For many of us in Florida, when we think of our debt we probably envision a few thousand dollars in loans and possibly a mortgage to be paid. Generally, our idea of debt doesn’t float above a few hundred thousand dollars, unless we’re talking about businesses and their debt.
So when an attorney and lawmaker in Charleston, South Carolina filed for Chapter 7 bankruptcy, many people were shocked to hear that he and his wife were over $6 million in debt.
According to reports, the couple filed a joint petition in early August, listing that they had nearly six times as much debt as they had in assets. The petition pointed out that the majority of their assets were actually tied up in their residence in Charleston and the two rental properties they owned in Florida and a part of Key West.
Like most families in Florida, the housing bubble hit hard and hundreds of thousands of homes either went into foreclosure or were abandoned all together. Financial experts working closely with this couple say that this was likely the main reason the couple has suffered such financial difficulties.
In order to expunge their debt, the couple filed for Chapter 7 bankruptcy, which allows debtors to liquidate all non-exempt property which is then distributed to creditors. The remaining debt is then wiped clean, though the residual hit to one’s credit score can stay on a person’s record for an extended period of time, usually for ten years depending on the amount of debt. Financial experts point out that people considering Chapter 7 should speak with an attorney to make sure that it is the right choice for their situation before filing.
Source: The West Virginia Record, “Hunt ditches $6 million in debt through bankruptcy,” Lawrence Smith, Oct. 19, 2012