Going into a new year with a significant amount of debt can be discouraging. After all, you’re just carrying last year’s problems with you as time passes, and you will continue to struggle with the consequences of significant debt in 2020. For this reason, you may be considering a more permanent and drastic step to deal with your debt problem.

For some overwhelmed Kentucky consumers, it makes sense to file for Chapter 7 bankruptcy protection. This option provides a person with the opportunity to deal with certain types of debt once and for all. For others, it may not be the right option. There is no one-size-fits-all solution for dealing with unsecured debt, and it is in your interests to first explore all of the options available to you.

The benefits of Chapter 7

When you file for bankruptcy, the automatic stay will go into effect. This means that creditors and debt collectors will have to stop contacting you. They cannot do things like initiate wage garnishment or move forward with the foreclosure process without permission from the bankruptcy court. This can give a consumer peace of mind as they try to work through their financial issues.

Chapter 7 bankruptcy also provides the benefit of dealing with certain types of debt. Unsecured debt, such as credit card balances and medical debt may be eligible for discharge at the end of the bankruptcy process. There is also the benefit of knowing this process is typically complete within a few months. 

The drawbacks of Chapter 7

Bankruptcy can be expensive, and it can leave a mark on your credit that will impact you for years to come. It may be difficult to secure credit for buying a home or getting a car. Chapter 7 bankruptcy is also liquidation bankruptcy, which means you could lose some of your personal assets. The proceeds from the liquidation process will go toward repaying some of your debts. Fortunately, there are exemptions that may allow you to keep some of your most important personal property.

Your financial future

If bankruptcy makes sense for you, it could be the key to allowing you to build a better and stronger financial future. Before you file or make any important decisions that could impact your life, you may want to seek an assessment of your case with an experienced attorney. This simple step can help you understand what you need for more financial stability and security in 2020.