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Appleton WI Bankruptcy Law Blog

Understand what happens when you go through bankruptcy

When your credit card and other bills become so overwhelming that you are having to figure out what to pay and what to let lapse, it might be time to consider your options for reducing the debt loan. You mustn't fall for scams and shams when you are in this position. Instead, you need to look into the legal ways to handle your debts. Bankruptcy might be the answer to your problem.

People who need to file for bankruptcy protection will need to look into the requirements for the type of case they want to pursue. For most consumers, there is the working man's bankruptcy, which is Chapter 13, or liquidation bankruptcy, which is Chapter 7.

Make a plan for handling Christmas credit card debt

Christmas debt is something that many Americans will accumulate at the end of the year. While there isn't really anything wrong with this, there is sometimes a problem in January when the credit card bills start coming in. This might bring up the question of how to handle that debt so that you can get the cards paid off quickly.

The method you use is going to depend on your situation. You must ensure that you know what balances you carry on your cards. This gives you an idea of what you are going to have to do to get it paid off. You can use this information to set a budget that enables you to get the balances down.

Reclaim your financial stability through bankruptcy

Filing for bankruptcy isn't something that most people want to do during their adult life. When you are in debt so deep that you can't find a way to pay at all, you might need to consider bankruptcy. The type of case you file determines what you will have to do.

If you have an income that allows, you might file a Chapter 13, which requires you to make repayments to the court. Those payments are divided up by the bankruptcy trustee and sent to your creditors. Some people prefer this type of bankruptcy since they are still paying their debts. Some people might not qualify if their income isn't enough to cover these payments and the regular life expenses they have.

Types of debt covered in a Chapter 13 bankruptcy

One of the possible consumer bankruptcy chapters that some people file when they need this protection is Chapter 13. This is known as the wage-earner's bankruptcy because debtors have to set up a repayment plan that covers some of the debts they owe. In most cases, the payment schedule will coincide with the debtor's pay schedule.

Understanding which debts must be paid under this type of bankruptcy can help you to determine whether this is the right decision for you or not. There are three types of debts that apply to these cases — secured, unsecured and priority. Each debt you have is placed into one of these categories.

  • Secured debts are backed by assets, such as vehicle loans or mortgages. These must be paid in full as part of the repayment plan you set up with the bankruptcy trustee.
  • Unsecured debts aren't backed by assets. Credit card and medical debts fall under this category. You must repay at least part of these debts in your repayment plan.
  • Priority debts include things like back taxes and child support arrearages. These must be paid in full during the bankruptcy proceedings.

Know the qualifications for a Chapter 7 bankruptcy

Sometimes, a person who is deep in debt won't have any assets or available money to pay off what they owe. Even making minimum payments is a big struggle. In these cases, a Chapter 7 bankruptcy might be in order, but only if the person can pass the means test. This is a set of guidelines that looks into a person's financial situation to determine whether they are allowed to file this type of bankruptcy or have to go with a different option.

We know that you might have some concerns about this. We can help you find out if you do qualify. If you do, we will help you find out about the process so that you know what to expect. The more you know, the better you might fare during it.

Higher income levels can also lead to higher levels of debt

Many people inaccurately believe that only people with low income levels struggle with debt. Nothing could be further from the truth. Individuals with low income and bad credit typically can only receive a small amount of money on credit. Even if they secure multiple different forms of credit, from car loans to credit cards, their income will limit how much lenders are willing to give them.

Individuals with higher income levels are at risk of receiving far more credit, which can lead to substantially overextending themselves. Higher-income individuals are also more susceptible to the desire to keep up with the Joneses. In other words, when you work in a high-profile and high-paid position, you are more likely to spend money on expensive clothing and fancy vehicles.

Beware of debt relief scams

Some people try to do anything they can to avoid having to file for bankruptcy. While this is a good thing for many, it is imperative that you make sure that you have a viable option that isn't going to lead to you being scammed. There are some unscrupulous companies out there that prey on your desire to avoid bankruptcy.

One of the best things that you can do if you are in this position is to review the credit counseling or debt relief agency you are considering working with. While there are some that will do what they are promising, you should avoid ones that make promises that seem too good to be true.

Regain control of your finances with bankruptcy

Your finances should be able to help you live the life you deserve. They shouldn't be a source of constant stress. If you never have enough money to cover your bills, it is probably time for you to make some tough choices. One of these is whether you are going to continue to struggle to pay off debts or if you are going to file for bankruptcy.

Just to be clear, bankruptcy isn't an easy answer to your money woes. Instead, this is something that is going to take time and effort. You will have to go through counseling and take other steps before you will have the case finished.

Make the most of the fresh financial start bankruptcy provides

When you file bankruptcy, your financial situation is going to change dramatically. You must ensure that you are prepared for the changes that are going to come. One way that you can do this is to set your budget. This gives you an idea of what you can afford and provides you with a snapshot of where your money is going each month.

You have to base your budget on reality. Start by recording your take-home income. From there, subtract the regular and vital monthly expenses, including your mortgage or rent, car payment, insurance, food, utilities and similar expenses. Once you have those finished, you can assign purposes to the rest of the money that is left. Unnecessary expenses, such as entertainment and clothing, are included in this.

Learn options to avoid vehicle repossession

Learning that your vehicle is in danger of being repossessed is a difficult situation. You probably rely on your car to get to work and run errands. Trying to stop a repossession from occurring is now your priority. We can help you find ways to prevent repossession of your vehicle.

There are a few things to remember if you are in this position. One is that you can't hide the vehicle from the repossession agent. You might be able to get away with this for a while, but eventually, they will find you. Plus, the longer you try to hide, the more money you are going to owe in fees.