When someone is struggling with debt and unsure of what to do next, it is difficult to see your way out of the situation. For some people, filing for bankruptcy may be the answer to what may seem like an insurmountable problem.

Chapter 7 bankruptcy differs from Chapter 13 bankruptcy because there is no payment plan in Chapter 7. Chapter 7 recognizes the insolvency of the debtor and erases all debt.

On July 31, ex-professional baseball player Jose Conseco filed for Chapter 7 bankruptcy. Despite making $48 million over the course of a 17-year career, he now claims only $21,000 in assets. Since retiring from baseball, Conseco has written a bestselling book, appeared on several reality shows, and worked in several jobs within baseball, but he still has not been able to maintain enough income to pay his $1.7 million in debts.

In 2010, it was determined that the top five reasons why Americans file for bankruptcy are medical bills, job loss, credit card debt, divorce or separation and unexpected expenses. The unexpected expenses can be a result of a natural disaster or theft that destroys your assets. Since Americans have watched the economy decline into recession, job losses have become more prevalent, making it harder for hardworking Americans to keep up with bills.

Average Americans have the same debt relief options as former millionaires like Conseco. Debt should not mean the end of a productive life. Chapter 7 allows debtors to hit the restart button on their financial health. Though filing for bankruptcy does have some short term effects on a person’s credit, it is still a great option to get from under the weight of a large financial load.

Source: fox5vegas.com, “Citing Las Vegas as home, Canseco files Chapter 7 bankruptcy,” Jon Castagnino, Aug. 2, 2012

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