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Chapter 7 bankruptcy or Chapter 13 bankruptcy?

The moment has arrived. The Kentucky resident has faced reality and knows that the debt problem must be addressed. Once this happens, there are various options that should be considered. Rather than attempting to refinance the debt or working with debt consolidation companies, many discover that filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy is a more appropriate solution.

While these two options appear to be quite similar, they do have some significant differences. Chapter 7 bankruptcy offers the individual the opportunity to have the majority of his or her debts discharged. While it is possible that some assets will be liquidated, unsecured debts are discharged and the individual no longer owes these debts. This process takes a little over three months to complete.

On the other hand, Chapter 13 bankruptcy offers the individual the opportunity to restructure debt. This allows the individual to continue paying his or her debt pursuant to a court-approved plan; however, the terms are more consistent with what the individual can afford. Then, after a three or five year repayment period, remaining debt is discharged.

With either type of bankruptcy, it may be possible for the individual to retain the house and/or car. This can often be done by reaffirming the debt. The individual can then make up any delinquent payments and continue making the appropriate payments.

Whether the Kentucky resident chooses to file for Chapter 7 bankruptcy or Chapter 13 bankruptcy is a personal decision that is contingent upon the individual's circumstances. By working with experienced legal counsel, the situation can be analyzed and a decision as to which one is the most appropriate can be made. Regardless, the selected option can typically provide the individual with much needed financial relief.

Source: propublica.org, "Bankruptcy: What's the Difference Between Chapter 7 and Chapter 13?", Paul Kiel, Sept. 27, 2017

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