Bankruptcy is a legal term used for Insolvency which means when the person is going through a major financial crunch where the person is declared as defaulter under Bankruptcy and is unable to pay the liability to the creditors. The statistics of Bankruptcy in some countries like United states is really alarming. More of the people are availing the Chapter 7 Bankruptcy relief. In past few years there has been a drastic increase in the number of people who are unable to clear the liabilities and so lead as bankruptcy. The legal procedure where a trustee administers the defaulter person’s status so as to provide a genuine distribution of the defaulter’s assets to the creditors is known as Chapter 7 Bankruptcy. This is way for defaulters to solve their financial problems, and is most vital process for the creditors where they can take the necessary steps against the person who has not paid the debts.

Top reasons which lead to bankruptcy

Let us now see what are the main reasons for bankruptcy and the people taking relief under Chapter 7 Bankruptcy? There can be reasons like unemployment or the loss of the job which may be due to employee lay off, termination or suspension, resignation etc. Other reason may be Excess of medical expenses which may lead to bankruptcy. Medical expensed may be incurred because of ill health of the defaulter or any family member on whom a huge amount is spent. Divorce from your spouse is also the important reason as this may have an impact on the financial status also. More or excessive use of the credit facility may also lead to bankruptcy and so the people apply for the relief under Chapter 7 Bankruptcy.

Affects of bankruptcy on defaulter and the property

Under Bankruptcy a person who has declared as insolvent legally and lawfully cannot continue to be the officer in any company, they cannot also trade with the registered name of any business, cannot take any more credit from anyone. If the person is availing the relief under the Chapter 7 bankruptcies then the defaulter will have to submit the passport and will not be permitted to do any international travel, he will also have to disclose all the assets detail to the trustee for chapter7 bankruptcy. All the property and assets of the insolvent person will be handed to the trustee who will then sell them to pay the liability to creditors under bankruptcy.