Personal bankruptcy allows people to be relieved of unmanageable debts. Medical expenses, excessive credit card debt, unemployment, and divorce are common reasons for filing personal bankruptcy. Chapter 7 bankruptcy is the most common form of personal bankruptcy. This allows people to wipe the slate clean and have all debts forgiven that are included in the bankruptcy.
Personal bankruptcy filings have risen lately with the new bankruptcy laws that will go into effect this year. These new laws will force many people into filing chapter 13 bankruptcy and will not allow complete forgiveness of debts.