A legal declaration that a person 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 causes why people choose to go bankrupt is because they lost their job. The current bad state of the economy has forced a lot of people to leave their work, and therefore leaving them incapable of providing 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. Nowadays, medical costs are really high and could pile up to inconceivable 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. 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 eliminate your property mortgage, but it will stop foreclosure before sales or bidding will occur. It will then allow you to repay the mortgage arrears, or the mortgage amount left.
5. Put a halt to creditors’ harassing calls and behavior – A lot of times, creditors tend to do debt collection in a not-so-nice manner. Their abusive and oftentimes annoying behavior is very unneeded, 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 plenty of other reasons to file for bankruptcy. Of course, the best way to handle whatever bad financial situation is to consult the legal department.
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