When to Consider Bankruptcy
May 28, 2026
FINANCIAL HARDSHIP
Financial problems often start small and gradually grow until they become overwhelming. It may begin with credit card balances that never seem to go down, even when you are making the minimum payments each month. Before long, you might find yourself using credit to cover basic needs like groceries or gas because your paycheck no longer stretches far enough. You begin falling behind on bills, which leads to more fees and added stress. The collection calls from creditors can become a daily reminder that things are getting worse. You may find yourself using one form of debt to pay another, moving balances around or taking out new loans just to stay afloat. As the situation worsens, you could even face lawsuits or wage garnishments that make it even harder to keep up. Eventually, you fall behind on your mortgage or car payments. Not seeing a way out, you might consider using retirement funds even though you know it could create long term consequences. Major life events such as job loss, medical issues, or divorce can make all of this even harder and leave you feeling overwhelmed and hopeless about your financial situation. If any of these challenges sound familiar, it’s understandable to need help. Bankruptcy could provide the protection and debt relief that can help you move forward.
BANKRUPTCY CAN HELP
Bankruptcy is designed to help people who are facing financial hardships that they cannot overcome on their own. The moment your case is filed, the automatic stay goes into effect, stopping collection calls, lawsuits, wage garnishments, repossessions, and even foreclosure. For many people, this immediate protection is the first real sense of relief they have felt in a long time. Depending on the type of bankruptcy you qualify for, you may be able to eliminate unsecured debts like credit cards and medical bills, catch up on missed mortgage or car payments, or restructure what you owe into something manageable. The two most common types of bankruptcy are Chapter 7 and Chapter 13, and each one provides debt relief in a different way depending on your situation.
CHAPTER 7 BANKRUPTCY
Chapter 7 Bankruptcy is often the best option for people who cannot realistically repay their debts based on their current income and expenses. It eliminates unsecured debts such as credit cards, medical bills, payday loans, and personal loans, providing you with significant debt relief. Chapter 7 also allows you to decide which secured loans you want to keep, such as your home or vehicle. If a payment no longer fits your budget, you have the option to surrender the property and eliminate the remaining debt. Bankruptcy exemptions protect your essential assets, helping you keep your home, vehicle, retirement accounts, and other important property. Chapter 7 Bankruptcy is also one of the fastest forms of debt relief, typically taking only four to six months from start to finish. If your debt has become unmanageable and you need real debt relief, Chapter 7 may provide the fresh start you need.
CHAPTER 13 BANKRUPTCY
Chapter 13 Bankruptcy is designed for people who have steady income but need time and protection while reorganizing their finances. Chapter 13 Bankruptcy provides debt relief through a manageable 3 to 5 year repayment plan based on your budget and the types of debt you owe. With Chapter 13 Bankruptcy, you can catch up on missed mortgage payments and stop foreclosure, even if a sheriff’s sale has already been scheduled. Chapter 13 Bankruptcy can also stop vehicle repossession and give you time to bring your loan current. It also helps manage tax debt, past due child support, or other obligations that cannot be wiped out in Chapter 7. Under Chapter 13 Bankruptcy, unsecured debts can be reduced or eliminated, and interest stops piling up, providing long term debt relief. If you need to protect your assets while reducing and reorganizing debt into something more manageable, Chapter 13 Bankruptcy may be the solution that helps you move forward.
REBUILDING AFTER BANKRUPTCY
You may be hesitant to consider bankruptcy because you believe your credit will never recover. In reality, continuing to struggle with overwhelming debt, late payments, collection accounts, and lawsuits can often be more damaging in the long run. Filling for bankruptcy is not the end of your financial story; it is the beginning of a healthier financial future. With your debt behind you, you can begin rebuilding your credit, create an emergency fund, and use credit responsibly to strengthen your financial situation. Many people see their credit improve within about a year after their bankruptcy is complete. Bankruptcy gives you the chance to reset, rebuild, and regain control of your finances.
FREE CONSULTATIONS
Thinking about filing for bankruptcy isn’t something anyone wants to do, but it is worth considering when debt becomes unmanageable. Many people wait longer than they should out of fear or uncertainty, even as their financial situation continues to worsen. At Pedersen Law Office, we take the time to understand your circumstances and help you determine whether bankruptcy is the right solution for you. We offer free consultations and will meet with you personally to review your options and guide you through every step of the process. Our law office proudly serves Appleton, Neenah, Menasha, Oshkosh, Green Bay, and surrounding communities throughout Northeast Wisconsin for bankruptcy and debt relief services.
