When overwhelming debt is a major concern, a Wisconsin debtor may try to explore the various debt relief options. Among those, the option of filing for bankruptcy is a decision that is often difficult to make. That is primarily because of the social stigma associated with filing for bankruptcy. In certain situations, however, bankruptcy is the best debt relief option.
As discussed in an earlier blog post, filing for bankruptcy is a path that a debtor should choose only after that debtor is confident about the subject of bankruptcy and explored all possible options thoroughly. The first few steps toward bankruptcy require the debtor to pay attention to all their personal financial issues. Once the debtor achieves that goal, the next step is to inform the creditors about the bankruptcy filing so that those creditors do not take drastic measures to recover the outstanding debt.
While filing for bankruptcy, it is also important for the debtor to remember that inaccurate information can severely affect a bankruptcy filing. In fact, concealing important information during a bankruptcy filing can be considered fraudulent, and the debtor may be subject to criminal charges.
Another method that a debtor may choose to eliminate debt is liquidating retirement accounts. Such debtors should understand that bankruptcy laws in the United States allow them to retain retirement accounts. Therefore, instead of using those funds to repay debts, filing for bankruptcy may be a wiser option. Nonetheless, this tactic largely depends on a debtor’s financial situation. Accordingly, the debtor may wish to seek professional advice.
Finally, if a person receives a large sum of money, while that person is in debt and is planning to file for bankruptcy, it probably goes without saying that it is a good idea for that person not to file for bankruptcy. Instead, that person may wish to explore other debt relief options, such as debt consolidation. The debtor should make the decision only after understanding the bankruptcy process thoroughly.
Source: The Huffington Post, “Here Is Exactly Why People Who File Bankruptcy Are Smart,” Steve Rhode, July 6, 2015