According to the National Bankruptcy Research Center, more than 1.3 million bankruptcies were filed in 2011, or about one for every 175 American adults. We all know the economy is bad, jobs are scarce, and the housing market is still poor. But what may surprise you is what causes an individual to file for bankruptcy protection.

#5: Unexpected Expenses

A catastrophic event can push a person to file bankruptcy. You can lose everything to a fire, flood, or a tornado, and an “act of god” can break your finances. Insurance does not always cover everything needed to make a person whole again, and sometimes there are associated expenses not covered by insurance. Lik

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Placing assets into a trust is not always an effective means of protecting those assets from creditors, or, thereby, from the asset liquidation power of Chapter 7 Bankruptcy Trustees.

As Ive written here before, a Chapter 7 Bankruptcy is a liquidation bankruptcy both in that your debt is liquidated, or discharged, and in that there is a possibility that your assets will be liquidated during the bankruptcy process. A Trustee assigned to your Chapter 7 Bankruptcy case by the Bankruptcy Court has the duty of seizing and liquidating personal assets that are valued above the limits of the protective exemptions provided by the Bankruptcy Code statute.

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“As the leading advocate for homeownership and housing issues, NAR applauds the Federal Housing Finance Agency for issuing a final rule to restrict Fannie Mae, Freddie Mac and the Federal Home Loan Banks from investing in mortgages encumbered by private transfer fee covenants.

“NAR has long been vocal in its opposition to private transfer fees since there is virtually no oversight on where or how fee proceeds can be spent, on how long a private transfer fee may be imposed, or on how the fees should be disclosed to home buyers – and this often places an inappropriate drag on the transfer of property.

“To that end, we fully support FHFA’s decision to ban private transfer fees, which we believe increase the cost of homeownership, provide no benefit to home buyers and do little more than generate revenue for developers or investors.

“NAR agrees with the exemption of private transfer fees paid to certain organizations, including some home owner, condominiums, and cooperative associations for funding capital reserves, capital improvements, upgrades and major repairs.

“FHFA believes that some private transfer fees have a legitimate place in real estate markets and should therefore be exempted from the rule; however, FHFA must ensure that the fees paid are reasonable and fully disclosed to home buyers well in advance of closing and that there be some direct benefit to the home owner.”

Whenever the subject of consumer bankruptcy comes up, most people automatically think it means filing a Chapter 7 bankruptcy because it quickly discharges most debt.  And the fact is that statistics show most people do file using this chapter, even though they must qualify by meeting the income requirement known as the Means Test.

Then, once qualified, a debtor has debt discharged in exchange for giving up any nonexempt property which the trustee sells to pay creditors.

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