This page contains general information. Call us at (715) 832-1800 for specific advice.

People in financial distress have four basic options to consider:

Do nothing. Exemptions protect poor, low income folks from creditor claims. For them, “doing nothing” offers a free form of debt relief. Meanwhile, the law will protect against harassment by collectors seeking payment of consumer debts. Later, when things improve, those folks can implement another debt relief solution. Read more about the “do nothing” option here.

Solve the problem outside of court. A person with only a few debts may resolve financial issues by working with creditors one by one. Options include refinancing and lump sum payoffs of reduced amounts. Note that debt cancellation outside of bankruptcy may be a taxable event. So folks looking at a debt reduction should consult a tax adviser to avoid unpleasant surprises at the end of the year.

Folks with more complex debt problems should look at presenting a general plan to all creditors. Don’t sign up with a “debt consolidation,” “debt settlement,” or “debt management” company. Instead, choose a Wisconsin credit counselor. We recommend Family Means and Catholic Charities. For home mortgage problems we suggest the Homeownership Preservation Foundation.

People may think about borrowing against their home or drawing on their retirement to pay off creditors. These are very dangerous “solutions” that do nothing but shift the problem from the present to the future. The result will almost always be even more financial pain down the road. More bad ideas.

Do a state court repayment plan. If creditors will not agree to a work out then an individual can ask a judge to force them to take payments. A Wisconsin “Chapter 128” plan gives debtors three years to pay a debt. However, this approach does not work with some creditors, including secured creditors. Read more about Chapter 128 here.

File for federal bankruptcy protection. Those in financial distress should consider bankruptcy as the last option. But it makes sense for those unable to pay. Or it may give a debtor time to make payment. For more about the bankruptcy option, click here.