An overview of Chapter 7 bankruptcy

On Behalf of | Oct 25, 2017 | Bankruptcy |

Financial stress and strain can be overwhelming for a Kentucky resident. It can also be incredibly isolating to feel as though a person is alone in their financial fight. Readers of this blog who are pressured by the weight of overwhelming debt and insurmountable bills may wish to consider Chapter 7 bankruptcy and then seek their own counsel on whether the process may be beneficial to their financial situations.

Chapter 7 bankruptcy is also known as liquidation bankruptcy. This is because under the Chapter 7 process a person sells off or liquidates much of the property they own so that the proceeds may be used to satisfy their financial obligations to their creditors. Exemptions exist that allow debtors to keep some of their possessions but, by and large, a person is required to reduce their assets in order to pay off their debts.

During the bankruptcy process, a debtor and their creditors may negotiate down the amount the debtor owes to become free of their obligations. For example, a debtor may owe $10,000 on a credit card, but may, after negotiations, be able to satisfy that debt for an agreed upon sum much lower than the initial $10,000 bill. Bankruptcy can open lines of communication between creditors and those who owe them money to resolve issues with economically feasible terms.

Chapter 7 bankruptcy is a form of legal relief for people who are struggling with debt. Filing for bankruptcy is not a sign of weakness, but rather can be a responsible tool for those debtors who have few options to break themselves free of the crippling weight of their debts.

Source: FindLaw, “Chapter 7 Bankruptcy,” accessed October 10, 2017

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