Individuals in Kentucky and throughout the United States who are looking to eliminate some or all of their debts may want to consider filing for bankruptcy. Individuals are typically eligible to file for Chapter 7 or Chapter 13 bankruptcy. Chapter 7 is considered a liquidation bankruptcy, and it allows a person to discharge most unsecured debts. Once a debt is discharged, an individual is no longer required to make payments on it.
It typically takes about four months for debts to be discharged after a person files a Chapter 7 petition. However, an automatic stay against creditor activity is granted as soon as a debtor files. Therefore, it is unlikely that a person will be contacted by a debtor between the time a case is filed and a discharge is granted.
When a person files for Chapter 7 bankruptcy, all of his or her assets are placed into a bankruptcy estate. The trustee who oversees the case is allowed to sell any items in the bankruptcy estate that are not exempt under state or federal law. In many cases, debtors are allowed to keep a portion of any equity that has accrued in their home even if the property is eventually sold. Debtors may also be given the right to retain their homes if they agree to make timely mortgage payments.
An attorney may be able to help a person learn more about a variety of debt relief topics. For instance, a debtor may be able to learn more as to whether filing for a liquidation bankruptcy is in his or her best interests. Legal counsel may also provide insight into the benefits of bankruptcy such as receiving an automatic stay from most creditor collection activities.