By the time that debt reaches an insurmountable point, most people in California will have reached their wit's end trying to repay what they can. Chapter 7 bankruptcy can be an effective tool for discharging debt and set people on a clearly defined path toward the best possible financial future. However, the process does involve possible asset liquidation, and not all types of debt are eligible for discharge.
Filers for a Chapter 7 bankruptcy can expect some of their assets to be liquidated. The resulting funds are then used to repay as much of a person's debt as possible. Not everything that a person owns is involved in this liquidation process, and exempt property may include a vehicle, tools of a person's trade and other various items. After a person's debt has been partially satisfied, the process of discharging debt begins.
In bankruptcy, only unsecured debt is dischargeable. Credit card debt, unpaid rent, medical bills, most personal loans and more are all unsecured debts that can be discharged through bankruptcy. Debts that cannot be discharged include dues for homeowners' associations, student loans, most taxes, and child support payments.
Although Chapter 7 bankruptcy does not allow for a blanket discharge of a person's existing debt, it is still undeniably useful for those in California who feel that they have no other options. By discharging unsecured debt, individuals may be able to better handle their remaining bills and find surer financial footing. However, as accuracy is key to a successful bankruptcy filing, guidance from an experienced party may be helpful.