If you are a Wisconsin resident overwhelmed with debt and finding it impossible to cope up, then it is time to look out for options. Bankruptcy is an option that many people consider, but filing bankruptcy devastates your credit score. When you are having problems with lump sum debts Debt Settlement is the best solution.
In Wisconsin the debt settlement is designed to reduce your lump sum debts by negotiating with your creditors to reduce your debt principal, as well as your interest and late fees.
Creditors are more willing to consider a settlement agreement if they know you may have to file for Bankruptcy. They know that if you file for bankruptcy, their chances of getting repaid are less than if they agree to a settlement. Most creditors are willing to settle for 40-60% of the original debt. Once your settled account has been paid in full your creditors will report to the credit reporting agencies that the account has been settled.
You can settle your accounts with your creditors either by yourself or with a debt settlement attorney.1) Negotiating your debts personally:
In order to negotiate your case properly you have to assure your creditors that you are unable to pay the current minimum monthly payments and get a settlement agreement in writing.2) Negotiating with the help of a debt settlement firm:
If you think negotiating with you creditors is too hard to do on your own, try enrolling with a professional debt settlement company. A debt settlement company will carefully analyze your situation and appoint an attorney to negotiate with your creditors.
Before signing with a debt settlement company, make sure it is affiliated with the BBB to ensure you remain free of hassles and avoid scams.
The duration for the debt settlement process in Wisconsin depends on several factors. They include:
If you decide to enroll with a debt consolidation company it can take 15 to 36 months to settle your debts. If you choose to settle your debts on your own the process will take longer.
The effect of debt settlement in Wisconsin is similar to the effect in other states. When you decide to enroll in a debt settlement program, your credit score is already poor. But as you start paying off your debts under the settlement program your credit score will start to recover, making way for further improvements.
The IRS views any amount forgiven by a creditor during a debt settlement program as income to you. This means that unless you were insolvent on the day before your settlement agreement was put into place, i.e., your liabilities were greater than the total amount of your assets, you will have to pay additional income tax on the forgiven amount.
For additional information on how your settlement will affect your Wisconsin taxes you should consult a Wisconsin tax professional.