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Lexington Bankruptcy Blog

Important points about divorce and bankruptcy

Many divorces stem from financial matters that just can't be resolved. When you are faced with mounting bills and tension that is leading to divorce, you might decide that you need to file for bankruptcy, too. The key here is that you don't want to do both of these legal matters at the same time because they can cause mutual problems.

When you are facing the need to handle a divorce and bankruptcy, you will have to determine which one is your priority. Unfortunately, this means that you and your soon-to-be ex will have to determine how to proceed.

How Chapter 7 bankruptcy affects credit scores

For many Americans, the prospect of declaring bankruptcy can be even more daunting than facing insurmountable debt. As many Kentucky residents are probably aware, Chapter 7 bankruptcy is often portrayed as a "hail Mary" final effort to discharge debt before financial collapse. The reality is somewhat different, and depending on the unique situation of the debtor in question, bankruptcy can sometimes be the most financially responsible option. 

Chapter 7 bankruptcy is the most common kind used by individuals and businesses, wherein a thorough accounting is taken by a court-appointed trustee of the individual or company's assets and debts. Some of these unsecured debts can be discharged by the court, while others may require assets to be liquidated to pay down. This can help to reduce an existing debt total and sometimes even clear it altogether. 

Chapter 7 or "voluntary" bankruptcy

The specter of debt is pervasive in the daily lives of many Americans. Between mortgages, car payments, credit card debt, medical bills and other forms of debt, Kentucky residents can sometimes get overwhelmed by the amount of money they owe to creditors. This is why it is important for struggling individuals and businesses to fully understand how debt management solutions like Chapter 7 bankruptcy work, well in advance of reaching the point where it could be a necessary step toward financial health. 

The most common form of bankruptcy, and the one most often represented in popular media, is a Chapter 7 filing. In Chapter 7 bankruptcy, the individual works with a court-appointed trustee to take stock of the value of their assets as compared to the amount of secured and unsecured debt they carry. This helps the court determine what debts can be discharged and what may need to be paid back through asset dissolution. 

Chapter 7 bankruptcy a valid solution to debt

American household debt is believed to have reached some $13 trillion by the end of last year, according to the Federal Reserve. Kentucky residents have contributed to that number through student loans, car loans, mortgages and credit card debt. For some people, the weight of debt can become too much to bear, which is why it is important to understand all potential avenues to lowering debt. This can include everything from loan consolidation to Chapter 7 bankruptcy. 

Some 733,000 businesses and independent citizens are likely to declare bankruptcy in2018, according to the U.S. Trustees Program. While that represents a downward tend since 2010, the numbers are slightly elevated from last year. The most difficult form of debt to discharge is student loans, which require proof of undue hardship. However, most consumer debt can be handled through renegotiation of payback amounts or bankruptcy. 

Chapter 7 bankruptcy does not mean financial ruin

It is a widely held belief that filing for bankruptcy could mean the end of future credit and financial security. However, this is not the case. Kentucky residents who choose to file for Chapter 7 bankruptcy are not necessarily in danger of jeopardizing their future finances by erasing their current untenable debt. 

A bankruptcy filing remains on an individual's credit report for seven years, but it is possible to recover from the credit hit far sooner than that. After a bankruptcy, a credit score will necessarily suffer, but depending on the length of time between the filing and -- for example -- applying for a loan, the amount of money it will cost can lower drastically. An auto loan that costs $15,000 may cost up to $2,000 in interest if applied for after a year of bankruptcy, but after two years, the amount could drop to as low as $800. 

Baseball legend files for Chapter 7 bankruptcy

A baseball player who made history in the 80s is facing financial strife in the modern era, according to sports and business news sources. Kentucky baseball fans may be familiar with Jack Clark, a power hitter who played with the St. Louis Cardinals from 1985 to 1987. Despite embarking on many successful business ventures in the intervening years, Clark is now filing his second Chapter 7 filing in the face of mounting debt. 

According to court records, Clark has maintained several jobs since his heyday in the 80s as a major league player. He has worked to flip houses and also had a successful sports radio show until 2013, when he alleged that another major player may be using performance enhancing drugs. After a lengthy lawsuit, Clark lost the radio show. This contributed to his current debt woes. 

3 signs you should consider bankruptcy

If you live in Lexington and have found yourself struggling with debt, you are not alone. In fact, you probably know a friend, neighbor or relative that has had trouble managing debt and maybe even declared bankruptcy. While the term "bankruptcy" tends to carry many negative connotations, in reality, bankruptcy is a very effective tool for reorganizing your debt and getting your finances in order. Not only that, but it could help you avoid foreclosure on your home or possibly save your car from repossession.

For some people, the signs that it is time to file for bankruptcy might be obvious. For instance, a stack of overdue payment notices and threats of repossession or foreclosure might lead them to begin the process. For others, it may not be so obvious. If you are wondering if you should declare bankruptcy, here are some signs you should look for.

Misconceptions about Chapter 7 bankruptcy

When the word "bankruptcy" is spoken in popular media, it is often meant to sound dramatic and fatalistic. However, financial experts agree that in many cases, filing for bankruptcy like Chapter 7 can be quite the opposite, opening doors to new opportunities for struggling Kentucky residents to rebuild their financial lives. In the face of overwhelming debt, this can sometimes be an extremely smart financial decision. 

For example, some people believe that for the duration bankruptcy references remain on their credit report, there is no way to improve their credit score. This is not necessarily the case. While credit scores will likely drop with a bankruptcy filing, intelligent borrowing practices -- including the use of secured credit cards or small installment loans -- can go a long way toward building credit back up in the following years. 

Toys R Us files for Chapter 7 bankruptcy

A famed toy chain is closing its doors in a surprise bankruptcy filing. Toys R Us, known here in Kentucky and around North America as the premier provider of toys and children's supplies, is converting an existing Chapter 11 bankruptcy to Chapter 7 liquidation proceeding. While there is no word on when, or in what manner, the chain will begin closing its locations, Americans can expect to look elsewhere for toys this coming holiday season. 

The company initially filed for Chapter 11 bankruptcy protection in Sept. 2017, which typically involves restructuring operations and reducing debt through cost-saving measures. Unfortunately, this tactic appears to have been ineffective in curbing the company's mounting debt. As a result, the company now plans to convert to Chapter 7 liquidation. 

Jazz company decides to file Chapter 7 and close its doors

Most Kentucky business owners know what it's like to encounter various financial challenges during the course of their careers. Even those who have been in business 40 years or more may face financial crises that are difficult to overcome. In some situations, it makes more sense to seek immediate debt relief options, such as Chapter 7 bankruptcy, than to keep sinking deeper into a financial black hole.

A jazz music festival company in another state recently decided to access Chapter 7 options. With approximately $33,000 in assets and more than $200,000 in liabilities, the company took it to a vote, resulting in a unanimous decision to file for bankruptcy. The particular type of bankruptcy the company has chosen as the most viable option will completely liquidate all its assets to pay back creditors.