If you reside in Wisconsin, you’re probably spending more on bills than average households in 29 other states. Careful budgeting, however, may help avoid a crisis when the unexpected occurs. Keeping track of spending habits and taking steps to control your finances will make a difference in how you cope with emergencies such as income reduction.
When unforeseen and overwhelming circumstances arise, you might also consider obtaining relief through a Chapter 13 bankruptcy. Chapter 13 can help you get back on track with mortgage and car payments, and often allows you to discharge certain debts even if they are not paid in full, upon completion of your Chapter 13 Plan payments. Chapter 13 requires financial discipline, so debtors who take control of their personal finances and are actively engaged with their budget and spending have the greatest odds of success.
Find a System That Works
“Budget” is not a four-letter word. It’s really just a plan for how you will use the money you have. The first step is getting a handle on what you are spending your money on. If you understand where your money is going, you will be able to make positive changes and prioritize what you spend your money on, which can help you eliminate or reduce unnecessary spending, and ensure you have the cash on hand to spend on the things you truly want and need.
You can find resources to assist you in recreating your household budget on the University of Wisconsin-Madison’s Financial Education website. Financial planning and bankruptcy topics in the UW-Madison program can be found here, and this link provides a contact list of no-fee financial educators.
Determine Your Legal Protection
Careful budgeting will not protect against every financial difficulty that you might face. If you continue to struggle with financial issues, especially if you’re facing foreclosure, you may consider Chapter 13 bankruptcy protection as your next step. When you file, the court grants an automatic stay, which halts further actions by your creditors outside of the bankruptcy case. This automatic stay continues during your case, and gives you an opportunity to reorganize and resolve existing debt issues.
Create a Repayment Plan
If your gross income falls below Wisconsin’s household average, the court may approve a workable three-year repayment plan. For incomes higher than the state average, the plan lasts five years, and the payment amount will be determined by a formula known as the “means test”. When you successfully complete the plan, certain remaining debts may be discharged. If your circumstances change, you and your attorney may need to work out a new arrangement with the court, but Chapter 13 contemplates and permits modifications of your Plan along the way.
Careful Consideration and Knowledgeable Filing Preparation
A Chapter 13 filing involves many nuances, and requires careful consideration of many different factors, including eligibility to file, plan payment requirements, options on modifying the terms of existing secured debt, and how you will manage your payment plan. A significant factor in the success of your bankruptcy may rest in your choice of an attorney. Learn more about how the right bankruptcy representation can make a difference by scheduling a consultation with an experienced attorney at the firm of Steinhilber Swanson LLP.