Top 5 Reasons Why People File For Bankruptcy
A legal declaration that an individual or business can’t pay their debts is known as bankruptcy. There are many causes why people would decide to declare bankruptcy, and here are some of the top causes:
1. Job loss – One of the most common reasons people opt to file for bankruptcy is because they lost their job. The current dire state of the economy has made a lot of people to leave their work, and therefore leaving them unable to provide for themselves and their family. Getting the boot may also mean losing insurance previously provided by their employer.
2. Medical bills – Sometimes, a terrible accident, illness or even just the loss of insurance caused by job loss, can be enough reason for a person to file for bankruptcy. Today, medical costs are really high and could pile up to unimaginable amounts. Filing for Chapter 7 Bankruptcy can greatly reduce 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 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 can stop foreclosure before sales or bidding can occur. This can then allow you to repay the mortgage amount left (also called mortgage arrears).
5. Put a halt to 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 on hold the demands of many creditors, thus ending the many harassing phone calls and bad behavior.
There are many other reasons to file for bankruptcy. Of course, the best way to handle whatever bad financial situation is to consult a lawyer.
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