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Positives and negatives of Chapter 7 bankruptcy

Some Kentucky residents may need to file for bankruptcy in order to get a handle on their debts or stop foreclosure, and Chapter 7 bankruptcy is one option where nonexempt assets are sold to pay creditors. Small business owners can use this form of bankruptcy when a business cannot be saved, and individuals or business owners benefit because most collection actions stop when filing for Chapter 7. However, there are some important concerns one should think about before making a decision.

Some debt is discharged through the bankruptcy process, but loans secured by collateral are in general not. The positive side to this is that these debts may become less pressing after one files for bankruptcy. Credit card debt can be discharged in Chapter 7, but student loans, child support and alimony payments are still one's responsibility.

There are types of property one can keep with bankruptcy while a trustee sells other assets, but an individual does not get to select property to keep. One must list all property and debts when filing for bankruptcy. Sales or withholding taxes remain owed, but income tax obligations from more than three years ago can in some cases be eliminated. Bankruptcy does offer protection from creditors, but one's credit report suffers as bankruptcy is listed on it for a decade. However, paying debts can help one regain a higher score.

One faces important decisions when looking for relief from debt and thinking about bankruptcy. When wondering about what property will be exempt and what will be liquidated, one may wish to consult an attorney. Based on one's situation, an attorney might offer one multiple options. Chapter 13 bankruptcy could be a better choice for some than Chapter 7, and solutions other than bankruptcy could also be available.

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Law Office of Ginger C. Cord, PSC
155 E. Main Street
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Lexington, KY 40507

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