What is Chapter 7 Bankruptcy
Chapter 7 bankruptcy is the most common form of Bankruptcy. It is what people think about when they hear the word “bankruptcy”. Those of us in the legal profession often call it a “straight” bankruptcy meaning that it is the traditional form of Bankruptcy. It is available to individuals and businesses and is used to “discharge” unsecured debts and surrender, without fault, secured items that a debtor no wants to be responsible for, like a house or a car.
Medical Debt
One of the most common debts that people have when they consider bankruptcy is Medical Debt. This is debt that results from doctors visits, lab work, hospitalization and other unforeseen expenses related to an individuals welfare. According to the Center for Disease Control (CDC) 43.6 million people in the United States have no insurance coverage. These people have few options when a major health crisis occurs. A simple flu or a more serious problem like cancer can happen anyone at any age. These things most be treated and this treatment is not free. Eventually this debts must be paid. It is not unusual for treatment for a serious disorder spiral up to 50, 60 or even 100 thousand dollars. Even if you are earning a good wage, this debt is difficult to over come. In this case, a bankruptcy may be your best and sometimes only option.
General Unsecured Debt
Credit Cards, Medical Bills, and Payday loans are common examples of unsecured debt. Unsecured debt is any type of debt in which the lender cannot reposes your property. Credit cards are a great example and also a common issue that causes people to seek the advice of an experienced bankruptcy attorney. Typically, in order to repay the debt that you owe, you need to gross about 3 times the amount that is owed in unsecured debt. If you owe 50,000 in general unsecured debt you need to gross at least $150,000 to pay that off. According to the website CreditCard.com, the average American household has $14743.00 of credit card debt. Combine that with interest rates ranging from 14% on the low end to 29% on the high end, and you can see that the Credit Card company is essentially forcing people to file for relief.
Business Failure
The United States is the land of opportunity. The laws of this country encourage people to take a risk and strive to achieve their dreams. Thomas Jefferson, known as one of our founding fathers, understood that if a person cannot afford to risk failure then our country would stagnate. That is why the right to file bankruptcy is guaranteed in the Constitution. Article I, Section 8 states that the Congress will have the power to create uniform laws on the subject of Bankruptcy. Read it for yourself here http://www.usconstitution.net/xconst_A1Sec8.html
If you have taken a risk and now have bills you cannot pay, a Chapter 7 Bankruptcy can be the fresh start that you need. An experienced Bankruptcy attorney can discuss your options and give you a better idea of what you are facing and how to get to the light at the end of the tunnel. Contact us today at 817-861-8400.
