When debt becomes overwhelming and you are not sure where to turn, filing for bankruptcy in Kentucky is a valuable option for those who want a fresh financial start. Common reasons that people file for bankruptcy include a sudden job loss, unexpected medical costs or excessive costs of living. When you file for bankruptcy, you will likely choose between Chapter 7 and Chapter 13, and there are several differences between the two.
Experian defines Chapter 7 as a liquidation bankruptcy. This means that to pay off your debts, most of your property is sold. Business entities and individuals can file for this type of bankruptcy and it typically takes anywhere from three to five months for the debt to be discharged. To qualify for a Chapter 7 bankruptcy your disposable income must be lower than the threshold. The benefit of Chapter 7 bankruptcy is that you can quickly dispose of your debts and start your financial life over. The downside is that you are unable to keep most of your property.
Chapter 13 bankruptcy is known as a reorganization bankruptcy. This is only for individuals and allows you to keep your property once you have set up a payment plan that fits your income. There are upper and lower limits to how much unsecured debt you can have, and you usually have three to five years to finish paying off your debts. The benefit of Chapter 13 is that you can keep your property and catch up on payments you are behind on for things like your car or mortgage. The downside is that you are required to keep making monthly payments to keep your property.
Bankruptcy is a great option for those who feel they are drowning and deal with stress and depression from overwhelming debt. A bankruptcy attorney can help you determine which type is right for you.
This is for educational purposes and should not be interpreted as legal advice.