Top 10 Reasons for Bankruptcy and What You Can Do
Bankruptcy can be a word that people toss around without fully understanding what it means. An outsider might think that anyone filing for bankruptcy has racked up credit card debt with shopping sprees and vacations. But there are actually a lot of other situations that can lead people into bankruptcy, sometimes through no fault of their own.
Reasons for Bankruptcy
While people may think that bankruptcy is a free pass to skip out on your bills and start all over again, it’s really not. Bankruptcy proceedings are lengthy, difficult, and do not always wipe the financial slate clean. But for people facing stacks of bills that they just cannot repay, bankruptcy can be the solution they need to start over financially. Here are the top ten reasons people file for bankruptcy:
Overuse of Credit
Well, irresponsible spending is one reason people end up in bankruptcy court. Overspending with credit cards, taking out car loans, or paying for anything else with a payment plan or a loan of any type can lead to bankruptcy. When minimum payments become burdensome, bankruptcy may be a good option.
Divorce or Separation
Changes in marital status can cause drastic changes in finance. Suddenly, two incomes supporting one household become two incomes supporting two households. Factor in legal costs, child support, alimony, and division of property, and you have a recipe for financial disaster.
An unexpected medical emergency can quickly drain a family’s financial resources, even when the family has medical insurance. In fact, one study from Harvard University found that 62% of personal bankruptcies involved medical bills.
The drop in income that comes with a job loss can be financially devastating. Whether the loss comes from a termination, layoff, or resignation does not really matter. Without a new income source, people can quickly drain their savings and start to rely on credit cards for everyday expenses.
A burst pipe can quickly cause thousands of dollars in damage to a home; a break-in can do the same. Natural or manmade disasters can cost families a lifetime of savings in just a few moments.
To Keep the Lights On
If you have stopped paying your utilities and are in danger of having them shut off, filing for bankruptcy can prevent utility companies from disconnecting service.
To Stop H
Calls and letters from bill collectors add stress to an already difficult situation. Filing for bankruptcy puts an end to harassment from collections agencies.
To Repair Credit
If your income is simply too low in comparison to your debt, and your credit is shot, filing gives you a chance to start over. It will take time, but by making responsible credit decisions after bankruptcy, you can repair your credit rating.
To Stop Bank or Wage Garnishment
If creditors attempt to garnish your wages or your bank account, filing can stop them.
For Peace of Mind
Filing for bankruptcy is a relief to many people who are in over their heads financially. When your income in simply out of line with your debt burden, and you cannot expect to repay that debt, it provides a way out. The opportunity to start fresh is a relief to many.
The bankruptcy lawyers at Bartifay Law Offices have helped many people file for bankruptcy over the years. If you are not really sure what is filing for bankruptcy or how to start proceedings, call our offices today.