The economic downturn 10 years ago did a lot of damage to many people’s lives in Kentucky and around the world. Whether it was loss of retirement funds or the repossession of a home or vehicle, the experience has changed the way many individuals approach the ideas of wealth, income and bankruptcy. The hesitancy to use bankruptcy as an option to create a clean slate has eased over the past few years.

Of course, bankruptcy is not the only option for dealing with debts. Depending on the types and amount of debt owed, there may be ways to settle accounts, even for less than the total debt, without going through the legal process of bankruptcy. However, determining whether these options are feasible and more advisable than a bankruptcy proceeding may require some knowledge of the potential legal ramifications of each, as well as attention given to the individual’s long-term goals. Whether the debts occurred due to divorce, job-loss, medical illness, or student loans, different paths may yield different results.

Obviously, if bankruptcy is the best option, the next question that would need to be answered would be whether a Chapter 7 liquidation or Chapter 13 reorganization is most advisable. In many cases, Chapter 7 personal bankruptcy may be the best way for Kentucky residents to meet their goals, including the discharge of most of their debts. However, the pros and cons of each type of bankruptcy should be considered before making any decisions. Understanding which debts can be wiped away, which may have to remain and the timeline and consequences of each action is essential to making the most informed decision possible.

Bankruptcy can have a sizable effect on a person’s life. Non-bankruptcy options exist, and the details of the bankruptcy process itself can vary from state to state. Getting more information about bankruptcy may be the safest way for Louisville residents to make a choice that’s right for them.