Once you identify all the unsecured creditors that you wish to include, a plan is proposed and filed in state court, who then appoints a trustee who acts as a receiver for the plan payments and makes distributions according to the plan. You enjoy the protections of the Wisconsin 128 plan if you remain current on your payments to the trustee (which can be deducted automatically from your paycheck and save you on trustee fees.)

What benefits do I receive if I put my bills in a Wisconsin 128 plan?

Upon filing your plan, all collection efforts of the creditors included in the plan must cease, including garnishments. Interest and penalty ceases to accrue upon filing of the Wisconsin 128 (unless it’s child support or state taxes.)

Interest accrued prior to filing the Wisconsin 128 still must be paid through the plan. You receive many of the same benefits that you would under a bankruptcy stay (I won’t address distinctions here, which could be important to your case and why you should speak to an attorney who is familiar with both bankruptcy and the laws of the Wisconsin 128, before deciding.)

What debts can be included in a Wisconsin 128 plan?

Unsecured debt that can be placed in a Wisconsin 128 includes medical bills, dental bills, late rent, credit card bills, pay day loans, personal loans, civil judgments, tickets and fines, past due utility bills, and in limited cases, state and municipal taxes.

What debts cannot be included in a Wisconsin 128 plan?

Secured debts cannot be solved through a Wisconsin 128, such as past due mortgage payments, and past due car payments. Domestic support obligations such as child support arrears should not be included. A Wisconsin 128 cannot resolve property taxes, and the IRS will not recognize a Wisconsin 128 for any tax liability.

Must I include all my unsecured creditors in a Wisconsin 128 plan?

No. There are some circumstances where it won’t make sense to include all of your unsecured debt, and you can always include creditors that you initially left out of the plan by amendment.

How do I know if I should consider a Wisconsin 128 plan?

A Wisconsin 128 is an excellent solution for the right circumstance. You should speak to an attorney who is familiar with both bankruptcy and Wisconsin 128 procedure before you decide. A good starting point is to estimate your plan payment after you total the unsecured debt balances you wish to include, add 10% to represent costs and administration, and then divide it by 36. For example, if you are getting garnished on a debt that is $3,000.00 and wish to only include that debt in your Wisconsin 128 plan, you would estimate a total debt obligation of $3,300.00 ($3,000 + $300) and divide it by 36 to estimate a payment of: $91.67 per month.

Can I file a Wisconsin 128 without an attorney?

A Wisconsin 128 can be filed through my office for a fraction of the price of a bankruptcy. I’ll give you a firm price once I’ve met with you and reviewed your circumstances.

Can I file a Wisconsin 128 without an attorney?

Certainly. I could pull my own teeth, too, I suppose. However, it is advised you have an attorney advocate at all stages of the Wisconsin 128 filing.

Call my office at 715-842-2500 and schedule a free consultation with my office to see if a Wisconsin 128 is right for you.

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How many times do these commercials warn you not to file bankruptcy?  I often wonder if they are trying to imply that you will lose your home if you file for bankruptcy.  In the vast majority of cases, you can file bankruptcy and keep your home and avoid foreclosure. What I hear when the ads warn you to not file bankruptcy is: don’t file bankruptcy until we’ve capitalized on your fears and taken every last cent from you before you have no other choice but to file bankruptcy.

Your best bet when considering a loan modification, or a short sale, is to work with your bank or lender directly.  Anybody in the middle will just increase your debt.

Loan Modifications

You’ve received that promising letter in the mail from your lender or third-party program to save your home: now what?  Go ahead and try,  but expect a long, drawn out process and a lot of red tape.  Less than 10% of mortgage negotiations are approved for a reduced mortgage rate and at least half of those fail less than a year after the modification.   Many report getting foreclosed upon during the process of negotiation the loan.

Talking heads on the television will tell you that a bank will do anything to avoid foreclosure.  Not true.  Most mortgages are insured and the bank cashes in on these policies when a house goes into foreclosure.  The bank often chooses the route that leads them to a more secure bottom line.   The banking industry does not sail their collective ship with a moral compass to reduce payments to keep you in the home.  The majority of people who successfully get a mortgage loan modification end up going into default soon after.  There are exceptions, but be forewarned.

Short Sales

A short sale is where the bank agrees to allow you to sell your home for less than what you owe the bank.  I think they call them short sales because it’s designed to leave the seller short.  Watch out for short sale brokers, who you may end up wasting a lot of money on if the bank refuses to work with them.  It is best to negotiate your short sale price directly with the bank.  One of the dangers a short sale may bring you is that you will be responsible for any deficiency.

So, what’s in it for you?  You can avoid foreclosure and there is the possibility that it may give you favorable treatment for future credit.  Surprisingly, walking away from the home via foreclosure can be a better alternative than dealing with a deficiency (provide they waive it via the foreclosure) than the nightmare of waiting month after month for a bank to approve the sale only to grant you the privilege of owing them a deficiency after the sale.

Why Loan Modifications and Short Sales May Not Work

It’s hard to tell folks sometimes, but there is a real possibility that some people cannot afford to keep their home, and no loan modification or short sale will change that reality.  Debt counseling or working with our office can reveal a budget and give people  ideas on how to move forward.  There are options that wont involve increasing your debt load through debt consolidation schemes, loan modifications and short sales, and if you are faced with a difficult decision concerning your house, call our Wausau office for an free initial  bankruptcy consultation.

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Garnishments can make a significant impact on your ability to support yourself and your family. The garnishment procedure is easy to start and often difficult to challenge. The amount garnished will include payment for the judgment creditor’s attorneys’ fees and the cost of filing the garnishment (over $200 in most counties.) Each garnishment order is effective against your wages for 13 weeks.

You must be provided an answer form, which affords you the opportunity to challenge the garnishment. The law may allow you to avoid the garnishment if you can show your income is below the poverty guidelines, which are included with the garnishment forms. You can also avoid garnishment if you can prove that you received need-based public assistance within 6 months of the earnings garnishment, or if you are eligible for such assistance. Child support payments take precedence over garnishments.

Our office can easily spot defenses during a consultation and review of the garnishment paperwork, and a recent pay stub. You may still have time to challenge your garnishment. However, there is a strong possibility that your employer and the judgment creditor followed all the rules and you’re stuck with the garnishment.

How Can I Stop Wage Garnishment?

There are four ways to avoid an earnings garnishment:

• - change jobs;

• - pay your judgment in full;

• - seek relief under “Chapter 128″ of the Wisconsin Statutes; and

• - file bankruptcy.

Change jobs? Job-hopping is an unwise strategy in a recession, and can cost you far more than what you hope to save by ducking the wage garnishment. Furthermore, some aggressive judgment collectors will find out where your new job is, or focus on your bank accounts instead. All the while, post-interest judgment continues to accrue.

Pay it off? Your financial circumstances might be favorable enough to pay the underlying judgment of your garnishment, but our office would need to know more about your situation before advising that you borrow money from another source of money to pay the judgment in full.

File a “Wisconsin 128″? There is a procedure under the Wisconsin Statutes, sometimes referred to as a “Wisconsin 128″ or “Chapter 128.” Filing for relief under the state statute also stops the garnishment. This procedure is less expensive, easier to apply for, and allows you to choose which debt you wish to be restructured. However, you must pay off all the debt that you allocate to the plan within three years. The plan can be changed and restarted, as circumstances arise, but the law insists that the debtor doesn’t abuse the system.  Our office can provide you with more detail and help you file a Wisconsin 128 case.

File Bankruptcy? Bankruptcy stops garnishment proceedings upon filing your case, and with limitation, can return money seized through garnishment back to you.  Bankruptcy can also provide effective relief for any other debts you may have. Explore this website to learn more about bankruptcy and dispel some of the myths. For example, you typically won’t lose your house, or your car, or your household belongings. Your overall credit profile can improve in some cases, especially if you avoid incurring debt after you file. You can get rid of most types of debt, including the judgment used to garnish your wages.

Call our office for a free bankruptcy consultation at 715-842-2500, and get rid of your garnishment for good.

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The United State Supreme Court, in 1971, held in Perez v. Campbell that, if the debt related to the financial responsibility law is discharged in bankruptcy, the license can be reinstated.  Chapter 13 debtors can also get their driver’s license reinstated through the bankruptcy court during the life of their bankruptcy plan.  The same principle applies to parking or traffic violations, if not classified as “crimes” under state law. You will not get your license reinstated if it was suspended or revoked for any other reason than the nonpayment of money (too many points, etc.)

Once you file a bankruptcy in Wisconsin, you simply submit a copy of your bankruptcy petition to the DMV and your license will be reinstated. However, you will be required to pay a reinstatement fee and carry SR-22 insurance. The only way to avoid these additional requirements is to file your case prior to your suspension hearing.

Bankruptcy is an excellent solution for those clients who need to reinstate their driver’s license, but cannot afford to pay a judgment or fines. The best time to file is prior to your suspension.

If you are facing a drivers license suspension, or have a suspended drivers license and need to get back on the road, call our Wausau office for a free initial bankruptcy consultation at 715-842-2500.

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The Health Care and Education Reconciliation Act 2010 (aptly known by some as “the new health care law”) has made tremendous waves throughout the news media, twitter, facebook and for talking heads on TV.  However, some folks may overlook the “Making College More Affordable” program contained within the new legislation.

Many of our clients are burdened with student loan debt, so I was curious if the new law provided relief for existing borrowers.

The good news is that new borrowers will have an easier time repaying their loans:

“New borrowers who assume loans after July 1, 2014, will be able to cap their student loan repayments at 10 percent of their discretionary income and, if they keep up with their payments over time, will have the balance forgiven after 20 years. Public service workers – such as teachers, nurses, and those in military service – will see any remaining debt forgiven after just 10 years. More than 1.2 million new borrowers are projected to qualify and take part in the expanded IBR program.”

The bad news is that there isn’t additional relief for existing borrowers.

Existing Borrowers Should Explore Income Based Relief

Income Based Relief may allow qualified borrowers with federal student loans (except PLUS) to drastically reduce their monthly student loan payments. In some cases, a borrower pays what they can for 10 or 25 years and the balance is then eliminated provided they made qualifying payments for the applicable term.  IBR has been around since 2009, and the website I encourage you to visit is:    ibrinfo.org.

Unfortunately, private student loans are not covered using IBR. If you are unsure if your student loans are federal, call your student loan lender and ask.

Once you’re certain your loans are federal (except PLUS loans) your next step should be to contact your lender and get the paperwork started.

Student Loans and Bankruptcy

Eliminating or modifying student loans through bankruptcy is difficult, if not impossible for some clients. However, you should consider all your options. A chapter 13 bankruptcy provides even more flexibility in handling student loan debt, even though you can’t discharge it. Filing a chapter 7 or chapter 13 bankruptcy operates as an automatic stay, and prevents collection efforts against you for the duration of your case.

The first step when considering any student loan for discharge is to see what type of student loan you have. A student loan cannot be discharged if it was “made, insured or guaranteed by any governmental unit, or made under any program funded in whole or in part by a government or a nonprofit institution.” If your loan cannot be discharged, the next analysis is to determine if you are eligible for an “undue hardship” exception. A successful motion may eliminate or reduce your student loan if the right factors are present in your case.

Our office handles student loans through bankruptcy and we would be happy to analyze your situation during a free initial consultation.

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Prologue

One of the areas I got the most from was bankruptcy. You can see people heave a sigh of relief—they are scared, frustrated, embarrassed and disillusioned all at once. Curing their debt problems is easy—any secretary can do it—but reinstating their morale, now that needs an expert. I got so good at this and got such satisfaction that I fidgeted waiting for the next BR client. (I quit before the new rules.) Here is my bankruptcy speech:

Memo

First, you need to understand that bankruptcy is not a declaration of defeat or failure like it was in your parents time (anytime before 1970). It is now a financial planning tool, and it is an effective one.

Next, there are two things about history you should understand.

1) When Columbus sailed, everyone thought he was “going over the edge”, so he could not find crews. But a faraway voice from the debtor’s prison wailed “I’ll go”. After reaching America, the men came ashore, found a big rock, and chiseled “In this country, you do not have to pay your debts” on it. This simple factor is the main reason why our economy developed in a unique (and it still is) way because it took the government out of private business. Until then, no one believed that private individuals could run an economy, but it not only worked, it exploded into an incredibly powerful economy. The new rule, however, having a huge effect on the economy, was largely ignored because there was very high social pressure for people to pay their bills. This pressure lasted until after WW II. Then, strange things began to happen.

2) Ford discovered that you could make more money by giving your workers more money. Sears discovered that you could make more money by not requiring your customers to pay. Your parents and grandparents preached: “Whatever you do son, protect your credit.” That advice was valid in the cash economy of the time, but the economy shifted dramatically to a credit economy, and that advice needs modificati9on. What your ancestors were talking about when they used the word “credit”, was “your good name and community reputation”. But soon, the credit economy changed everything*, and now, NO ONE has a good name or a community reputation. (Do any of your friends, associates or relatives pay all their bills in a timely fashion?? A) You don’t know, and B) You don’t care.)

*If $100,000 worth of groceries leaves the supermarket on Friday, the night deposit will be $10,000 or less.

Today the word credit has a new meaning (ask Dad or Granddad if this is what they meant by “credit’.) “Credit” now means the ability to buy things you cannot afford. To the extent this is true, we should advise our children—“Do not get credit.” (This is Suzy Orman’s advice—she gets it.) This is the second historical development you should try to understand.

Finally, since you are so saddled with the “credit” brainwashing of your ancestors, take heart. Look at your creditors. They sold you things on credit or paid for things you wanted but could not afford. That is their business. On the day they did this, as businessmen, they knew just how many of their borrowers would file bankruptcy, and, just like Sears knows just what they will lose to shoplifting, they add this cost into their transaction with you.

Read your contract—it says: “I promise to pay $____ per month, unless I elect to file bankruptcy, in which case, you get zero. In return for your allowing me this option, I agree to pay 19 percent interest.”

So, by filing bankruptcy, you are not “breaking a promise”, you are simply electing an option given to you by the creditor. The simple new economic fact is that the lenders and sellers do not need to ever collect on the principal, so long as they are paid an extremely high interest rate. Sears built its tower with money borrowed from insurance companies that was secured by Sears customers accounts, and pays its Tower mortgage with interest collected from those same accounts. The principal is irrelevant.

DON’T FEEL BAD. Become a one unit cash economy and you will be much happier than almost everyone—it is orange crate furniture until you save enough for a kitchen table, just like your granddad. Or participate in the credit economy, but not with vigor, and “don’t buy things you cannot afford.”

Amen, Don.  I hope others gain relief from your perspective.

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Can you get credit after your bankruptcy discharge?

Yes, in fact many clients report getting credit card offers in the mail shortly after they file. However, the interest rates won’t be as favorable and the credit limits should be lower than what many borrows experienced in the last decade.

However, ask yourself why you need credit to begin with. You should focus on how to accumulate any leftover income in the form of savings or investments. I advise my clients to start saving enough money in the bank to cover their basic needs for three or four months before even considering borrowing any money, for any reason.

Will I be able to purchase a house after a bankruptcy discharge?

Yes. Most lending programs and data we’ve seen suggest that you can qualify for a home mortgage within 18 to 24 months after a bankruptcy discharge. However, your chances are improved if you have a stable income, a down payment, and little or no other debts. Again, bankruptcy helps by eliminating the very debt that may have jeopardized your chances for getting a home mortgage, had you applied before filing bankruptcy.

Is my credit record ruined by filing bankruptcy?

Your ability to borrow money, bankruptcy or no, has less to do with a credit score than your overall solvency. The more important question most lenders ask in our new economy is: does the borrower have more assets and income than debt?

Your debt-to-income ratio actually improves in most cases after filing bankruptcy which assists your overall credit profile. The bankruptcy event will remain on your credit for up to 10 years, but it isn’t the only factor that establishes your credit worthiness.

However, some lenders who are unfamiliar with bankruptcy may make a negative judgment about your application for credit.

What should I look out for on my credit report after my bankruptcy discharge?

The debts you listed in your bankruptcy will still remain on your credit report. Your bankruptcy should be listed, too, which will alert potential lenders that all discharged debt listed on your credit report is no longer legally enforceable. In plain language: your credit report should prove that your bankruptcy wiped out the legal claims of your old creditors, and that you have less debt than before you filed bankruptcy.

Our office recommends that you don’t use your annual free credit report to assist with the filing of bankruptcy, but to save the free annual credit report to clean up any errors on your credit report that may arise after you receive your bankruptcy discharge. I would allow at least a couple of months to pass before expecting the credit reports to catch up with the bankruptcy discharge.

Feel free to review a Summary of the Fair Credit Reporting Act to understand your rights when it comes to credit reporting.

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I’ll begin the series with what I see as the most important issue facing Wisconsin families: foreclosure.

Topic: Foreclosure

Our Wausau office receives the following question at least once every other week:

Question: We already know we aren’t keeping the house and we can’t afford to make any more payments toward the mortgage. How much time will we have to stay in the house until we get kicked out?

Before lawyers can answer that question, it is always a good idea to explain exactly where you are in the process.

Foreclosure Process (Ultra Short Version)

1. Breach Letter. A certified letter will arrive warning you of their intent to foreclose and they will invite you to pay to get current, “or else.” (The “else” follows)
2. Summons and Complaint. Handled like any other civil case. Always file an Answer and have an experienced attorney look for all possible defenses to your case. RESPA, TILA, HOEPA and other consumer protection laws can help, especially if your mortgage originated in the era of ‘fast and loose’ lending.
3. Judgment. Failure to file an answer, or a successful defense, may result in a judgment for the mortgagor.
4. Publication. There is a time period established by statute that requires publication of the foreclosure sale.
5. Sale. This is your last chance to find funds to buy the house. It is rare, but some folks have been able to save their home at the foreclosure sale.
6. Confirmation. Once the sale is complete, the judge reviews the paperwork to see if all the statutes were followed concerning the foreclosure, publication, notice and sale.
7. Deed. The deed is transferred to the highest bidder at the sale (which is the bank in a vast majority of cases.)
8. Eviction. Once the deed is transferred, the successful bidder now has the option of evicting anyone who remains in the home.

I hope you can see that the foreclosure process does not happen overnight. The stories you may hear of couples living in foreclosed homes for over a year, are likely true. After all, some banks may have trouble selling the homes they repurchased in foreclosure and would rather have folks in the house keeping the pipes warm and tending the property.

Timing Depends on Facts

Real Estate Foreclosure is governed by Chapter 846 of the Wisconsin Statutes. The statutes specify how much time must elapse before certain actions can be taken during foreclosure. For residential property, the timing of the foreclosure depends on one of the following three fact categories:

1) House is abandoned. (Two month redemption period)
2) House is occupied and the lender does not seek to sue the homeowner for money during the foreclosure (Six month redemption period)
3) House is occupied and the lender wants to sue the homeowner for money during the foreclosure (One year redemption period)

The redemption period is the time from judgment (Step 3, above) to sale (Step 5, above.) The law encourages lenders who wish to have a quick return of the property, to forgo suing the homeowner for money damages (deficiency.) The law also encourages folks who are faced with a foreclosure not to abandon the house.

The Sale, Confirmation and Eviction

Once sold, the Sheriff has up to 10 days to report the sale, and the foreclosure attorneys must schedule a hearing with the court to confirm the sale, and must allow at least 5 days of notice to all parties in interest prior to said hearing. Don’t forget that an eviction action is a separate proceeding with it’s own time line. The fastest evictions are in the range of two to three weeks, if all the hearings, notices and service fall in place.

Commencement of the Case Depends on Contract

The commencement of the case is governed by the actual terms of the mortgage and note, and when followed, certain consumer protection statutes. Most contracts allow a cure period before a lawsuit may be commenced, and the time line from the drafting of a complaint to getting a summary judgment can vary by jurisdiction and lender practice. Filing an answer can slow down the process for several months, especially if there are merits and the case is tried. However, using an answer as a mere delay tactic can incur further costs and fees under some circumstances if the lender is willing to pursue them.

But don’t forget: ALWAYS FILE AN ANSWER TO A FORECLOSURE COMPLAINT.

Conclusion

Thus a conservative answer to how long you have until they take the house in foreclosure, is:

Answer: It depends on whether you file an answer, which redemption period applies, and how aggressively the lender pursues the property.

For most Wisconsin residents who are living in the home, and who will not be sued for money damages, the answer is at least seven months or more from the time you are sued.

If you take nothing else of value from this article, take this: you probably have more time than you think. Don’t fall victim to foreclosure rescue scams. The Wisconsin State Library has a wonderful resource page to help answer basic questions, including an article on how to answer your foreclosure complaint.

Gaining the advice of an attorney is critical, and you should always know your options before making a decision on how to handle the foreclosure, especially when you think you don’t have any options left. We charge a flat minimal fee for all consultations concerning foreclosure lawsuits. Call us today at 715-842-2500 to schedule a consultation.

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The biggest surprise is clearly the increase of the homestead exemption, especially for married couples, who were limited under the old law to preserve $40,000 in their homestead. A married couple can now exempt up to $150,000 in their residence, provided the household qualifies for the exemption.

2009 Senate Bill 259 is set to publish on December 15, 2009, which will become effective on December 16, 2009. The exemptions are set to change as follows:

Consumer Goods

Increased from $5,000 to $12,000

Motor Vehicles

Increased from $1,200 to $4,000

Personal Injury Awards

Increased from $25,000 to $50,000.

Depository Accounts

Increased from $1,000 to $5,000

Qualified Homestead

Increased from $40,000 per household to $75,000 per spouse.

For business debtors and consumer debtors who have businesses:

Equipment, Inventory, Farm Products, Professional Business Books

Increased from $7,500 to $15,000

*What is an exemption, anyway?”

An exemption describes what a bankruptcy filer can keep when filing a liquidation case, such as a Chapter 7 bankruptcy. For example, if a Wisconsin bankruptcy filer owns an automobile worth less than $4,000, the new exemption law allows you to keep the vehicle. Under the old law, you could only keep vehicles that did not exceed a value of of $1,200.

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Music not quite as catchy, but it’s nice to know that the FTC is making folks aware that the only place to get a truly free credit report is through annualcreditreport.com

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