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What is the goal of a bankruptcy filing?

Millions of Americans have had to face severe financial challenges over the last several years. For some, the prospect of filing a personal bankruptcy action may have popped up as an option. But, from the court's perspective, what should an Escondido resident's goal be when filing for bankruptcy?

The website for the United States Bankruptcy Court cites one particular court case that stands out as setting the precedent for all bankruptcy actions. The case, from way back in 1934, commented on the purpose of the bankruptcy laws in America. In short, the case stated that honest people, who have, for one reason or another, stumbled into unfortunate times, should be able to use the bankruptcy laws of the United States to get a fresh start on their financial situation going forward - unburdened by prior debts and financial obligations.

In essence, that fresh start is the goal of most bankruptcy actions. Chapter 7 bankruptcy, in particular, allows a filer to discharge debt while being allowed to hold onto many of the necessary items that the filer will need in order to go about daily life: a car, retirement savings and tools of their trade.

There are several different forms of bankruptcy under the federal law but, for most individuals and families in Escondido, Chapter 7 bankruptcy will likely be the path to follow. Anyone who explores Chapter 7 bankruptcy as a potential debt solution will likely find that the protection provided from creditors, as well as the future financial relief that could come with discharging current debt obligations, may indeed lead to that fresh start they are looking for.

Source: uscourts.gov, "Process - Bankruptcy Basics," Accessed Nov. 21, 2015

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