For people in Kentucky who are experiencing financial problems that they do not believe they can escape, the stress can be overwhelming as they seek solutions and try to find a way to move forward. Bankruptcy is a legal strategy to overcome financial challenges and start again either with a clean slate (Chapter 7) or with a payment plan (Chapter 13). Mentioning these two basic options is important as many prospective filers are not aware of the difference and how the situation determines which is preferable.
Chapter 7 is a liquidation. People who do not have significant property and assets can get a clean slate by filing for Chapter 7. If there are assets that are of value, a trustee will take them, convert them to cash and distribute them to creditors to pay some of the debts. Since Chapter 7 generally does not have nonexempt property, it might not be wise for a person who owns a home or a car with value to file for it. After the case is completed, the debts are discharged and the person will no longer face the calls, letters and relentless debt collection attempts. It will drastically harm the person's credit, but most are willing to make that tradeoff and rebuild their credit as time passes.