In a changing global scenario personal finances are taking the biggest hit and individuals who started start-ups or other businesses that didn’t do well, and those who had been laid off work and the unemployed are in a fix. They are financially broke and believe that probably declaring bankruptcy is the only option left for them.
But, every single individual should know that bankruptcy is not often the best solution to all your financial woes. Here are five reasons why you should not file for bankruptcy, especially if you live in Milwaukee, WI.
- When funds are available
Not everyone who wants to declare bankruptcy is financially in the doldrums; there is still a vast majority of people who can afford to clear all their bad debts more so if the debt is small compared to their financial resources. But how can one determine if they are capable of clearing all their debts with whatever income they earn.
A simple way, which in fact is recommended by several bankruptcies advisors in Milwaukee, WI is to make a list of all your expenses on a monthly basis which include credit card payment, utility bills, healthcare and other routine expenses and deduct the same from your monthly income. If you have a decent sum of money still left, then you can most certainly clear your debts over a period of time.
There is no fixed amount of debt that can be called small; for some a few thousand itself will be insurmountable while for others even thousands can be a small debt. Hence, if you have any chance of clearing your debts you should not declare bankruptcy; only and only of if you have no income and do not see any prospects of improving your economic situation should you file for bankruptcy.
- Tax debt
In Milwaukee, WI not all debts are considered equal and there are a few specific debts that cannot be eliminated by bankruptcy. Payroll taxes and penalties tax debts cannot be wiped away by bankruptcy claims. If you have ever tried to evade taxes and have used unscrupulous means like using a false social security number while filing your returns, you can’t file for bankruptcy.
The only way your income tax debt can get eliminated is if it is more than three years old before you filed for bankruptcy and it must have been assessed by IRS at least 240 days before your bankruptcy claim. When most of your debts are tax related, bankruptcy is not an option you should choose because you will accrue none of the benefits associated with discharging debts due to bankruptcy.
- Student loan debt
It is next to impossible to eliminate student loan debts through bankruptcy. In fact the bankruptcy code clearly states this clause that all educational loans are non dischargeable. Is there a provision to escape this? Well, you can appeal to the court in Milwaukee, WI that the loan be discharged because otherwise you will undergo severe financial hardships which will affect your minimal standards of living. If you can prove that in the past you have attempted to pay all your loans, you may have a chance of reducing your loan but no complete reprieve is possible.
- When you want to protect your Credit Score
It is very obvious that bankruptcy will hurt your credit scores and this in turn will hurt all your financial transactions in future. How much will your credit scores reduce is hard to predict but if you have had a high credit score you will most certainly see a fall of almost 150 points. So in case you want your score to remain intact, and are able to pay your loans then do not file for bankruptcy.
- Loss of assets
By now you must know that chapter 7 bankruptcy might lead to loss of all your assets. Assets like property, house, family heirlooms which are not protected by any exemption rules can be seized by the bankruptcy trustee and sold to clear your debts with the creditors. Each state has its own exemption rules. In Milwaukee, WI the exemption rules are very pro the citizens, as a result most often the clients can keep all their assets.
There are a few assets that do not fall in the purview of the exempted list; these can be protected with the help of a competent bankruptcy attorney who will do a pre-bankruptcy planning to ascertain means to protect them – attorney green bay wi if you thikn you really need one .
Thus, no one knows when he tide may change and you might have to go through a financial crunch and related hardships. There is a common misconception that bankruptcy is the only way out, but that is not the case in all situations. When faced with imminent bankruptcy consult a competent authority and list out all the pros and cons of declaring bankruptcy for your situation and only then file for it.