Bankruptcy basically means a legal declaration that a person or business can’t pay their debts to its creditors. There are many causes 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 causes why people choose to go bankrupt is because a job loss. The economy’s current critical state has forced a lot of people to leave their work, and therefore leaving them unable to provide for themselves and their family. Losing a job 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. These days, medical costs are really high 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 – If your home, car, or other highly valuable possession of yours is being repossessed, filing for Chapter 13 bankruptcy could force the creditor to return said items to you. After this, your past missed payments will be merged into your bankruptcy plan. What will happen is you will give monthly payments to the trustee of your bankruptcy plan, and they in turn will pay the finance company.
4. Catch up on missed mortgage payments and stop home foreclosure – Filing for Chapter 13 Bankruptcy won’t get rid of your property mortgage, but it will stop foreclosure before sales or bidding can occur. This can then allow you to repay the mortgage arrears, or the mortgage amount left.
5. Stop creditors’ harassing calls and behavior – A lot of times, creditors tend to do debt collection in an unpleasant manner. Their abusive and frequently annoying behavior is very unneeded, and in fact, unethical. Filing for bankruptcy can put a stop to 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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