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Handling the realities of Chapter 7 bankruptcy

While it is true that the spending habits of some Americans can get them into debt trouble, it is equally true that financial hardship can visit any household without warning. For some Kentucky residents, unexpected expenses or long-standing debts can create a financial position that can be difficult to escape from. Chapter 7 bankruptcy is a responsible and helpful choice for those who are faced with unmanageable debt, but the key is to understand how to deal with the financial challenges bankruptcy can introduce in order to get back on a positive track. 

In 2017, there were an estimated 766,000 bankruptcies filed by private households. These were typically Chapter 7 bankruptcies, which are categorized as liquidation bankruptcies. This means that an individual filing for this type of bankruptcy will have his or her assets accumulated and debts assessed by a court-appointed trustee, with nonexempt assets subject to liquidation to pay down creditors. Any remaining unsecured debt after the net proceeds of liquidated assets have been applied -- including medical bills, credit cards and personal loans -- are typically discharged by the bankruptcy court. 

Of course, this support comes at the cost of a more challenging credit situation for a number of years following the filing. The peace of mind offered by a Chapter 7 filing can often be worth the financial work that needs doing once the filing has gone through. Most filers find that their credit situation rebounds relatively quickly, especially when a concerted effort to re-establish good credit is made.

Chapter 7 bankruptcy can be a complicated process, so Kentucky residents considering filing might benefit from the support of an experienced attorney in handling the situation. An attorney can walk an individual through the paperwork required to file, and also suggest options to improve credit following a bankruptcy discharge. Together, this support can help transition into a healthier financial future. 

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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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