Bankruptcy basically means a legal declaration that an individual or business no longer pay their debts to those they owe money from. There are many reasons why people would declare bankruptcy, and here are some of the top causes:
1. Loss of a job – One of the most common causes why people opt to file for bankruptcy is because a job loss. 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 pink slip 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. Nowadays, medical costs are really expensive and could pile up to inconceivable 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 the aforementioned 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 bidding or sales can occur. It will then let you to repay the mortgage amount left (also called mortgage arrears).
5. Put a halt to harassing calls and behavior from creditors – More often than not, creditors tend to do debt collection in an unpleasant manner. Their abusive and oftentimes annoying behavior is very uncalled for, and in fact, unethical. Filing for bankruptcy can put on hold the demands of many creditors, thus halting the many harassing phone calls and bad behavior.
There are many 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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