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Country singer files for Chapter 7 bankrutpcy

Eddie Montgomery of the country music duo Montgomery-Gentry recently filed for Chapter 7 bankruptcy in Lexington months after the closure of his steakhouse in Harrodsburg, Kentucky. Montgomery, a resident of Danville, reportedly listed a total of $1.9 million in assets and $13.4 million in debts, most of which stem from his failed restaurant.

According to Montgomery’s attorney, the bankruptcy filing was largely due not only to his business closure, but also to his divorce. It is not at all uncommon for bankruptcy and divorce to occur around the same time. Financial challenges often put a good deal of stress on relationships. And as Montgomery’s attorney points out, it is quite common for those going through divorce and business closure to file for relief in bankruptcy. 

Chapter 7 bankruptcy, as some of our readers know, is different from Chapter 13 bankruptcy in that it involves the liquidation of assets and immediate payment of creditors, after which the debtor may obtain discharge of remaining debts. Chapter 7 bankruptcy is often referred to as “fresh start” bankruptcy, since it wipes out most of the debtor’s liabilities.

By contrast, Chapter 13 bankruptcy involves setting up a repayment plan lasting three to five years, during which the debtor makes regular payments to the bankruptcy court. The decision to file for Chapter 13 bankruptcy over Chapter 7 depends on a number of factors, including one’s current income and whether or not there are assets the debtor wishes to keep. Some people, for instance, choose Chapter 13 bankruptcy in an effort to save their home from foreclosure. Whether or not a bankruptcy filing can save one’s home largely depends on the debtor’s ability to keep up with house payments and the repayment plan at the same time.

Those who have questions about which type of bankruptcy is best for them to file for do well to consult with an experienced bankruptcy attorney. 

Source: Kentucky.com, “Country singer Eddie Montgomery files for bankruptcy,” Janet Patton, January 2, 2014. 

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