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Tennessee native used bankruptcy to settle $1.2 million debt

Hamilton, Tennessee, residents are probably well aware that debts can be both good and bad. On the one hand, debts can be used for self-improvement like obtaining higher education or purchasing large items like a house or car. On the other hand, debtors must live within their means and pay their accounts on time or they may face serious consequences like accumulating insurmountable debt that leads to creditor harassment and financial challenges.

Readers should take note that anyone, regardless of social status or income, may experience financial challenges due to unemployment and other unexpected life changes. Such is the case of a Tennessee native and finance expert who was given just 90 days to pay his $1.2 million debts.

This man was earning a $250,000 annual salary when his debts caught up with him. The man's borrowing habits were scrutinized by his creditors, who gave him three months to settle his debts or face the consequences. Given this short window of time, the man decided to settle his accounts by filing for bankruptcy.

Now, he is living a debt-free life. As a personal finance expert, this man serves as an inspiration to others who are currently facing huge debts and running out of options.

There are two options for bankruptcy-Chapter 7 or Chapter 13. Chapter 7 bankruptcy is also known as liquidation while Chapter 13 bankruptcy is also called reorganization. Under liquidation, property and assets of the debtor are liquidated to pay off the debts. A debtor granted with reorganization will be able to pay the acquired debts under a repayment plan that can last from three to five years. Once the repayment plan is finished, all debts will be discharged.

Hamilton residents who are experiencing similar financial woes may wish to consult with a financial professional. The professional can explain all the details pertaining to bankruptcy and suggest which type of bankruptcy best fits the client's situation.

Source: Gobankingrates.com, "6 Financial Horror Stories That Could Happen to You," Jennifer Calonia, Oct. 31, 2013

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