Especially since the collapse of the housing bubble in 2007, even seemingly successful individuals have found themselves declaring bankruptcy. One Arizona school official that has a listed income of $305,000 has now filed for Chapter 7 bankruptcy.
The assets and liabilities on this individual's petition are listed to be $500,000 to $1 million. It also appears that his $1.1 million home is facing foreclosure if other options are not made available to this person.
As with many homeowners, the school official's attorney advised him to explore filing bankruptcy as a means of negotiating a settlement with the bank to prevent a foreclosure from taking place. Creditors listed in a Chapter 7 petition are not able to force a home sale in order that debts owed to them are honored.
However, though banks are often willing to do a loan workout with distressed homeowners, these entities will be much more reluctant to do this when the homeowner is being inundated by other creditors. Chapter 7 bankruptcy provides debtors a fresh-start by providing a court ordered process to deal with an individual's debts.
Experienced bankruptcy attorneys can go through your options with you and make a determination as to what is the best financial option. In some cases Chapter 7 may be the best option, in others it might be Chapter 13, and in still others it may be not filing bankruptcy at all.
When individuals have a certain income source, they also often have certain financial obligations that come along with the earning of that income. It’s sometimes impossible to pay back loans without access to other loans. Unfortunately, when the income source is severed, the financial obligations may still remain.
When we are speaking of debts that exceed seven figures, it’s increasingly difficult for business people to pay back what is owed without access to credit to keep their businesses running. Interest alone concerning those obligations can mount up very quickly.
Source: Arizona Daily Star, "Sunnyside's Isquierdo files Ch. 7 bankruptcy," by Jamar Younger, May 22, 2013