Wisconsin Bankruptcy Law

To much hoopla including television commercials in heavy rotation,  the post-bankruptcy GM announced (as we’ve reported here previously) that it had repaid $6.7 in taxpayer-funded bailout loans ahead of schedule. But, as it turns out, is there both more and less here than meets the eye? U.S. Senator Charles Grassley called it an elaborate Trouble Asset Relief Program (TARP)  “money shuffle.” And the TARP federal inspector general confirmed that the money was paid back not from earnings from selling cars but from another pool of TARP bailout money the automaker already received from the government. According to Grassley, “the taxpayers are still on the hook, and whether TARP funds are ultimately recovered depends entirely on the government’s ability to sell GM stock in the future. Treasury has merely exchanged a legal right to repayment for an uncertain hope of sharing in the future growth of GM.  A debt-for-equity swap is not a repayment.”

More information will likely emerge on the exact nature of GM’s arrangement in the coming days and weeks. For ordinary consumers seeking debt relief in Wisconsin, however, there are no smoke and mirrors. A Chapter 7 bankruptcy in Milwaukee or elsewhere is typically a straight liquidation. A Chapter 13 in Milwaukee requires a repayment plan over an extended period of time without any creative bookkeeping.  And if the debtor is in business, the debtor can continue to operate that business during the course of the Chapter 13 case.  In these challenging economic times, you may find yourself considering either a personal bankruptcy in Milwaukee or a Milwaukee small business bankruptcy. A qualified, professional Wisconsin bankruptcy lawyer can promptly determine your circumstances and then explain the individualized options available for your particular financial needs.

Have you reached the point of no return when it comes to financial difficulties? Making the decision to file for an individual bankruptcy in Wisconsin is not to be made lightly. It’s difficult for many consumers–especially given widespread unemployment and plummeting home equity– to really come to grips with their financial picture. With that in mind, here is a list (suggested by Los Angeles attorney Christine Walton) of some warning signs that it may be time to seek counsel from a Wisconsin bankruptcy lawyer:

    * You’ve emptied your entire bank account to pay bills and are considering tapping into your IRA for the same reason
    * You’re using plastic to as a short-term fix, but the card balance is getting entirely out of hand
    * Your rent or mortgage is seriously overdue
    * Debt collectors call you more often than your own family
    * You can barely pay more than the minimum payment on your outstanding debts
    * You’re about to lose your car to the repo man

If these challenges sound familiar, declaring a Chapter 7 or Chapter 13 in Milwaukee may perhaps be the next logical shoe to drop. Bankruptcy protection in federal court under the bankruptcy laws of Wisconsin can allow a consumer to clear a lot of debt off the books and start anew. A no-obligation candid assessment of your situation by a debt consolidation lawyer may be the first step towards much-needed debt relief in Wisconsin.

This blog often addresses the careful decision making that may or may not lead a debtor to an individual bankruptcy in Wisconsin. But in certain circumstances under the bankruptcy laws of Wisconsin, a creditor can go to federal court to force a debtor into Chapter 7. This is called an involuntary bankruptcy, but it is not all that common because it comes with various technical strings attached.

Under the law, if a debtor is on the hook for about $10,000 or more to 12 or more creditors, three of the creditors must join forces to file the involuntary bankruptcy petition. If the debtor has less than 12 creditors, then only one of them need file, again provided at least $10,000 in debt is at issue. Also, the creditor(s) must provide evidence that the debt or debts in question are undisputed and that the debtor is in default on the obligations.

Why would a creditor go to all the trouble of filing involuntary bankruptcy papers against a consumer? Perhaps creditor might be concerned that a consumer is going on a spending spree (perhaps in anticipation of a bankruptcy filing down the road) rather than pay overdue bills. Another reason might be a concern that the debtor is hiding assets or parceling out money or property so that there is nothing left for creditors to seize. But going in this direction can be a risky proposition for the creditor. If the bankruptcy court decides that the involuntary petition was filed in bad faith or has no basis, the petition can be dismissed and the court can turn the tables on the creditor and order it to pay damages and legal fees to the debtor. By the way, farmers can’t be dragged into an involuntary bankruptcy by law, so if you’re a farmer, that’s one less thing you have to worry about in today’s difficult economy. Nor does an involuntary bankruptcy apply to a Chapter 13 bankruptcy in Milwaukee or elsewhere in Wisconsin.

The bankruptcy court gives the debtor an opportunity to respond to an involuntary petition before determining which, if any creditors are entitled to debt relief in Wisconsin. If you’ve been targeted for an involuntary bankruptcy, you need the services of a Wisconsin bankruptcy lawyer right away. A Milwaukee bankruptcy attorney can size up your situation and put together a response to the court that will, if appropriate, contest the involuntary bankruptcy attempt and otherwise protect your financial interests from overreaching creditors.

About 50 General Motors and Chrysler car dealerships in Wisconsin who where to shut down as part of last year’s massive government-financed bankruptcy are trying to get back in business. Under a federal law that was enacted in December, the dealers have the right to go to challenge the automakers’ decision to target some dealerships for elimination and not others. Apparently Wisconsin ranks number 10 in the country in the number of dealerships filing for arbitration. Many dealers argued that the corporate decision making was random and unreasonable.

An arbitration is a trial-like hearing that is presided over out-of-court usually by a retired judge or a lawyer with particular conflict-resolution and technical skills. About 1,500 of the affected dealerships (more than 50 percent) across the country have filed for arbitration with the American Arbitration Association to get back their franchises. The hearings are scheduled to begin in March and wrap up by June.

GM filed for Chapter 11 bankruptcy protection in June 2009–the fourth largest bankruptcy in U.S. history and the largest for an industrial corporation. The federal government currently owns 60 percent of GM. Chrysler went bankrupt in April 2009.

Dealerships that have a successful outcome in arbitration could presumably help improve the state’s employment picture. To some degree, more jobs could have a positive impact on residents who might otherwise be considering an individual bankruptcy in Wisconsin or looking into other forms of debt relief in Wisconsin.

As we put 2009 in the rear-view mirror, final numbers show that bankruptcies filed in Wisconsin (both the Eastern District and Western District U.S. bankruptcy courts) totaled
27,413–a 30 percent increase over 2008. The vast majority (80 percent) were Chapter 7 petitions. Wisconsin bankruptcy filings jumped by an astounding 65 percent since 2007. And going forward, as the Milwaukee Journal Sentinel points out, underemployment in addition to unemployment looms large: “Bankruptcy lawyers noted it’s not only layoffs and firings driving people to insolvency as the economic downturn drags on. The losses of once-regular overtime pay and full-time status have left consumers unable to stay current on monthly payments that in the past were no problem to handle.” Lost or limited income would also suggest that Wisconsin bank foreclosures will continue to multiply as more jobless homeowners have difficulties keeping up with monthly payments.

Hopefully, Wisconsin residents who are currently out of work or underemployed will find greater success in their job hunt in 2010. But any consumer behind the economic eight ball may find that this could a good time to speak with a debt consolidation lawyer about various options, including an individual bankruptcy in Wisconsin. A Chapter 7 or Chapter 13 bankruptcy in Milwaukee may not be in the immediate future, if at all, but getting answers to your Wisconsin bankruptcy questions may be a valuable starting point for your prospects of obtaining debt relief in Wisconsin.