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Handling Chapter 7 bankruptcy

It is no secret that debt is a major issue for many American families. From credit card and medical debt to student loans and back taxes, there are many sources of possible debt for Kentucky residents, and in some cases that debt can become insurmountable. That is why nearly 800,000 Americans chose to file for Chapter 7 bankruptcy last year. Before making such a significant financial decision, it is equally important to understand the basics. 

Chapter 7 bankruptcy is also known as a liquidation bankruptcy, wherein a court assigns a trustee to handle an individual's proceeding. Once the bankruptcy petition is filed, the filer's assets and debts are reviewed to determine what debts can be discharged. Often, unsecured debt like credit card and medical debt meet those criteria. Other kinds of debt, like alimony and student loans, are rarely dischargeable. 

The trustee will determine what assets must be liquidated to pay toward secured debt. A bankruptcy filing stops creditors from garnishing wages or repossessing material assets until the further order of the court. It is also important to note that a Chapter 7 bankruptcy stays on a credit report for up to 10 years, and can influence an individual's ability to secure loans -- particularly in the first few years after the filing. 

Chapter 7 bankruptcy is an important decision to make for a Kentucky family that is struggling with debt. This is why it should not be undertaken lightly, and why the support of an experienced bankruptcy attorney can be so helpful. An attorney can work with an individual to determine what course of action best suits his or her financial needs, taking much of the guesswork out of a crucial financial decision. 

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