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Insurmountable debts may be settled through Chapter 7 Bankruptcy

The economy of the United States is driven by debts. Consumers in Tennessee use debts to purchase a car, earn higher education and many other services. However, consumers should pay the debts on time to avoid accumulating debts and huge interests. One woman's situation is a clear example of how some Americans accumulate debts.

After the woman graduated in college, she had to face another challenge: paying off $15,000 in credit card debt. While in school, the woman used her credit card to pay for clothes, tuition, food and school fees. The woman also purchased a car for transportation. She then accepted a job paying her $35,000 annually. The added debt made it impossible for the woman to settle her existing debts. After the woman lost her job, she decided to file for bankruptcy.

According to a study, job loss, home foreclosure and credit card debt are the most common reasons why people file for bankruptcy. Many consumers use Chapter 7 bankruptcy as a way out of their debts. Under Chapter 7, property and assets will be liquidated to settle or discharge the debts.

Another form of personal bankruptcy is Chapter 13, also known as reorganization bankruptcy. A debtor who was granted with Chapter 13 bankruptcy protection has to undergo a repayment plan lasting from three to five years. A federal judge oversees the entire procedure. Most of the debts are discharged once the repayment plan is finished.

To learn more about bankruptcy for individuals, a debtor may speak with a bankruptcy attorney in Chattanooga, Tennessee. The legal professional can handle the case for the debtor, allowing the latter to focus on rebuilding his or her financial status.

Source: Mainstreet.com, "This kind of debt can lead to bankruptcy," Juliette Fairley, Dec. 12, 2013

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