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Benefits of Chapter 7 bankruptcy

When one hears the term "bankruptcy," one often associates it with a negative connotation. Many Kentucky residents have learned that this is actually far from the truth. For many, filing Chapter 7 bankruptcy added a positive dimension to a very difficult situation.

Falling victim to spiraling debt happens all too quickly and easily. For some, the downward spiral began with the loss of a job or a medical crisis. For others, credit card debt got out of control, and as interest continued to accumulate, the ability to pay off the debt shrank.

Chapter 7 bankruptcy offers the individual the opportunity to start over. With this type of bankruptcy, the majority of unsecured debt can be discharged. Furthermore, it is possible that select secured debt can be reaffirmed so that the individual can hold on to a house and/or car. These debts are typically secured using the item as collateral for the loan. However, if the debt is reaffirmed, the individual continues to make those payments and maintains possession of those assets.

Another benefit of Chapter 7 bankruptcy is that once it is filed, an automatic stay is in place. This stay means that creditors are prevented from attempting to collect until the further order of the bankruptcy court. This stay applies to both secured and unsecured debts.

One other area of concern for many Kentucky residents is how a bankruptcy will affect their current job. It is important to note that an employer is prevented from firing someone simply based upon their filing for bankruptcy protection. Experienced legal counsel can provide guidance as to whether Chapter 7 bankruptcy can provide the financial relief the individual is seeking based upon the given situation.

Source: americanbar.org, "Bankruptcy Pros and Cons", March 22, 2017

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