For many Wisconsin residents, headache-inducing debt has become part of their daily reality. If you’re deep in debt and behind on your payments, you should consider your debt relief options to get back on track financially.
How Does Debt Relief Work?
Debt relief is a set of actions taken to significantly reduce, restructure, or refinance debt to make it easier for a borrower to repay. Debt relief measures are usually needed when debt becomes so severe that the borrower can’t make the regular, required payments.
Debt relief options can help you in several ways:
- Extend your repayment terms
- Lower your interest rates
- Reduce your debt’s outstanding principal amount
In some cases, creditors may agree to restructure debt and provide some form of relief rather than suffering a total loss due to the borrower’s inability to meet obligations.
Is Debt Relief A Good Option?
If your debt has gotten out of hand or you can’t find ways to repay, a debt relief program could be your best option. Debt relief programs can help you better manage the debt payments and improve your financial situation.
When To Seek Debt Relief
Nearly 80% of all Americans today are in debt. The COVID-19 pandemic drained the savings accounts of millions of Americans and sent personal debt skyrocketing. While the average debtor can manage to make their repayments, this is not the case for everyone.
Some of the most common reasons that people seek debt relief in Wisconsin include medical bills, credit cards, divorce, reduced income, unexpected expenses, disability, and eviction. Regardless of the source of your debt, it may be worthwhile to consider debt relief. Individuals struggling with overwhelming debt should contact Wynn at Law, LLC to schedule a free consultation to outline a personalized debt management strategy. Seeking debt relief can mean the difference between chronic stress and freedom from financial burden.
Types Of Wisconsin Debt Relief
Being in overwhelming debt can be nerve-wracking and make you feel insecure about the future. However, the good news is that several options can help you get back on your feet.
Bankruptcy is a widespread Wisconsin debt relief option, but it is not a one-size-fits-all solution. There are two main types of personal bankruptcy for Wisconsin residents. The first is a Chapter 7 Bankruptcy, which is sometimes known as “straight” or “liquidation” bankruptcy and is designed to eliminate debt — credit cards, personal loans, medical bills, and other unsecured debt. The second is a Chapter 13 Bankruptcy is a debt repayment plan that consolidates, reorganizes, and restructures debt to make repayment more manageable.
Bankruptcy can provide the following benefits:
- Stop creditors and collectors from contacting you
- Stop all collection lawsuits and actions to collect the debt
- Stop wage garnishments
- Stop the Wisconsin foreclosure process and avoid evictions
- Stop the repossession of cars, appliances, and other personal property
Chapter 128 Debt Amortization Plan
A Wisconsin Chapter 128 Debt Amortization Plan is a low-cost alternative to bankruptcy that focuses on consolidating debt with a personalized debt plan. This Wisconsin debt relief option can pause late fees, wage garnishment, and accruing interest. The structure of Chapter 128 allows you to customize your approach by selecting the unsecured debt that makes sense for your situation. Typically a Chapter 128 plan will include a combination of debt from credit cards, civil judgments, payday loans, medical bills, personal loans, or collection accounts.
Debt consolidation is a debt relief solution that merges all your debt into a single liability to simplify its repayment. Choosing this option means that all of your unpaid loans or credit card debt are combined into one loan that you can pay off, occasionally even with a lower interest rate. In addition, debt consolidation often allows you to manage your monthly payments easier as it reduces the number of payments being made on your debt.
Debt Management Plans
If credit card debt is your main issue, a Debt Management Plan (DMP) might help turn your financial situation around. A DMP is organized through the help of a credit counselling agency and is offered to those who cannot complete credit payments at their current terms. DMPs typically cover unsecured debt, such as credit cards or loans that are not secured by collateral. The counselling agency negotiates a new plan to your creditors on your behalf, and if successful, you can waive certain fees that have been incurred and lower your monthly interest.
A settlement allows you to negotiate with your creditor to waive a portion of what you owe so that you can more easily make your monthly repayments. Depending on what you can negotiate with your creditor, settlement agreements can reduce your debt significantly. Although there’s no guarantee that a creditor will waive a portion of your debt obligation, a successful settlement results in you having to pay a far less amount than what you owe, placing you in a better position to repay them.
Debt forgiveness is what happens when a creditor agrees to remove all (or a portion) of your debt obligation. This route often involves complex negotiations with creditors. Most creditors aren’t thrilled with the idea of just simply cancelling a debt. However, debt forgiveness can also be achieved through formal bankruptcy proceedings.
Learning to manage your finances more effectively can make the difference between falling further into debt or paying it off entirely. If you’re struggling to pay off your unsecured debt and have concerns about your credit score, credit counselling can help you finally make some progress. This program educates debtors on more efficient ways of paying off their debt and avoiding additional debt in the future. Credit counselling is a requirement for individuals that file for bankruptcy in Wisconsin.
What To Know Before Applying For Debt Relief?
Negotiating to restructure your debt can seem like a daunting task, but know that you’re not alone. Wynn at Law, LLC can help you explore your debt relief options and help you regain financial stability.
Speak To A Wisconsin Bankruptcy Attorney
If your outstanding debt is unmanageable, and you’re considering all of your Wisconsin debt relief options, speaking to an experienced attorney can help you decide the best course of action. If filing for bankruptcy is a good option for your situation, a bankruptcy attorney is crucial to navigate the complex process successfully. Having a bankruptcy attorney at your side can help you become successful at eliminating your debt and save you money.
Beware Of Debt Relief Scams
Fraudulent debt service companies often target vulnerable consumers by using a false promise to significantly reduce or eliminate their outstanding debt. When dealing with any debt relief company, it is crucial to do your homework to ensure their legitimacy. The Wisconsin State Attorney General’s office and the Better Business Bureau can provide the information you need to validate the legitimacy of any debt settlement company you intend to hire.
Interest rates will always have a massive impact on your monthly payments. If you decide to pursue debt consolidation, always make sure to compare your old interest rates to the consolidated rates. In addition, be careful about accepting terms that reduce monthly payments but greatly extend the amount of time you will have to repay. While you might be enjoying lower monthly payments on the new loan conditions, you could end up paying more over the entire length of the loan.
Debt Relief Fees
If you’re considering enrolling in a debt management plan, make sure to be aware of all fees before committing.
Any time you negotiate with a creditor to reduce your outstanding debt, the amount the Creditor “forgives” can be considered taxable income. Therefore, always take tax implications into account when deciding which debt relief option is best for you.
Does Debt Relief Affect Your Credit Score?
Depending on which type of Wisconsin debt relief program or method you choose, the impact on your credit score can vary. Some effects can be temporary, while others can impact your credit score for up to a decade. However, missing payments will also negatively impact your credit score. If you are in a financial position where you can’t meet all of your debt obligations, many structured debt relief options could be better for your long-term credit score.
Schedule A Free Bankruptcy & Debt Consultation With Our Wisconsin Law Firm
When it comes to resolving your debt issues, you don’t have to go through it alone. If you need help negotiating with creditors or creating a debt management plan, it’s always better to consult with an experienced bankruptcy and debt relief attorney.
Wynn at Law, LLC’s attorneys will review your situation and provide you with practical legal advice. The goal is to help you move forward and become debt-free. Contact us today for a free Wisconsin debt relief and bankruptcy consultation.