5 Causes Why People File For Bankruptcy
Bankruptcy basically means a legal declaration that an individual or business no longer pay their debts to its creditors. There are many causes why people would declare bankruptcy, and here are some of the top causes:
1. Loss of a job – One of the most common reasons people choose to go bankrupt is because they lost their job. The economy’s current bad state has forced a lot of people to leave their work, and therefore leaving them incapable of providing for themselves and their family. Getting the pink slip may also mean losing insurance that would’ve been 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 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 – 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 consolidated 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. 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 will stop foreclosure before bidding or sales can occur. This can then let you to repay your mortgage amount left (also called mortgage arrears).
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 unnecessary, 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. Of course, the best way to handle whatever bad financial situation is to consult a lawyer.
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