For many Americans, debt is a real and pressing concern in their day-to-day lives. Here in Connecticut, many families carry a variety of debt, the most troubling being unsecured credit card debt, which can be notoriously difficult to pay down due to high interest rates. For those in dire straits, Chapter 7 bankruptcy could be a viable alternative, but it is important to understand what such a filing entails.
In general, Chapter 7 bankruptcy (also known as liquidation bankruptcy) involves filing in a local bankruptcy court and being assigned a trustee to help navigate the process. Chapter 7 targets unsecured debts like personal loans, credit cards and medical debt. In some cases, a bankruptcy court is in a position to forgive debts of this kind. While the record of this erasure remains on a credit score for ten years, it has the power to remove the impending spectre of immediate debt.
Chapter 7 bankruptcy can also involve liquidating existing assets like homes and vehicles to help pay down debts. It is important to note that not all assets are exposed to such liquidation in a bankruptcy filing. For example, if a home or car is worth less than an amount prescribed by state and federal law, that asset could be considered exempt from the process.
Filing for bankruptcy is a major financial move that can have positive effects on the lives of Connecticut residents struggling with debt. However, it is important for citizens to understand the particulars of a Chapter 7 filing in order to ensure the move is right for them and their families. Seeking the support of an experienced bankruptcy attorney can help smooth the road toward financial freedom.
Source: Nasdaq.com, "Taking the Bankruptcy Plunge: Which Type of Filing Is Right for You", Nov. 20, 2017