Chapter 7 bankruptcy is the most common type of bankruptcy filing for individuals who can no longer pay their bills. While this legal procedure allows debt to be discharged, it severely damages credit, meaning that future loans will be very expensive, if they can be found at all. Under a bankruptcy reform law passed in 2005, bankruptcy became more difficult and expensive, requiring pre-filing counseling and implementing a “means test” preventing filing if you make too much money. The law also required that eight years must pass between Chapter 7 discharges.