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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. 

According to some experts, many people still hold on to the negative stigma attached to bankruptcy, and as a result, they will often delay the process until things have become truly dire. Even then, they might panic and gamble on alternatives that may not be prudent. For example, if a creditor files a lawsuit, some people have been known to liquidate 401(k) and other retirement assets, incurring withdrawal penalties and income taxes. 

Of course, this is not to say that Chapter 7 bankruptcy is the best choice for all Kentucky residents facing debt problems. Seeking out the support of financial advisors to determine the course of action to suit one's circumstances and goals is a good place to start. If bankruptcy turns out to be the best way to go, the support of an attorney during the filing process is invaluable to ensure that all debts are renegotiated or forgiven outright. 

Source:, "Bankruptcy is the solution to crushing debt for some consumers", Sarah O'Brien, April 5, 2018

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