Wisconsin Bankruptcy Law

With intense competition from Netflix and others, bricks and mortar video rental stores have really fallen on hard times. Movie Gallery, Inc., the parent company of Hollywood Video filed for bankruptcy protection several months ago and closed several of its Milwaukee-area stores. After defaulting on one of its loans, the company notified the court on May 7 that it will shut down all of its approximately 1,900 remaining locations nationwide, including stores in Cudahy, Racine, and Kenosha.  The chain has lost significant market share to the movies-by-mail or via online streaming offered by Netflix or local Redbox rental kiosks. Blockbuster Video has encountered similar issues, and may also wind up in bankruptcy. Blockbuster has already closed a number of its shops around the country.

As these corporations (as well as local small businesses) are finding out, consumer preferences can be fickle.  If you own a troubled business in Wisconsin that may not be able to stay afloat in this difficult economic environment, a bankruptcy attorney in Milwaukee can help. A skilled Wisconsin bankruptcy lawyer can assess you assets and liabilities and develop a solution, which can include a Milwaukee small business bankruptcy, geared to your particular needs. While the bankruptcy law, for example, does not permit you to go Chapter 13 as a business entity, the petition can include business-related debts for which you signed a personal guarantee. So an individual bankruptcy in Wisconsin does provide some means for dealing with heavy debts that an individual might have piled up in a business.

Last Sunday’s 60 Minutes broadcast created a lot of buzz with its segment about homeowners voluntarily allowing their overvalued mortgages to go into foreclosures. The CBS website explains:

Currently, about seven million homeowners are behind on their mortgages and that number is only getting worse. Banks, with the help of the government, are offering some relief to homeowners who’ve lost jobs and just can’t meet their payments. But there’s a growing number who can pay but are simply walking away from houses that are now worth as little as half of what they paid for them. It’s called "strategic default." People have done the math and decided making those monthly payments is just throwing money away, leaving the mortgage holders – the banks – as zookeepers of an ever-growing parade of white elephants.

But there is another option rather than a "strategic" or other forms of default: it is also possible to avoid Wisconsin bank foreclosures altogether by filing a personal bankruptcy in Milwaukee or in the surrounding area  under Chapter 7 or Chapter 13. For one thing, a bankruptcy filing puts the bank’s foreclosure case on hold. Another factor to consider is the Wisconsin homestead exception, which is $150,000 for a married couple which could make your home safe from foreclosure. And even if you are thousands of dollars behind on your payments, a Chapter 13 petition may allow you to spread out the amount that you are behind over five years. This means that you only end up paying a very small percentage of that total every month and as far as your lender is concerned, the loan becomes current once again.

If you fallen behind on your loan payments through no fault of your own, contact a Wisconsin bankruptcy lawyer right away. Depending upon the circumstances, and what exceptions may or may not apply to your particular situation,  you may be able to save your house and thereby keep your family under one roof through an individual bankruptcy in Wisconsin.

In a previous blog entry, I mentioned that a bankruptcy filing in U.S. bankruptcy court must contain a complete inventory of assets, income, and debts. To conceal any information is a federal crime. That being said, keep in mind that April 15 is right around the corner. Before we know it, tax season will be upon us, and one of your bankruptcy assets could be an anticipated federal (or state) tax refund–even if you don’t actually have “possession” of it yet. If you are gearing up for an individual bankruptcy in Wisconsin, your bankruptcy “estate” (i.e., all your property that could be pooled to pay off your outstanding debts) must include the anticipated refund as a line item even if your tax return is as yet un-filed. If you’re not 100 percent sure about what, if anything, you’ll get back from the government, this entry can be listed as a “possible tax refund” in the paperwork.

In some instances depending on the amount of the payment and/or other factors, the tax refund may possibly be considered exempt property that you can keep depending upon the bankruptcy laws of Wisconsin. As they often say on TV, however, “don’t try this at home.” This is the kind of complex legal technicality that only a seasoned Wisconsin bankruptcy lawyer can figure out. But as mentioned above, the first thing is to make sure you have informed your Wisconsin bankruptcy counsel or debt consolidation lawyer that you are expecting a refund for overpaying your taxes.

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.

If an individual bankruptcy in Wisconsin becomes a foregone conclusion, the question might then become which form to choose under the law. The most common form for most debtors is Chapter 7, a basic liquidation proceeding.  On the other hand, Chapter 13 provides debtors who have sufficient income with an alternative path by allowing them to repay a portion of their debts over 3-5 years through a payment plan.

Most debtors opt for Chapter 7, depending upon their income, debts, and assets. (Please note that depending upon the means test and other legal and financial components, a debtor may be ineligible for Chapter 7.) There are other factors too. For example, although the courts are jammed with bankruptcy filings, a Chapter 7 case could be wrapped up in about three months as long there are no objections from creditors or anything else that might gum up the works. Your hearing with the court-appointed bankruptcy trustee is usually quick and ceremonial. As discussed in this blog previously, Chapter 7 allows consumers to hold on to most of their property under the various applicable exemptions. Perhaps most importantly, Chapter 7 wipes out most of the unsecured debt; you’re usually off the hook to those creditors. And Chapter 7 allows you to reestablish or rebuild credit before you know it.  And a Chapter 7 petition runs up less legal costs (often just a one-time fee) than going Chapter 13.

If you’re struggling with a mountain of unpaid bills, it may be time to speak with a Wisconsin bankruptcy lawyer to obtain answers to all of your Wisconsin bankruptcy questions. As one option to consider, Chapter 7 is a way under the bankruptcy laws of Wisconsin that many consumers obtain financial relief through a full discharge of debts that have grown to an unmanageable level.