About 420,000 Americans filed for bankruptcy between 2022 and 2024, according to reports from the US courts. Approximately 325,000 of those cases were filed under Chapter 7. It's usual to refer to this bankruptcy petition as a "Fresh Start."
A clean slate following Chapter 7 bankruptcy is a fallacy. It does not eliminate financial debt; rather, it provides a more calculated method for making payments to creditors or assisting in selling non-exempt assets.
According to US Courts, this is mostly done to give an honest debtor a "fresh start" by discharging some of their obligations. Regarding each of the discharged debts individually, the debtor is not liable. If you wait too long to file for bankruptcy, you risk losing possessions like your house, car, and retirement funds. So, before you Press The Restart Button with Chapter 7, it is better that you know the nuances of the process.
In what way does bankruptcy give you a fresh new start?
First, your debt is discharged, which allows for a fresh start. All of your debts are dismissed in bankruptcy, except for any secured debts that you decide to preserve, such as mortgages and loans for cars and trucks. Debt from credit cards, medical bills, and personal loans are all gone, erased forever.
The fresh start starts with freedom because those canceled obligations are never repaid. Freedom from the pile of debt, freedom from hefty interest rates and minimum monthly payments, and freedom from the weight of loans you might never have been able to pay back. Thus, even though debtors' prisons are no longer in existence, having a mountain of debt can nevertheless feel like a jail. Declaring bankruptcy releases you from that jail.
The second option to start over after bankruptcy is to rebuild a solid credit score. If your credit history is marred by delinquent payments, charge-offs, or repossessions, and you have poor credit and a low credit score, filing for bankruptcy erases that history completely and starts again. Most consumers have improved to a 700 credit report score in one to two years.
Having a clean slate in terms of debt, no required minimum payments and a high credit score is, in essence, a fresh start when it comes to finances that can transform your entire future. Opportunities that were unavailable before filing for bankruptcy due to stress, debt, and poor credit prohibiting you from taking advantage of them can now be seized. You can use the opportunities presented by life's decisions to better yourself and the people who depend on you by doing more and being more. That's basically what filing for bankruptcy offers those who want to protect their assets and start again.
Give yourself the chance for a fresh start if you are experiencing the psychological, emotional, and practical hardship that comes with having a lot of debt. Make an appointment with a knowledgeable lawyer who can assist you with your case.
