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The Intersection Between Filing for Divorce and Filing for a Chapter 7 Bankruptcy

wynnatlaw — Tue, 08 Nov 2022 20:01:21 +0000

Filing for a Chapter 7 bankruptcy allows you to discharge unwanted unsecured debt and get a fresh start on your finances. Unsecured debt is any debt that is not backed by an asset, such as credit cards, medical bills, payday or personal loans, judgements, and garnishments. If you and your spouse are struggling with these debts and also considering a divorce, it is important to ask yourselves whether filing for bankruptcy or divorce first would be more advantageous to your situation.

Consider asking yourself these three questions to help determine whether to file for bankruptcy or divorce first:

1. What will save me more money, stress, and time?

Filing bankruptcy jointly before divorce saves money. When you file a Chapter 7 jointly, you only have one case, which allows you to split court and attorney’s fees between you and your spouse, rather than bearing the burden of these costs individually. A Chapter 7 bankruptcy filed with a knowledgeable bankruptcy attorney is typically discharged in approximately 90 days, saving you time and stress from arguing over these debts later during your divorce filing, thus decreasing divorce costs.

If your spouse files bankruptcy during your divorce, then the divorce will be paused until the bankruptcy case closes. Thus, it is a better idea to agree with your spouse to file bankruptcy jointly before divorce. This avoids dragging out the already very stressful and emotional process of a divorce filing.

Plus, several studies show that the number one reason for divorce is financial trouble. It is possible that discharging you and your spouses’ debts through a Chapter 7 bankruptcy may incidentally save your marriage once your financial issues are resolved.

2. Which spouse is responsible for which debts?

Wisconsin is a community property state; therefore, all property acquired during a marriage is subject to equitable distribution after divorce. This means that all debt incurred during the marriage, regardless of which spouse incurred the debt, is to be paid back 50/50. This can lead to collection efforts, lawsuits, and a hindered credit score.

Divorcing spouses can agree to divide these debts between themselves, but the stress of negotiating these debts can be relieved by filing a Chapter 7 bankruptcy before divorce, as it eliminates determining who pays for what debts during the divorce.

In making the decision of whether to file bankruptcy or divorce first, there are some cautions to be aware of. The first issue is the potential of having an uncooperative spouse who does not want to file jointly. If this is the case, then you should file alone. However, within the divorce proceeding, be careful not to agree to any conditions of the divorce requiring you to pay part of any joint debt. A completed Chapter 7 bankruptcy will free you of those financial obligations.

A second caution to be aware of is how marital debt is treated in bankruptcy. The payment of marital debt, or in other words, any debt you agreed to pay your spouse during divorce, may not be discharged or eliminated in bankruptcy.

3. Is filing for bankruptcy before divorce going to increase my exemption amounts?

A Chapter 7 bankruptcy exemption allows you to protect the equity in your property from creditors. For instance, the Wisconsin Chapter 7 exemption allows you to protect up to $75,000.00 in equity in your home, meaning that creditors cannot take your property if the equity in your home is less than $75,000.00.

Filing jointly may increase your exemption amounts because the State of Wisconsin allows you to double your exemption amounts, essentially allowing you to protect more property from creditors.

Reasons to use a lawyer in filing for Chapter 7 bankruptcy:

1. A lawyer can help you qualify for Chapter 7 when you may have thought you did not qualify

2. An improper filing can result in lost assets or a dismissed case, wasting your time and money

3. An experienced attorney can help fill out the complex forms and paperwork

4. An attorney can be a buffer between contentious spouses, thus easing communication

Schedule a Free Bankruptcy & Debt Consultation with Wynn at Law, LLC

If you are considering bankruptcy and have questions, don’t hesitate to contact our bankruptcy attorney, Shannon Wynn. Wynn at Law, LLC offers free, in-depth bankruptcy consultations. Our bankruptcy attorneys are here to listen, advise, and help during your financial difficulties so you can move forward with your life.

You can reach our bankruptcy attorney by phone at 262-725-0175 or our website’s contact page. Wynn at Law, LLC has bankruptcy law offices conveniently located in Salem, Delavan, and Lake Geneva, Wisconsin.

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Medical bills a threat to financial independence

wynnatlaw — Thu, 06 Jul 2017 11:45:00 +0000

We are frequently seeing clients with ‘surprise’ medical bills when Wynn at Law,LLC counsels people through bankruptcy proceedings. Catastrophic medical bills are, unfortunately, one of the more common reasons for Chapter 7. Usually those clients didn’t have insurance coverage. The surprise medical bills to which this article refers are bills health insurance did not cover.

For example, you schedule an in-network procedure. You’re assured your insurance is covering the cost. But a few weeks later, an OUT-of-network bill arrives. The Jan. 2017 Journal of the American Medical Association (JAMA) pointed out the problem. “The average anesthesiologist, emergency physician, pathologist, and radiologist charge more than four times what Medicare pays for similar services, often leaving privately insured consumers stuck with surprise medical bills that are much higher than they anticipated.”

Wisconsin, by the way, is among the states with the highest out-of-network markups according to the study.

As a patient, you don’t get to select the specialists like the anesthesiologists – who charge six times what insurance customarily pays based on the Medicare rate. But you do get the specialist’s invoice once your insurer carves out how much it will pay. States and Congress will sort out how customers avoid surprise billings. Maybe the solution is in Healthcare Reform… might be in state laws capping out-of-network charges… either way, it doesn’t change the immediate danger it puts your financial independence in.

Wynn at Law, LLC works with clients to try to avoid a bankruptcy filing if they can. Sometimes, it’s as simple as talking with the insurance company and the out-of-network provider about the crushing surprise bill.

Our team here at Wynn at Law LLC hope you had an enjoyable and safe Independence Day, and we want you to know that we’re by your side if your financial independence is put in jeopardy.

*The content and material in this original post is for informational purposes only and does not constitute legal advice.

Photo by Sean Prior, used with permission.

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Spot the five early warning signs for bankruptcy

wynnatlaw — Thu, 16 Mar 2017 16:41:00 +0000

Most of Wynn at Law, LLC‘s bankruptcy clients face sudden situations that have them considering filing Chapter 7 or Chapter 13 bankruptcy. I’m talking about things like massive medical bills or sudden job loss. Finances can be a difficult balancing act at other times as well, so I put together a quick list of warning signs.

1. Wage garnishments. These are a dead giveaway that something got out of hand at some point and a bankruptcy filing may be in the cards. However, before a wage garnishment can take place, the creditor has to take you to court to get the order. So, here is the real heads up…

2. Summonses. If a creditor wants a piece of you and has been unsuccessful with collections on its own or with the help of a collection agency, they take you to circuit court. The court is in the county in which you reside. Walworth County Circuit Court, for example, is in Elkhorn. The court sends out a summons when a creditor files against you.

3. Missed or late payments. When you lose track of paying bills by the due date, it’s probably time to use a calendar. If you’re regularly late or paying at or below the minimum payment, that’s a warning sign. It’s also a money drain. Late fees are a nuisance. When you start paying interest on late fees added to your account balance, the situation can spiral out of control quickly.

4. Maxed out cards. One reason we miss payments or pay below the minimum is because a credit limit can be a tempting way to extend your income. Buying groceries on the credit card is one example. Even if you’re a super couponer, paying for Pick ‘n Save on the Visa negates any incremental savings from the coupons.

5. No savings. When you’re not following the old adage that you pay yourself first by putting money into savings or investments (like your retirement plan), it’s a signal. It could flag an unhealthy relationship with money that could bring anyone to Wynn at Law, LLC. Not every saver can squirrel away enough to make it through an unexpected loss of income… but it provides cushion.

The pattern in these five warning signs is in reverse order. If you’re at warning sign #1 already, call us. If you’re at warning sign #5, there’s probably still a lot you can do before needing an experienced bankruptcy attorney.

*The content and material in this original post is for informational purposes only and does not constitute legal advice.

Photo by Igor Stevanovic, used with permission.

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Credit counseling makes sense now more than ever

wynnatlaw — Thu, 02 Mar 2017 12:30:00 +0000

Wynn at Law, LLC sees a wide variety of bankruptcy clients. Young families and retirees. Executives and hourly wage earners. Men and women, with or without spouses. The common thread through our entire family of clients is that – when it comes to bankruptcy – managing finances became a problem. It may have been suddenly. It may be long in the making. Either way, credit counseling is an important required part of the path that most find beneficial.

Pre-bankruptcy credit counseling became a requirement as a result of The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005: Twelve years ago and just three years before a recession brought a steady stream of bankruptcy filings. The significant reform of the bankruptcy system was passed by Congress and signed into law by President Bush and created tighter eligibility requirements. Because of that Act, most people filing for bankruptcy now undergo credit counseling in a government-approved program. Wait, there’s more. After the conclusion of bankruptcy proceedings, but before any debt can be discharged, debtors also participate in a government-approved post-bankruptcy financial management education program.

Don’t let the label ‘government-approved’ scare you off: These programs are harmless. You can find out which agencies have been approved for our area just by giving us a call.

Pre-bankruptcy counseling was put into place in 2005 to potentially steer people out of the courts if a repayment plan would work instead of filing. Counseling is required even if it’s obvious a repayment plan won’t work. Usually, by the time you’ve called Wynn at Law, you’ve already discovered your debts are too high and your income is too low.

The pre- and post-bankruptcy programs don’t shame you into submission. On the contrary, another set of eyes takes an impartial look at your situation in the pre-bankruptcy course. You might learn from your missteps. The second of the two required programs gives you solid financial management practices that will keep you from facing unmanageable debt again. That just makes sense: As much as Wynn at Law values your business, it’s a good thing when we don’t have repeat bankruptcy customers.

*The content and material in this original post is for informational purposes only and does not constitute legal advice.

Photo by Alpha Spirit, used with permission.

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Automatic Stay is a bankruptcy lawyer telling creditors to ‘back off’

wynnatlaw — Thu, 02 Feb 2017 12:30:00 +0000

One bit of peace of mind my bankruptcy clients welcome as much as a fresh financial start is the Automatic Stay. Immediately upon Wynn at Law’s filing of your bankruptcy, creditors generally cannot continue the collection process. It’s quiet time at dinner time since the persistent calls usually come to a screeching halt. When you file, Attorney Shannon Wynn becomes the contact person for the creditor.

The stay halts all attempts by creditors to collect your debts, including existing wage garnishments, lawsuits, and car repossessions. And of course the calls and letters.

Not all debts are subject to this provision. For example, child support orders and arrears are not stayed and the state can continue to attempt collection. Also, if a creditor believes he or she has sufficient grounds to continue, the creditor may petition the court to lift the Automatic Stay. Rare, but it happens.

It isn’t to imply they won’t get a share of your assets. Their share is a proportion. To simplify it, let’s say one third of your debt is owed one creditor: Then one third of your assets are owed them. Not more if they keep after you with more letters and calls. Once the automatic stay is in effect, that creditor is likely to receive less than the full amount they are owed if anything at all. Plus, creditors know you can file suit against THEM if they continue to try to collect after a bankruptcy filing. That, too, is rare, but it happens.

When isn’t there an Automatic Stay? If you’ve had Wynn at Law, LLC or another firm file a bankruptcy for you in the prior year, you may not get the Automatic Stay. With residential leases, a landlord can continue an eviction if they already obtained a judgment. Even after the bankruptcy filing, a landlord could start an eviction if he or she can demonstrate that the home/condo/apartment is being damaged.

*The content and material in this original post is for informational purposes only and does not constitute legal advice.

Photo: Sonar. Used with permission.

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