Chapter 7 Bankruptcy in the Modern Day U.S.

It has been decades since personal debt could land an individual in the poorhouse, clapped in irons. Money-lending has been viewed in history as a cut-throat business with the victim typically being the borrower. As western society grew more and more developed, so did the laws pertaining to personal bankruptcy. Comparatively, the U.S. has a much more sophisticated bankruptcy system than in previous epochs. This blog is focused on providing a recent and concise summary of how chapter 7 bankruptcy is now handled in the U.S. and why it shouldn’t be considered a terminal condition.

Currently, chapter 7 bankruptcy is the most common form of all bankruptcies filed in the U.S. today. It allows for liquidation of “non-exempt” assets. The term “non-exempt” is important to remember because there was a time where all personal assets could be stripped of a debtor. Now the process could be viewed as more cordial with each bankruptcy petition having built-in protections for personal amenities such as clothes, furniture and even automobiles.

Although in a bankruptcy case the courts wish to fulfill the debts owed to the creditors, there are now cases which can be deemed as completely “non-exempt” cases. This means that the courts have found there are no considerable non-protected assets worth seizing and selling on behalf of the creditors involved.
Although these new attributes may make chapter 7 seem like an irresistible option, there are guidelines protecting it from being abused by those looking to take advantage of the system in place. In 2005 the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was passed which made it more difficult to declare chapter 7 debt. This act also allowed for more transparency in the bankruptcy court system and regularly provides valuable statistics that record how many and what types of filings are occurring and when. To read more about this, click here.

Chapter 7 in modern day America is still a serious matter, but it should be viewed as a valuable financial tool in times of overwhelming or unmanageable debt. There are intricate laws protecting those declaring bankruptcy and the whole process could be described as uneventful. Feel free to read more about chapter 7 bankruptcy here.


  1. […] to filing a bankruptcy case, a debtor must complete a credit counseling course through a government-approved organization within 180 days before the filing date of the bankruptcy […]