Even responsible Wisconsin residents can quickly find themselves in overwhelming debt if their income is reduced or stops altogether. Many students rely on credit cards for expenses that student loans do not cover, such as living expenses or clothing and food. However, if someone is not able to find steady employment or loses their job, something that has become increasingly common in the current economy, they may end up with mounting debt and no way to pay it off.
Credit card debt in particular can be onerous because of the fees and interest associated with it. In some cases, people find the amount they owe doubling based on late charges, overdraft fees and a high interest rate. In these cases, filing for Chapter 7 bankruptcy may enable people to get out from under debt that they are not able to pay back.
While filing for bankruptcy can have a negative impact on someone’s credit score, if someone already is behind on credit card and loan payments, their credit rating is already suffering. Additionally, people are able to rebuild their credit fairly quickly, and many individuals are even able to obtain FHA home loans within two years of filing. Secured and prepaid credit cards can help consumers to rebuild their score by enabling them to show a steady stream of on-time payments.
While bankruptcy can eliminate most or all of someone’s unsecured debt, there are still some types of debt that it will not discharge, such as government backed student loans. A bankruptcy attorney may be able to help someone understand how the filing process works, what is covered and if they are better off filing for Chapter 7 or Chapter 13 bankruptcy.
Source: Main St , “This Kind of Debt Can Lead to Bankruptcy”, Juliette Fairley , December 12, 2013