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Chapter 13 bankruptcy may be appropriate option

Life happens. People get sick, and bills pile up. The simple fact is that almost every Kentucky resident will face a financial crisis at one time or another. For some, filing for either Chapter 7 or Chapter 13 bankruptcy is the answer.

While Chapter 7 may appear to be the quickest and easiest method to get out from under debt, it may not be the appropriate option. This is due to the fact that after liquid assets are used to pay debt, the remaining debts are discharged. This allows the individual a fresh start.

Many times, however, Chapter 13 bankruptcy is the better choice given the situation. It is likely that the individual has some secured debt that he or she would like to retain. Under Chapter 13 bankruptcy, a repayment plan is established, and debts are repaid over a three or five year time period. This often allows the individual the opportunity to retain certain desired items used to secure debt such as a car or home.

Prior to filing for bankruptcy, the individual must undergo credit counseling from an approved agency. Once this is completed, a certificate is issued that will need to be filed. Additionally, there are specific income criteria and debt levels for each form of bankruptcy.

On the surface, Chapter 7 and Chapter 13 bankruptcy can be confusing to the average Kentucky resident. However, an experienced bankruptcy attorney can analyze the situation and then make a recommendation as to which form is appropriate for the individual. Once this decision has been made, the process to relieve one's debt burden can begin.

Source:, "Two Types of Personal Bankruptcy", LaToya Irby, Accessed on June 4, 2017

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