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Who looks at bankruptcy, and how can it help with a fresh start?

With America's economy continuing to slowly struggle to pull itself from the depths of the recent recession, many people in Escondido may be looking for options on the best approach to dealing with strained financial situations. The housing market remains stagnant, unemployment numbers are less than encouraging and for some people most of the options don't look too appealing. However, anyone who is looking for a fresh start with their finances may not have thought of filing for bankruptcy yet, and what benefits doing so could bring to an individual or family's fiscal issues.

The unfortunate part about these problems is that just the word "bankruptcy" has taken on its own cultural meaning. Many Americans almost automatically associate bankruptcy with a sense of irresponsibility or failure. They couldn't be further from the truth. Many people who find themselves and their families in the most desperate of financial situations can't really be held to blame for it. The economy crumbled in recent years, and along with it came many months of American employers shedding jobs left and right. Sudden joblessness can force a family to turn to their credit cards and other forms of borrowing just to pay the bills. And sudden medical expenses can also sometimes strain a family's financial abilities to the breaking point.

For anyone dealing with these types of hardship, a Chapter 7 bankruptcy filing can be the best option in a bad situation. Known as "liquidation" bankruptcy, a Chapter 7 filing will put a halt to all collector actions, as the bankruptcy trustee assesses the filer's financial situation. But that's not all. In a Chapter 7 filing a person's assets are categorized and accounted for, and anything that is non-exempt is sold to go toward paying the filer's creditors. Any remaining debt is discharged.

Escondido residents should not be shaken by the myths and negative associations revolving around a bankruptcy filing. Bankruptcy is meant to help consumers deal with an unmanageable debt burden, in order to place them on a firmer, and better, financial path.

Source: The New York Times, "Life After Bankruptcy," Vickie Elmer, Sept. 13, 2012

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