When you first realized you were financially in over your head, you likely did what many other Wisconsin residents do in similar situations: You tried to handle it yourself. Perhaps, you tightened your purse strings and started packing lunches from home for work instead of eating out. Maybe you also canceled some magazine subscriptions or regular indulgences, such as manicures or a membership at a local gym.
When financial crisis hits, however, even the best efforts are not always enough to get things back on track. That is not necessarily a reason for despair though, because there are often debt relief solutions available if you know where to look. In fact, many people are able to wipe their slates clean and start afresh by filing for Chapter 7 or Chapter 13 bankruptcy. There are differences between the two and if you’re considering filing, you’ll want to seek clarification ahead of time.
As with most financial relief systems, you must meet the qualification requirements of Chapter 7 or Chapter 13 bankruptcy before submitting a petition for either. The following list shows what some of those requirements are:
- Income: If you hope to qualify for Chapter 7 bankruptcy, you will need to pass a means test. This test measures your current income with the Wisconsin average household income, and if your income is higher than the median for the state, you may not qualify for this type of debt relief.
- Ability to pay back debt: Another prerequisite for filing Chapter 7 bankruptcy is that you must be able to prove that you do not have means to pay back the debt you owe.
- Business owners: If you are filing as a business, but are not a sole proprietor, you may be limited to Chapter 13 versus Chapter 7 bankruptcy, which is for individuals and sole proprietorships.
- Debt limitations: If you want to file under Chapter 13, you must make sure your secured and unsecured debts do not exceed set limits.
If you are unsure which type of bankruptcy might be a best course of action in your current circumstances, it can be helpful to talk to someone who is well versed in bankruptcy law. There are typically benefits and downsides to most debt relief options. You must consider your immediate needs as well as your ultimate financial goals for your future. The good news is that your financial problems are likely not permanent and there is support available to help you lay the groundwork for restored financial stability.