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Lexington Bankruptcy Blog

Chapter 13 bankruptcy or debt consolidation?

Credit card debt can quickly add up. A new skirt here, dinner out there, and the end result can easily be hundreds of dollars in unplanned purchases. This on top of minor financial set-backs, and the average Kentucky consumer suddenly finds himself or herself thousands of dollars in debt. For some, budgeting is the answer; however, others will need to look at more extensive measures such as debt consolidation or perhaps Chapter 13 bankruptcy.

For those families who carry credit card balances, those balances over the past year averaged over $16,000. With interest rates in the double digits, the likelihood of paying off this debt without incurring astronomical interest is low. Thus, it is usually in one's best interest to look for ways to eliminate this debt.

Chapter 7 bankruptcy and credit card debt

On almost a daily basis, the Kentucky consumer can open the mailbox and find yet another credit card offer. Some offer cash back on purchases, and others offer free airline miles. Many times, the introductory interest rate is extremely low; however, in a very short period of time, that will likely change. The constant influx of credit card offers often serves to make the use of credit cards attractive to the typical consumer. In the end, credit cards can be a problem for some and Chapter 7 bankruptcy may be the best option to get out from under their crushing debt.

The average American family carries a credit card balance of over $8,000. For some, this balance is much higher. In addition, it is predicted that overall credit card debt owed by the American consumer will exceed $1 trillion by the end of 2017.

Chapter 13 bankruptcy can help one become more financially stable

It is easy to get behind financially. For some Kentucky residents, one or two unexpected expenses can wreak havoc on the budget. In such circumstances, there is no way to pay everything that is due. This often causes one to get further and further behind with no way break the cycle. Fortunately, Chapter 13 bankruptcy offers a way to make the necessary changes and become financially stable once again.

Chapter 13 bankruptcy allows the individual to establish a repayment plan. This plan spans a three to five year year time period in which the individual will pay off all or part of his or her debts. At the end of this established time period, the majority of remaining debts are discharged. It is important to keep in mind that there are some debts that are not eligible to be discharged.

Exemptions and Chapter 7 bankruptcy

Filing for bankruptcy could be the best financial decision that a Kentucky resident makes. Although the decision often brings with it a certain degree of uncertainty and emotional concerns, it provides the individual with the financial relief needed to start over financially. For many, Chapter 7 bankruptcy is the solution to what has become an overwhelming financial dilemma.

Under Chapter 7 bankruptcy, the majority -- and, in some cases, all -- of the individual's debts are discharged. This means that they go away and repayment is no longer required. However, along with this type of bankruptcy, the individual may be required to liquidate certain assets to help offset some of these debts.

Chapter 13 bankruptcy may be appropriate option

Life happens. People get sick, and bills pile up. The simple fact is that almost every Kentucky resident will face a financial crisis at one time or another. For some, filing for either Chapter 7 or Chapter 13 bankruptcy is the answer.

While Chapter 7 may appear to be the quickest and easiest method to get out from under debt, it may not be the appropriate option. This is due to the fact that after liquid assets are used to pay debt, the remaining debts are discharged. This allows the individual a fresh start.

Can all debts be discharged in Chapter 7 bankruptcy?

As you learn more about Chapter 7 bankruptcy, it won't be long before you turn your attention to the types of debt that you can discharge.

If you qualify for Chapter 7, you may soon realize that it's the best way to improve your finances and gain a fresh start in the future.

Chapter 7 bankruptcy -- escape from the debt cycle

At some point, it is time to face reality. The credit card debt continues to escalate and the reality is that it will take what seems like a lifetime to make it go away without help. For many Kentucky residents, debt has become an overwhelming burden fueled by student loans, credit card and other types of debt. Fortunately, Chapter 7 bankruptcy offers a way out of this vicious debt cycle.

While most tax and student loan debt will not go away with bankruptcy, other debts will. For example, unsecured debt such as credit cards can be discharged. Furthermore, tax debt older than three years may also be dischargeable.

Chapter 13 bankruptcy may save family home

As financial problems mount, decisions regarding which bills to pay and which bills to let lapse often become a topic of conversation for a family. Fear of losing the family home is often a primary concern when Kentucky residents face significant financial problems. One way to possibly solve the dilemma over which bills to pay and as a way to save the family home is to file for Chapter 13 bankruptcy.

With Chapter 13 bankruptcy, the bills are reorganized to allow the filer some financial breathing room. Once the individual files for bankruptcy, a trustee is appointed. This trustee then reviews the debts that the individual owes and the individual's income that is available to pay this debt. A repayment plan is proposed by the filer, based upon a repayment scheduled over a three to five year time period. The plan must be approved the court court before it can be put into effect.

What to do after filing Chapter 13 bankrutpcy

Decisions have been made, paperwork has been filed and the Kentucky resident can finally begin to breathe a sigh of relief. For many, the most difficult part of a Chapter 13 bankruptcy in federal court is taking that first step and deciding to put an end to the financial struggle. Now that the process has begun, what needs to be done?

In some instances, the individual filing for bankruptcy protection will also have tax concerns. In this case, he or she will want to contact the Collections Division of the Kentucky Department of Revenue. Upon making contact, the individual will need to provide the department with the bankruptcy case number and the date that it was filed.

Top reason people file Chapter 7 bankruptcy

There are many reasons why one might pursue a bankruptcy filing. Financial struggles can strike anyone due to employment loss, overspending, emergencies and/or health issues -- among others. It is, however, believed that medical debt is the top reason people in Kentucky and elsewhere pursue Chapter 7 bankruptcy filings.

According to a report from the Kaiser Family Foundation, in 2014, 40 percent of Americans went into debt because of a medical problem. Many people with medical debt do have health insurance, but the coverage simply is not enough, especially in cases involving severe injury or illness. It is believed that 20 percent of insured Americans under the age of 65 struggle to pay their medical bills. Many of them use all of the savings to cover the costs, and 42 percent of them have to take on extra jobs to make ends meet.