Bankruptcy: 5 Major Reasons

A legal declaration that a person or business can’t pay their debts is known as bankruptcy. There are many causes why people would declare bankruptcy, and here are some of the top reasons:

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. Losing a job may also mean losing insurance previously 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. These days, medical costs are really expensive 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 ” 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 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 eliminate your property mortgage, but it can stop foreclosure before bidding or sales will occur. This can then allow you to repay your 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 a not-so-nice manner. Their abusive and frequently annoying behavior is very uncalled for, 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.