Drastic Times, Drastic Measures?

A recent article published by Kiplinger warns that “a wave of bankruptcies and foreclosures appears to be building.” The author says that the combination of covid, inflation, supply chain issues, and a workforce that is demanding more flexibility, has created a perfect storm. 

The Hanson & Payne team has noticed the confluence of these events as well. We, however, are a bit more optimistic than the author about what the future holds. Wisconsinites, and Milwaukee area residents and businesses, in particular, are a resilient and resourceful bunch. 

Time To Take Action? 

The author suggests that everyone should be taking evasive action to avoid the predicted financial crisis:

For homeowners, interest rates will almost certainly increase in the near future.  If a homeowner can refinance his or her mortgage to take advantage of the current low-interest rates, that course of action should be considered.

For consumers, accelerating the timing of any major purchases will make sense since the looming inflation will make the dollar worth less and less and make the effective cost of an item more expensive as time passes. Individuals should also consider exiting the stock market or minimizing their stock portfolios as soon as possible. Conversion of stock to cash is not a good strategy during a time when the value of the dollar will steadily decline. Conventional wisdom dictates that investment in precious metals, such as gold and silver, is a safe harbor.  Thus, selling stock and buying gold and silver makes sense.

Business owners should analyze their businesses based on the assumption that the near future will bring high inflation, high interest rates, and a continuation of supply chain disruption.  It is prudent to take steps to restructure the business in a way that will mitigate the damages if those future assumptions come to pass.  

Whether you should follow this financial advice depends on your specific situation. Nobody can predict the future, and even authors in respected publications like Kiplinger can only speak in generalities. The same is true of sources giving out information on bankruptcy. 

Generally Speaking, You Need To Know The Specifics 

Whether or not a wave of bankruptcies is coming tells you little about whether you or your business is at risk of being pushed into bankruptcy. Talking through your finances with an experienced bankruptcy attorney like those at Hanson & Payne is the best way to figure out if bankruptcy is in your future. 

You may also choose to file for bankruptcy proactively. Bankruptcy provides businesses an opportunity to retool and refocus. It can head off emerging issues before they become big problems by giving the filer much-needed flexibility. 

If you are worried about your finances or have questions about bankruptcy, the Hanson & Payne team is here for you. We are Milwaukee-based attorneys who have decades of experience helping Wisconsin businesses and families secure their financial futures. Please contact us today to schedule a meeting. 

And You Thought Things Couldn’t Get Any Worse

Do you remember that Tom Hanks movie from the 1980s where he and Shelley Long buy a beautiful looking house only to find out it is, as the movie’s title suggests, “The Money Pit”? The front door comes off its hinges, staircases tumble down, and a bathtub even falls through the floor. Just when they think they have identified everything that is wrong, something else breaks. 

The parade of errors is funny, but also a good reminder that there’s no limit to bad luck. Just because things have been going poorly doesn’t mean they have to start turning around. Often, you need to take action to make things go your way. For many of Hanson & Payne’s clients, filing for bankruptcy is that self-initiated inflection point. 

Many Milwaukee area residents and businesses use the bankruptcy process to help get their finances under control and move forward. Unfortunately, filing for bankruptcy is no guarantee that your luck is going to change. 

File Soon, But Not Too Soon

Bad things can and do happen to people after they have filed for bankruptcy. That’s why it is important to figure out when filing for bankruptcy will work best for you. You should do it soon enough that it can help you salvage what you still have. But not too soon. You don’t want to risk your financial situation getting a lot worse after your case is filed. 

While bankruptcy can help you deal with debts that have already accumulated, it typically cannot help with financial issues that arise after the case is filed. 

What About Post-Petition Debt?

The debt you have before your case is filed is called “pre-petition debt.” The bankruptcy process is designed to deal with this debt. 

Debt that you incur after your case is filed is called “post-petition debt.” Most post-petition debt cannot be addressed in a pending bankruptcy case. However, there are some exceptions to this rule. 

First, some Chapter 13 petitioners may be able to have post-petition debt included in their existing bankruptcy repayment plan if the court okays it. Whether this is allowed depends on the type and amount of debt, and sometimes, the judge. 

Second, if you have filed for bankruptcy under Chapter 13, you can request that your case be converted to a Chapter 7 case. If your case is converted, you should be able to include new debts in it. 

If you have questions about post-petition debt or any type of debt, Hanson & Payne’s experienced team of bankruptcy attorneys is here for you. There are tactics that can be used to reduce or help you manage post-petition debt even if it cannot be forgiven. 

Milwaukee Area Bankruptcy Attorneys You Can Trust

At the end of “The Money Pit,” Hanks and Long’s characters have everything fixed up, and the possibility of a happily ever after. With some help and hard work, they dug themselves out of the pit. The same thing is possible for Milwaukee area residents who find themselves in a financial hole. Hanson & Payne is an experienced bankruptcy firm that can help you when everything seems to be going wrong. Please contact us today to schedule a meeting.

A Titan Of The Tech Industry Who Called Milwaukee Home

It is not too often that the death of a Milwaukee citizen makes national news, but John C. Koss deserves every ounce of ink spilled about him. Koss and a friend invented stereo headphones, revolutionizing the way we listen to music. Milwaukeeans know him for his charitable work, and the humorous billboards the Koss company put up around town. What many people may not know is how he stepped up and led his company through the Chapter 11 bankruptcy process

According to his obituary in the New York Times, “Koss and his friend Martin Lange Jr., an engineer, developed a portable stereo phonograph in 1958 that they called a ‘private listening station.’ It had a turntable, speakers, and a privacy switch that let users plug headphones into a jack. But most of the headphones available, like those used by telephone operators, shortwave radio users, and pilots, were incompatible and not stereophonic. So they rigged up cardboard cups that contained three-inch speakers and chamois pads from a flight helmet, and they attached them to a headband made of a bent clothes hanger covered with a rubber shower hose.” 

The private listening station didn’t take off, but Koss headphones became the industry standard. They were even used by the members of the House Judiciary Committee for listening to the White House tapes during President Richard M. Nixon’s impeachment inquiry. 

In the 1980s, Koss brought in a professional manager to help grow the company. The manager diversified the product line and moved production offshore, but instead of growing, things fell apart. The professional manager left after his five-year contract was up, and Koss retook the reins. Eventually, the company had to file for Chapter 11 bankruptcy. 

In a 1988 interview with Inc. magazine, Koss said about his company’s bankruptcy, “I felt awful … My board had agreed, my family had agreed, but I was the guy who had to sign the papers. I just walked around in a daze, angry at myself.”

Two years later, in a follow-up interview, he elaborated a bit more on how bankruptcy impacted him.

INC.: Does it cost you anything in your head, your heart, or your gut to file bankruptcy?

KOSS: It costs a lot. The guy who starts the business never thinks it’s going to fail. That is why most bankruptcies are too little, too late. People wait too long, thinking something will happen at the last minute. Somebody has to be objective for you in your organization. If you are an entrepreneur, that person has to tell you, We’ve got to stop here, or there will be nothing left. I don’t think the fellows in Chicago who became our lead bank realized that they weren’t dealing with a man and a business; they were dealing with a man and his life’s work — not only my life’s work but my wife’s and the five kids’. What were we going to do, take something we had spent all our lives developing and just throw it away? Or were we going to fix it? It was never a question of whether we were going to turn it around, just when.

INC.: So it was more than a business issue for you?

KOSS: Yes, it was the family, the lifestyle, the whole thing. It wasn’t just deciding with your wife that, gee, the business has come to the end, so we’ll let it go and do something else. This was an exciting life’s work…. Signing those Chapter 11 papers was hard — especially because of my age. I’m from a generation where you never did that.

INC.: How did you reconcile this bias you had against bankruptcy in light of having to file for one yourself?

KOSS: I talked to a lot of people, including some friends who had gone through it. One friend gave me very good advice. He said: “When you do this, you’ll want to hole up at home. You won’t want to talk to anybody or see people. You’re going to feel like a beaten animal. Don’t do any of that,” he warned me. He said it would eat me up from the inside, and I’d die from it.

…The first night I stayed in and sat with my wife. It was on the television, and of course, I had called a few friends to let them know it was coming. The next day, though, I went charging into the office with a very positive attitude because we were going to get through this thing. We were sharing information about what was going on with our employees and everybody else.

Another friend told me that there’s another reason that you don’t go into hiding. The reason is that a lot of people out there want to help you.

INC.: Is failure — to the extent that bankruptcy is seen as failure — a culturally acceptable event?

KOSS: Failure is when you join the turf club. Anything else is an experience that didn’t work out too well. Bankruptcy is a tool. If you try your best and you’re an ethical and honest businessman and circumstances work against you, the tool is there to give you a chance to start over. We started over, and my God, look at all the jobs and the families we saved.

This is a refreshingly honest look at how difficult it is to file for business bankruptcy when your business is very much an extension of yourself. But as Koss said, sometimes circumstances work against you, and you need to use the tools available to turn things around. Bankruptcy is that tool, and using it is nothing to be ashamed of. 

Rest in peace, Mr. Koss. Thank you for everything you did for Milwaukee, and the music you brought to the world. Contact our team today.