Like many others across the country, Milwaukee residents are feeling the burden of debt in various forms. It can be hard to see the light at the end of the tunnel, and understandably so. You might feel like all hope is lost when bills pile up and the phone keeps ringing. Fortunately, when you file for Chapter 7 bankruptcy, it’s a step in the right direction. The basic idea of this bankruptcy option is to wipe out (discharge) debts, such as credit cards, medical bills, and past-due utility bills. It can improve your financial situation and help you obtain a fresh start.
That said, let’s go into a bit more detail about what is forgiven when filing for Chapter 7 bankruptcy in Milwaukee.
1. Credit Card Debt
The road to bankruptcy via credit card debt is fairly easy to follow. Almost every Chapter 7 bankruptcy case includes credit card debt. If you’ve maxed out your credit cards and are getting deeper into debt, chances are you’re feeling overwhelmed. Debt collectors are notoriously aggressive in pursuing credit card debt. Filing for bankruptcy can stop the lawsuits and collection agencies once an automatic stay is put in place. This prevents creditors from starting or continuing action against you to collect the debt.
Although there are benefits to eliminating credit card debt in Chapter 7 bankruptcy, there are some exceptions to this process. Here are two cases where the debt would not be successfully discharged:
- You incurred debt on your credit card as the result of fraud
- You used the credit card to purchase property that the creditor has a security interest in, such as a high-end appliance or a luxury piece of jewelry.
2. Medical Bills
The cost of healthcare is a sizable problem for Americans and, in fact, is a prime factor in personal bankruptcy. If you’re considering bankruptcy as a solution for medical debt, you’re not alone. Medical bills are considered “non-priority” or general unsecured debt. There is no cap on how much of your debt can be discharged by filing.
3. Personal Loans & Payday Loans
Payday loans are often used when someone needs cash fast. However, these loans usually have extremely high-interest rates. As a result, the borrower ends up paying a higher amount back to the lender than they actually borrowed. It is not uncommon for borrowers to begin by making use of payday loans and wind up filing for bankruptcy. Bankruptcy can help borrowers who have payday loans they can’t repay.
Bankruptcy can also wipe away unsecured personal loans. As long as you did not pledge anything as collateral, like your car, a Chapter 7 bankruptcy will discharge the debts owed on all personal loans as well.
4. Back Rent or Lease Payments
One type of bankruptcy that most people think is not dischargeable in bankruptcy is back rent. If you find that you have to default on your lease agreement due to financial difficulties, bankruptcy can help your situation. Filing Chapter 7 bankruptcy can put an automatic stay on eviction actions and also prevent the landlord from collecting any past due rent that you owe. Before starting this process, you should consider consulting with an experienced bankruptcy lawyer who can help you weigh the pros and cons of this route.
5. Utility Bills
When you’re in financial distress, utility bills can be overwhelming. You may have been given a warning that your services will soon be disconnected after missed payments. Utility bills are unsecured debts and treated like credit cards, medical bills, and personal loans in Chapter 7 bankruptcy. Upon discharge, the utility company generally wipes out the bill up to the very day of filing. When this happens, the utility company cannot alter, refuse, or discontinue your service.
It’s important to keep in mind that current and future utility payments will not be discharged during your bankruptcy. After you have filed, you must continue to make payments to avoid disconnection in the future.
We Can Help You File For Chapter 7 Bankruptcy in Milwaukee
Not sure if Chapter 7 or Chapter 13 bankruptcy is right for you? We can help! At the Bankruptcy Law Center, bankruptcy is all we do. We know the ins and outs and can help you get the most out of your bankruptcy. You may find yourself with significant debt relief, free from the hassles of debt collectors, and allowed to restart your financial life. When you’re ready, we’ll be here to help you file for Chapter 7 bankruptcy in Milwaukee.
Contact us today to schedule your free case evaluation.