Bankruptcy basically means a legal declaration that a person or business no longer pay their debts to those they owe money from. 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 causes why 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 incapable of providing for themselves and their family. A job loss 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. These days, 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 ” 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 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 can stop foreclosure before sales or bidding can occur. This can then allow you to repay your mortgage arrears, or the mortgage amount left.
5. Stop creditors’ harassing calls and behavior ” More often than not, creditors tend to do debt collection in a not-so-nice manner. Their abusive and oftentimes annoying behavior is very unnecessary, 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 plenty of other reasons to file for bankruptcy. Of course, the best way to handle whatever bad financial situation is to consult a lawyer.