The most common reason the people file for Chapter 7 bankruptcy is some kind of a catastrophic life event. It could be job loss, a divorce, a medical emergency, a some sort family emergency. It’s also common to see people file chapter 7 who don’t have anything major happen in their lives, but who slowly sink into bankruptcy because of our economy. The cost of living goes up every year and the overtime that many people used to count on in order to balance their household budgets is frequently not there anymore. These people tend to use savings and, unfortunately, sometimes their retirement account, to pay household living expenses until there is nothing left to pay bills with. At that point, they frequently turn to bankruptcy court protection. This is unfortunate, because retirement accounts are usually 100 percent protected in bankruptcy.
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