Bankruptcy basically means a legal declaration that a person or business no longer pay their financial obligations to its creditors. There are many reasons why people would 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 a job loss. The current critical state of the economy has forced a lot of people to leave their work, and therefore leaving them unable to provide for themselves and their family. Losing a job 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 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 – 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 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. 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 will occur. This can then allow you to repay the mortgage arrears, or the mortgage amount left.
5. Put a halt to harassing calls and behavior from creditors – More often than not, 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 a stop to 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. Consulting the legal department is of course the best way to handle whatever bad financial situation you may have.
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