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

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.

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.

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.

The post The Intersection Between Filing for Divorce and Filing for a Chapter 7 Bankruptcy appeared first on Wynn at Law, LLC.

Bankruptcy can be complicated. If you’re considering filing for Chapter 7 bankruptcy, continue reading to learn how hiring a lawyer can help you with the process. At Wynn at Law, LLC, we work with clients to determine if Chapter 7 bankruptcy is the best course of action to get control of their debt while retaining most assets and property. This blog will discuss the steps and benefits of filing for Chapter 7 bankruptcy, so you have the information you need to decide if it’s the right choice for you.

What is Chapter 7 Bankruptcy?

Chapter 7 bankruptcy discharges unsecured debts like credit cards, medical bills, personal loans, judgments, and garnishments. Secured debt, such as a vehicle loan or mortgage, may also be discharged if the individual no longer wants to keep the property that secures the debt. Some types of bankruptcies have income requirements to file. However, in a Chapter 7 bankruptcy, the debt is discharged without a payment plan, so you do not need to meet an income requirement to file. This provides people with lower income an option to start fresh and build a solid financial foundation for the future.

The first step in filing for Chapter 7 bankruptcy is to make sure you qualify by taking Wisconsin’s Means Test. Wynn at Law, LLC can help you assess your qualifications using this test. If you do not qualify, our experienced attorneys will help you explore other bankruptcy options that may be a better fit.

When Should I File for Chapter 7?

You probably have many questions and concerns about whether you should file for Chapter 7 bankruptcy. If you answer yes to one or more of the questions below, then you may want to consider contacting Wynn at Law, LLC:

• Does the thought of figuring out everything you owe overwhelm you?
• Can you only make your minimum credit card payments?
• Are debt collectors constantly calling you?
• Do you use your credit cards to pay other bills?
• Are your wages being garnished?

When debt leads to filing for bankruptcy, it can feel paralyzing, but it is important to remember that over 16,000 people in Wisconsin declare bankruptcy each year. Yet, with the help of a compassionate and local bankruptcy lawyer, there’s hope for a more financially stable future.

The attorneys at Wynn at Law, LLC are Wisconsin bankruptcy professionals who have a 100% bankruptcy discharge rate. Since one of our firm’s primary practice areas is bankruptcy, we are up-to-date on the law and highly experienced.

What Are the Steps to File for Chapter 7 Bankruptcy?

Meeting with an Attorney

Your first step in the Chapter 7 bankruptcy process is consulting with a lawyer and determining if you qualify. Wynn at Law, LLC offers free, in-depth bankruptcy consultations where they gather information to develop an accurate picture of your property, income, expenses, and debts. Then, Wynn at Law, LLC will complete the Means Test to see if you qualify for Chapter 7. If Chapter 7 is not an option for you, they will discuss other options.

Preparing Your Petition and Schedules

The next step is to prepare your bankruptcy petition and schedules. Our attorneys will use the information you provide to assemble these documents. Since the bankruptcy petition can be complex, Wynn at Law, LLC is ready to explain every step of the process to help you feel more comfortable and educated.

Credit Counseling Course

When filing for Chapter 7 bankruptcy, the court requires you to take a credit counseling course. Once you have completed the credit counseling course and all filing documents are reviewed and approved by you, Wynn at Law, LLC will file your bankruptcy with the court.

I Filed for Bankruptcy. Now What?

After your Chapter 7 bankruptcy case is filed, there are some additional steps to complete before your debt is discharged or eliminated.

Meeting with the Trustee

After filing your Chapter 7 bankruptcy, you’ll meet with the Chapter 7 bankruptcy trustee. The bankruptcy court appoints the bankruptcy trustee to confirm your identity, review your bankruptcy papers, and ask questions about your income and property. This is a brief meeting, also called the 341 meeting. During the 341 meeting, it is common for the bankruptcy trustee to find that you don’t own any property he or she can sell to pay your creditors. If this is the case with your bankruptcy, the trustee files a Report of No Distribution, telling the creditors involved in your case that you don’t have any assets which will be taken from you.

Discharge

The bankruptcy court will discharge your debts approximately 60 days after your 341 meeting. Therefore, it is usually 3-5 months from the time you initially file for Chapter 7 bankruptcy to when your debts are discharged.

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.

The post Filing for Chapter 7 Bankruptcy in Wisconsin: What You Should Know appeared first on Wynn at Law, LLC.

In its simplest terms, debt consolidation is the act of taking out a new loan so that you can combine all your current loans into one, resulting in a single monthly payment. Debt consolidation ideally provides a lower interest rate and better repayment terms compared to the existing debt. There are several kinds of debt consolidation options that you might want to consider, and the choice of what route to take depends on your situation and long-term financial goals.  

Get A Free Wisconsin Bankruptcy Attorney Consultation

If you are unsure of what step to take or where to begin, a free consultation with a bankruptcy attorney is a good starting point. A Wisconsin bankruptcy attorney will analyze your financial situation and recommend the best action for your situation. There is no one-size-fits-all solution for managing debt. Consulting with a Wynn at Law, LLC attorney can provide a customized roadmap to a better financial future and help you reach your debt-free goals.

Types Of Wisconsin Debt Consolidation Loans – How Does Debt Consolidation Work?

Debt consolidation is a tool that enables you to combine all your debt and can include (but is not limited to) credit cards, medical bills, student loans, personal loans, and car loans. Debt consolidation can save you money and simplify your budget over time.  

Do Consolidation Loans Hurt Your Credit? 

Anytime you take out a new loan, a credit inquiry is required, translating to a “hit” or inquiry on your FICO score. This credit inquiry means that your score will temporarily decrease by a few points. However, the benefits of no longer missing payments and paying off your consolidated debt will likely outweigh the credit score dip. When looking at the bigger picture, this is a small price to pay so that you can get a better handle on your finances.  

What Are The Risks Of A Wisconsin Debt Consolidation Loan? 

A debt consolidation loan can be a great option if you want to simplify your finances, but this option can be more harmful than beneficial if you can’t keep up with the payments. You must be financially disciplined when you take out a debt consolidation loan.  

The monthly minimum payment for a debt consolidation loan is typically higher than a credit card’s minimum monthly payment. With this in mind, make sure that you can afford this payment for the life of the loan; any missed payments will negatively affect your credit score. 

Borrowing From Your Home’s Equity

If you are a homeowner, a popular tool that you can use for debt consolidation is to take out a Home Equity Line of Credit (HELOC). Also known as a ‘second mortgage,’ HELOCs let you borrow against your home’s equity. However, there are usually fees that you must pay, such as an appraisal fee or an application fee. Due to the costs associated with this option, a HELOC is one of the costlier solutions for debt consolidation.  

Since the line of credit is secured against your property, the annual interest rate is usually lower than an unsecured loan. However, there is a significant disadvantage to using a HELOC to consolidate debt. If you cannot make payments on it, the bank can foreclose on your home. Be sure to consult a Wisconsin bankruptcy attorney or debt consolidation specialist before deciding if this option is right for you. 

Borrowing From Retirement Accounts 

Borrowing against your retirement account is another option for consolidating debt. For example, if you have a 401k, you likely have an opportunity to borrow against the balance of this account. Since the loan is secured against your retirement investment account, this route also provides a low-interest rate and extended repayment period.  

The limit for borrowing against your 401k is typically 50% of the balance or a maximum of $50,000. The payment to this loan can automatically deduct from your future earnings. But be aware, if you don’t pay off your loan in full, you might be subject to early withdrawal penalties and expensive tax consequences. 

Balance Transfer Credit Card 

Another popular option for debt consolidation is applying for a balance transfer credit card. This credit card type generally has a lower interest rate or a promotional balance transfer interest rate, usually a 0% annual percentage rate (APR) for a specified number of months. 

Even if you are saving money initially, it is vital to note the interest rate that you will pay after that promotional period ends, especially if you know that you won’t pay off the credit card within the 0% promotional period. You should also check the credit card’s fees, like balance transfer fees and annual card fees.

Attorney Shannon Wynn is available for a FREE debt consolidation consultation to review opportunities for managing your debt.

The Pros & Cons Of Wisconsin Debt Consolidation – Is It The Right Choice For Me? 

The goal of debt consolidation is to save money and reduce the stress of debt repayment. Let’s look at a scenario; if you have a lot of credit card debt with varying high-interest rates and you decide to consolidate all your debt into a lower percent interest credit card, you will instantly save money.  

Another benefit of debt consolidation is simplicity. Instead of juggling multiple payments, you can make a single payment every month that covers all your debt. You can even set up automatic payments toward the loan from your bank account for peace of mind to avoid missing a payment. 

While your score may dip initially, taking out a debt consolidation loan will help improve your credit score over time. One factor that makes up your credit score is credit utilization, which evaluates the balances you owe versus your credit limit. The lower the credit utilization is, the better your credit score will be. Since the debt consolidation loan will help you pay off your debt, this will lower your credit utilization, resulting in an improved credit score. 

Requirements For Debt Consolidation – How To Qualify For A Debt Consolidation Loan? 

Every financial institution or lender has its own set of guidelines for qualifying a borrower for a debt consolidation loan. The common factors for eligibility are your credit score and debt to income (DTI) ratio. 

The higher your credit score, the better your chance of getting approved and obtaining a low interest rate. If you have a low credit score, you might want to consider getting another person to co-sign on the loan with you. A credit score in the mid-600’s will typically be enough to qualify you for most debt consolidation loans with a steady income and reasonable DTI ratio. 

The DTI ratio is a representation of the percentage of your gross income compared to your debt. Lenders use DTI ratios to determine if a borrower will make enough money to pay for their debt while also covering essential expenses. Financial institutions tend to favor customers who have a lower DTI because this means that the person will be more likely to cover the monthly payments.  

Debt Consolidation Alternatives

Before pursuing debt consolidation, it is recommended that you explore at least one of the alternatives below. 

Create A Budget 

Creating a budget might sound basic, but it is the easiest way to figure out if you can afford to live within your means. Start by writing down how much income you make per month and how much you have to pay in loans/bills each month.  

Then, you can figure out your disposable income, which is income that you’re free to spend on whatever you’d like. You can use part of your disposable income to pay down some of your loans. The most important thing is learning to stick to your budget and making your goals realistic.  

Contacting Your Creditors 

You can contact your creditors on your own to try to negotiate a lower monthly payment or interest rate reduction. Banks and financial institutions have hardship departments that can work with you to structure a payment plan or amend the terms of your loan to make it possible for you to continue to make payments. 

Schedule A Consultation With Wynn at Law, LLC

Schedule a free consultation with a Wisconsin Bankruptcy Attorney so that you can have a better understanding of your debt management options. Take advantage of our expertise to have a better chance of improving your financial status. Contact Wynn at Law, LLC to schedule a free debt consultation at one of our three law offices in Southeast Wisconsin. Give us a call at 262-725-0175.

The post Wisconsin Debt Consolidation appeared first on Wynn at Law, LLC.

How Does Debt Relief Work? 

Debt relief is a set of actions taken to significantly reduce, restructure, or refinance debt to make it easier for a borrower to repay. Debt relief measures are usually needed when debt becomes so severe that the borrower can’t make the regular, required payments.  

Debt relief options can help you in several ways:  

• Extend your repayment terms 
• Lower your interest rates 
• Reduce your debt’s outstanding principal amount 

In some cases, creditors may agree to restructure debt and provide some form of relief rather than suffering a total loss due to the borrower’s inability to meet obligations.

Is Debt Relief A Good Option? 

If your debt has gotten out of hand or you can’t find ways to repay, a debt relief program could be your best option. Debt relief programs can help you better manage the debt payments and improve your financial situation. 

When To Seek Debt Relief 

Nearly 80% of all Americans today are in debt. The COVID-19 pandemic drained the savings accounts of millions of Americans and sent personal debt skyrocketing. While the average debtor can manage to make their repayments, this is not the case for everyone.  

Some of the most common reasons that people seek debt relief in Wisconsin include medical bills, credit cards, divorce, reduced income, unexpected expenses, disability, and eviction. Regardless of the source of your debt, it may be worthwhile to consider debt relief. Individuals struggling with overwhelming debt should contact Wynn at Law, LLC to schedule a free consultation to outline a personalized debt management strategy. Seeking debt relief can mean the difference between chronic stress and freedom from financial burden. 

Types Of Wisconsin Debt Relief 

Being in overwhelming debt can be nerve-wracking and make you feel insecure about the future. However, the good news is that several options can help you get back on your feet.

Bankruptcy  

Bankruptcy is a widespread Wisconsin debt relief option, but it is not a one-size-fits-all solution. There are two main types of personal bankruptcy for Wisconsin residents. The first is a Chapter 7 Bankruptcy, which is sometimes known as “straight” or “liquidation” bankruptcy and is designed to eliminate debt — credit cards, personal loans, medical bills, and other unsecured debt. The second is a Chapter 13 Bankruptcy is a debt repayment plan that consolidates, reorganizes, and restructures debt to make repayment more manageable. 

Bankruptcy can provide the following benefits: 

• Stop creditors and collectors from contacting you 
• Stop all collection lawsuits and actions to collect the debt 
• Stop wage garnishments 
• Stop the Wisconsin foreclosure process and avoid evictions 
• Stop the repossession of cars, appliances, and other personal property 

Chapter 128 Debt Amortization Plan

A Wisconsin Chapter 128 Debt Amortization Plan is a low-cost alternative to bankruptcy that focuses on consolidating debt with a personalized debt plan. This Wisconsin debt relief option can pause late fees, wage garnishment, and accruing interest. The structure of Chapter 128 allows you to customize your approach by selecting the unsecured debt that makes sense for your situation. Typically a Chapter 128 plan will include a combination of debt from credit cards, civil judgments, payday loans, medical bills, personal loans, or collection accounts.

Debt Consolidation

Debt consolidation is a debt relief solution that merges all your debt into a single liability to simplify its repayment. Choosing this option means that all of your unpaid loans or credit card debt are combined into one loan that you can pay off, occasionally even with a lower interest rate. In addition, debt consolidation often allows you to manage your monthly payments easier as it reduces the number of payments being made on your debt. 

Debt Management Plans 

If credit card debt is your main issue, a Debt Management Plan (DMP) might help turn your financial situation around. A DMP is organized through the help of a credit counselling agency and is offered to those who cannot complete credit payments at their current terms. DMPs typically cover unsecured debt, such as credit cards or loans that are not secured by collateral. The counselling agency negotiates a new plan to your creditors on your behalf, and if successful, you can waive certain fees that have been incurred and lower your monthly interest.

Debt Settlement 

A settlement allows you to negotiate with your creditor to waive a portion of what you owe so that you can more easily make your monthly repayments. Depending on what you can negotiate with your creditor, settlement agreements can reduce your debt significantly. Although there’s no guarantee that a creditor will waive a portion of your debt obligation, a successful settlement results in you having to pay a far less amount than what you owe, placing you in a better position to repay them. 

Debt Forgiveness 

Debt forgiveness is what happens when a creditor agrees to remove all (or a portion) of your debt obligation. This route often involves complex negotiations with creditors. Most creditors aren’t thrilled with the idea of just simply cancelling a debt. However, debt forgiveness can also be achieved through formal bankruptcy proceedings. 

Credit Counselling 

Learning to manage your finances more effectively can make the difference between falling further into debt or paying it off entirely. If you’re struggling to pay off your unsecured debt and have concerns about your credit score, credit counselling can help you finally make some progress. This program educates debtors on more efficient ways of paying off their debt and avoiding additional debt in the future. Credit counselling is a requirement for individuals that file for bankruptcy in Wisconsin.

What To Know Before Applying For Debt Relief? 

Negotiating to restructure your debt can seem like a daunting task, but know that you’re not alone. Wynn at Law, LLC can help you explore your debt relief options and help you regain financial stability. 

Speak To A Wisconsin Bankruptcy Attorney 

If your outstanding debt is unmanageable, and you’re considering all of your Wisconsin debt relief options, speaking to an experienced attorney can help you decide the best course of action. If filing for bankruptcy is a good option for your situation, a bankruptcy attorney is crucial to navigate the complex process successfully. Having a bankruptcy attorney at your side can help you become successful at eliminating your debt and save you money. 

Beware Of Debt Relief Scams 

Fraudulent debt service companies often target vulnerable consumers by using a false promise to significantly reduce or eliminate their outstanding debt. When dealing with any debt relief company, it is crucial to do your homework to ensure their legitimacy. The Wisconsin State Attorney General’s office and the Better Business Bureau can provide the information you need to validate the legitimacy of any debt settlement company you intend to hire. 

Interest Rates 

Interest rates will always have a massive impact on your monthly payments. If you decide to pursue debt consolidation, always make sure to compare your old interest rates to the consolidated rates. In addition, be careful about accepting terms that reduce monthly payments but greatly extend the amount of time you will have to repay. While you might be enjoying lower monthly payments on the new loan conditions, you could end up paying more over the entire length of the loan.

Debt Relief Fees 

If you’re considering enrolling in a debt management plan, make sure to be aware of all fees before committing.  

Tax Implications 

Any time you negotiate with a creditor to reduce your outstanding debt, the amount the Creditor “forgives” can be considered taxable income. Therefore, always take tax implications into account when deciding which debt relief option is best for you. 

Does Debt Relief Affect Your Credit Score? 

Depending on which type of Wisconsin debt relief program or method you choose, the impact on your credit score can vary. Some effects can be temporary, while others can impact your credit score for up to a decade. However, missing payments will also negatively impact your credit score. If you are in a financial position where you can’t meet all of your debt obligations, many structured debt relief options could be better for your long-term credit score. 

Schedule A Free Bankruptcy & Debt Consultation With Our Wisconsin Law Firm 

When it comes to resolving your debt issues, you don’t have to go through it alone. If you need help negotiating with creditors or creating a debt management plan, it’s always better to consult with an experienced bankruptcy and debt relief attorney. 

Wynn at Law, LLC’s attorneys will review your situation and provide you with practical legal advice. The goal is to help you move forward and become debt-free. Contact us today for a free Wisconsin debt relief and bankruptcy consultation. 

The post A Complete Guide To Wisconsin Debt Relief appeared first on Wynn at Law, LLC.

• What happens to your tax refund check if you plan to file for bankruptcy?
• Can you lose your tax refund?
• Should you wait to file your taxes? 

In this article, Wynn at Law, LLC’s bankruptcy attorney Shannon Wynn explains how you can file for bankruptcy and keep your income tax refund.

Should I wait to file my income taxes if I am considering bankruptcy?

Are you contemplating filing for Chapter 7 or Chapter 13 bankruptcy this year? If so, you may be wondering about the best timing for your bankruptcy. One common consideration is if it is better to file bankruptcy before or after filing your income taxes.

Each individual’s situation is unique. A bankruptcy attorney can help you decide when is the best time for you to file.

Generally, Wynn at Law, LLC’s bankruptcy attorney, Shannon Wynn, recommends filing your bankruptcy petition after filing your income taxes. In most cases, this is the best scenario. If you file for bankruptcy before filing your 2020 income taxes, the bankruptcy trustee may request you file your 2020 taxes quickly after your bankruptcy filing. Filing your taxes prior to filing bankruptcy, will also help your bankruptcy attorney give you the best advice on any refunds you are entitled to receive from the state or federal government. 

Your income tax refund and the bankruptcy estate

Your bankruptcy estate consists of all the assets you own when you file your Wisconsin bankruptcy case. Your income tax refund amount is included in your bankruptcy estate. That means the bankruptcy trustee may be able to use the refund to pay your creditors, whether you have already received the check or if you are still expecting the refund check. 

It is possible to protect your income tax refund check from the trustee, but that will depend on the allowable amount you can exempt by law and is influenced by the other assets you need to exempt. It is essential to consult with a bankruptcy attorney to pre-plan your bankruptcy estate and exemptions. 

Ways to keep Your income tax refund check when filing for bankruptcy

You can spend your tax refund prior to filing bankruptcy without getting into trouble with the bankruptcy trustee if you spend it the right way. This list includes living necessities, such as mortgage payments or rent, food, car repairs, and a few others. Ask a bankruptcy attorney what expenses qualify. 

It is important to remember that some expenses and utilities can be paid, such as medical bills, but may not be a good idea to pay prior to filing bankruptcy. Once you file your bankruptcy, you may not be responsible for repaying those creditors. You must choose the best way to spend your tax refund, and it is wise to do so under the advice of a bankruptcy attorney.

A bankruptcy attorney can help protect your tax refund

The absolute best way to avoid losing your income tax refund is to talk to a bankruptcy attorney. It may be worthwhile to use your income tax refund to pay your bankruptcy attorney fees if you plan to file for bankruptcy. If you are hiring an attorney to help with your bankruptcy case, which you should, you need to pay your bankruptcy attorney before filing your bankruptcy case. With your tax refund, you can pay your bankruptcy attorney upfront in one lump sum and start your case faster. This is especially beneficial if you are having a hard time raising the money for the cost of filing bankruptcy.

Things to avoid doing with your tax refund when filing for bankruptcy

You must not spend the income tax refund money frivolously. Never purchase luxury items or spend the money on loan repayments to your family and friends. Doing so can cause the trustee to require the repayment of the money. 

People can often spend their tax refund money before filing for bankruptcy. File your taxes, receive your check, spend the money, and then file your bankruptcy. However, it is vital to keep a record of exactly how the money was spent. The bankruptcy trustee has the right to ask you.

Can bankruptcy eliminate income tax debt?

It is possible to discharge some Federal and Wisconsin income tax debt by filing for bankruptcy. However, the debt must meet specific qualifications:

• Federal or state income taxes only.
• Tax returns must be filed on time – despite not paying the balance due. 
• The tax debt must be at least three years old. (If you are expecting to owe money for your 2020 income taxes, it will not be dischargeable because the debt is less than three years old.) 
• The IRS’s income tax debt must be assessed at least 240 days before you file or must not have been assessed at all (240- Day Rule).

Once your qualifying tax debt has been discharged through bankruptcy, you are no longer responsible for paying back the taxes and any penalties assessed on your tax debt. 

Do I need to file my income taxes?

Yes. The bankruptcy trustee will require you to provide copies of (at least) the last 2 years of income taxes. 

Contact Wynn at Law, LLC’s bankruptcy law office

If you are considering bankruptcy this year and have questions, please contact our bankruptcy attorney, Shannon Wynn. Wynn at Law, LLC offers free, in-depth bankruptcy consultations. Our bankruptcy attorney is here to listen, advise, and help during your financial difficulties. You can reach our bankruptcy attorney by phone at 262-725-0175 or by email via our website’s contact page. Wynn at Law, LLC has bankruptcy law offices conveniently located in Salem, Delavan, and Lake Geneva, Wisconsin.

The post Learn How You Can File Bankruptcy and Keep Your Tax Refund appeared first on Wynn at Law, LLC.

Paying for an attorney may be concerning when your debt already feels unmanageable; however, in virtually all cases, the cost of declaring bankruptcy is far less than the total expense of bills, late fees, and interest that you would pay without bankruptcy.

The cost of filing for bankruptcy will depend on the details of your situation. There are three main categories of expenses to consider when evaluating bankruptcy:

• Bankruptcy Court Filing Fees
• Bankruptcy Attorney Fees
• Required Credit Counseling Courses

In this article, Wynn at Law, LLC will explain the costs of filing for bankruptcy in Wisconsin.

Breakdown of Wisconsin Bankruptcy Costs

There are two common types (also known as chapters) of bankruptcy for individuals in Wisconsin: Chapter 7 Bankruptcy and Chapter 13 Bankruptcy. The type of bankruptcy significantly impacts bankruptcy fees and costs. 

Note: the cost of declaring bankruptcy is the same for married couples as it is for single individuals when you file with Wynn at Law, LLC.

Bankruptcy Attorney’s Fees

Attorney’s fees are the largest variable cost for declaring bankruptcy. While it is possible to file for bankruptcy without an attorney, it is typically an expensive mistake. Individuals representing themselves (called pro se) have a significantly lower bankruptcy success rate than individuals represented by an attorney.

To protect consumers from excessive fees, bankruptcy judges can review the attorney’s fees and approve or deny the fees as appropriate for a particular case. Chapter 13 Bankruptcy attorney’s fees tend to be more expensive than attorney’s fees for a Chapter 7 Bankruptcy case.

Cost of Chapter 7 Bankruptcy Attorney

Chapter 7 Bankruptcy is the most popular type of bankruptcy for Wisconsin residents. This type of bankruptcy provides the opportunity to eliminate credit card debt, personal loans, medical bills, and other unsecured debts.

Factors that can impact attorney’s fees include:

• Business Ownership
• Number of Creditors
• Asset Ownership and the Need for Asset Protection Planning
• Foreclosure, Repossession, Eviction, and Other Legal Actions
• Non-Dischargeable Debts (Student Loans, Child Support, Alimony, or Past-Due Taxes)

Learn more about Chapter 7 Bankruptcy

Cost of Chapter 13 Bankruptcy Attorney

Chapter 13 Bankruptcy consolidates, reorganizes, and restructures unsecured debt using a repayment plan. Typically, Chapter 13 repayment plans require the restructured debt to be repaid over 3-5 years. This type of bankruptcy is available to individuals and couples that intend to use future disposable income to pay some or all debt. 

Chapter 13 Bankruptcy attorney’s fees can often be included in the bankruptcy repayment plan or be scheduled on a payment plan with the attorney.

Learn more about Chapter 13 Bankruptcy

Schedule a No-Cost Bankruptcy Consultation

Don’t let the cost of an attorney keep you from pursuing bankruptcy. Wynn at Law, LLC understands that bankruptcy clients are in financial distress. Schedule a FREE consultation with Wynn at Law, LLC to discuss your financial situation. Our attorneys will help you determine if bankruptcy is the right option for you and Wynn at Law, LLC offers flexible payment plans. The sooner that you contact a bankruptcy attorney, the more money you can save.

Bankruptcy Filing Fee

Filing a petition for bankruptcy typically requires a court filing fee. The bankruptcy filing fee is standardized across the United States.

The Chapter 7 Bankruptcy filing fee is $335.

The Chapter 13 Bankruptcy filing fee is $310.

If an individual’s income is below 150% of the Wisconsin poverty line, it is possible to get a waiver that eliminates the filing fee for Chapter 7 Bankruptcy. Fee waivers are rare for Chapter 13 Bankruptcy cases. The bankruptcy court may allow you to pay the filing fee using installment payments over a series of weeks or months depending on your income as well.

Required Courses

To successfully file for bankruptcy, individuals must complete two educational courses. The first required course is a credit counseling session, which must be completed before filing. The second mandatory course is a debtor education course, which must be completed before the debts are discharged. Both of these courses can be completed online and are not excessively time-consuming.

Generally, these courses cost less than $50 each. These courses must be taken through an approved provider, and the course provider determines the price.

Other Bankruptcy Fees

There are a few additional costs and fees that may arise when filing for bankruptcy. Additional costs are typically minimal and can occur due to document printing and commuting/travel. Miscellaneous fees can occur if additional motions need to be submitted or files need to be retrieved from the courts.  

An experienced bankruptcy attorney can minimize the risk of additional fees by carefully reviewing the bankruptcy case before filing.

How to Reduce Bankruptcy Costs

There are a few options to reduce out-of-pocket expenses for individuals concerned about the fees associated with filing for bankruptcy.

Some individuals may also qualify for free legal advice through Legal Action of Wisconsin (Racine). This legal aid office helps qualifying Walworth County and Kenosha County residents to reduce the overall cost of bankruptcy, and their lawyers can represent cases pro-bono (for free).

Unemployed, low-wage earners, disabled, and elderly individuals may be eligible for fee reductions or waivers.

It is possible to file for bankruptcy without an attorney. However, it is essential to remember bankruptcy attorneys have a significantly higher success rate for discharging debts.

Is Bankruptcy Worth It?

Bankruptcy is an option to consider for excessive debt from medical bills, utility bills, payday loans, vehicle repossession debt, personal loans and credit cards. Depending on the type of bankruptcy, individuals can eliminate all or most debt.

If you are facing financial difficulty, meeting with a bankruptcy lawyer can help you evaluate all of your debt relief options. Wynn at Law, LLC offers a FREE bankruptcy consultation. During this consultation, our attorneys will be able to estimate the debt that can be eliminated and will provide a personalized quote for the cost to file for bankruptcy. Contact Wynn at Law, LLC at 262-725-0175 to schedule your consultation at one of our three Southeastern Wisconsin locations.

• Lake Geneva Law Office
• Delavan Law Office
• Salem Lakes Law Office

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A Chapter 7 bankruptcy filing stays on a FICO record (aka ‘credit score’) for 10 years from the date you file your bankruptcy. It’s seven years from the date of filing for a completed Chapter 13. Either may sound like a very long time. But first and foremost, it beats the bind that led to the filing. The creditor calls (see related article on the Automatic Stay) are a thing of the past. The stack of bills next to your checkbook might be considerably shorter and probably better matches your paycheck.

Credit scores react first

A bankruptcy filing is serious business and should be given serious thought prior to filing. That being said, it does have some potential bright spots as a new beginning.

Hidden among the bad news that your credit score likely will go down upon filing bankruptcy is the fact that your score probably was in bad shape before the filing anyway. And heading for worse. Another silver lining is that many of your debts are gone; therefore, the bankruptcy will make your debt to income ratio much better. In both Chapter 7 and Chapter 13, delinquent accounts before filing remain on your credit report. In Chapter 7 cases, they will stay on the report for seven years. Chapter 13 debts are often paid off according to the bankruptcy payment schedule in three to five years. Since these debts are repaid all or in part, the records will be removed from your credit report sooner than Chapter 7 debts, which aren’t repaid at all.

You can get credit again

It isn’t going to happen overnight, but you will have an opportunity to rebuild credit. More, shall we say ‘aggressive,’ lenders swoop in first with high interest credit card and auto loan offerings right after filing. Resist the temptation, if possible. As you rebuild a steady track record of paying on-time things like mortgage payments, car payments, and student loan payments, better chances to rebuild credit will come. Usually a secured credit card opportunity is going to come your way first.

Once you establish a good payment record and are living within your means, lenders will see you as a decent risk. Why? They know you can’t file another Chapter 7 bankruptcy again for eight years after your previous Chapter 7 filing.

You know your pitfalls

The best outcome in a bankruptcy filing is that you’ve learned from and implemented corrections to previous money errors or have been able to put a horrible life event behind you like a medical emergency or car repossession. You’ll know the consequences of paying late, for example. You also learn to budget. And stick to it.

Image by Andrew Lozovyi, used with permission

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Bankruptcy filing – or the prospect of it – usually puts Wynn at Law LLCclients in full-out panic mode. One of the most alarming, last-ditch, hail-Mary ideas coming from this desperation is to cash out a retirement plan to avoid bankruptcy court. In some cases, people can ‘borrow’ against their company retirement plan, usually a 401(k). This is as dangerous as cashing out to cover the financial struggle.

Don’t. Touch. This. Money.

 
Retirement money is tax-exempt until you touch it. If you touch it too early, you’ll be subject to taxes and penalties. Here’s a primer on a few of those consequences:

A tax specialist or accountant will give you clearer instruction on your particular situation’s consequences. Wynn at Law LLC is concerned about those immediate consequences, and the long-term ones. It’s your retirement income you’re putting in jeopardy. You’re mortgaging your entire future! If you leverage this nest egg to avoid bankruptcy filing today, you may have just kicked the can down the road, facing potential bankruptcy in your retirement years.

In almost every case, your qualified retirement plan is EXEMPT from your bankruptcy filing anyway. You get to keep the plan, your creditors don’t. But this goes back to a message from an earlier Wynn at Law LLC article on honesty: You have to disclose that your own a retirement account. It’s still going to be your retirement nest egg, they can’t touch it, but you can’t hide it.

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

 Photo by Barbara Reddoch, used with permission.

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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.

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