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Looking at the impact of income on debt relief and bankruptcy, P.1

Earlier this month, the U.S. Census Bureau released the latest American Community Survey, the aim of which is to gather data about a variety of population characteristics, including household income. For the state of Wisconsin, one of the outcomes of the survey was that there has been a decrease in income figures.

According to the survey, median household incomes dropped 7.3 percent between the five-year periods of 2005-2009 and 2010-2014. There are several factors that have been mentioned in connection with the decrease, including the collapse of the housing bubble and the ensuing recession, which has impacted Wisconsin's manufacturing sector. A decrease in the number of jobs that pay a living wage has also been noted. 

Income is an important factor for several reasons when it comes to dealing with burdensome debt. First of all, a struggling debtor's income level impacts whether or not bankruptcy is even necessary. For a struggling debtor, there are alternatives to bankruptcy, but the debtor's income level can determine whether pursuing one of these alternatives is a viable option.

Bankruptcy alternatives include things like debt consolidations and transferring debt to a low interest credit card or obtaining a low interest loan, which can both result in lower interest rates and thus lower monthly payment. The debtor must still have sufficient income, though, to continue making payments.

Another bankruptcy alternative is working with creditors to set up a repayment plan, which can lead to lower monthly payments and/or reduced interest rate or sometimes reduced debt. Of course, creditors have to be willing to cooperate with this approach. When creditors aren't willing to cooperate, working with an agency to come up with a repayment plan can help. In our next post, we'll mention a couple things to keep in mind about debt management plans with respect to income. We'll also look briefly at a couple other ways income impacts bankruptcy.


The Oceanside Post, "Wisconsin household incomes declining," Irvin Gilbert, Dec. 12, 2015.

FindLaw, "Finding a Bankruptcy Alternative," Accessed Dec. 12, 2015. 

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