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A variety of debts can underlie the need for bankruptcy protection

Often, a person points to a specific event that led to their decision to file for bankruptcy protection. Studies have looked into the number of bankruptcies that have followed a medical emergency. Medical debt is often cited as the tipping point for many Ohio residents.

The loss of a job in the household can obviously strain a budget. Mounting credit card debt, a wage garnishment or bank account seizure, a repossession or foreclosure-the reasons vary. But many bankruptcies also include a combination of many forms of debt that have suffocated a household budget.

A woman in one of Ohio's neighboring states highlights how a variety of debts can be included in a bankruptcy petition. The woman, the sister of a former Detroit mayor, says that she is in financial distress. The woman is self-employed-pulling in around $2,000 each month, according to court records. But she is suffering under a mountain of debt, totaling more than $345,000.

The only assets that the woman claims to own include less than $900 in personal property and a home that was once valued at $250,000. The home is now worth only about $70,000, according to the bankruptcy petition.

Among the creditors that she has listed are utilities, department stores, medical debts from doctors and a hospital, and back taxes. Generally, taxes may not be dischargeable in bankruptcy. Nonetheless, whether a debt is owed to the government, or a family member, all creditors are included in a bankruptcy filing.

While the woman is filing for bankruptcy relief, she is also working on the tax issues. She says that she is trying to negotiate a settlement of more than $54,000 that she owes in back taxes.

For many Ohio residents, a variety of debts can be more cumbersome than that one debt most people cite as the breaking point. Filing for a fresh financial start under the bankruptcy code can help some people get back on their feet-especially in the wake of the Great Recession.

Source: Detroit Free Press, "Ayanna Kilpatrick files for bankruptcy," Tresa Baldas, June 18, 2012

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