When people declare bankruptcy, what happens to the people who are owed money?

Bankruptcy is at record highest in the USA due to the "credit crisis." Banks making bad real estate loans, and subsequent credit tightening standards.

Chapter 7

That is such a narrow minded view. It is just spewing **** and ignorance.

I know of many rich people that just make the decision to not pay their bills because they don't feel they need to. They can pay them but they don't. I have less sympathy for these folks (none).

There are a lot of problems facing this country. There aren't enough jobs. There have never been enough jobs. A lot of the jobs that people have pay that is inadequate. It affects everything. That's why it is a big deal. These are the people that will pay their bills if they have the means. They are not tight wads. If they were then they would be richer.

Finance is still not taught widely enough in schools. It should be. It should be a required course for every student. But to my knowledge, it's not. My parents taught me but I still find it difficult. I don't make enough money.

Bankruptcy is a last resort for a lot of people. Some people abuse it. I know someone that has. But it's not simple as financial maturity. There are larger problems that causes it. If we don't start addressing the causes, it will only get worse.

one bankruptcy shouldnt cause mom and pop to go out of business
i think they can claim it as a lose on income taxes

In answer to your question (which many people danced around) when somebody declares bankruptcy what happens to the people that they owe money to? They get screwed. And not only do they get screwed, we all get screwed. The next time you go to the bank to get a mortgage or a car loan or a personal loan or get a credit card, be rest assured that part of the rate you pay is to pay off for those people who defaulted on their loans by declaring bankruptcy. We all pay for deadbeats. So the next time you find yourself complaining about high interest rates on loans, remember it in part is caused by all these people declaring bankruptcy.

Mom and Pop stores would normally be the ones filing bankruptcy. The majority of bankruptcy cases in the last year and half are due to high credit card balances and adjustable rate mortgages, that have left a lot of people, including mom and pop type businesses in really bad shape financially.

Really the people who are left holding the bag are the lenders who took a chance on those who barely qualified. Yes it's bad and it costs them a lot of money, and fair or unfair bankruptcy is a way out. A good percentage of those who file bankruptcy are people who have lost someone, were a victim of identity theft or simply lost their jobs and were unable to get back on their feet. Bankruptcy is a benefit that can be the lifeline for people in these situations.