question, "can I keep all of my property?"  Is usually yes.
  • Will a Bankruptcy Stop Utility Disconnection? 
    • Not only will a bankruptcy stop a utility disconnection, but it will also get your lights turned back on if they have already been shut off!
  • What is the Means Test and How Does it Work?      
    • The means test was created by congress in 2005 as part of BAPCPA (Bankruptcy Abuse Prevention and Consumer Protection Act) in order to stop people from filing bankruptcy who could afford to pay back their creditors.  If you are under median, you are not subject to the means test. 
    • The median family incomes for Wisconsin (the link shows 2010 numbers, mine are current) are as follows:
      • One in household: $43,661.00
      • Two in household: $58,668.00
      • Three in household: $65,775.00
      • Four in household: $81,296.00
      • Five in household: $89,396.00
      • And just for fun, 15 in household:  $170,396.00
    • If you are over the median income, you are subject to the means test.  The means test takes your gross monthly and subtracts your IRS allowed deductions.  That gives you your "Disposable Monthly Income" or DMI.  If your DMIx60 is greater than $10,000 or 25% of your unsecured debt, then filing a chapter 7 is presumed to be an abuse (because the court presumes that you can afford to pay back some of your creditors). 
    • Means Test Illustrated:
      • Danny Debtor lives alone, has no kids, rents an apartment, and has one car with a lien on it.  His gross yearly income is $53,661 (or $4,471.75/month).  Therefore, he needs enough deductions to get his DMI under $10,000 (assuming he has $45k schedule F debt).  Keep in mind that the deductions are not what you actually spend.  They are what the IRS thinks you should spend.
      • Monthly IRS Allowed Deductions for Household of One:
        • Food, clothing, household supplies, personal care: $583
        • Healthcare: $60
        • Housing and utilities: $428
        • Vehicle operation expense:  $212
        • Vehicle own/lease expense: $517
        • Taxes: estimate at $1,175/mo for tax withholding
        • Term life deduction: $100
        • Internet and pager: $75
        • Health Insurance: $150
        • Total: $4327.00/mo in deductions
      • Calculation
        •     $4,471.75 (monthly income from above)
        • -   $4,327.00 (monthly deductions)
        • =  $144.75 (Disposable Monthly Income)
      • $144.75 x 60 = $8685.00 - which is less than $10,000 and less than 25% of unsecured debt.
    • Danny Debtor Can File a Chapter 7 With Milwaukee Debt Attorneys!
  • What Exemptions Can I Use? 
    • As mentioned above, when you file a bankruptcy, all of your assets create the bankruptcy estate.  You are allowed to keep all of the assets you can exempt.  Anything you cannot exempt can be liquidated and sold by the chapter 7 trustee.  In a chapter 13, you must pay to unsecured creditors the fair market value of any assets you cannot exempt.
    • Step 1: Decide which exemption scheme you're going to use.  The following are the most often used exemption amounts for one person (for spouses filing jointly, double them).  The type and value of your property will dictate which exemption scheme you should choose. In Wisconsin, you can choose between Wisconsin Exemptions and Federal Exemptions.
      • Federal:
        • Real Property: $22,975
        • Household Goods: $12,250
        • Jewelry: $1,550
        • Motor Vehicle: $3,675
        • Wildcard: $1,225 plus unused real property exemption up to $11,500 ($12,750 total)
      • State:
        • Homestead: $75,000
        • Household Goods: $12,000
        • Depository Accounts: $5,000
        • Motor Vehicle: $4,000 plus any unused homestead exemption up to $16,000
    • Step2: Make sure you meet the residency requirements to use the exemptions you've chosen.
      • What the statute says:
        • 11 USC § 522(b)(3)(A) states: ... any property that is exempt under Federal law, other than subsection (d) of this section, or State or local law that is applicable on the date of the filing of the petition to the place in which the debtor’s domicile has been located for the 730 days immediately preceding the date of the filing of the petition or if the debtor’s domicile has not been located in a single State for such 730-day period, the place in which the debtor’s domicile was located for 180 days immediately preceding the 730-day period or for a longer portion of such 180-day period than in any other place;
      • Let's break it down:
        • In order to use Wisconsin exemptions (or any state's exemptions for that matter), you must have lived in that state for the two years (730 days) prior to filing. 
        • If you have lived in WI for the two years before filing, you can choose either WI or Federal Exemptions.
        • If, however, you lived in one or more states in the 2 years before filing, things get a little complicated:
      • Hypothetical #1
        • John Debtor lived in Illinois for ten years and moved to Wisconsin 360 days before filing.  Because John Debtor lived in two states in the 730 days before filing, we need to look past the 730 period to the 180 days before that - look back is 2.5 years instead of 2 years.  Because John lived in Illinois during the 180 day period prior to the 730 days, he must use Illinois exemptions in his Wisconsin filed bankruptcy.
      • Hypothetical #2
        • Jane Debtor lived has lived in WI for 360 days.  Jane lived in IL for 445 days before she moved to WI.  Before she lived in IL, she lived in PA for 10 years.  So, PA for 10 years, then 445 days ago moved to IL and one year ago moved to WI.
        • In the last 730 days, Jane lived in two states.  Therefore, we need to look at the 180 days prior to the 730 days.  Jane lived in two states during the 180 days.  Whichever state she lived in the majority of the 180 days will control her exemptions.  Because she lived in WI for 360 days and IL for 445 days, she was in IL 75 of the 180 day look back period.  She was therefore in PA for 105 of those days.  Therefore, PA exemptions apply.  
      • Some states only allow their residents to use their exemptions.  If you find yourself stuck with an exemption scheme from a state you used to live in and they only allow their residents to use their exemptions, you can use federal exemptions.

  • Business Tycoons and other Famous People that Have Filed Bankruptcy 
    • Henry Ford: Founder of Ford Motor Company
    • William Durant: Founder of General Motors
    • Walt Disney: Founder of Disney
    • H.J. Heinz: Founder of Heinz Ketchup Company
    • Mark Twain: Author
    • Oscar Wilde: Poet
    • Abraham Lincoln
    • Ulysses S. Grant