Bankruptcy is a scary thing for many people. Even if there was no way to prevent falling into inescapable debt, some people still feel like they have failed if they have to file for bankruptcy. Filing for bankruptcy, however, is not a sign of failure. In fact, it is a responsible, and often positive, step toward freedom from debt.
Take, for example, the case of singer Aaron Carter. Carter began is music career years before he turned 18. Because he was a minor, the singer's finances were managed by other people. During that time, taxes on his income went unpaid. While this was not Carter's fault, he is now being held responsible for it.
In total, Carter owes $2,204,854 to various creditors, including the Internal Revenue Service. His assets are worth only $8,232.16. To get his finances back on track, he filed for Chapter 7 bankruptcy.
Chapter 7 bankruptcy allows an individual to discharge most unsecured debts, including credit card debt, medical bills and mortgage debt. In most cases, Chapter 7 bankruptcy allows a person to keep his or her home, bank accounts and other personal property while putting an end to harassing creditor phone calls.
As Aaron Carter's situation shows, sometimes there is no way to avoid insurmountable debt. For many people, bankruptcy provides a source of relief, allowing a person to get rid of debt and get their finances back on track. With the help of a bankruptcy attorney, you can determine which type of bankruptcy makes the most sense for your situation.
Source: Us Weekly, "Aaron Carter Files for Chapter 7 Bankruptcy: 'Positive Step For Him,' Says Rep," Nicole Eggenberger and Jennifer Peros, Nov. 21, 2013