Encouraging signals of growth in the economy aside, some Kentucky residents are still suffering from creditor harassment and in need of debt relief. Filing for bankruptcy is never an easy choice, and it can become complicated when considering how the options could impact individual situations. One Virginia court decision showed how a Chapter 7 case may play out, and the results could provide encouragement to a debtor seeking this route.
A married man sought Chapter 7 relief. His justification was that debt incurred by two mortgages and $60,000 in student loan debt left him unable to handle his monthly expenses. The trustee in his case reported to the court that those expenses included a second home that his wife had purchased. The trustee considered that sale of one home would help satisfy the man's obligation to creditors under Chapter 7.
Unlike in Chapter 13 cases, which establish a repayment plan lasting as long as five years, a Chapter 7 case involves the liquidation of non-exempt assets. The judge sided with the debtor, however, and allowed him to keep the two homes. The judge cited the man's lifestyle choices as a factor in allowing relief from the mortgage debt.
Choosing the type of bankruptcy and how to present a case to the court is often as difficult a decision as making the first choice to file for bankruptcy. The decision becomes more complex with an understanding that judges differ in their approach to debtors, and the courts in one jurisdiction may have different precedents from those in another. An attorney with experience helping debtors file for bankruptcy could be of assistance to a client who is considering this form of debt relief.