Bankruptcy can be a life preserver for people drowning in debt. However, not all debts can be discharged. Likewise, every individual may not be eligible to file. Chapter 7 and Chapter 13 are the most common forms of consumer bankruptcy. Individuals have to pass the “means test,” to file Chapter 7. To pass the test, the consumer’s income must be less than the state’s median income. If your disposable income is too high, you are not eligible to file.
A bankruptcy attorney in Waukesha WI area will explain the Chapter 13 filing requirements. Basically, Chapter 13 is referred to as a wage earner’s plan. Filers must have a regular source of income. Further, a portion of that monthly income goes to pay the debt. The income can come from several sources including,
2. social security benefits
3. pension payments
4. unemployment benefits
Consumers who are considering filing should consult with a Bankruptcy Attorney. Talk to the attorney about which debts can be discharged. For instance, people who owe the I.R.S. may be stuck with this debt. Only a certain amount of taxes can be discharged. Likewise, alimony and child support arrears cannot be discharged. Interestingly, people cannot discharge legal judgments they owe due to driving under the influence. Mortgage and car payments are treated similarly. A Bankruptcy Attorney in Waukesha WI may be able to negotiate a cram-down. This applies to people who owe more on the property than it is worth. Payments on the agreed upon cram-down figure must stay current. Additionally, the arrears are spread out over the life of the bankruptcy.
Many consumers have student loan debt. It is quite difficult to discharge these debts. Individuals have to prove that repaying the loans would cause a severe hardship. It is best to contact the lender and work out a payment arrangement. There are some alternatives to bankruptcy. People can try to negotiate with creditors directly. Or, a consumer credit company may negotiate on your behalf. In the end, people still have to pay their debts or face certain consequences. Bankruptcy is a better alternative than being sued or having your wages garnished.