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Chapter 7 bankruptcy misconceptions hinder a fresh start

Many people in Appleton, Wisconsin, and throughout the United States characterize filing for bankruptcy as "embarrassing." However, if a fresh financial start is needed, the right debt relief solution may be bankruptcy, once all the facts are known.

A survey conducted by YouGov found that almost one in every four Americans have considered filing for insolvency and 18 percent of those households surveyed have already done so. A more surprising comparison of survey results indicated that although many participants stated that filing for bankruptcy was "shameful," more than one half said that it opened an opportunity for a fresh financial start.

Chapter 7 bankruptcy or liquidation is the most common debt relief option in the United States. However, not all people know that a Chapter 7 filing cannot discharge certain debts, such as alimony and unpaid income taxes. In addition, although many Americans are burdened by student loans, such loans are insured by third parties and are often excluded in bankruptcy.

Chapter 7 can discharge credit card debts, medical debts and some personal loans by giving up some assets. This option can help anyone who does not have a steady source of income or can stop wage garnishment. However, bankruptcy can remain on a person's credit history for up to 10 years and can only be filed once every eight years.

Financial literacy is the solution to relieve overwhelming debt and then remain debt free. For those who consider bankruptcy a last resort, it is important to know how a bankruptcy filing works. Anyone struggling with debt must be eligible to file and should undergo credit counseling.

Source: MainStreet.com, "One-Quarter of Americans have Considered Filing for Bankruptcy," Hal M. Bundrick, Feb. 26, 2014

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