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DMX may be forced to convert bankruptcy form

Rapper DMX's bankruptcy has recently been criticized by U.S. Department of Justice officials for inconsistencies and delays. The bankruptcy was originally a Chapter 11 bankruptcy, which the artist filed in 2009 to reorganize his debts. According to the official monitoring the case, DMX failed to fully disclose his assets. One filing stated his monthly income as only $5,000, but this figure was lowered to $1,667 in the next filing.

The Justice Department official in New York urged the judge overseeing the case to convert the rapper's bankruptcy from Chapter 11 to Chapter 7, or liquidation. If the suggestion is taken, the rapper's property and assets will be liquidated to settle his debts.

Debts are a nationwide concern. Anyone in Tennessee can face financial challenges from illness and unemployment, among other issues. Creditors have a right to collect payments when bills are due, but some creditors engage in creditor harassment, which can be stressful to debtors who are trying to find ways to settle or discharge their debts.

DMX's case is a reminder to those filing for bankruptcy that inconsistencies in filings can subject a case to a different form of bankruptcy that may not fit their needs. To prevent this from happening, a debtor needs to be accurate with details when filing. This will help a court accurately analyze the financial footing of honest debtors who wish to settle incurred debts.

Here in Tennessee, any debtor who is interested in using Chapter 7 bankruptcy may wish to speak with a financial professional. Consulting a professional before filing enables the debtor to understand the details of liquidation and how they can benefit from this form of bankruptcy. Once the debts are settled, the consumer should be able to start over and enjoy a debt-free life.

Source: The Wall Street Journal, "DMX in Hot Water with Bankruptcy Watchdog," Jacqueline Palank, Oct. 22, 2013

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