Overwhelming debt means much more than just cutting back on non-essentials to pay bills. For many people in Kentucky, the reality of their debt is much more dire and may involve avoiding harassing creditor phone calls, watching unpaid bills pile up on the counter and deciding between groceries or the paying for essential medical care.
Popular media likes to portray people working hard and paying off this type of debt themselves, but doing so can be impossible for the average person. And yet, many people avoid pursuing bankruptcy. Not only is there an unfair stigma to bankruptcy, but debtors often mistakenly believe that they will lose all of their belongings.
Yes, you can keep property during Chapter 7 bankruptcy
Chapter 7 is a smart solution for those facing serious amounts of insurmountable debt. In this process, debtors turn over some of their property, which a bankruptcy trustee then sells to repay some of their debts. At the conclusion of bankruptcy proceedings, remaining debt is discharged.
You do not have to give up every last thing you own in an effort to pay back an impossible debt. Many debtors stay in their homes and continue driving their motor vehicles to and from work. Forcing a person to give up all his or her property in exchange for discharged debt would be counterintuitive to bankruptcy's mission, which is to help secure a better financial future.
Much of your property may be exempt
Exempt property is property that you keep during bankruptcy. Homes and primary vehicles are both considered necessary for modern life, and, as such, are assets that most people hold on to during bankruptcy. However, exempt property can vary wildly for each person. Some examples of exempt property include:
- Reasonable household furnishings and appliances
- Musical instruments, when the debtor is a professional musician
- Tools of a person's professional trade
- Work-related pensions
- Awards from personal injury claims
- Public assistance and benefits
Non-exempt property usually covers non-necessity items. Collections, secondary vehicles, family heirlooms and investments are not exempt property.
Bankruptcy may be your path to a better future
It can be understandably upsetting to consider giving up some of your possessions. However, you will not be forced to sell off all your worldly possessions when seeking Chapter 7 bankruptcy protection. Anything that is necessary for working or living will remain right where it belongs — with you.
Understanding this can help make the decision to file bankruptcy easier. The protections and better chance at financial security afforded by bankruptcy can turn years of struggle into a better future. Although undeniably helpful, bankruptcy law can be confusing, and most people are well-advised to seek the guidance of an experienced lawyer when filing.