Why Should I Have My Customer Reaffirm in Bankruptcy?

B&BTake a moment for “Bits & Bytes” as Deanne Koll discusses the reasons why a lender should have its customer reaffirm a debt in bankruptcy.

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.

When a debtor agrees to reaffirm a debt, the debtor agrees to be personally liable on a debt, after the discharge in the bankruptcy case. Normally, upon receiving a discharge in bankruptcy, a debtor is relieved from any personal liability on debts incurred prior to the bankruptcy filing.

For example, if I owe my attorney $200 and then I file bankruptcy and receive a discharge, that attorney is forbidden from collecting that $200. If a customer reaffirms, however, the circumstances change.

When a debtor signs a reaffirmation agreement in bankruptcy, that debtor agrees that he or she will remain personally liable on a debt after the bankruptcy discharge. This usually occurs on secured debts on which the debtor desires to continue to pay post-bankruptcy.

A common example is a real estate mortgage on the debtor’s homestead. If the debtor expresses a desire to keep the home post-bankruptcy, a creditor should require a debtor to sign a reaffirmation agreement. If the reaffirmation agreement is signed, and the debtor later defaults, the debtor is still personally liable on the note.

Meaning, if there is an eventual deficiency, he or she will remain liable for that amount.

On the other hand, if the debtor does not sign a reaffirmation agreement, but continues to pay on the mortgage and then years later defaults, the creditor is forbidden from seeking a deficiency judgment on any shortfall because of the failure to obtain a reaffirmation agreement in the underlying bankruptcy.

As you can see, this is a tricky area of the law, and you should seek legal advice on reaffirmation options regarding any specific situation.

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What is a “No Asset” Bankruptcy?

B&BTake a moment for “Bits & Bytes” as Deanne Koll explains what a “no asset” bankruptcy is and what it means to a lender.

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.

If your customer filed for Chapter 7 bankruptcy protection, you may—at some point—receive a notice from the bankruptcy court saying that the bankruptcy is a “no asset” case. What does that mean?

In Chapter 7 bankruptcies, the appointed trustee must determine whether there are assets of the debtor that would be available for distribution to creditors.

In other words, the trustee has to review the assets disclosed by the debtor and determine if any of those assets are not “exempt” assets and thus can be taken by the trustee to satisfy creditors.

The vast majority of Chapter 7 bankruptcies are “no asset” bankruptcies. Meaning, the debtor has no assets which are available for distribution to creditors. Exempt assets are not available for distribution.

In Wisconsin, an individual may exempt personal bank account cash up to $5,000 and home equity up to $75,000 (or $150,000 if a couple). Those exempt assets are not available to be taken and sold by the trustee.

When you receive notice that a bankruptcy is a “no asset” bankruptcy, you know that you need not file a Proof of Claim, since there are no assets that will be sold to pay unsecured creditors.

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Business Succession Planning – Part I

B&B - Bus Edition (small with cropped line)Take a moment for “Bits & Bytes,” as Attorney Tom Schumacher explains succession planning for the owners of a closely held business. This first video addresses personal issues for the business owner.

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

This is the first in a series of six videos on succession planning for the owners of a closely held business. This video addresses personal issues for the business owner. In future segments, we will look at the business advisory team, documenting the business organization, timing of the business succession plan and, finally, financial matters.

If you are the owner of a closely held business, at some point you must begin to think of a succession plan. Your first step is to determine your personal goals. As the owner of a successful closely held business, a significant amount of your life has been devoted to developing and growing your business.

Much of your personal identity is tied up in the business. A succession plan will involve transferring the business to family members, co-owners, employees or outside parties unrelated to you, the business owner.

The common element in any business succession plan is that you, as the business owner, are no longer going to be intimately involved with the day to day operations of the business. This will be a dramatic, life changing event for you, the business owner.

The beginning point for a business succession plan is for you to consider your life style and goals separate from the business. What will you do during the 10 or more hours a day you formerly spent working in your business? What are other interests and activities you will pursue? Will you look at taking advantage of other business opportunities?

Will you change the region where you live to a more favorable climate, both for weather and income taxes? Where do other members of your family reside and do you want to be in the same area? Do you want to step back from work completely or do you want to continue to engage in some work activity with your former business, as an employee for another business, or engage in a new business venture?

Another factor to consider is how much of the benefits you enjoy flow through your business, such as vehicles, real estate, club memberships, travel, meals and entertainment. Many, if not all, of these benefits may change in character or disappear once you sell the business.

In addition, they may be paid for with after tax dollars rather than deducted as business expenses. Speaking of dollars, what amount of income is going to be sufficient to support the lifestyle you want to enjoy once you are no longer receiving income and other benefits from your business? What will your monthly and annual budget look like?

These are just some of the factors you need to consider as you begin to establish a succession plan for your business. Before you begin to look at the plan for the business, you need to look at what the plan is for you.

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Why Do I Need to File a UCC-1?

B&BTake a moment for “Bits & Bytes,” as Attorney Deanne Koll explains why it is important for a lender to properly and timely file a UCC-1.

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.

A UCC-1, sometimes referred to as a financing statement, is a document filed by a creditor to put all other parties on notice that the creditor has a secured interest in certain personal property. The UCC-1 is akin to a real estate mortgage, but for personal property.

With real estate, the way a third party knows that a creditor must be paid before he or she takes the real estate free and clear is by reviewing the real estate records and seeing if there are outstanding mortgages.

The same is true for personal property. The UCC-1 is filed to “perfect” a creditor’s security interest by putting the public on notice of the creditor’s lien. The UCC-1 tells third parties that the creditor has a right to take possession of and sell certain assets for repayment of a specific debt.

Lastly, the filing of a UCC-1 establishes a creditor’s priority. Just as a 1st mortgage holds priority over later recorded mortgages, a UCC-1 filed 1st on certain personal property holds priority over later filed UCC-1s on the same property.

Clearly it is important for a lender to properly and timely file a UCC-1 when a lender takes personal property as collateral for its loan.

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OSHA Assists Construction Industry to Improve Worker Safety

Breakfast with Bakke NormanMary Bauer, Compliance Assistance Specialist, explained the ways that OSHA can assist companies in the construction industry with worker safety. Bauer spoke as part of the Breakfast with Bakke Norman quarterly seminar series.

The Future of the Construction Industry in Western Wisconsin was the topic of “Breakfast with Bakke Norman”, a quarterly seminar series offered by Bakke Norman Law Office, on Tuesday, November 8, 2011, at WITC in New Richmond. The panelists were:

  • Brad Boycks, Chief Lobbyist Director of Government and Political Affairs for the Wisconsin Builders Association
  • Mary Bauer, Compliance Assistance Specialist at OSHA
  • Toby Madden, Regional Economist at the Federal Reserve Bank of Minneapolis
  • Julie Dodge, Senior Vice President at First National Community Bank

Other videos from, “Future of the Construction Industry in Western Wisconsin” series

WBA Rep Discusses Impacts of Political Shifts

Breakfast with Bakke NormanBrad Boycks, Chief Lobbyist Director of Government and Political Affairs for the Wisconsin Builders Association, discussed the impact of the political shifts on lobbying efforts. Boycks presented as part of the Breakfast with Bakke Norman quarterly seminar series.

The Future of the Construction Industry in Western Wisconsin was the topic of “Breakfast with Bakke Norman”, a quarterly seminar series offered by Bakke Norman Law Office, on Tuesday, November 8, 2011, at WITC in New Richmond. The panelists were:

  • Brad Boycks, Chief Lobbyist Director of Government and Political Affairs for the Wisconsin Builders Association
  • Mary Bauer, Compliance Assistance Specialist at OSHA
  • Toby Madden, Regional Economist at the Federal Reserve Bank of Minneapolis
  • Julie Dodge, Senior Vice President at First National Community Bank

Other videos from, “Future of the Construction Industry in Western Wisconsin” series

Challenge of Construction Loans in Down Economy

Breakfast with Bakke NormanJulie Dodge, Senior Vice President at First National Community Bank, explained the lending challenges for construction loans in the current economic environment. Dodge’s presentation was part of the Breakfast with Bakke Norman seminar series on November 8, 2011.

The Future of the Construction Industry in Western Wisconsin was the topic of “Breakfast with Bakke Norman”, a quarterly seminar series offered by Bakke Norman Law Office, on Tuesday, November 8, 2011, at WITC in New Richmond. The panelists were:

  • Brad Boycks, Chief Lobbyist Director of Government and Political Affairs for the Wisconsin Builders Association
  • Mary Bauer, Compliance Assistance Specialist at OSHA
  • Toby Madden, Regional Economist at the Federal Reserve Bank of Minneapolis
  • Julie Dodge, Senior Vice President at First National Community Bank

Other videos from, “Future of the Construction Industry in Western Wisconsin” series

Economic Trend Data and Impact on Construction Industry

Breakfast with Bakke NormanToby Madden, Regional Economist at the Federal Reserve Bank of Minneapolis, shared the economic trend data on the construction industry. Madden spoke as part of Bakke Norman’s “Breakfast with Bakke Norman” seminar series on November 8, 2011.

The Future of the Construction Industry in Western Wisconsin was the topic of “Breakfast with Bakke Norman”, a quarterly seminar series offered by Bakke Norman Law Office, on Tuesday, November 8, 2011, at WITC in New Richmond. The panelists were:

  • Brad Boycks, Chief Lobbyist Director of Government and Political Affairs for the Wisconsin Builders Association
  • Mary Bauer, Compliance Assistance Specialist at OSHA
  • Toby Madden, Regional Economist at the Federal Reserve Bank of Minneapolis
  • Julie Dodge, Senior Vice President at First National Community Bank

Other videos from, “Future of the Construction Industry in Western Wisconsin” series

Adam Jarchow Speaks on Frac Sand Issues

At Bakke Norman’s Municipal Seminar held April 5, 2012, attorney Adam Jarchow spoke to the group about the latest issues and information pertaining to frac sand mining. Frac sand has been a “hot topic” in northwestern Wisconsin, whether it be municipal boards seeking to impose regulations or impose moratoriums against frac sand mining in order to explore options for regulation; mining companies seeking approval to commence operations; citizens with sand on their land seeking to assist interested mining companies; or citizens in municipalities opposed to mining operations.

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Banking Issues of Doing Business in China

Breakfast with Bakke NormanJohn Novak, Bremer Bank, discussed the challenges and risks of the transfer of money, exchange rates and other banking-related issues of doing business in China. Novak spoke as part of the Breakfast with Bakke Norman seminar on August 4, 2011.

Doing Business in China was the topic of the inaugural “Breakfast with Bakke Norman”, a quarterly seminar series offered by Bakke Norman Law Office, on Thursday, August 4, 2011, at WITC in New Richmond. Panelists were:

Other Videos from “Doing Business in China” series

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