Most Colorado residents do what they can to live within their means. On occasion, however, medical emergencies may arise, business deals may go south or any number of other circumstances may occur that leaves a person struggling with debt. In these situations, it may be necessary for the person to file for Chapter 7 bankruptcy.
For instance, a former political powerhouse of one state recently filed for Chapter 7, citing $2.1 million in debt accumulated between he and his wife. The man was previously known for advocating that individuals live within their means, although even he could not overcome the massive debt he accumulated through various methods.
The couple's debt included $70,000 in credit card debt, $20,000 in federal student loans, unpaid taxes and hundreds of thousands of dollars worth of loans the man personally guaranteed for business expenses. This is typical for many people in a Chapter 7 filing, particularly the credit card debt, which can quickly add up.
Fortunately, by filing for Chapter 7, individuals can eliminate their unsecured debt, including the credit card debt they may have amassed over the years. In the case of the man above, the personally guaranteed debt may also be dischargeable. On the other hand, student loan debt and unpaid taxes may not be able to be discharged through bankruptcy.
The man's case illustrates that, no matter what one's personal philosophy may be with regard to living within a person's own means, sometimes circumstances arise that make that motto unattainable. In these cases, Chapter 7 remains an effective option to discharge debt and get a fresh start.
Source: Star Tribune, "Former Minnesota GOP Chairman Tony Sutton declares personal bankruptcy," Baird Helgeson, Sept. 9, 2013