Former child pop star files for Chapter 7 bankruptcy

Finances can be a difficult personal affair for someone to attempt to gain control over. Many Mississippi residents are often overwhelmed by bills, loans and other debts. Some people will end up looking to get a fresh financial start by filing for Chapter 7 bankruptcy. One can only wonder how a child or young adult could get a handle on such matters, particularly when others may be taking advantage of their financial situations.

Former child pop star, Aaron Carter, recently concluded that Chapter 7 bankruptcy was the appropriate means for him to seek debt relief. It is not entirely clear how his debt mounted, but his parents and manager may have been misusing Carter's money. No matter the cause, now Carter is trying to get a handle on the over $3 million of outstanding debts, which are primarily owed for taxes and credit cards.

Carter decided to file for bankruptcy, and on his bankruptcy petition he listed around $3 million in debts and less than $10,000 in assets and cash. With such an overwhelming disparity between his debts and assets, it makes sense that Carter sought the protection of the bankruptcy court. Now, he seeks to get much of his debt discharged.

Not all debts are dischargeable in bankruptcy. The debts fall into different categories, which affect whether they remain. Debt that is unsecured by property is usually discharged. In contrast, secured debt may not be discharged. Instead, a bankruptcy petitioner must consider one of three options: (1) paying off the debt; (2) returning the property; or (3) agreeing to new terms to help pay off the debt. Finally, there are debts that are usually not dischargeable, including child support and student loans. Taxes also fall into this latter category. However, if certain conditions are met, a debtor may be able to avoid paying off some tax debt as well. Mississippi residents in a situation similar to Carter's -- although probably with less debt -- can turn their financial situations around in bankruptcy proceedings.

Source: gobankingrates.com, "With Only $8,000 to His Name, Aaron Carter Declares Chapter 7 Bankruptcy," Amanda Garcia, Nov. 22, 2013

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