The term "bankruptcy" can seem scary to an individual who fears the consequences of pursuing this type of legal filing. However, the thought of sinking deeper and deeper into unmanageable debt may seem just as frightening. Understanding the ins and outs of Chapter 7 bankruptcy can help a Pennsylvania resident to decide whether choosing this option is right in his or her unique situation.
Chapter 7 bankruptcy filings are fairly common and require individuals to submit certain types of property to a trustee. This trustee then liquidates the property, and the resulting money goes to creditors, who agree to have the person's debt discharged. He or she still can keep certain items, such as clothing or items needed in a home.
It is worth noting, however, that a creditor for a secured asset, such as a vehicle, can still rightfully take this asset back unless the filer reaffirms the debt. In order for a person to be eligible for Chapter 7 bankruptcy, he or she must meet certain debt and income qualifications. The biggest challenge that a person faces after filing for bankruptcy is experiencing a drop in one's credit score.
Being overwhelmed by debt can have a major impact on a person's finances as well as on his or her peace of mind. This is why Chapter 7 bankruptcy is a legal solution for consumers in Pennsylvania. In cases where a person sees no way out of his or her crushing debt, Chapter 7 often is a responsible way to confront this debt and to finally reclaim control over one's financial life.
Source: businessdayonline.com, How to know when to declare bankruptcy, No author, Feb. 10, 2014