Tag Archives: Consumer Bankruptcy

Bankruptcy to Eliminate Consumer Debt

consumer bankruptcy, consumber debt, consumer bankruptcy attorneyIn bankruptcy lingo, the term “consumer debt” is often used to clarify how debts have been incurred. Different from business debt, consumer debt involves funds used for consumption rather than investment. Consumer debts are typically classified as such based upon the purchase of consumable goods that do not appreciate in value, such as those things that are purchased to pay personal or household expenses.

More about Consumer Debt
You’ll hear some other terms associated with consumer debt such as secured, unsecured, variable interest rate, fixed rates, and deductibles. It is helpful to understand the meaning behind these terms. It is also important to understand that not all consumer debt is considered to be negative. (Your mortgage is a good example of this.) Any debts that have high interest rates, such as credit cards, auto loans and some student loans, are typically considered bad consumer debt. Most recent studies indicate that the average U.S. Household Debt is increasing. For the first time, credit card debt is approaching one trillion dollars. In 4Q of 2015 alone, consumers racked up more new debt than in 2009, 2010, and 2011 combined. There is a level of economic concern when consumer spending goes far beyond what can be paid back.

Consumer Debt and Chapter 7 Bankruptcy
The good news is that if your debts are mostly consumer debts, half or more of your total debt, then you may be eligible to file Chapter 7 bankruptcy to eliminate debts. A Debt Advisors bankruptcy attorney may administer what is called, “The Means Test.” This, among other factors, will help determine what kind of debt you have, how much, when the debt incurred, what the purpose was, who made the purchase, etc. During the calculation of consumer debt, both spouses and debt incurred by children living in the home will be included. There are some surprises too, like the fact that medical bills are usually classified as non-consumer debts.

When filing bankruptcy, the determination of which debts are business or consumer can get a little tricky. Hire an experienced consumer bankruptcy attorney to ensure that your bankruptcy is filed correctly the first time. Your attorney will conduct a thorough debt analysis and cover all the bases to avoid any potential bankruptcy disputes in court. (The bankruptcy trustee and court will review each debt closely, and you will need the appropriate documentation.) Ask for our free consultation to get information you are looking for right now.  Bankruptcy may turn out to be the best financial decision you have made regarding oustanding consumer debt.

New Law Amends part of Wisconsin Consumer Act

New Law Amends part of WisconsinThe collecting, buying and selling of debt has become a multi-billion-dollar industry.  Debt Collectors will do whatever it takes to collect a debt. Sometimes called “debt buyers,” these organizations purchase charge-off debts for pennies on the dollar then often repackage and resell the debt, or portions of the debt to other agencies or firms to make more profit. The result of changing owners several times is the loss of important details associated with the original credit document.  In the event that a debtor is sued, it can be very difficult to track and verify original creditors, account numbers, dates, etc.  The FTC has made state recommendations which would essentially make it easier for debtors to verify the debts they are potentially being sued for. (Name and terms of the original creditor, last 4 digits of original account number, amount and date of the original default or charge-off, and amount currently due including principal, interest and fees.)
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Wisconsin Consumer Act Revised:  As of March 1st, 2016 parts of the Wisconsin Consumer Act have changed, but not enough to appease the FTC’s recommendations to fully protect the debtor.  For example, the new Wisconsin law does not require creditors to provide the original account number, the default or charge-off dates, or the terms of the original contract.  In addition, “specific itemization” is not required in the new law.  Many consumer advocates are disappointed in the new law because these missing details will continue to hurt consumers in the event that they are sued.

Bankruptcy Attorney Chad Schomburg:  “The Wisconsin legislator did not make the Wisconsin law strict enough on debt buyers or collection agencies.  They still have only minimal requirements when filing lawsuits against consumers, making it very confusing as to what debts they are actually collecting on.  The debtors then do not have much recourse under the Wisconsin Consumer Act.  They might be better off seeking protection through the Federal Consumer Protection Act, or more importantly, through bankruptcy.”

Debt Advisors Law Offices: Your situation may or may not benefit from bankruptcy.  To find out what your best options are, call Debt Advisors Law Offices at 414-755-2400 or find us online at MyDebtAdvisors.com.   For your convenience, we offer six Wisconsin locations.  The attorneys at Debt Advisors are experienced in dealing with credit agencies, and will steer you in the right direction.