Check the Expiration Date on Those Debts

A friend of ours was recently helping their parents clean out their house so they can downsize. Tucked away in a forgotten drawer was a pile of coupons clipped in the 1970s. Instead of chucking them in the trash, our friend outsourced the task of sorting through all the coupons to his kids to keep them busy. Some were for products that no longer exist. Most had long expired. But a few were manufacturer’s coupons with no expiration date. You could take one of those down to the Piggly Wiggly and use it today. 

In many ways, old debts are a lot like those old coupons. Most businesses and creditors have old debts sitting in their metaphorical junk drawers collecting dust. At one point in time, the creditor hoped to collect those debts, but eventually, it was not worth the time or money spent to seek repayment. Now, some of the debts are owed by companies and people that no longer exist. Other debts have expired. 

What are expired debts?

Expired debts, like expired coupons, are worthless. You can ask a store to honor a coupon past its expiration date, but it will probably say no. The same goes for expired debts. You can try to collect them, but savvy debtors will know they are no longer legally obligated to pay you. 

Debts expire after the statute of limitations for collecting them has run. After the statute of limitations has run, the debt is no longer collectable. Each state sets its own statute of limitations, and different types of debt may be treated differently. Many Wisconsin debts expire after 6 years. 

Wisconsin Law on Debt Collection – Chapter 427 of the Wisconsin Statutes

The bulk of Wisconsin’s laws on debt collection can be found in Chapter 427 of the Wisconsin Statutes. Even merchants who are attempting to directly collect a debt owed to them must follow Wisconsin’s debt collection laws. This is important to note because many merchants collecting a debt owed directly to them mistakenly believe that they are exempt from Wisconsin’s debt collection laws because they are not included within the definition of “debt collector” under the federal Fair Debt Collections Practices Act. 

Be sure you are in compliance with both state and federal laws when you are attempting to collect a debt owed to you. If you violate Wisconsin’s law relating to Debt Collection Practices, there are several remedies available to the consumer.

The final way old debts are similar to the drawer full of old coupons is that processing them is often outsourced. The kids sorted the coupons, and debt collection agencies are often tasked with collecting debts that are overdue. 

Work with an Attorney to Get Your Expired Debts Settled

If you have a pile of old debts collecting dust, and you are interested in collecting them, make sure you are not wasting your resources going after expired debt. Consider outsourcing your collections to a repudiable collections agency, or working with an attorney that has experience serving businesses and creditors like you. If you are looking for representation, please contact our office today to schedule an initial consultation. 

Beware Bankruptcy Petition Preparers

When you are on the brink of bankruptcy, getting some much-needed advice and assistance can be a life-saver. But be careful who you trust. A Milwaukee area woman recently got busted for giving bad advice to filers in our area. 

Carolyn A. Word, who has also gone by the name Carolyn Dixon, may be criminally prosecuted for ignoring a 2010 order not to work as a bankruptcy petition preparer, and attempting to hide her post-2010 activity from the court. 

Who Are Bankruptcy Petition Preparers?

Bankruptcy petition preparers are non-attorneys who can — as their name suggests — help you prepare a bankruptcy petition. However, they are only typists. They are prohibited by law from giving legal advice. Petition preparers in the Eastern District of Wisconsin, which includes Milwaukee and the surrounding counties, may charge a maximum of $75 for their service. 

Word was previously barred from serving as a petition preparer, and fined because she overcharged low-income people for her services, and may have offered improper legal advice. However, it appears that she did not stop preparing petitions. Word got caught because she told one of her clients to lie to the court, and hide the fact that she had provided assistance. 

While there is nothing wrong with working with a bankruptcy petition preparer if all you need is someone to help you type up your petition, you should be careful about who you work with and be wary of any advice they try to give you. Working with an experienced bankruptcy attorney is a much better option. 

An attorney can do much more than help you fill out the piles of paperwork a bankruptcy requires. 

The first thing an attorney will do is help you figure out if bankruptcy is truly the best option for you, or if other actions could be taken to help get you back on track. 

If bankruptcy is the best path forward, the next step is figuring out which type of bankruptcy is right for you. Most people file under Chapter 7 or Chapter 13. A Chapter 7 bankruptcy is a traditional liquidation — your assets are sold off, the proceeds are used to pay off your debts, and most remaining debts are forgiven. A Chapter 13 bankruptcy is more like a corporate reorganization — you enter into a court-supervised repayment plan, and after a few years you are caught up on your payments and some debts are forgiven. An experienced attorney can help you determine which chapter it would be best for you to file under. 

The Benefits of Working with a Bankruptcy Attorney

Once you have filed your bankruptcy petition with the court, your attorney will work as your advocate and liaison with the court. You will never have to show up to court alone or answer questions without someone who is on your side explaining them to you. 

Perhaps more importantly, your attorney becomes a shield between you and your creditors. Once you obtain legal representation, you can tell your creditors they must speak to your lawyer instead of contacting you directly. 

The benefits of working with an experienced bankruptcy attorney are many. While others may offer you help with your bankruptcy case, what they can do for you is extremely limited. You should be suspicious of any non-attorney that says they can help you file for bankruptcy. 

I Scream, You Scream, We All Scream for Receivership

Schoep’s Ice Cream is one of the largest and oldest independent ice cream factories in the country. Since opening its doors in 1928, the Wisconsin-based business has grown to the point that it makes over 12 million gallons of ice cream every year. However, the company has fallen on hard times.  

Schoep’s owners recently asked the courts to put it under receivership, which is an alternative to filing for bankruptcy. In its petition, the company revealed that it owns assets with a book value of $21.3 million, but has $19.1 million in debt. The company will not be able to pay off its creditors as its financial obligations come due, and it fears that the fair market value of its assets is significantly less than the book value. 

For Sale — As Is, No Warranty 

Because this is a receivership, and not a bankruptcy, the court-appointed attorney handling the case will be tasked with selling Schoep’s as an operating business, and distributing the money generated by the sale to the company’s creditors. There are reportedly already buyers interested, so this should not be a difficult task. 

The goal is to have the company operate as the same business after the sale, with the same name and employees it has now. It will just have different owners and less debt — or perhaps different debt if the buyer has to finance the sale.

The Difference Between A Receivership And A Bankruptcy 

This is a textbook example of how receiverships are different than bankruptcies. 

If the company had filed for bankruptcy instead, it would either go through a restructuring or it would wind down operations and liquidate its assets. However, the financial problems the company is facing are reportedly due to the sudden loss of a couple of big clients. Unless this is the first sign of a shifting market, the company should be able to recover from this over the long-run and continue to churn out frozen treats to delight the masses. 

Entering into a receivership allows the current owners to exit the business without shutting down the business. This is important to many business owners, who have poured their blood, sweat, and tears into building something they do not want to see die. Handing over control to a new owner is a better alternative than shutting down, laying off loyal employees, and seeing all that hard work go down the drain. 

Helping Businesses In the Milwaukee Area Find A Path Forward

At Hanson & Payne, we have helped numerous business owners in the Milwaukee area navigate the receivership process. We have also advised business owners that are unsure if receivership or bankruptcy the best option. We have experience with both processes, so our firm can help business owners understand what their options are, and what choosing one over the other would mean for their business. Contact us today to schedule and initial consultation. 

After Years of Bankruptcy, University of Wisconsin Oshkosh Foundation Comes Out Still Intact

In the event that a business becomes unable to pay off its outstanding debts, it may seek bankruptcy protection under either Chapter 7 or Chapter 11. Under Chapter 7, the business stops operating and a designated trustee sells off the business assets. The proceeds of these sales are distributed to creditors and anything left over goes back to the owners of the company.

Under Chapter 11, a business is allowed to continue to operate and reorganize. Usually, the debtor will maintain control of its business through the process with oversight provided by the bankruptcy court. The result of Chapter 11 will either be the successful reorganization of the business, conversion to Chapter 7 bankruptcy proceedings, or dismissal. After years of going through Chapter 11 bankruptcy, the University of Wisconsin Oshkosh Foundation successfully reorganize and is continuing operations after bankruptcy proceedings have ended.

After Years of Bankruptcy, University of Wisconsin Oshkosh Foundation Comes Out Still Intact

The University of Wisconsin Oshkosh Foundation went through three years of Chapter 11 bankruptcy proceedings. The bankruptcy reorganization plan for the Foundation was successful and it now has almost $20 million in assets and the ability to fund hundreds of student scholarships to be valued in the thousands. Additionally, the Chair of the Foundation, Tim Mulloy reports that the foundation has received $3 million in the past few months alone.

The Foundation stumbled into some financial issues when it struggled with several real estate investments that were not proving fruitful. The Foundation required financial support from the university. However, it was suspected that this ran afoul of Article VIII, Section 3 of the Wisconsin Constitution which prohibits the use of public money for private purposes. It was later revealed that the acts of the University to support the Foundation were not, in fact, unconstitutional. The potentially illicit transactions and the media coverage reporting them as such, however, did nothing but hurt the financial situation of the Foundation and they were forced into Chapter 11 bankruptcy.

Now that the Oshkosh Foundation has successfully come out from Chapter 11 bankruptcy proceedings, it is planning for the future. During the who ordeal, the University of Wisconsin-Oshkosh announced the creation of another foundation called the Titan Alumni Foundation. This foundation also solicits donations to fund scholarships. Now there are plans in the works for the two foundations to merge.

Wisconsin Bankruptcy Attorneys

Bankruptcy is not necessarily the end for your business. Like the Oshkosh Foundation, your business can successfully survive and thrive after bankruptcy. The dedicated bankruptcy attorneys at Hanson & Payne, LLC are here to provide clients with unparalleled support. We protect and guide you and your business through bankruptcy to meet your goals. If one of your goals is to see your business thrive after bankruptcy, we are here to help make that happen. For all of your bankruptcy needs, contact us today.

Testing, Testing… Is This Thing On? How Means Testing Shapes The Bankruptcy Process

There is a common misperception among folks in the Milwaukee area that all personal bankruptcies are liquidation bankruptcies. Our clients often assume that all their assets will be sold off, their debts wiped out, and then they will have to rebuild their life from scratch. 

But it is also common knowledge that some companies file for bankruptcy, then continue operating as if nothing out of the ordinary was going on. David’s Bridal, for example, filed for bankruptcy last year, but is still selling dresses and otherwise outfitting bridal parties. Wisconsin-based Shopko attempted to follow a similar path but ultimately shut down. 

This doesn’t seem fair. Why should companies get to decide if they want to liquidate and shut down or try to keep operating while people are forced to sell off all their assets and start over with nothing? 

The reality is that people can choose to file for bankruptcy under a chapter of the bankruptcy law that allows them to hold on to many of their assets instead of being forced to liquidate them. 

Chapter 7 and Chapter 13 Bankruptcy

There are two main chapters of the bankruptcy code that people may file under — Chapter 7 and Chapter 13. 

A Chapter 7 bankruptcy is a traditional liquidation-style bankruptcy. Assets are sold off, the proceeds are used to pay off debtors, and most remaining debts are forgiven. 

If starting over with nothing is not appealing, or the debtor has an asset like a house or car that he or she really wants to hold on to, filing under Chapter 13 may be a better option. Chapter 13 is sort of like a corporate restructuring. The court presses the pause button on collections, figures out how much the debtor owes, then sets up a multi-year repayment process that allows the debtor to get caught up on their payments and get their finances under control. At the end of the process, most debts will be paid off rather than forgiven. 

Deciding which chapter to file under can be difficult. And that task is made more complicated by the fact that some people who want to file for bankruptcy under Chapter 7 are legally barred from doing so. 

Because the government wants to encourage people to pay off their debts rather than have them forgiven, the law tries to push people to file under Chapter 13 rather than Chapter 7 by forcing would-be Chapter 7 files to pass a means test

What is the means test?

The means test is a government-designed set of factors that measures a filer’s income, expenses, and family size to determine whether it thinks the filer has enough disposable income to repay his or her debts.

If a debtor “fails” the means test, it means the government thinks he or she should attempt to pay off his or her debts through the Chapter 13 bankruptcy process instead of having them forgiven through the Chapter 7 process. 

As bankruptcy attorneys, it is our job to help our clients figure out which chapter of the bankruptcy code would be better for them to file under. If they think getting a clean slate through the Chapter 7 process would be best, we help them through the means testing process. 

Take Backs, Clawbacks & Money That Is Rightfully Yours

Advice columns and etiquette guides are chock-full of suggestions about what to do when someone asks for something they previously gave you back. This advice is most often sought out at the end of a relationship when there are shared household items to divvy up or a diamond ring that is causing strife.

Some etiquette gurus suggest pushing back politely. Others say give the item back and move on with your life. As bankruptcy practitioners, we often wonder why the law of take-backs is not more fleshed out because, in our world, the law is quite clear. 

If a debtor that owes you money, or someone you do business with declares bankruptcy, the court may order any assets the filer transferred to you within the last few months returned to the bankruptcy court so that they can be equitably distributed among all creditors. 

These clawbacks are meant to guard against the preferential treatment of certain creditors and ensure all creditors are treated fairly. However, if you are the entity being forced to give back the money that is rightfully yours, you may question how fair this actually is. 

Fortunately, there are exceptions to the clawback rule that you may be able to take advantage of. The three most common preference defenses are (1) the contemporaneous exchange for new value, (2) the subsequent new value and (3) the ordinary course of business defenses.

1. Contemporaneous Exchange for New Value

The most common defense is the contemporaneous exchange for new value defense. It applies when the payment sent to a creditor was intended by both the debtor and creditor to be a payment for some new good or service exchanged right when new assets were transferred to the creditor. The assets transferred cannot have been exchanged in order to pay off old debts.

Organizations doing business with debtors who are in financial trouble should make it clear in their contracts and financial records that money coming in is being exchanged for something new of value, not paying off past due invoices.

This defense exists because policymakers want to incentivize companies to keep doing business with troubled organizations in hopes that they can get back on their feet. 

2. Subsequent New Value

This defense is only slightly different from the previously discussed defense. In order to claim the subsequent new value defense, the creditor must have given something of value to the debtor after payment from the debtor was received. Once again, this exception was drafted in order to incentivize the continuation of business relationships in situations where the creditor could easily have been pushed into bankruptcy sooner.

3. Ordinary Course of Business

This defense applies when a payment subject to clawback was received in the ordinary course of business between the creditor and the debtor. In order to take advantage of this defense, the creditor must be able to show that its relationship with the debtor did not change in the time period leading up to the debtor’s bankruptcy filing. No special payments were received, things were just going along like they usually did.

Don’t Give Up Without A Fight 

If you have been hit with a preference claim, and the courts are asking you to give back the money or other assets that are rightfully yours, don’t hand anything over without a fight. 

Hanson & Payne has helped many Milwaukee area businesses take advantage of these and other exceptions to the preference transfer law. In our experience, the sooner a creditor acts after being notified of a potential clawback the better. However, it is never too late to try and protect the money you are rightfully owed from flowing into someone else’s pocket. 

Whether you have just been notified your business was doing business with someone who has filed for bankruptcy, or you have already been asked to return a payment flagged as a preference transfer, don’t hesitate to contact our office and find out what your options are.

How Can I Negotiate My Debt with Creditors?

Getting behind on bills can happen to anyone. It only takes one financial setback, such as a car accident, job loss, or illness, to throw your finances into upheaval. Once this starts, however, things can quickly get out of hand and you may find yourself buried under a pile of bills that you just cannot pay.

While bankruptcy is an option, there are many steps before you may want to consider it. For instance, did you know that many creditors will work with you regarding your outstanding debt? They want to get paid and they will often work with you on not only negotiating a payment plan, but on the amount of the outstanding debt.

How Can I Negotiate My Debt with Creditors?

Working with creditors to negotiate a reduction in the overall amount you owe them is a big step in getting a handle on your debt situation. First, it is always better to call your creditor to try and negotiate the debt before they send it to a collection agency. This will avoid a big impact on your creditor score. Also, debt collectors buy debts for pennies on the dollar. This means that the creditor will likely be amenable to reach a settlement with you. Even if you pay slightly more than a collection agency would to buy the debt, it is still better for them.

Before you attempt to negotiate your debt with creditors, read and save all mail and correspondence related to the debt. Review your income and expenses and know what you can reasonably offer the creditor in order to settle your debt. Be prepared to take notes when you speak with the creditor. This means writing down the name of the person you spoke with and what was discussed. If you reach an agreement with your creditor regarding your payment, be sure to get it in writing.

When negotiating your debt with a creditor, mentioning the possibility or likelihood of filing bankruptcy in the near future can be an effective way to open up the creditor to reduce your debt. In Chapter 7 bankruptcy filings, unsecured creditors usually get nothing. This is also the case in most Chapter 13 filings. Your unsecured creditors, such as credit card companies, are aware of this and will be more than willing to accept what they can get from you in the face of getting nothing should bankruptcy occur.

Negotiating your debts will largely depend on what type of debt you are trying to negotiate. For instance, many people struggle with mortgage payments. A mortgage payment can easily be one of your biggest monthly expenses. Do not wait for foreclosure to be inevitable. You can call your mortgage servicing company and inquire regarding your modification options.

You may also be one of the many Americans struggling with student loan payments. Unfortunately, student loan debt is almost impossible to negotiate. Student loan debt is very rarely dischargeable in bankruptcy which gives the creditor little incentive to work with debtors. There are, however, many options for refinancing student loans, government programs that will allow you to reduce your monthly payment obligation, and even programs to eventually have your outstanding loan balances forgiven.

Wisconsin Debt Negotiating Attorneys

A financial situation can quickly go from bad to worse. Do not wait to lose total control over the situation. Hanson & Payne, LLC will work with you and your creditors to help you through your financial troubles. Let us help you move towards a brighter financial future. Contact us today.

No More Shopko Gate At Lambeau

The Green and Gold are back on the gridiron, but you will notice something a bit different about Lambeau Field if you visit it this season. The gate that used to be known as Shopko Gate is now being referred to as “South Gate.” 

Shopko had been the sponsor of the entrance gate added to Lambeau Field as part of the south end zone expansion since 2013. Now, both the retailer and its name above the gate are no more. 

So, What’s Going to Happen Now?

When the Ashwaubenon-based retailer filed for Chapter 11 bankruptcy protection in January, the future of the gate’s name was uncertain. Had the “Official Hometown Store of the Packers” already locked in a multi-year deal? Would its name above the gate outlive the company itself? 

We now know the answer is no, but that does not mean that the Shopko name will be erased from history. 

Shopko purchased the naming rights to Shopko Hall in the Brown County Veterans Memorial Complex for the life of the building in 1999 for $1.4 million. However, in a weird twist of fate, that building is being demolished this year to make room for the new Brown County Expo Center. 

The only enduring Shopko branding is carved into the CityDeck boardwalk that juts out over the Fox River. According to the Press Gazette, “Shopko contributed $250,000 toward CityDeck’s $12 million price tag and the recognition for its support will not be going anywhere. It is literally carved into the wood in Shopko Landing.” 

The Packers will undoubtedly have no trouble finding a new sponsor for “South Gate” and may even get another company to pay it to be called the “Official Hometown Store of the Packers,” but this is an example of the ripple effect bankruptcies have on even healthy businesses they are connected to. The Packers had a 98% drop in profit over the last year, and losing a major sponsor would have played some role in that dramatic decrease even though it is not mentioned as a major factor in the team’s statement about its finances

Contact Our Attorneys Today to Help Navigate Through Bankruptcy

At Hanson & Payne, we help companies going through bankruptcy, and companies who are impacted by a customer or debtor’s bankruptcy, navigate what can be a complex and frustrating process. We are a reliable and experienced team you can trust in the worst of times. Contact us today to schedule an initial consultation. 

What We Learn From the Remington Bankruptcy

Last year, the nation’s oldest gun manufacturer went bankrupt, but it continues to operate as a market leader in the firearms industry. Remington’s resilience provides an excellent case study on the bankruptcy of a business that continues to operate, and the actions its creditors took to save it.

A perfect storm

Remington’s bankruptcy was unexpected, to say the least. Over the past decade, the gun market has been booming. Experts in the industry claimed President Obama was the best gun salesman ever since 2nd Amendment enthusiasts feared he would curtail their rights, and therefore stockpiled guns and ammunition. 

But when President Trump was elected, things changed. People were no longer buying out of fear, so gun sales slowed dramatically. Around this same time, Remington was sued by the relatives of the victims of the Sandy Hook massacre. The shooter favored Remington guns. 

The bad press and drop in sales couldn’t have come at a worse time for Remington, which had a great deal of debt foisted upon it by the private equity company that bought it back in 2007 — they did some sort of financial wizardry that sort of made the company pay for its own acquisition and then some. Remington couldn’t make the hefty payments and was forced to declare bankruptcy. 

Down but not out

Instead of liquidating its assets and closing up shop, the century-old company negotiated a debt-for-equity swap with its creditors. Creditors took ownership stakes in the company in exchange for forgiving more than $775 million of debt. Remington also received $193 million in new financing. 

It is on this new financial footing that the company will move forward. It has a state of the art factory in Alabama and sportsmen across the country who are loyal to the brand. Thanks to the bankruptcy system, it can capitalize on these assets and perhaps stay in business another 100 years. As Anthony Acitelli, Chief Executive Officer of Remington put it, “It is morning in Remington country.”

Not as unique as it may seem

Remington’s story is not uncommon despite the fact that there are not a lot of news articles written about companies that successfully navigate the bankruptcy system or debt-for-equity swaps. Every day the Hanson and Payne team helps Wisconsin businesses who are contemplating bankruptcy, or who have already filed, find a path forward. And we are just as frequently called on by creditors who are looking for guidance when a debtor is in financial trouble.

The sooner a business comes to us for help, the more options are available to it. We have lots of experience helping debtors and creditors avoid bankruptcy altogether by negotiating business workouts or creative financing options. Debt-for-equity swaps are just one option. 

Whether you or one of your clients are facing challenging market conditions or made poor financial decisions, there is a path forward. The Hanson and Payne team can help your business out of even the most difficult situations. Contact us today to schedule an initial consultation. 

Fox Valley Pro Basketball Files for Chapter 11 Bankruptcy

Chapter 11 bankruptcy allows a business to continue operating throughout the bankruptcy process. With this type of bankruptcy filing, the debtor usually proposes a reorganization plan intended to both keep the business alive and pay its creditors over a period of time. Recently, the owner of the Menominee Nation Arena in Oshkosh, Wisconsin, filed for Chapter 11 bankruptcy protection. The owner of the arena, Fox Valley Pro Basketball, Inc. filed for bankruptcy on August 19th in the Eastern District of Wisconsin Bankruptcy Court.

Fox Valley Pro Basketball Files for Chapter 11 Bankruptcy

Menominee Nation Arena is home to NBA G League Wisconsin Herd. This basketball team is affiliated with the Milwaukee Bucks. Fox Valley Pro Basketball, Inc., owner of the arena, was more than a year behind on the mortgage payment for the Menominee Nation Arena. Just before the company was due in Winnebago County Court regarding the mortgage non-payment, it filed for bankruptcy. Bayland Buildings, a general contractor, had filed a Foreclosure of Mortgage complaint against Fox Valley Pro Basketball and claimed that the company owed $13 million on the mortgage. Bayland Buildings stated that no regularly scheduled mortgage payment had been received by Fox Valley Pro Basketball since May of 2018.

In the bankruptcy filing, it is estimated that Fox Valley Pro Basketball has assets totaling between $10 million and $50 million. The filing further states that the company may have close to 200 creditors and estimated liabilities of $10 to $50 million. The bankruptcy court, during a hearing on August 23rd, approved a lending proposal for Fox Valley Pro Basketball while the company makes an effort to successfully reorganize the business. In order to meet cash flow needs during the Chapter 11 bankruptcy proceedings, Windward Wealth Strategies, Inc., owned by a group that has a controlling interest in Fox Valley Pro Basketball, has agreed to lend Fox Valley Pro Basketball up to $200,000. Greg Pierce, President of Fox Valley Pro Basketball has also stated that they are putting money of their own on the line to make the bankruptcy and reorganization process successful. With Chapter 7 bankruptcy, a business is usually looking to bring operations to a close. Chapter 11 bankruptcy allows a business to remain open during the bankruptcy process and attempt to reorganize the company in order to survive bankruptcy and continue operations.  Menominee Nation Arena does plan on continuing operations throughout the reorganization. Jason Fields, General Manager of the arena, has made it clear that the arena remains committed to supporting the greater Oshkosh community.

Wisconsin Bankruptcy Legal Counsel

The type of bankruptcy you file is very important. The knowledgeable bankruptcy attorneys at Hanson & Payne, LLC can counsel you on your options and provide trusted legal counsel throughout the bankruptcy process. We are here to provide continued support to our clients and always watch out for their best interests. Contact us today.