Life can take any number of twists or turns. A person can make honest efforts to plan ahead in an effort to create financial stability. However, a major life event or slowly accumulating debt can cause that planning to unfold. Massachusetts residents looking for debt relief may simply not know where to turn.
One of the most frequently discussed financial stories of the year has been the city of Detroit's decision to file municipal bankruptcy. Although this is a major news item, readers may be wondering: How does this relate to personal debt problems?
On a very basic level, the city of Detroit was pushed into bankruptcy for reasons similar to many private citizens. Over the years, the city has been failing to fill budget gaps, which can happen to a person as their bills stack up. Bankruptcy has long been a means to provide legal protection while an entity works to clear debt.
Realistically, however, municipal bankruptcies aren't exactly the same as a personal bankruptcy. In Chapter 7 bankruptcy, an individual is typically required by the court to liquidate a number of personal assets to pay back creditors. One bankruptcy observer notes that the court assigned to a municipal bankruptcy case will likely not have the same discretion to order asset liquidation.
Very broadly, Chapter 7 bankruptcy is a much clearer process than municipal bankruptcy. If the city of Lawrence filed for bankruptcy, hypothetically, city officials might not know exactly what to prepare for because municipal bankruptcies aren't too common. On the other hand, thousands of people seek the relief of personal bankruptcy every year, so the path through that process has been cleared many times over.
Of course, every person's financial situation is unique, so it may be helpful to receive legal advice to determine the best option for debt relief. This way, a fresh financial start may seem much more attainable.
Source: WXYZ News, "Comparing bankruptcies: Is Chapter 9 like a Chapter 7?" Jeff Vaughn, July 18, 2013
