Bankruptcy basically means a legal declaration that a person or business can’t pay their financial obligations to its creditors. There are many reasons why people would decide to declare bankruptcy, and here are some of the top reasons:
1. Loss of a job – One of the most common reasons people choose to go bankrupt is because a job loss. The economy’s current dire state has made a lot of people to leave their work, and therefore leaving them unable to provide for themselves and their family. A job loss may also mean losing insurance that would’ve been provided by their employer.
2. Medical bills – Sometimes, loss of insurance, a terrible accident or unexpected illnesses can be enough reason for a person to file for bankruptcy. Nowadays, medical costs are really expensive and could pile up to unimaginable amounts. Filing for Chapter 7 Bankruptcy can greatly cut or even completely eliminate these debts.
3. Preventing repossession of properties – Be it a car, your home, or any other highly valuable item that has been repossessed, filing for Chapter 13 bankruptcy could force the creditor to return said items to you. After this, your past missed payments will be consolidated into your bankruptcy plan. You will no longer pay to your creditors, but to your trustee instead. In turn, they will pay the finance company for you.
4. Stop home foreclosure and catch up on missed mortgage payments – Filing for Chapter 13 Bankruptcy won’t get rid of your property mortgage, but it can stop foreclosure before bidding or sales will occur. It will then allow you to repay the mortgage amount left (also called mortgage arrears).
5. Stop creditors’ harassing calls and behavior – Oftentimes, creditors tend to do debt collection in a not-so-nice manner. Their abusive and frequently annoying behavior is very unnecessary, and in fact, unethical. Filing for bankruptcy can stop the demands of many creditors, thus ending the many harassing phone calls and bad behavior.
There are plenty of other reasons to file for bankruptcy. Consulting with your lawyer is of course the best way to handle whatever bad financial situation you may have.
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