Top Reasons When To File Bankruptcy.

Here are the top 10 reasons when to file for bankruptcy protection. Also, be sure to talk to a credit counselor before going down this path, and also look into other ways to get out of debt.

1. Bankruptcy will allow you to eliminate the legal obligations you have to pay many of your debts. The process of getting rid of your outstanding debt is called a discharge of debts. The goal of this step is to reduce outstanding debt you have to give you a fresh start to help you keep up with bills and get your financial life in order. Whether you file through straight bankruptcy, which is Chapter 7 Bankruptcy, or through reorganization, which is Chapter 13 Bankruptcy, most or all of your debts can be erased.

2. It will stop the foreclosure process on your home. It will allow you to effectively make mortgage payments to catch up on any missed payments of your home mortgage. In addition, if your home is currently in foreclosure, a Chapter 13 Bankruptcy filing will stop the foreclosure process at any time prior to the sale. Bankruptcy filing doesn’t eliminate the home mortgage on your property without payment. Instead filing for bankruptcy will allow you and the court to structure a plan to help you repay your mortgage arrears.

3. Bankruptcy can prevent your property or car from being repossessed by creditors. Even if a bank or a creditor has already repossessed your automobile, a bankruptcy filing can force them to return your car or other personal property that was taking. However, only if the bankruptcy was filed soon enough. The past
payments you missed on your car or property will be consolidated into your Chapter 13 Bankruptcy plan. After this consolidation is complete, you will no longer pay the bank of finance company, but you will rather make your monthly payments to the trustee of your Chapter 13 Bankruptcy filing, and that party will then pay the finance company or bank.

 

 

 

4. Eliminate, or reduce, medical bills and debt. It may be that an unfortunate illness, accident or disease can almost ruin a family and its finances. Many individuals and families have to make choices on what bills and debt that they will pay. Often, certain types of bills that were once important become insignificant to the large medical bills that are due. And if you file a Chapter 7 bankruptcy that can greatly reduce or eliminate the amount of medical bills or debt.

5. File Bankruptcy due to a recent loss of employment. Many surveys and studies show that the loss of employment is one of the most common reasons people file for bankruptcy protection. For example, a family can get comfortable on living on two or maybe just one salary. Maybe the family takes on regular, but a manageable amount of debts, and pays normal, everyday bills with relative ease. And then say that all of a sudden maybe one, or even both spouses lose their employment and a family must then go from two salaries to one. Losing employment is closely tied to high medical debt and bills. Losing your job then means that this
family may be left without the protection of insurance that was once provided by their employer. And sadly often times this lack of employment opportunity and lack of insurance combine to create an almost impossible mountain to climb without the help of bankruptcy filing and protection.

 

 

6. Stop harassing behavior from creditors. Unfortunately some creditors will not take the correct course of action when trying to collect bills and a debt. Oftentimes, some creditors will very persistently call the home, or even work, of a particular debtor and give abusive behavior. Not only are doing things like this by the creditor unethical, in many cases it can be illegal.  Filing bankruptcy will help stop the demands of many creditors and it will stop the inappropriate behavior and harassing phone calls.

7. Prevent or restore your utility service from being shut off. Filing bankruptcy can stop the utility company from turning off your electric or heating service.

8. It can help with student debt. Yes, it is true that your student loans will not be eliminated from bankruptcy, but like many other types of unsecured debt and bills, bankruptcy can consolidate your student loan debt for you to help make the payments more manageable.

9. End wage garnishments. Some people will file for this reason. Chapter 7 Bankruptcy will stop wage garnishment from occurring. Wage garnishment is the practice of money being taking from your paycheck, and it basically reduces your weekly earnings often. A Chapter 7 Bankruptcy filing will allow you to purchase necessities for both your family and you. Also, a Chapter 13 Bankruptcy will also help you in this regard.

10. Challenge some claims of fraudulent creditors. Some creditors are not honest. And a bankruptcy filing will allow you to challenge these untrue or illegal claims from those creditors who are trying to collect more money from you than you really owe on your bills or debt. An attorney can assist you and provide the support you need to step up to and challenge these creditors. Many attorneys often will level the playing field between a single debtor and a big creditor. Filing for bankruptcy will stop fraudulent reporting and illegal activity by a creditor.