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When to press the "bankruptcy button" for debt relief

Wisconsin residents are well aware of the financial issues occurring in their neighboring state. Detroit's bankruptcy filing are not only a topic of conversation but could also be a reality for some residents and business owners. Bankruptcy might be most beneficial for people on the verge of pressing the panic button because of financial challenges. This could be a viable option in terms of debt relief.

When it comes to decision making; however, knowledge is key. The same can be said for filing for bankruptcy. If a person is in such a quandary, it is best that he or she is armed with sufficient knowledge before proceeding.

To start, the person should consider the following: bankruptcy can help pay off most of the person's debts, stop vehicle repossession and stall the foreclosure of a home. On the other hand, it does not eliminate secured debts, student loans, alimony and child support. Also, it cannot pardon debts that were incurred after filing for bankruptcy.

Another thing to consider is that filing for bankruptcy will be reflected on a person's credit report for a certain period of time. While it may not hinder the person's ability to get a loan, the person may still have to prove him or herself in order to secure a loan.

Finally, a person may qualify for Chapter 13, also known as reorganization bankruptcy. This type of bankruptcy involves undergoing a manageable repayment plan to deal with debts. The person will be required to make monthly payments until the debts are repaid. This usually takes approximately three to five years. Another possible option is Chapter 7, known as liquidation bankruptcy.

Bankruptcy is a great option for Appleton and Outagamie residents as well as business owners. However, it may be wise to consult an experienced and reputable bankruptcy legal professional before deciding to press the "bankruptcy button." The legal professional may be able to check if the person qualifies for Chapter 13 or Chapter 7 as well as securing a legitimate credit counseling agency, which is a requirement for the bankruptcy filing.

Source: Huffington Post "When is bankruptcy the answer?," Dedrick Muhammad, August 19, 2013