Although the economic recovery seems to have found its rhythm, many Americans, including those in Wisconsin, still struggle to make ends meet. When financial pressures mount, these individuals might look for options to stay afloat. Payday loans and credit cards are often used as a temporary measure, but far too often these sources of temporary relief become long-term economic pits. High interest rates and unfair lending practices can leave an individual struggling to maintain the debt. Oftentimes it is too difficult, and these debts balloon to proportions that make them impossible to pay back.
So, what can an individual do to find relief in this situation? One option is to file for Chapter 13 bankruptcy. Under a Chapter 13 filing, a debtor is required to repay secured debts in full. Secured debts are those that are backed by collateral. This category often includes a car and property. Unsecure debt, then, is debt that is not backed by collateral. A portion of unsecured debt must be repaid under Chapter 13 bankruptcy, but once the repayment plan concludes any remaining debt may be discharged.
An individual who is drowning in credit card debt may be able to find debt relief by filing for Chapter 13 bankruptcy. However, that is not the only option available to those struggling with financial challenges. Chapter 7 bankruptcy may also be an option, but it differs significantly from Chapter 13.
Since there are differences when it comes to choosing whether bankruptcy is right for an individual and, if so, which type, it can be beneficial to get more information about the bankruptcy process.
Source: FindLaw, “Chapter 13 Bankruptcy Rules FAQ,” accessed on Feb. 29, 2016