A Chapter 7 Bankruptcy is sometimes referred to as a 'liquidation' or a 'straight' bankruptcy. In a Chapter 7, the debtor turns over all non-exempt property to the bankruptcy trustee who then converts it to cash for distribution to the creditors. The debtor receives a discharge of all dischargeable debts usually within four months. In the vast majority of cases the debtor has no assets that he would lose, so Chapter 7 will give that person a relatively quick "fresh start".
Remember: One of the goals in declaring bankruptcy is to give those who are
burdened and overwhelmed with debt a "fresh start!"
What are the most common reasons someone would file a Chapter 7 Bankruptcy?
You must remember, no one sets out to declare bankruptcy. Almost all bankruptcies are unplanned and due to unforeseen circumstances, such as: Losing ones job or being laid off. Large Medical expenses. Marital Problems. Other large unexpected Expenses.
A recent study by Harvard University found that half of all US bankruptcies were caused by medical Bills (MSNBC). The study was published online in February of 2005 by Health Affairs. The Harvard study concluded that illness and medical bills caused half (50.4 percent) of the 1,458,000 personal bankruptcies in 2001. The study estimates that medical bankruptcies affect about 2 million Americans annually — counting debtors and their dependents, including about 700,000 children.
