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Can you get a “clean slate” with a bankruptcy filing?

On Behalf of | Feb 17, 2023 | Bankruptcy

Financial problems can be one of the greatest sources of stress in a person’s life. There is no denying that in California and throughout the rest of the country the last few years have been difficult, and no doubt millions of people have found their financial situations drastically altered. Debt, in particular, can start to get out of control when finances start to spiral.

Some of our readers have probably heard of bankruptcy as a potential path to a “clean slate” for debt-ridden financial situations. Is that really true? Well, in fact, many people can indeed address their debt issues by filing for Chapter 7 bankruptcy—which is commonly referred to as “liquidation” bankruptcy and can be a great way to get many of your debt obligations discharged.

Chapter 7 overview

The Chapter 7 bankruptcy path can be fairly straightforward. A filer’s assets will be assessed, and then all non-exempt assets will be sold off—or “liquidated.” The funds received from liquidating those assets are then applied toward outstanding debts. In general, any debts remaining thereafter are discharged.

So, the fact is that Chapter 7 bankruptcy is indeed a potential path toward a fresh start, from a financial perspective. Yes, there are some “cons” to consider even in light of the potential “pros,” but often, the pros outweigh the cons for those who need a way to address burdensome debt obligations. If you believe your finances may benefit from assessing the possibility of a “clean slate,” you may want to see if you qualify for Chapter 7 bankruptcy.