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Lexington Bankruptcy Blog

3 keys to debt management

Unfortunately, one of the lessons they do not teach in school is how to effectively manage debt. For most people, it is something they figure as they step into adulthood and open their first credit card account. While it often starts small, with that first low-limit card, as we get older, we tend to enter into more debt.

For instance, your first car loan was probably a major jump in your overall debt. Then came the home loan and perhaps another car and various credit cards. In fact, most Americans live their lives paying on one debt or another. For some people, the debt might remain at a manageable level compared to income, but for many others, this is not the case. In an economy full of downsizing and layoffs, it is easy to find yourself in a position where you can no longer manage your debt.

The Chapter 7 bankruptcy process

A great deal of the information available pertaining to bankruptcy filings is not necessarily reliable. Some Kentucky residents may be hesitant about the prospect of filing for Chapter 7 bankruptcy. However, a bankruptcy filing can sometimes be the best decision for a stronger financial future.

Bankruptcy refers to a procedure in federal court that helps consumers and businesses discharge debts they can't pay, and repay creditors that they can. When debts become unmanageable bankruptcy offers protection from creditors and a way to confront one's financial problems responsibly and directly. However, this process requires a considerable amount of paperwork, including a full accounting of all assets and debts related to the individual filing the petition.

Chapter 7 bankruptcy can help with credit card debt

Credit cards are a common feature in many people's wallets. While it can be difficult to imagine a life without easy access to these lines of credit, high interest rates can make it difficult for some people in Kentucky to repay what they owe. For some, Chapter 7 is the best option for handling overwhelming consumer debt. 

Experts recently reported that total consumer debt is on the rise, but it is not all bad news. While Americans are borrowing more, they are also doing a good job of paying it back. Default rates for the first half of 2018 are about the same as they were in 2017 despite most consumers having a bit more they need to pay back. 

Purchasing a vehicle during Chapter 7 bankruptcy

Filing for bankruptcy can have many different effects on the finances of the individual who files. Here in Kentucky and elsewhere throughout the nation, a certain amount of confusion exists as to how Chapter 7 bankruptcy actually works and what is (and is not) allowed. It is vital for an individual seeking bankruptcy to solve debt problems to understand the process, and how filing affects financial decisions.

For example, a common question is whether or not large purchases like a car are allowed when one files for bankruptcy. It is technically possible to purchase a vehicle while in a liquidation bankruptcy, but it may not be the best financial move. Chapter 7 bankruptcy usually lasts between three and six months, and during the process, assets are being reviewed by the trustee to determine what can be liquidated to pay down debt.

Chapter 7 may help Kentucky residents keep their homes

Many Kentucky residents will face some type of financial hardship during their lives. In some cases, those difficulties may even put homes at risk of foreclosure. When this happens, families may wonder what they will do if they lose their homes, but before thinking of the worst case scenario, parties may want to consider Chapter 7 bankruptcy as an option for stopping or slowing down foreclosure efforts.

Receiving notice of foreclosure can be a major blow to anyone. The majority of people do not intend to fall so far behind on mortgage payments that this type of situation arises, but it can happen more easily than often believed. Fortunately, when faced with this predicament, people do not have to simply give up and relinquish their homes to their lenders.

Help, I've just been laid from off my job!

An unexpected job loss is never an easy experience to endure, but is survivable with a great deal of effort on your part. Your mind may be racing with worst case scenarios that end with you living in a van down by the river, but that's not likely to happen.

Take some time to calm yourself down and review your options. Whatever course of action on which you embark, you will need all your wits about you on your new path. Below are some suggestions for those facing this life challenge.

If finances veer off-track, Chapter 7 may be a solution

For many young adults in Kentucky, learning how to budget finances is a high priority. A lot of people graduate from college, are unable to find jobs in careers pertaining to their degrees and soon find that just making ends meet is a much bigger challenge than they'd expected. When financial problems get out of hand, it is helpful to know that tools, such as Chapter 7 bankruptcy, may be viable solutions.  

Those in the 18-30 age bracket often take bad financial advice from well-meaning friends or family members. This can spark a serious financial crisis more quickly than one might typically imagine. For instance, when parents or others emphasize the perceived importance of paying back all college loans right away, it can backfire and lead to further financial trouble.  

More seniors filing for Chapter 7

It is widely accepted that post-retirement life, or the so-called Golden Years, are meant for enjoying the fruits of a lifetime of labor. However, for some Kentucky seniors, this could not be further from the truth. A tough economy is taking its toll on the over-65 crowd, leading many to seek solutions for growing debt. Thankfully, a Chapter 7 bankruptcy can be very helpful in this instance, if debtors file with time to spare.

Over the last several decades, as some research papers have pointed out, the security net designed to protect the elderly has been shrinking. Reduced income as a result of retirement is not always enough to cover skyrocketing health care costs. As a result, older Americans make up a demographic that is increasingly at risk for high levels of debt, with little way to pay it off.

Handling debt, from consolidation to Chapter 7

According to recent studies, the average American consumer debt has now crested a record high of $13.2 trillion, which means the American adult carries an average of $40,000 in debt. This might sound daunting to Kentucky residents handling this level of debt, much of which can be attributed to credit cards, auto loans and other debts. Thankfully, many people have managed to overcome massive debt by making use of debt-reduction tools and practices, from debt consolidation all the way to Chapter 7 bankruptcy.

The first step in tackling debt is to come up with a comprehensive plan. This means checking one's credit score and determining where the debt is owed. Some people do not realize they are carrying mountains of debt until they take a close look at their finances. Building a budget that sets aside income to pay down this debt is a good practice at this stage in the game.

Chapter 7 a possible route to handling debt

For many Americans, debt is a reality of day-to-day life. Kentucky residents know debt can accrue for many reasons, from unforeseen medical debt to a loss of income leading to credit card spending. Thankfully, the options for households facing serious debt are diverse -- from credit counseling to Chapter 7 bankruptcy, there is a solution for every family.

Cutting unnecessary expenses and creating a comprehensive budget are both good places to start for the average American family, which often finds itself spending money where it need not be spent. Some families find it helpful to cut down on entertainment and dining out as one way of "cutting corners" and reducing costs. Building a budget that takes into consideration where money is being overspent, and plotting a course toward lowered spending across the board, is also helpful.