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An important point when looking at a bankruptcy

The prospect of filing a bankruptcy is often seen from an emotional perspective. We often speak of the feelings of many of our Wisconsin clients of "being overwhelmed by debt" and the stress that can permeate every aspect of their lives. The debt collectors never stop, and the barrage of demand letters and phone calls can make you feel as if you are being squeezed on all sides.

These emotional issues can distract from an important element of a bankruptcy calculation, which is that it is a calculation. While aspects of bankruptcy can feel very emotional, at the end of the day, your bankruptcy should be an economic calculation based on your debt, your income and the prospect for that to change in the future.

Bankruptcy can eliminate much of your debt, either quickly via a Chapter 7 if you have few assets, or during a longer period with a Chapter 13, if you have some assets that you can afford to keep.

A story discussing the purchase of a foreclosed home from a bank describes how a financial institution views this transaction. For a bank, the price of the home is very abstract.

A single home makes up a very small portion of the total assets the bank holds. A bank may foreclose on a property or refuse to negotiate on price after a foreclosure, even when it could obtain better deal, because that negotiation does not fit in a larger strategy.

For the average person, facing a bankruptcy, those assets make up your life. You see your life in your home, your car and all of the other stuff that you own. And with that stuff comes an emotional attachment, a sense of pride or status and all of the other emotions that follow.

These emotions can cloud your economic judgment. However, you need to view the relationship with your creditors as the economic relationship that it is, and determine what makes financial sense for you.

Your bankruptcy attorney can help you separate some of those emotions from the economic reality of the situation, and show how a bankruptcy filing can provide the "fresh start" you need.

Source:, "Pros and Cons of Buying a Foreclosed Home," Brendon DeSimone, August 07, 2015

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