Wisconsin Bankruptcy Law

In a previous blog posting, we discussed the means test and the median family income as they relate to an individual bankruptcy in Wisconsin. The median family income as determined by the federal government varies from state to state and also depends on the size of your family.

The means test in part determines whether a debtor can file a Chapter 7 bankruptcy in Milwaukee (or elsewhere). Or, in the alternative, a Chapter 13 repayment plan. In other words, the means test is a line in the sand a between eligibility for a Chapter 7 liquidation or Chapter 13. In short, it can have huge financial ramifications about what, if anything, you need to pay back in a consumer bankruptcy in Milwaukee.

Before a debtor passes or fails the means test, various items that can be deducted from your income under the bankruptcy laws in Wisconsin. Although each situation has unique aspects, necessary expenses can include taxes, union dues, health and disability insurance, child care expenses, energy costs in excess of the national average, and job-related education, among others. To establish these expenses to the satisfaction of the bankruptcy court, you’ll need organized, valid records for at least six months prior to the bankruptcy filing.

Determining all the applicable exemptions and expenses in a bankruptcy case is a job for a trained professional. Millions of Americans file bankruptcy every year for one reason or another. Lawmakers created the bankruptcy code to help protect honest, hard-working people from suffering through their financial disasters. At the same time, the laws can be very tricky and technical, so it is essential to obtain guidance and input from an experienced Wisconsin bankruptcy lawyer. Do not go it alone.

No one needs to hold a bake sale for Yankee’s star Alex Rodriguez, but it turns out that he is an unsecured creditor in the Texas Rangers’ bankruptcy. The Rangers officially filed Chapter 11 in Ft. Worth federal court yesterday, in part to orchestrate the sale of the club (for $575 million) to an investors group led by Hall of Fame pitcher Nolan Ryan and attorney Chuck Greenberg. The Rangers owe the third baseman about $25 million in deferred salary dating back to when A-Rod was a member of the team. He is the top unsecured creditor in the Rangers’ petition followed by five other baseball players. Unsecured creditors in a bankruptcy are those who have no security interest in a debtor’s physical property, and are usually last in line to get paid, if at all. Greenberg told the media, however, that the players will be paid in full.

Unsecured debt is debt that is not backed by collateral. In ordinary circumstances (outside of the world of superstar athletes), this can include unpaid credit cards, medical bills, utility bills, collection accounts, and personal loans.  And sometimes a debt settlement can be an effective bankruptcy alternative for an everyday consumer in Wisconsin rather than an overextended sports franchise.

A debt consolidation lawyer can negotiate with unsecured creditors on your behalf perhaps without the need to file a Chapter 7 bankruptcy in Milwaukee. If you are in financial trouble, discuss your options with an experienced Wisconsin bankruptcy lawyer.  He or she will work with you to obtain much needed debt relief in Wisconsin.

Bankruptcy is not suitable as a do-it-yourself proposition. The bankruptcy laws have a lot of complex technicalities which explains why you need a skilled legal expert to guide you in a personal bankruptcy in Milwaukee or in any other localities in Wisconsin. Here are a few things to keep in mind in an initial consultation with a Wisconsin bankruptcy lawyer.

Fully disclose all financial issues. Don’t hold back. As we discussed in previous blog entries, concealing any financial information is against the law. It can also result in a dismissal of the bankruptcy case, and in some instances can result in the debtor being locked up.

Answer the lawyer’s questions candidly. Some answers may be slightly uncomfortable, but to effectively represent you and provide you with sound legal advice, the lawyer needs you to put all your cards on the table.

Getting a second opinion is fine. As an informed consumer,  it’s your prerogative to speak with more than one lawyer, but don’t shop around for another lawyer merely to spin a difficult situation more to your advantage, perhaps by withholding key facts.

A general practitioner or an inexperienced lawyer is not your best advocate. Look for an experienced bankruptcy attorney who practices in the bankruptcy courts ever day. That’s the kind of track record that you need for an individual bankruptcy in Wisconsin.

Finally, your friends and relatives will be very well meaning, but any final decision about filing a Chapter 7 bankruptcy in Milwaukee should be made in close consultation with a skilled legal professional who stays on top of the bankruptcy laws in Wisconsin.

If you need to file bankruptcy, choosing the right lawyer is critical. In many cases, the simple truth is that the more experienced attorney will do a better job, which means getting you the most benefit from filing and avoiding the mistakes that someone less experienced is bound to make.

This blog has been following the case of the now-estranged husband and wife team of daycare providers who apparently hid income after filing a Chapter 7 bankruptcy in Milwaukee. In April, the husband was sentenced to six months in prison for filing false reports. Yesterday, the second shoe dropped, when a federal judge sentence the wife, who had earlier pleaded guilty, to one year behind bars. Both spouses will also have to pay restitution and go on probation after they are released.

The Milwaukee couple originally went Chapter 13 in November 2001. Their case was converted to Chapter 7 in 2004. Separately and together, the couple received thousands of dollars from the state of Wisconsin’s taxpayer-subsidized childcare program during this time that apparently was not disclosed in the bankruptcy paperwork. According to the Milwaukee Journal Sentinel, from 2003 to 2008, the husband received about $725,000 from the state-sponsored program and the wife received about $540,000 just in 2008 alone. The Sentinel notes that “Federal, state and local authorities are investigating dozens of child care providers for possible fraud.” The couple is not charged in this investigation.

Under the bankruptcy laws in Wisconsin, a debtor must reveal all income, property, and liabilities. Concealing any financial information is against the law, and in some cases can result in the debtor wind up being locked up.  So it’s a very bad idea to try to engage in any form of creative bookkeeping. If you are considering an individual bankruptcy in Wisconsin, make absolutely sure that you have compiled a complete set of accurate financial records. You must provide your Wisconsin bankruptcy lawyer with all the documents relating to your personal and business debts so that he or she can address your financial needs in full compliance with the law.

Wisconsin bankruptcies increased by 20 percent in the first quarter of this year, the Milwaukee Journal Sentinel reports. Consumers and businesses filed about 6,000 bankruptcy petitions under the bankruptcy laws in Wisconsin as compared with approximately 5,000 in January-March 2009. Most of these petitions were of the Chapter 7 variety; a Chapter 7 liquidation is the most common form of an individual bankruptcy in Wisconsin. According to the article, “Among those coming to see bankruptcy attorneys are laid-off workers or entrepreneurs who tried to survive by using credit cards to cover costs, hoping the economic downturn wouldn’t continue as long as it has.” Reaffirming some of our recent blog entries, the story also observes that “many small-business owners whose businesses have failed are declaring personal bankruptcy.”

The article notes that Wisconsin residents with good skills and expertise still can’t find work in a down economy despite their best job-hunting efforts: “Lawyers who handle bankruptcy cases said even though more analysts say the economy is turning around, it’s not happening fast enough to prevent people who’ve been fighting to stay afloat from declaring insolvency.”

If your personal and/or business financial affairs have reached the point of no return, a candid, confidential discussion with a debt consolidation lawyer may be extremely beneficial. A Wisconsin bankruptcy lawyer is a good person to have in your corner especially if you are currently unemployed and need debt relief in Wisconsin.