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The news we heard at Wynn at Law, LLC in February reported that Wisconsin bankruptcy filings last year were at their lowest level since 2007, before the recession. What does that mean to you? Absolutely nothing. Economists care about the number because it means more people are working (maybe) and more people are paying what they owe (probably).
It could also mean that more people in debt sought relief immediately after the mortgage crisis rather than waiting and struggling. There’s no shame in that. And there’s no shame in waiting until now to file if you’ve struggled trying to get caught up. About the only thing that fewer filings in 2016 means to you and me is that the bankruptcy judge may have a little less of a backlog of cases. Maybe.
On that note, one of the first questions I get is, ‘How long will the filing take?’ A lot less time than it took to get into debt, for sure. And a lot less time than it takes to continue to paddle upstream against interest rates, penalties, and harassing phone calls. Depending upon the shape your financial records are in, the process is around four to six months. That’s the filing process to get a ruling. If you have a Chapter 13 bankruptcy, you’re still involved with payment plans approved by the court for the following 36 to 60 months.
Before Wynn at Law, LLC files your Chapter 7 or Chapter 13 bankruptcy, however, most clients are required to go through pre-bankruptcy credit counseling and get a certificate. I’ll have more about this in next week’s article. Once we have that and file with the court, the Automatic Stay gives you an immediate break. Take a look at my earlier article on Automatic Stay.
There are several other milestones along the process including the creditor meeting I mentioned last week. Following the creditor meeting, there’s a 60-day window for the creditors to possibly challenge discharging your debt. So, from filing to the end of that 60-days, the average case in southeast Wisconsin will take four to six months. Or maybe a little less in light of the recent news.
 
*The content and material in this original post is for informational purposes only and does not constitute legal advice.

Married couples share many aspects of their lives, including finances, which can make filing for bankruptcy a complicated decision.  In this article, our Roseville Chapter 13 bankruptcy attorneys discuss a few key aspects of how filing for bankruptcy can affect your spouse, including whether you are liable for your husband or wife’s debts, filing for bankruptcy without your spouse, and some of the reasons to consider – or avoid – filing jointly with your husband or wife in California.

Are You Liable for Your Spouse’s Debts in Chapter 7 or Chapter 13 Bankruptcy?

When you file for bankruptcy, your objective is to obtain a discharge, which will eliminate your liability for dischargeable debts, such as credit card debt and medical debt.  However, unless you are filing jointly with your spouse, only your financial liabilities are affected.  If you file for bankruptcy but your spouse does not, he or she will still be responsible for any debts you held jointly (in addition to any personal debt he or she may have, which will also be unaffected by your bankruptcy).
When you file for bankruptcy, you immediately trigger an injunction, or court order, known as the “automatic stay.”  The automatic stay remains in effect for the duration of the bankruptcy, and generally prevents creditors from taking collection actions.  Critically, the non-filing spouse will not be protected by the automatic stay, which means that creditors can continue contacting him or her about jointly-held debts.  For these reasons, filing jointly is often appropriate in situations where most of the couple’s debts are shared.
Conversely, filing individually makes more sense if the debts are primarily held by one spouse.  If you have considerable debt, but your spouse has little debt of his or her own, filing jointly may be inappropriate – particularly because there are time limits that restrict the number of discharges you can obtain within a certain time period.  If you declare bankruptcy but your spouse does not, he or she will retain the option of filing at a later date should doing so become necessary.  Moreover, because bankruptcy will, at least initially, have a negative impact on your credit score, it makes little sense for both spouses to file if only one person is actually in need of debt relief.
Can I File Chapter 13 without My Spouse?
The short answer to this question is yes, you can file for Chapter 13 bankruptcy (or Chapter 7 bankruptcy) without your husband or wife.  There is no law requiring married couples to file jointly.
Ultimately, the decision to file jointly or separately must be evaluated by each couple – ideally with help from an experienced Chapter 13 or Chapter 7 bankruptcy lawyer in Roseville.  A bankruptcy strategy that proves pragmatic for one couple may be entirely inappropriate for a different couple.  It simply depends on each couple’s unique financial situation, including not only their present circumstances, but also their financial goals for the future.
Advantages of Filing a Joint Bankruptcy for Married Couples

Just as there are reasons to avoid filing jointly, there are also some situations where a joint bankruptcy makes financial sense.  For example, it might make sense to file jointly if most of your debt is shared and is of a dischargeable nature.  Here are two benefits to filing for bankruptcy jointly with your wife or husband:

1. There are court fees and other costs associated with filing for bankruptcy.  If you file jointly, you will share a single petition with your husband or wife, which means you will save money by “killing two birds with one stone.”  For reference, it costs $335 to file a Chapter 7 bankruptcy petition and $310 to file a Chapter 13 bankruptcy petition in California bankruptcy court.
2. If you file together, you may be able to double your exemptions, which are used to protect property from sale by the trustee assigned to your case.  For example, personal property exemptions can help protect your appliances, furnishings, vehicles, jewelry, family heirlooms, and other valuable items.

California Bankruptcy Lawyers Serving Sacramento and Roseville
Every married couple is uniquely impacted by different legal and financial factors.  By discussing your situation in depth with an attorney, you and your husband or wife will be empowered to make an informed decision about which course of action is most suited to achieving your goals.  Bankruptcy is a major financial decision, and before you file any paperwork, it is in your family’s best interests to make sure that you are represented by a skilled and knowledgeable California bankruptcy attorney who can sit down with you to determine who is responsible for which debts, how your property and assets are divided, and how to approach the situation in a practical, efficient, and cost-effective manner.
To talk about your California bankruptcy case in a free and completely confidential legal consultation, contact The Bankruptcy Group at (800) 920-5351.  We have extensive experience assisting married couples and single individuals with joint and individual bankruptcy filings in the Sacramento and Roseville area.
The post What Will Happen to My Spouse if I File for Bankruptcy in California? appeared first on The Bankruptcy Group, P.C..

By Ed Adamczyk 

Feb. 17 (UPI) -- Total U.S. household debt climbed to a near-record $12.58 trillion by the end of 2016, a Federal Reserve Bank of New York report says.

February's 33-page "Quarterly Report of Household Debt and Credit" shows that every category of debt measured -- including mortgages, credit cards, student loans and auto loans -- saw an increase.

The total increase of $460 billion in 2016 was the largest in a decade. Mortgage balances, now at $8.48 trillion, made up 67 percent of the household debt.

At the current rate of growth, household debt is expected to break the 2008 record high, of $12.68 trillion, sometime in 2017. The year was marked by the start of a recession.

The report indicates mortgages still make up the bulk of household debt, but student loans are now 10 percent of the total, auto loans are 9 percent of the total and credit card debt is 6 percent. Dollar amounts rose in each category in 2016's fourth quarter. The rising debt indicates that banks are extending more credit to households.

A major difference between the 2008 and 2016 debt levels, the report said, is that fewer delinquencies were reported at the end of 2016. In last year's fourth quarter, 4.8 percent of debts were regarded as delinquent or late in payment, compared to 8.5 percent of total household debt in 2008's third quarter.
There were also 200,000 fewer consumer bankruptcies reported in 2016's fourth quarter, a four percent decline, compared to the fourth quarter of 2015.

Copyright © 2017 United Press International, Inc. All Rights Reserved. 

 
The Eight Circuit Bankruptcy Appellate Panel (8th BAP) affirmed the discharge of a $27,000 of federal student loan debt despite the fact that the debtor, Sara Fern, was eligible to pay nothing in an Income Based Repayment (IBR) plan.  See In re Fern.
The debtor is a 35 year old single mom of three children, ages 3, 11 and 16.  She originally sought a degree as an accounting clerk, but after being unable to complete the required coursework she changed studies and obtained a degree as a beautician.  After graduating she attempted to start her own business and rented space in a tanning salon, but her efforts failed. For the past 6 years she has worked for the same employer earning $1,506.78 of take-home pay.  She also receives food stamps and rental assistance but does not receive any child support. Her income has been consistent and she has no savings.  The court noted that her income is not likely to improve.
Based on these factors the Department of Education opposed the debtor’s discharge request for the reason that she qualifies for a zero monthly “payment” under an Income Based Repayment plan. The 8th Circuit has previously stated that student loans should not be discharged when a debtor can afford to make a modified payment through an income-based repayment plan.  Educ. Credit Mgmt. Corp. v. Jesperson, 571 F. 3d 775(8th Cir 2009).  The DOE argued that if the monthly income-based payment would be zero, how could the loans be a hardship?
The bankruptcy appeals court disagreed.

We do not interpret Jesperson to stand for the proposition that a monthly payment obligation in the amount of zero automatically constitutes an ability to pay.

The court distinguished the Jesperson opinion from a case involving a low-income debtor who qualifies for a zero monthly student loan payment.  The Jesperson case involved an attorney who graduated with $300,000 of student loan debt. The debtor in Jesperson was young attorney in good health with no dependents, and he had the ability to substantially increase his income. Jesperson was a case where the debtor’s self-imposed conditions limited his income. In contrast, Sara Fern was working to her full potential while raising three minor children with no assistance. And, even though a zero monthly payment does not affect a debtor’s current monthly income, it does constitute an emotional burden and it causes long-term damage to the debtor’s credit rating thus affecting the cost of borrowing for car loans, etc.
Is the 8th Circuit becoming lenient on student loans? Nobody could ever argue that the conservative judges of the 8th Circuit are lenient, but they have become more skeptical of income-based repayment plans when there is no evidence that a debtor’s income will ever change.
 
Image courtesy of Flickr and Chuck Falzone.