2011 Foreclosure Statistics

Don’t be another statistic.  Call me today to find out how Chapter 13 Bankruptcy can help save your home from foreclosure.

Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Total
Brown 85 70 99 72 65 67 62 78 102 61 87 87 935
Calumet 13 7 11 10 7 11 10 10 12 9 10 13 123
Door 11 8 8 10 10 10 11 14 5 4 11 5 107
Florence 1 4 4 1 1 1 1 0 3 1 0 2 19
Fond du Lac 40 24 33 27 37 31 20 37 34 26 30 23 362
Forest 2 5 2 3 3 5 4 1 5 2 2 8 42
Green Lake 8 7 11 6 6 4 6 6 7 9 12 8 90
Kewaunee 9 5 7 3 4 13 6 6 15 8 5 7 88
Langlade 10 5 9 12 10 6 4 11 12 7 4 3 93
Manitowoc 40 24 25 17 22 21 13 20 22 23 26 23 276
Marinette 24 20 17 10 16 10 13 18 18 19 13 18 196
Marquette 7 4 9 6 5 9 8 13 8 10 7 10 96
Meonominee 0 1 2 0 0 0 0 0 0 0 1 0 4
Oconto 28 13 17 16 13 16 16 17 20 22 19 17 214
Outagamie 43 38 58 50 47 33 46 44 50 38 38 40 525
Shawano 24 18 19 11 13 19 11 12 14 10 18 4 173
Sheboygan 43 38 46 27 42 40 42 44 39 35 45 37 478
Waupaca 22 21 19 13 20 24 12 26 22 18 20 12 229
Waushara 13 10 16 12 10 14 10 16 13 8 14 7 143
Winnebago 59 50 63 53 43 37 34 48 38 59 57 46 587
Total 482 372 475 359 374 371 329 421 439 369 419 370 4780

The Ostritch Effect

I was chatting with a colleague of mine about clients who claim to never be served with legal notices, and we ended up on a discussion of the ostrich effect.  When claims of lack of service are fully investigated, what we discover 9 times out of 10 is that, in fact, notices were served to our clients, they just ignored the notice or didn’t understand the notice.  At any rate, this is generally referred to as the ostrich effect – the belief that problems will go away on their own if you just ignore it and pretend like everything is hunky dory.  We see this all the time with people who just suddenly become aware of a pending wage garnishment, foreclosure sale, or utility shut-off.
As I’ve blogged about in the past, the first quarter of the year is generally a very busy time for bankruptcy attorneys.  A confluence of events leads to a number of people suddenly realizing that they need to file for bankruptcy:
  • Christmas credit card bills
  • property and income taxes
  • annual dues and memberships
  • winter heating costs
  • increased lay-offs and unemployment rates during the winter season

And all of this culminates into the April 15 deadline for people to have their utilities shut off due to the end of Wisconsin’s winter moratorium.  Literally thousands of debtors who haven’t been paying their utility bills, all scrambling at once to file bankruptcy as an 11th hour attempt to keep the lights on.
So it is in that spirit that I bring up the ostrich effect in the hopes that this whimsical illustration will remind folks to not wait until the last possible minute.  Consult with an attorney.  Our initial consultations are free, and it never hurts to arm yourself with as much information as early on as possible.

Bankruptcy MythBusting #10

Myth:  I will never have another credit card again!  I don’t want or need to rebuild my credit.
Fact:  Your credit does more for you than allow you to incur debt.  Although rebuilding credit for that purpose is enough of a reason if you ever hope to buy a home or new car.  But let’s pretend for a moment that you are willing to live in an apartment for the rest of your life and buy beaters with cash, just to avoid going into debt again.  Your credit score is used by more than just lenders, such as prospective employers, insurance underwriters, and prospective landlords.
In a nutshell, you need to be concerned with your credit score (and more importantly, rebuilding your credit score), because it will impact many areas of your life.Credit cards might not be the best way to rebuild credit, but it is faulty logic to believe that credit cards are – in and of themselves – bad.  They are not.  Credit cards can be very useful tools, if used properly.The problem is that too many people use credit cards and loans as a means of supplementing their income.  For example, Bob earns $2k per month, spends $3k/mo, and supplements his income by taking out $1k loans each month.  Bob is living beyond his means.  The proper way for Bob to handle his finances is to either scale back his expenses, find ways to increase his income, or a combination of both.Credit cards are best used as a means of a temporary advance.  Bob spends $2k/mo, and Bob earns $2k/mo, but Bob doesn’t have $2k right this second.  He needs to make a purchase, and will have the money to cover the purchase on a later date.  He puts the purchase on a credit card, and promptly squares his bill when the statement comes in.Of course, budgeting (leaning how to scale back expenses as necessary) and determining what expenses are necessities and what expenses are optional is a whole other topic.  As an experienced bankruptcy attorney, I can help make suggestions for improvements to your budget so that you only have to go through bankruptcy once, and can avoid having to do it again in the future.
If you’d like to schedule a free consultation to determine what we can do for you, give my office a call at (920) 490-6160.

Bankruptcy MythBusting #9

Myth:  Debts I list on my bankruptcy schedules will be discharged.  OR  Debts I do not list on my bankruptcy schedules will not be discharged.  OR  I can pick and choose which debts to include.
Fact:  A lot of confusion arises because most people think that “listing” a debt is synonymous with “filing against” or “discharging” a debt, which is inaccurate.  Unfortunately, too many people do not disclose all of their debts as they should, and this causes big problems down the road.  Listing a debt on your bankruptcy schedules is NOT synonymous with having the debt discharged.  Whether a debt is discharged depends on the nature of the debt, not whether it was listed and disclosed.A non-dischargeable debt (such as a student loan or tax debt) is what it is.  You could file bankruptcy over and over again, and list your student loans on your bankruptcy petition each and every time.  Unless you can demonstrate the nearly impossible standard of undue hardship, those student loans are not going away.And a dischargeable debt (such as a credit card or medical bill) is what it is.  So many clients want to keep a particular store credit card, a credit card for making fuel purchases, or they don’t want to file against their favorite doctor.  But the bankruptcy is universal, and all unsecured debts are discharged, whether they were listed on schedules or not.

Stated another way, the Chapter 7 discharge is “good against the world,” including unscheduled creditors.  The discharge is said to be good against the world in the sense that it applies to all unscheduled debts except those that are expressly made nondischargeable by § 523.  In re Guseck, 310 B.R. 400, 402 (Bankr. E.D. Wis. 2004)

Nor does listing your home mortgage and auto loan mean that you are going to lose your house or car.  Most people get to pick and choose which secured debts they will reaffirm or surrender.  Listing secured creditors on your bankruptcy schedules is not itself an affirmation of intent.So if a debt will be discharged whether or not it is listed on schedules, or if a debt is non-dischargeable whether or not it is listed on schedules, then why is it is so important to list creditors on schedules?No matter who the creditor is – a non-dischargeable student loan, a dischargeable credit card, or a home mortgage you intend to reaffirm – they are all legally affected by your bankruptcy filing.  Your bankruptcy case automatically endows you and all of your creditors with certain rights and responsibilities.Disclosing all debts is a matter of proper notice and due process rights.  Each of your creditors is entitled to be made aware of your bankruptcy so that they can conform their behavior accordingly.  If their debt is dischargeable, they may be entitled to object to discharge if they can prove fraud.  Though student loans won’t be discharged, your lender is still required to not make collection attempts while the bankruptcy is pending.  And though you intend to reaffirm your home mortgage, the debt is technically dischargeable, so your lender needs to execute a reaffirmation agreement.And if your case is an “Asset Chapter 7” (non-exempt property available to the trustee to be sold for the benefit of unsecured creditors) or a Chapter 13 (which includes monthly plan payments to be redistributed among creditors), then all of your creditors have a right to know about the bankruptcy so they can file claims.Sure, there are other reasons to list all creditors.  (1)  So you get the full force and benefit of your automatic stay and discharge injunction protections.  (2)  Because your debt to income ratio, who your creditors are, and how much your creditors are owed (regardless of class) may very well have a material impact on your case and how it is administered.  (3)  Because keeping unsecured debts “out of bankruptcy” usually means you’re still making payments to them, which would suggest that you have been making preferential payments.But at the end of the day, it is primarily a due process issue.  Each and every one of your creditors, regardless of your intent to pay and regardless of dischargeability, will be affected by your bankruptcy case and have a right to know that you filed for bankruptcy.
Want to find out what bankruptcy could mean for you?  Call (920) 490-6160 now to schedule a free consultation.

Bankruptcy MythBusting #8

Myth:  I make too much money to qualify for bankruptcy.
Fact:  Although it is possible to earn too much money to qualify for Chapter 7 Bankruptcy, there is no income limit on Chapter 13 Bankruptcy.  Even millionaires and billionaires can file for bankruptcy.  It’s not about the money you make.  It’s all about your debt to income ratio.  A person making $40k per year in income and no debt could be doing better than someone making $400k per year if the latter person has a bucket load of debt.
Several weeks ago, I saw an advertisement for some reality show – I believe it was “Braxton Family Values”, where one girl commented on another girl’s house and pool “Is this what it means to be bankrupt?”  I thought the ad was amusing.
Bankruptcy is a very nuanced field of law.  I don’t mean to give anyone the impression that if they file for bankruptcy, that they too could wind up in a Beverly Hills mansion with an Olympic size swimming pool.  But the notion that “bankruptcy is for poor people” is incredibly short-sighted and ignorant.
They say a rising tide raises all ships.  But if a tide falls low enough, it can sink all ships, too.  During a good economy, most bankruptcy debtors tend to be low income individuals.  But in a rough economy, like we are experiencing now, the socioeconomic make-up of the average debtor has become far more affluent.  In short, people we used to consider wealthy and beyond bankrupt, they too are faced with mounting debt that their income falls short of being able to pay.
An experienced bankruptcy attorney can look over the facts of your case and predict fairly accurately what you can expect in both a Chapter 7 and Chapter 13 environment before you make any commitments.  Want to find out what bankruptcy could mean for you?  Call (920) 490-6160 now to schedule a free consultation.

Bankruptcy MythBusting #7

Myth:  I don’t have enough debt to file bankruptcy.
Fact:  There is no legal requirement or minimum amount of debt necessary to file for bankruptcy.  There may be more pragmatic concerns, such as whether you have enough debt to make filing bankruptcy worthwhile.  I generally try to discourage people from filing for bankruptcy with less than $6k in unsecured debt because the cost to benefit ratio becomes small, though I’ve had clients insist on filing bankruptcy over less than $4k in debt.  Usually, there is some other factor motivating bankruptcy, not just the amount of debt.  Most people have somewhere between $20k to $80 in unsecured debt.
You can have too much debt.  Chapter 13 has limitations on how much debt you can have.  If your debt exceeds those amounts, and do not qualify for a Chapter 7 Bankruptcy, you could be stuck with the much dreaded Chapter 11 bankruptcy (which is usually for corporations, but individuals sometimes file Chapter 11, too).  Fortunately, very few people have so much debt that they are faced with this scenario.
The good news is that an experienced bankruptcy attorney can look over the facts of your case and determine whether Chapter 7 or Chapter 13 is best for you before you make any commitments. Call (920) 490-6160 now to schedule a free consultation.

Bankruptcy MythBusting #6

Myth: I will lose my tax refund.
Fact:  In Chapter 7, a tax refund is what we call a “contingent asset” which means that it is an asset that you are currently entitled to, but will not receive until some future date.  Once a tax refund is received, it is converted to a cash asset.  So you will want to list and exempt the next tax refund you expect to receive after the date your case is filed.  In other words, if you file April 1, 2012, have received your 2011 tax refund 2 weeks earlier, you will want to estimate and list your expected 2012 refund (which you wouldn’t get until early 2013).  You also must list any tax refunds for prior years that you haven’t received yet.Most debtors can exempt their tax refund.  Tax refunds might not be exempt if it is a large refund and the debtor already has a lot of other assets that are exhausting available exemptions.
In Wisconsin, the only exemption available for tax refunds is the federal wildcard exemption.  Debtors who elect to use state exemptions for any reason (usually to protect equity in real estate in excess of $40k) cannot exempt their tax refund.
In Chapter 13, tax refunds are perceived as future disposable income.  In the Eastern District of Wisconsin, the convention is that some debtors must pay in half of their refund, others may keep their refunds.
Above median debtors are entitled to keep their refunds because their tax deduction is computed on the line 30 of the Means Test based on actual tax liability.  It is presumed that the debtor must adjust their tax withholdings to effectively make their tax refund zero in order to afford the plan payment as required under the Means Test.
Below median debtors never make it to line 30 of the Means Test, so their tax deduction is based on their budget schedules, which is based on tax withholdings.  Since a person can over-withhold, the trustee gets half of the refund, if any.
Why only half?  If the debtor gets to keep half, it provides more incentive for the debtor to maximize their refunds on their tax returns, so both the debtor and unsecured creditors get the biggest slice of the pie as possible.
Above median debtors can be required to submit 1/2 of their tax refunds, too.  This happens anytime the tax liability on the Means Test is calculated by some other method than the standard formula, or if the debtor does a post-confirmation amendment of the plan (because post-confirmation amendments no longer rely on the Means Test, but on the budget).
An experienced bankruptcy attorney can look over the facts of your case and predict fairly accurately the fate of your tax refunds in both a Chapter 7 and Chapter 13 environment before you make any commitments.  Want to find out what bankruptcy could mean for you?  Call (920) 490-6160 now to schedule a free consultation.

Bankruptcy MythBusting #5

Myth:  I received notice of foreclosure.  It’s too late to save my home.  I might as well give up and find somewhere to rent.
Fact:  This one varies considerably from state to state.  In Wisconsin, receiving a summons and complaint for foreclosure is just the first step in a considerably long process.
There are a few ways to stop foreclosure.  One is to pay the reinstatement amount (bring the account current).  This is the simplest way, but it involves paying late fees, penalties, interest, and attorney fees associated with the foreclosure.  And 9 times out of 10, whatever caused the initial default will also prevent you from affording this option.
Refinance and loan modification are also options.  Refinancing is tough – even in optimal housing market conditions – because obtaining a new mortgage with mortgage defaults on your credit report is a challenge.  Loan modification requires finding a reputable company to modify through, which is next to impossible.
Or you can cure your arrears at no additional interest through a Chapter 13.  Case law has established that in Wisconsin, you can stop foreclosure so long as Chapter 13 is filed before the Confirmation of Sale.  However, best practice is to file your Chapter 13 before the Sheriff’s Sale.
Procedurally in Wisconsin, a mortgage lender typically files a foreclosure lawsuit after two missed mortgage payments.  Depending on the court’s docket load, a hearing is usually scheduled between 6-8 weeks later.  At that hearing, a judgment of foreclosure is usually entered unless there is a bona fide dispute.  From the date the foreclosure judgment is entered, the homeowner has a minimum 6 month redemption period.  The redemption period can be lengthened to 12 months if the mortgage lender is seeking a deficiency judgment, or shortened to 3 months if the property is abandoned.  (These time frames are generally halved if the property is not the debtor’s primary residence.)  Sometime after the redemption period ends, there will be a Sheriff’s Sale.  About 2 weeks after the Sheriff’s Sale is the Confirmation of Sale.
So a judgment of foreclosure does not instantly spell doom.  You have upwards of 6-8 months to get a case filed and save your house.
However, you should consult with an attorney immediately once you have learned of foreclosure.  You don’t want to have to rush your attorney to do a sloppy filing.  You have 6 months minimum, there’s no reason to walk into an attorney’s office at the 11th hour.
Want to find out what bankruptcy could mean for you?  Call (920) 490-6160 now to schedule a free consultation.  I can determine what it would take to stop your home from going into foreclosure, and how much time you have left to act.

Bankruptcy MythBusting #4

Myth:  I can file for bankruptcy without an attorney.
Fact:  This myth is actually true.  Whether it is prudent is a whole other can of tuna.
Although the bankruptcy courts require corporate debtors to be represented by an attorney, individuals are permitted to file bankruptcy without an attorney, or pro se,  But is this wise?
Most of the bankruptcy schedules are actually pretty straight forward.  List everything you own on Schedules A & B.  List all of your debts on Schedules D-H.  Write up your budget on Schedules I & J.  Follow the instructions and answer the questions on your Statement of Financial Affairs.
The tough parts, however, are Schedule C (your exemptions) and Form B22 (the Means Test).
Schedule C requires intimate knowledge about how to qualify to use one set of exemptions over the other, knowing the available exemption statutes and their ever-changing dollar limits (which are not always current in the statutory publications), and the best way to arrange exemptions to maximize their benefit and stretch.  All of this, to say nothing of the scores of litigation involving proper use of exemptions, community property laws, and other related topics.  Sometimes, navigating Schedule C is tricky, even with an attorney.  Doing so without an attorney puts you in increased danger of losing assets to trustee liquidation.
Similarly, the Means Test is a complex form intended to standardize and compute disposable income.  Most of the available deductions are buried in IRS tables.  Again, there is a large amount of litigation and case law that impacts allowable deductions on the Means Test that can test even the most seasoned bankruptcy attorneys, let alone someone with no legal training.
Bankruptcy is a very nuanced field or law.  It’s not even wise for licensed attorneys to merely “dabble” in it from time to time.  Your best bet is to have an attorney who routinely practices bankruptcy and constantly stays on top of changes in the laws and trends in their interpretation.
Not to mention, you will make your judge and trustee happier if you are represented by counsel.  Court dockets are clogged with pro se debtors whose cases are under special review because they failed to file important documents, complete credit counseling, and meet other very important deadlines.
Even in the simplest of bankruptcy cases, there is a lot of knowledge necessary to file the bankruptcy properly.  It’s a lot to learn for one-time use.  Bankruptcy attorneys may make the process seem easy, but those of us who do dozens of cases each month use our years of experience to put procedures and policies in place to make the process as seamless as possible.  Our practices are built on years and years of trial and error, and a lot of sweat.
An experienced bankruptcy attorney can look over the facts of your case and predict fairly accurately what you can expect in both a Chapter 7 and Chapter 13 environment before you make any commitments.  Want to find out what bankruptcy could mean for you?  Call (920) 490-6160 now to schedule a free consultation.

Bankruptcy Mythbusting #3

Myth:  I don’t want to file for bankruptcy because it will damage my credit and I have great credit now.
Fact:  This myth is composed of about one teaspoon of fact and two cups of fiction.  The teaspoon of fact is that yes, your credit will take a hit after you file for bankruptcy.
The first cup of fiction is believing that you have great credit right now.  If a person’s finances have become so distraught that the person has made an appointment with me to discuss bankruptcy, their credit is usually worse than they think it is.  Most people think that their credit rating is based solely on their payment history, and because they are current on all of their bills, they must have excellent credit.
In fact, credit scores are based on several items – only one of which is payment history.  The algorithms for determining credit score are a tightly guarded trade secret held by the credit bureaus, so there are only a few people in the world who know with certainty what affects credit and by how much.  What we know, however, is that your credit score is impacted by:

  • payment history
  • debt to income ratio
  • types of debts
  • number of open accounts open
  • available / unused credit
  • residential and employment stability
  • and much more…

No matter what sort of bankruptcy you’re filing under, bankruptcy is generally a debt to income ratio problem.  Even millionaires can file for bankruptcy.  The issue isn’t how much money you make, but whether that income is sufficient to pay back your debt as it becomes contractually due.
The second cup of fiction is that your credit is ruined forever.  While it is true that the bankruptcy remains on your credit for up to ten years, your credit score can be rehabilitated.  Think of bankruptcy as resetting you to when you turned 18 and had no credit.  You start over from scratch.
If you’re lucky, you will have debts that survive bankruptcy, like a mortgage, car loan, or student loans.  These debts already exist, so you don’t have to reapply for them.  You can continue making payments on these debts and use them to re-establish your credit worthiness.  Filing Chapter 13 can also help rebuild credit a little faster than it would in Chapter 7, because you’re paying back some of your debt, plus the regular plan payments and payments from the trustee help.  If you file under Chapter 7 and don’t have any surviving debts, small secured loans (furniture and appliance loans) are a great way to get back on your feet.
When done correctly, most people have substantially better credit scores about 12 months after filing bankruptcy than they did going in.
Also bear in mind that your bankruptcy will – in some respects – make you less of a credit risk.  People filing for Chapter 7 Bankruptcy can’t get another Chapter 7 discharge for 8 years.  New creditors know that one way or another, they’re going to get paid for the foreseeable future.  Also, with all of your unsecured debt now eliminated, you now have a better debt to income ratio, and presumably, an increased ability to pay back new debt.
An experienced bankruptcy attorney can look over your financial circumstances and give you advice on the best ways to rebuild your credit after bankruptcy before you make any commitments.  Want to find out what bankruptcy could mean for you?  Call (920) 490-6160 now to schedule a free consultation.