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February 2013 Archives

Bankruptcy comes early for many college students

Many Wisconsin residents in their early 20s, including college students, find themselves deeply in credit card debt thanks to impulsive choices due to lack of financial experience and easy access to credit. According to a study by the International Journal of Business and Social Science, half of college students in the United States have four or more credit cards. This can cause them to end up with enormous debt, financial troubles and poor credit scores. One woman who recently shared her story racked up more than $20,000 in credit card debt in college. She received her first credit card as a freshman. Four years later, she had four credit cards and was deeply in debt. According to the story, she admits that she had problems understanding the way that her debt added up over time.

Options for escaping debt and making a fresh financial start

A number of options exist for Wisconsin residents looking to escape debt, and not all of them involve filing for bankruptcy. Two debt relief options that do not involve filing for bankruptcy are credit counseling and debt settlement. With credit counseling, people work with a non-profit agency that can help them establish a budget. Sometimes, these agencies can also help to negotiate lower payments or have fees removed from an account. While the process can take three to five years, the budgeting skills gleaned and low cost make credit counseling an attractive option for individuals aiming to budget more intelligently and streamline their payments. Debt settlement often involves a third-party who negotiates with creditors, and it can also help reduce interest rates and principal balances, but it can leave a bad mark on one's credit report.

Using bankruptcy to protect personal vehicles from repossession

For many Wisconsin citizens, debt can seem impossible to overcome, which is why federal law allows people whose debts exceed their assets to get a fresh start by filing for bankruptcy. There are two types of personal bankruptcy protection: Chapter 7 and Chapter 13. Each type has different benefits based on a person's specific financial situation. With a Chapter 13 bankruptcy, the consumer is allowed to set up a repayment plan whereby some debts may be paid off over a period of three to five years.When a person files for Chapter 7 bankruptcy, there is an automatic stay that prohibits a creditor from taking action to collect against the person. Even with secured debt such as a vehicle loan, the lender must obtain permission from the court before they can repossess the vehicle. This provision in the law may give consumers some relief if they are having trouble meeting their monthly payments.

Golden Guernsey trustee seeks purchasers

Waukesha's 83-year-old Golden Guernsey Dairy plant filed for Chapter 7 bankruptcy in Delaware and closed abruptly on Jan. 5. The California capital firm that formerly owned the Wisconsin facility criticized the workers' union, pricing pressures and operating expenses for their roles in prompting the decision. In the wake of the closure, over 100 employees are searching for new jobs and benefits. The Workforce Development Center hosted a job fair specifically for these individuals, who were allowed to return to the plant to claim their personal effects. The new bankruptcy trustee has been actively searching for purchasers and is hosting tours of the site. He believes that buyers will be interested in the chance to purchase the plant free of encumbrances.

Understanding bankruptcy and foreclosure

As increasing numbers of people in Milwaukee and beyond are facing foreclosure due to a poor economy, lost jobs or decreased income from divorces, some look to personal bankruptcy to save their homes. While filing for bankruptcy could delay the foreclosure process, it may not to be able to save someone's home. Additionally, the delay that filing for bankruptcy provides in the foreclosure proceedings generally ends up being only about two months' time, experts say.When someone files for bankruptcy, banks can request a relief from stay, which removes a home from bankruptcy protection. Many lenders will file these motions within a week or two of receiving notice of the bankruptcy filing, says a bankruptcy adviser. Unless someone can prove that they are current on their payments, the relief from stay is granted.

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