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Knowing your options is vital to protect assets in Chapter 7

Many people who become overwhelmed by their personal debt load seek a fresh start by filing Chapter 7 bankruptcy. Through this process, Chattanooga families may be able to discharge a significant portion of their unsecured debts and keep the assets that are most important to them, such as their home. This process can be confusing at times, so it's a good idea to know exactly what your options are within the bankruptcy process.

In many cases, Chapter 7 filings allow people to keep their homes, or other items acquired with secured debt, so long as they are able to make payments at the current rate or a modified rate. Within the bankruptcy filing process, people are asked to list the assets they intend to keep and have three primary options regarding their secured debts: redeem, reaffirm or surrender.

For those that wish to keep their home or other secured assets, redeeming or reaffirming is typically the best option. By redeeming secured debts, an individual is agreeing to pay off the loan at its current value or at a refinanced rate. On the other hand, reaffirming means that a person agrees to sign a legally-binding contract to pay off the entirety or a portion of their debt.

In cases where individuals choose the "surrender" option, they indicate that intend to give an asset back to their lender. This option can apply to houses, cars or other secured debts. However, this option does not necessarily remove a person's liability to pay off their debt.

The complexity of bankruptcy filings is a reason why many people choose to consult with a knowledgeable professional. By seeking help, people gain an understanding of exactly what filing for bankruptcy can do to improve their financial circumstances. Though the process can be daunting, Chapter 7 is the best option for many people.

Source: Fox Business News, "What Should You Say to Save House in Bankruptcy?" Justin Harelik, Mar. 6, 2012

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Mark T. Young & Associates
2895 Northpoint Blvd.
Hixson, TN 37343

Toll Free: 888-376-0282
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