Struggling with debt? Chapter 7 bankruptcy may be the answer

After struggling with debt, the 1986 Major League Baseball American League rookie of the year and 1988 league MVP, Jose Canseco, recently filed for bankruptcy protection. Mr. Conseco specifically filed for Chapter 7 bankruptcy, which offers individuals relief from most of their debts through asset liquidation and debt discharge allowing for a fresh financial start.

Late last month, Mr. Canseco, who is 48 years old filed for Chapter 7 bankruptcy after acquiring substantial debt in recent years. His bankruptcy petition reveals that he has less than $21,000 in assets and nearly $1.7 million in liabilities, including a $500,000 debt he owes to the U.S. Internal Revenue Service. By filing for Chapter 7 bankruptcy, Canseco now has protection from creditors.

Like Canseco, Mississippi residents who are experiencing financial difficulties may be able to seek relief from creditors by filing for Chapter 7 bankruptcy. The purpose of Chapter 7 bankruptcy is to erase most of an individual's debts to allow him or her to move forward with a more promising financial future. Typically a bankruptcy petitioner is not allowed to discharge certain types of debt such as taxes owed to the IRS unless certain hardship requirements are met. A bankruptcy attorney in your state can help you determine what those requirements are.

A Chapter 7 bankruptcy begins when an individual files a petition disclosing his or her assets, liabilities and other financial information to the bankruptcy court. This filing offers immediate relief by stopping creditors from pursuing any collection action against the debtor. The next step is the liquidation process. Liquidation is the selling off of an individual's assets in order to pay past debts. It is important to note that the law protects certain property from liquidation.

Often times, individuals can keep their home, automobile and other personal property. Once this process is over, the bankruptcy court will hold a discharge hearing. It is at this time that the court may discharge an individual's debts. Once the court discharges a debt, a creditor can no longer attempt to collect on that debt. An individual is then on the way to a new financial future.

The Canseco story reminds us of the protection and debt relief that Mississippi residents can seek from the bankruptcy courts during times of financial difficulty. Individuals who want a fresh financial start may find that filing for personal bankruptcy can be a real lifesaver.

Source: The Washington Post, "MLB slugger Jose Canseco files Chapter 7 bankruptcy in Nevada," August 1, 2012

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