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Is debt settlement a wise choice for Wisconsin consumers?

| Nov 29, 2015 | Debt Management |

Wisconsin residents have higher than average credit scores compared to residents of other states, which is indicative of their ability to manage to live within their means. Also, on average, a Wisconsin resident’s credit card debt is $4327, almost $100 less than the national average.

But even with those encouraging statistics, it is inevitable that some consumers are going to wind up struggling to pay down their debts. One method of taming the debt monster is debt settlement. Creditors agree to accept a greatly reduced sum that is far less than the original debt. They agree to these terms in order to get some recovery on the outstanding debt.

Wisconsin consumers who could benefit most from these arrangements are those with medical debts who are in poor health, those who are no longer earning as much income and those who are hopelessly mired in debt.

But there is a caveat, however. These credit card companies may still be pursuing debtors for debts that are no longer recoverable once the statute of limitations has elapsed.

Wisconsin creditors are governed by the Fair Debt Collection Practices Act. One of the protections the Act offers consumers includes not contacting anyone who doesn’t live or is present in the original debtors home about the alleged debt, unless:

— The creditor is attempting to ascertain the debtor’s location if it is reasonable that he or she changed jobs or moved.

— The debtor gave consent.

— The creditor is trying to seize property owned by the debtor to pay off the debt.

In those cases, creditors are limited to only mailing a single notice each month if debtors request that the creditor stop contacting them. However, if the creditor obtains a judgment regarding the debt, this no longer applies.

Collection agencies in the state can only charge a maximum interest rate of 5 percent, and residents have wage protection of 80 percent of their disposable weekly earnings, or 30 times the federal minimum wage per hour.

As there are many different ways to resolve unpaid debts, including through filing for consumer bankruptcy, Wisconsin residents should seek financial and legal advice to explore all options.

Source: nationaldebtrelief.com, “Wisconsin,” accessed Nov. 27, 2015

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