What creditors can and cannot take in bankruptcy proceedings

On Behalf of | Dec 21, 2020 | Uncategorized

It is sometimes easy for even the most financially prudent people to become overwhelmed with debt. A serious injury, for example, could quickly lead to significant medical bills, a situation that could be further complicated if the person is unable to work. While many people in California know of the option of filing for bankruptcy, they may be hesitant to do so because of lack of knowledge of the process or fear of losing their home, for example.

While filing for bankruptcy can help with a variety of different types of debt, there are some that are exempt from this protection. For example, child support and criminal restitution and fines cannot be discharged. While student loan debts may be discharged under certain situations, it is difficult to do so.

In Chapter 7 bankruptcy, many debts may be discharged, but it can involve selling certain properties to settle debts. While this may seem daunting, there are many assets that are exempt from liquidation. For example, a car, home, professional tools, furniture and retirement accounts are often exempt. However, there is typically a certain monetary limit for these exemptions.

There is no doubt that the decision of filing for bankruptcy is a difficult one that requires serious contemplation. For many people in California, seeking such protection is the best option for their financial situation — perhaps the only way to start with a clean financial slate. To help those considering such a path, consulting with an experienced attorney is often beneficial to fully understand the available options, including the types of protections available, and their consequences.

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