Common Bankruptcy Mistakes

Deciding whether to file for bankruptcy is difficult. Not only can bankruptcy affect your life in numerous ways, but it’s a complicated and intimidating area of the law. However, once you’ve made the decision to file for bankruptcy, the last thing you should do is make avoidable mistakes. Mistakes during the bankruptcy process can cost you—big time. Therefore, if you’re considering filing for bankruptcy in Milwaukee, it’s imperative that you understand—and avoid—the following common bankruptcy mistakes. 

Avoid These Bankruptcy Mistakes

1. Failing to list all creditors

The bankruptcy process can be overwhelming and confusing—particularly for those debtors who fail to enlist the services of an experienced Milwaukee bankruptcy lawyer. In this confusion, debtors sometimes fail to include all creditors in their bankruptcy filings. If you fail to list a creditor in your bankruptcy case, you may lose the opportunity to discharge the debt connected to that creditor.

2. Hiding assets

Debtors sometimes attempt to hold on to assets by hiding them from the bankruptcy court. Not only can this jeopardize an entire bankruptcy proceeding, but’s it’s also illegal, and it can result in prison time and fines. When you file for bankruptcy, you must disclose all your assets to the bankruptcy court.

3. Repaying family members or creditors before filing for bankruptcy

Debtors sometimes attempt to pay family members and creditors back prior to filing for bankruptcy. However, when a debtor pays back a family member or creditor before filing for bankruptcy, the bankruptcy court may view such payments as preferential, thereby requiring the family member or creditor to pay the money back to the court.

4. Running up credit cards before filing

Some debtors purposely run up their credit cards immediately prior to filing for bankruptcy under the mistaken belief that the additional debt will be discharged. This is wrong. If you make large credit card purchases immediately prior to filing for bankruptcy, the court may force you to pay for them.  

5. Waiting too long to file for bankruptcy

Anyone considering filing for bankruptcy knows that debt can get out of control. However, debtors often wait too long to file for bankruptcy after realizing they can no longer pay their bills. All this does is make the problem worse. If your debt has gotten out of control, you should at least discuss the possibility of filing for bankruptcy with a Milwaukee bankruptcy lawyer

6. Failing to contact a Milwaukee bankruptcy lawyer

The biggest mistake you can make when filing for bankruptcy in Milwaukee is failing to contact a Milwaukee bankruptcy lawyer. Without a bankruptcy lawyer on your side, you are bound to make mistakes. Therefore, in order to avoid the pitfalls inherent in the bankruptcy process, you should contact an experienced Milwaukee bankruptcy lawyer as soon as possible. At Hanson & Payne, our bankruptcy attorneys will help you avoid the pitfalls inherent in the bankruptcy process while doing everything in our power to ensure a successful result in your bankruptcy case. Please contact us today to schedule a consultation.

Pros and Cons of Chapter 7 Bankruptcy

If you’re having financial troubles, you may be considering filing for Chapter 7 bankruptcy. Depending on your circumstances, filing for Chapter 7 bankruptcy can either be a great idea or something to avoid. Therefore, before deciding, you should familiarize yourself with the pros and cons of Chapter 7 bankruptcy. 

Chapter 7 bankruptcy: the pros

A fresh start: Chapter 7 eliminates most unsecured debts. By erasing most unsecured debts, Chapter 7 bankruptcy gives you a fresh financial start. 

You get to keep certain assets: Bankruptcy law allows you to exempt some personal property. This means that, despite filing for bankruptcy, you’ll likely get to certain assets, such as your vehicles and retirement accounts. 

No repayment plan: In Chapter 13 bankruptcy, debtors must pay back their debts. In Chapter 7 bankruptcy, however, your debts are eliminated, allowing you to start anew.

You get to keep your tax refund: Depending on the circumstances, you may be able to keep your tax refund after you file for Chapter 7 bankruptcy. 

It’s fast: The typical Chapter 7 bankruptcy case takes approximately four months. In addition, after you file for bankruptcy, your creditors can no longer contact you.

Chapter 7 bankruptcy: the cons

Your credit takes a hit: It takes ten years for a Chapter 7 bankruptcy to drop off your credit report. This lowers your credit score and can make it difficult for you to obtain certain types of loans. 

Not all debt is forgiven: Certain debts remain even after you file for Chapter 7 bankruptcy. These include debts like alimony, child support, student loans, and taxes. 

You may lose your home: If you’re behind on your mortgage payments when you file for Chapter 7 bankruptcy, there’s a good chance that your mortgage company will pursue a foreclosure of your home.

You may not qualify: Not everyone is eligible to file for Chapter 7 bankruptcy. People who have little to no disposable income are the best candidates for Chapter 7 bankruptcy. In order to determine whether you qualify, the court will perform a means test, which is an examination of your income.

You may lose valuable assets: After filing for Chapter 7 bankruptcy, you’ll probably have to liquidate nonexempt personal property to pay off your secured creditors. For example, if you own your home free and clear, the court may decide to sell it to account for secured debt. 

Contact a Milwaukee Bankruptcy Lawyer 

If you are considering filing for Chapter 7 bankruptcy in Milwaukee, you need an experienced Milwaukee bankruptcy lawyer on your side. At Hanson & Payne, we offer bankruptcy and debt negotiation services for Milwaukee and all of southeast Wisconsin. In addition, our attorneys understand that filing for bankruptcy is a big decision, so we are committed to giving you the information and guidance necessary for you to make an informed decision. Please contact us today to schedule a consultation.

Chapter 7 and Chapter 13 Bankruptcy: What’s the Difference?

Chapter 7 and Chapter 13 are the two types of bankruptcy available to individual filers. If you are considering filing for bankruptcy, your income will primarily determine whether you file for Chapter 7 or Chapter 13 bankruptcy. However, there are differences between Chapter 7 and Chapter 13 bankruptcy other than income requirements. Below are the main differences between Chapter 7 and Chapter 13 bankruptcy. 

Chapter 7

Chapter 7 bankruptcy wipes out most unsecured debts. Common unsecured debts include credit cards and medical bills. To qualify for Chapter 7 bankruptcy, a debtor must meet specific income requirements. A debtor who makes too much money must file for Chapter 13 bankruptcy.

When a debtor files for Chapter 7 bankruptcy, an order called an automatic stay immediately stops most creditors from continuing collection efforts. The bankruptcy trustee then sells all nonexempt property to pay back the debtor’s creditors. If a debtor has no nonexempt assets, his or her creditors receive nothing.

Although Chapter 7 bankruptcy is the right choice for low-income debtors with few assets, it can also work for filers whose discharged debt exceeds the value of the property sold.

Chapter 13

Chapter 13 bankruptcy is designed for debtors who have enough money left over every month to pay back at least some of their debts through a repayment plan. Although most Chapter 13 filers make too much money to qualify for Chapter 7, some debtors choose to file for Chapter 13 bankruptcy due to the benefits it offers over Chapter 7.  

In Chapter 13 bankruptcy, a debtor can keep all of his or her property. In exchange, the debtor must pay back all or a portion of his or her debts through a repayment plan. Typically, Chapter 13 bankruptcy is for debtors who:

  • Fail to qualify for Chapter 7 bankruptcy but need debt relief;
  • Have debts that can’t be discharged, such as child support arrears or alimony that they’d like to pay off within five years; or
  • Have fallen behind on a car or house payment and want to catch up on missed payments and keep their property.

The bottom line

If your debt has gotten out of control, you may want to consider filing for Chapter 7 or Chapter 13 bankruptcy. However, before making a final decision, you should consult with a Milwaukee bankruptcy lawyer

Contact a Milwaukee bankruptcy lawyer 

If you are considering filing for bankruptcy in Milwaukee, you need a knowledgeable and experienced Milwaukee bankruptcy attorney in your corner. At Hanson & Payne, we offer bankruptcy and debt negotiation services for individuals in Milwaukee and all of southeast Wisconsin. When you choose us to represent you in your bankruptcy case, we will do everything in our power to protect your interests and see your case through to a successful conclusion. Please contact us today to schedule a consultation.