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Why Filing Chapter 7 Is The New Black

As many Americans find themselves in dire financial straits as a result of a precarious job market and rising living expenses, filing for bankruptcy has become the only solution for people who are heavily debt-burdened and see little or no possibility of the situation improving.

While you might feel like Piper first entering Litchfield in Orange is the New Black at this scary prospect, you don't have to. Chapter 7 bankruptcy in particular has consistently been one of the most popular choices for those filing for personal bankruptcy. Even though personal bankruptcy filings in general fell by 12% between 2014 and 2015, Chapter 7 filings accounted for 67% of all non-business bankruptcies in 2015 and 69% in 2014. 

Chapter 7 is "the new black" primarily because many personal filers often don't qualify for Chapters 12 and 13 (Chapter 11 is for business filers.) There are many pros and cons of filing for Chapter 7 bankruptcy. It remains a popular choice even if Chapters 12 and 13 are an option because despite the hit you'll take on your credit score (Chapter 7 bankruptcies may be on your credit report for up to 10 years) and losing access to any credit cards, it only takes about 4-6 months to complete the process to get relief from most or all of your debt.

For Indiana residents in particular, there are an extra set of pros and cons when it comes to filing Chapter 7 bankruptcy. It's extremely popular in Indiana because it gives you a chance at a totally fresh start, there's no minimum for the amount of debt you have in order to file, and any wages you earn after filing are yours-- they don't go to your creditors or bankruptcy court. The same goes for any property you acquire. Indiana bankruptcy court also protects you from wage garnishments, debt collectors, and property seizure as of your filing date. 

There is another benefit the collection agencies and banks won't tell you about.  Credit scores usually rise after discharge, because there is now no or greatly reduced debt and no fear of a future bankruptcy filing.

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