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Failed business ventures may lead to bankruptcy

Starting a business is a difficult project at any time, but in today's turbulent economy, it is even more risky. However, people must earn a living and to do so, some people invest all their money into their business and if it doesn't work, they also end up not only losing their investment, but sometimes even more of their savings as they rack up debt in order to start it up.

Arizona residents may have heard about the country singer going through this dilemma as the restaurant he started closed suddenly. The singer had taken millions of dollars in loans to start up the restaurant. Due to his debt, he now has filed for Chapter 7 bankruptcy.

Debtors struggling with their finances and facing creditor harassment and wage garnishment may not be aware that they may be entitled to federal and state protection in the form of a bankruptcy filing. Filing for bankruptcy puts an end to the relentless creditor phone calls and also puts an automatic stay on foreclosure proceedings and other legal action taken by creditors. In fact, it is possible for filers to retain possession of their residential home and even other household possessions such as the car, furniture and even jewelry, up to a certain value.

When it comes to personal bankruptcy, Arizona residents have the option of filing for either Chapter 7 or Chapter 13 bankruptcy, depending on their eligibility. To be eligible for Chapter 7 bankruptcy, the debtor's income must fall within a certain range. The court usually appoints a trustee who finds assets to sell to pay the debtor's debts. In Chapter 13 bankruptcy proceedings, the court creates a payment plan for the debtor based on his or her income. In a Chapter 13 filing, debtors may get to keep more of their assets and eventually pay off their debt, but on more reasonable terms. Whichever option Arizona residents select, the end result is the same-they can begin their financial lives anew.

Source: The Lexington Herald-Leader, "Country singer Eddie Montgomery files for bankruptcy," Janet Patton, Jan. 2, 2014