Why do individuals usually file bankruptcy?

Well, there are any myriad of reasons why an individual might file bankruptcy.  The first is they just have fallen too far behind whether because of illness or a job loss or just feeling overwhelmed and they need a fresh start.  They will often take advantage of a Chapter 7 bankruptcy.  Chapter 7 bankruptcy is going to improve your life in a lot of ways.  One way is it’s going to eliminate a lot of stress.  We all know how hard it is to deal with debt that you just don’t know how you’re going to pay back.  Dealing with constant creditor calls, constant harassment from creditors, constant letters and a constant feeling of swimming around in a circle and never really getting anywhere.
Other reasons that people file Chapter 7 bankruptcy are to save assets and protect assets.  For instance, if you were to become sick and fall several payments behind on your mortgage, you could file Chapter 13 bankruptcy and catch up from what you are behind on your mortgage over five years as well as paying the mortgage going forward.  This is often a powerful tool with cars as well where if you fall behind on a car and it gets repossessed, you are able to catch up on the car, even sometimes extending the loan and getting a better interest rate on that car.