How Do I Determine What to Bid at Sheriff’s Sale? New Lender Edition of Bits & Bytes Now Available.

B&BTake a moment for the new edition of “Bits & Bytes,” as Attorney Deanne Koll explains what a creditor should consider when determining what to bid at sheriff’s sale. Click here for a transcript or click here to view previous videos in the Lender Edition series.

Disclaimer: This video is designed to be educational and informative, but it is not legal advice. Collection law is constantly evolving and subject to change. Each situation is unique, and each case should be addressed to fit the unique situation.

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How Do I Determine What to Bid at Sheriff’s Sale?

B&BTake a moment for “Bits & Bytes,” as Attorney Deanne Koll discusses what a creditor should consider when determining what to bid at sheriff’s sale.

Disclaimer: This video is designed to be educational and informative, but it is not legal advice. Collection law is constantly evolving and subject to change. Each situation is unique, and each case should be addressed to fit the unique situation.

There are many, many factors in the analysis of what a creditor should bid at sheriff’s sale.

A creditor should consider whether it has waived or preserved its deficiency rights. If deficiency rights have been preserved against the borrower, the creditor will have the burden to prove its ultimate bid price is “fair value” for the property. Clearly, that will influence the bid price by the creditor.

A creditor should also consider whether the debtor may later file a bankruptcy in which the creditor could claim a right to assets. If a creditor bids in its entire amount due at sheriff’s sale, the law presumes that the creditor was then paid in full for the debt.

If the debtor later files a bankruptcy and has assets for distribution, that creditor would be unable to make a claim in the bankruptcy. The creditor’s full amount due bid price satisfied the entire debt.

A creditor should also consider any priority liens against the property. Some possible priority liens would be real estate taxes, assessments or first mortgage holders. Clearly, a bid price consider any of those liens as those costs would need to be paid by the winning bidder.

Lastly, a creditor should consider whether the bank wants to entice other bidders. If the bank is not interested in receiving the property back, it should consider its holding costs and sale costs and make a competitive bid at sale. Doing so may entice another party to bid at the sale.

There are many other factors which may come into play in any particular sheriff’s sale bid analysis. A creditor should discuss this process with their attorney.

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Attorneys Gary Bakke and Robert Walter Celebrate 50 Years of Service

In 1965, a gallon of gas was 45 cents. Lyndon B. Johnson was our 36th president. Personal computers were a futuristic vision. For two young men, 1965 meant graduation from law school and the first steps in what would become long and successful legal careers.

On May 12, the State Bar of Wisconsin recognized Gary Bakke and Robert Walter of Bakke Norman Law Offices for 50 years of service to their clients and their communities. Gary Bakke’s many accomplishments include serving as State Bar President and being named one of the Best Lawyers in America every year since 1987. He continues in active practice, representing clients in complex business and family law matters.

Bob Walter ran his own successful law practice and an Abstract and Title company before joining Bakke Norman in 1990. He continued to represent local individuals and businesses, while also serving as a Dunn County Court Commissioner until retiring in 2006. He has remained active in retirement and currently serves as a Dunn County Board Supervisor.

Tom Schumacher, current managing partner of Bakke Norman states, “We are extremely proud of the 50 years of service Gary Bakke and Bob Walter have given to the residents of Northwest Wisconsin. Gary and Bob remain very active in their communities. Their dedication to clients and their respect for the rule of law have been guiding principles to all of the attorneys and staff at Bakke Norman. We congratulate Gary and Bob on this milestone.”

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Gary Bakke

Bob Walter

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Can I Rent my House to Someone or Can’t I?

Back on March 4, 2015, I posted about a case involving Cedarburg where an appeals court held that a use of a single family dwelling in a residential zoning district which restricted uses to single family dwellings (and some other uses not pertinent to this post) did not prevent the owner from renting it out as a short term rental. The appeals court in that case held that if the zoning code was silent on such restrictions of short term rentals, that the owner could use the house for short term rentals.

In a recent case, Accola vs. Vilas County, the appeals court held that a single family dwelling in the residential district could not be used for short term rentals.

So, in Cedarburg, single family dwellings in the residential district can be used as short term rentals. In Vilas County they cannot. Why the different holdings? Any seeming contradiction is merely superficial. What both courts said is that you have to look carefully at the words of the zoning ordinance. What does it say? If it unambiguously restricts short term rentals, that is okay. But if it is silent on that issue, then it does not restrict. But be careful, the words of the ordinance are what matter – different words may give us a different result.

So the result in any given case will depend on the facts of that case and the words of that ordinance, not a broad (and likely false) generalization based on the factual results from a different case.

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One of my Customers Filed for Chapter 7 Bankruptcy Protection. Now What?

B&BTake a moment for “Bits & Bytes,” as Attorney Deanne Koll explains what a lender can and cannot do after a Chapter 7 Bankruptcy Petition is filed to avoid any “stay” violations.

Disclaimer: This video is designed to be educational and informative, but it is not legal advice. Collection law is constantly evolving and subject to change. Each situation is unique, and each case should be addressed to fit the unique situation.

The most important thing to remember when you receive a notice of any bankruptcy filing is that the “automatic stay” has gone immediately into effect.

This means that, once the bankruptcy petition has been filed, the debtor is immediately sheltered from any collection activity by any creditor on pre-petition debt. The “stay” encompasses almost any action that may be taken to collect on a debt.

Some of the forbidden actions are: starting a lawsuit, having a judgment entered or sending a Notice of Right to Cure. Thus, any bankruptcy notice should be immediately shared with all parties working on that account, to avoid any “stay” violations.

After appropriate measures are taken to ensure the lender will not violate the automatic stay, it is important to consider the credit that the lender has with the bankruptcy customer. For example, does the lender have a car loan, a home equity line of credit or simply an unsecured note with the debtor? What credit exists will determine what steps should be taken next.

A last consideration for lenders is whether the bankrupt customer may be interested in reaffirming on any debt with the lender. While the details of a reaffirmation agreement is a topic for another day, it is worth at least having an attorney review the bankruptcy schedules to determine if the debtor has listed the lender (and its credit) as one he or she wishes to reaffirm.

If this is the case, the lender can retain recourse rights against the bankrupt debtor, regardless of whether he or she eventually receives a bankruptcy discharge. This can be a major advantage for the lender.

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Special Issue – Municipal Law Alert

A special issue of the Municipal Law Alert is now available online. This special issue discusses how small employer health insurance payments or reimbursement plans may violate the Affordable Care Act.

Click here or click the title below to read the article. Archives of the Municipal Law Alert, including the ability to key word search, are also available.

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Small Employer Health Insurance Payment or Reimbursement Plans May Violate Affordable Care Act

The IRS has issued two important notices concerning small employers* (fewer than fifty full time equivalent employees, or FTEs) and the reimbursement or direct payment of health costs or health insurance.

IRS Notice 2013-54 and IRS Notice 2015-17 clarify the IRS position that small employers may no longer reimburse employees for health plan premiums, and may no longer direct pay premiums that are for health insurance that is not part of a qualified group plan. For example, a situation which may violate the new IRS regulations is an employer that does not offer health insurance to employees. Instead, the employer offers reimbursement up to a specific dollar amount for the employee to use against their own health insurance expenses. Employees find and purchase individual health insurance on their own, and then get reimbursed from the employer for the premiums.

If you do not know if your health plan is a qualified group plan, you should check with your benefits specialist or consultant.** It is very important that you clarify your status. The penalties for employers who violate these IRS regulations are significant (violating employers may be subject to a $100/day excise tax per applicable employee, which is $36,500 per year, per employee, under § 4980D of the Internal Revenue Code). Although there is some ambiguity on whether the IRS § 4980D excise tax would apply to a local governmental unit (e.g., a city, village or town), it appears that it is possible that the excise tax would be applicable to local governments by implication of the Public Health Service Act, which does apply to local governments.

There is currently a grace period where no penalties apply. But that grace period ends on June 30, 2015. So beginning in July, if you are reimbursing or direct paying for your employees’ health insurance which is not part of a qualified group plan, you may face significant penalties from the IRS.

IRS Notice 2015-17 also clarified that employers who must stop paying or reimbursing health insurance premiums, but who wish to compensate their employees who will lose this reimbursement, can give their employees a raise to make up for any loss, but must not condition that raise in any way on requiring the employee to purchase health insurance.

Links to the IRS Notices can be found on the IRS Website at: http://www.irs.gov/Affordable-Care-Act/Employer-Health-Care-Arrangements.

*Note: this article does not apply to employers having more than 50 full time equivalent employees. It also does not apply to employers who offer their employees a qualified group plan for health insurance. For guidance on calculating your FTEs, see the IRS website at the following page: http://www.irs.gov/uac/Small-Business-Health-Care-Tax-Credit-Questions-and-Answers:-Determining-FTEs-and-Average-Annual-Wages.

**If you do not have a benefits consultant and you are uncertain if these provisions apply, you may need to consult with one. Our law firm uses J.A. Counter & Associates, Inc., 1477 S. Knowles Avenue, New Richmond, Wisconsin, (715) 246-3811, http://jacounter.com/.

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