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Louisville Bankruptcy Legal Blog

How long may Chapter 7 bankruptcy affect credit?

Many Kentucky residents may be aware that filing for any kind of bankruptcy, especially a Chapter 7 liquidation, will affect one's credit rating. But what is a credit rating exactly? The credit rating is a number used by many banks and other lenders to determine whether an individual is a good risk to lend money to. What this means is that though lending money to anyone is always a risk, people who have a history of paying their debts on-time and in full are seen as more likely to continue to do so in the future. Thus, banks and other institutions are more likely to extend better interest rates and higher available credit lines to such people.

Obviously, filing a Chapter 7 Bankruptcy means that the filer is saying he or she is unable to pay all of his or her debts. Therefore, such filings are reported to the three credit agencies that keep record of consumer debt payments and issue credit ratings used by financial institutions. For a Chapter 7, the filing can affect a person's credit history for 10 years from the date the bankruptcy petition is filed. This means that for 10 years after the bankruptcy filing there will be a 'negative' mark on that person's rating.

Pros and cons of Kentucky business bankruptcy

Louisville business owners very often become entrepreneurs not only because they have an interest in the type of business they are running, but also because they wish to have the independence that comes from being their own bosses. This means they have a lot freedom in how to run their businesses, but also much responsibility when it comes to fulfilling the businesses' obligations. Sometimes, whether through bad luck, a mistake, or other circumstances, a business finds itself in a situation in which it cannot realistically meet its obligations. It is in these situations that owners may contemplate filing a business bankruptcy case.

While many people worry about the stigma and reputational hit that may be associated with a Chapter 11 bankruptcy filing, there is another factor to take into consideration: potential loss of independence in running the business. As we have previously touched on, the decision to reorganize a business' debts through a Chapter 11 case will likely subject the business' operations to the scrutiny of the bankruptcy court. This is often done through the use of the creditor's committee, in which some of the entities to which the business owes debts are given the role of overseeing the operations of the business and even investigating its procedures and personnel.

Some requirements for filing Chapter 13 bankruptcy

Making the decision to file for bankruptcy is stressful. Deciding what type of bankruptcy to file can be equally as stressful. Not everyone is able to file for all forms of bankruptcy, and while some may wish to pursue Chapter 13 and some may want to take a different route, it's important to understand what qualifies a person for such an action.

While Chapter 7 bankruptcy allows a debtor to liquidate property to pay creditors, Chapter 13 works in a different way. Instead of discharging nonexempt property, Chapter 13 lets a debtor keep possessions and put a plan in place to pay creditors in a three- or five-year time period. This plan may be a better fit for certain situations, but there are certain criteria that a person (or couple) must meet in order to file.

Getting over your anxiety about filing bankruptcy

Filing bankruptcy is a big step in your financial life, one of the most important decisions you will ever make. You may have preconceived notions about filing that lead you to wonder how good an idea it is.

If you are waffling, perhaps you should look at the possibility of bankruptcy in a new light. Here are a few facts that may help ease your anxiety and give you more impetus to make a decision.

Assistance navigating the Chapter 7 bankruptcy process

Finances are not easy to manage. Sometimes, the harsh realities of life throw curve balls that can send your financial wellbeing into a spiral. In these stressful situations, it can seem like nothing will help to bring you above water once again. There are, however, methods of dealing with massive debt and financial concerns that can help get you back on your feet. Chapter 7 bankruptcy is one such option.

Filing for chapter 7 bankruptcy can remove much of the pressure of crushing debt but also has aspects that need to be considered before hastily making the decision. While there are many types of debt that can be erased during the process, this involves giving up property in order for that debt to be eliminated. There are two different types of property in these situations - exempt and non-exempt.

Kentucky business bankruptcy and taxes

The old line "Nothing is certain but death and taxes," is often attributed to Benjamin Franklin. Whoever said it, it probably rings true to many Kentucky business owners. Unfortunately, for many of them, they didn't expect that the two might be related when it comes to their businesses. Especially for small business ventures, the complexity of the tax code can lead to issues when the business files taxes, creating a situation in which the business ends up with a large amount of tax liability.

Most businesses operate with expenses that create debts above and beyond any taxes owed. This means that when the tax bill, along with any penalties assessed for the missing tax payments, the business may find itself in an untenable position. When such a company is in a position where it appears it will not be able to pay its debts and become profitable, ownership may consider filing for bankruptcy.

Don't navigate the Chapter 7 bankruptcy process alone

Slipping further and further into debt is an awful and stressful feeling. What may being as a few simple bills can quickly spiral out of control, leading to every waking moment being consumed by the pressure and desire to escape the financial burden you've found yourself in. Instead of living in this financial pressure chamber for too long, however, there are options of erasing debt such as Chapter 7 bankruptcy. It's important to understand what this process entails before starting down the path.

At its most basic, Chapter 7 bankruptcy allows a debtor to eliminate most of their debt and start over with a blank slate. While this sounds like a fantastic alternative to drowning under bills - and it certainly can be - it is not a process that should be seen as a "get out of jail free" option.

People of all ages are deeply in debt due to medical bills

The medical bills associated with many health issues can be astronomical. If you are receiving treatment for multiple health problems or a serious illness, are recovering from major surgery or require ongoing physical therapy due to a disability, you know how the bills can pile up.

The good news is that relief is actually closer than you think. There are options for getting out of debt. You only need the help of a professional who is knowledgeable about solutions, including bankruptcy, to point you in the right direction.

What is consumer bankruptcy?

Millions of Americans throughout the country find themselves struggling with their finances. While many are deep in debt as a result of unforeseen or unpredictable consequences, such as a serious illness, others find themselves struggling to make ends meet due to overspending.

Consumer debt is not uncommon in the United States. More often than not, it is not one big purchase that leaves a person or family in debt, but a series of small purchases that simply add up over time. Studies show that people find it easier to spend when physical money is not exchanged. By whipping out and swiping a credit card opposed to opening a wallet and handing out cash, it is more difficult for us to understand the ramifications of our purchases.

Chapter 13 bankruptcy may be right for the recently unemployed

The economic downturn that occurred in Kentucky and across the United States around 2008 hit many people quite hard. Lack of growth and a crash in certain markets led to loss of jobs for many, which led to depressed consumer spending, leading to more lay-offs in a negative feedback loop. Unfortunately, when this happened, many individuals found themselves unemployed and with poor job search prospects due to the lack of hiring that was happening.

Now, almost 10 years later, things are better. Many people have gotten back to work, and are beginning to dig themselves out of the financial holes they had found themselves in. Unfortunately for some Kentucky residents, the time without a steady income created some difficulties that won't go away quite so easily. Perhaps they fell behind on mortgage or car payments. Perhaps they ran up a large amount of revolving-door debt by having to live off of credit cards. In these situations, it may feel like a hopeless task to return to a semblance of financial balance, even now that there's an income flowing again.

  • NACBA- National association of consumer bankruptcy attorneys
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