While no one purposely makes choices with their finances with the intention of having to file bankruptcy down the line, life happens. Unexpected expenses arise, or current expenses become too much and all of the sudden, you find yourself in overwhelming debt. That debt accumulates interest, fees, and gets much bigger much faster than you expected or could keep up with. While there is a myth that irresponsibility is the only factor that leads to bankruptcy, there are many factors that precipitate the need for filing a Chapter 7 or Chapter 13 bankruptcy.
Change in income or loss of employment – when a person loses their job or has to take a pay decrease to keep their job, often people will use credit cards to keep up with their bills. This leads to more and more debt, without the income to make a dent in it.
End wage garnishment – when debt is piling up, often creditors will take steps to collect on the debt including garnishing the debtor’s wages. This NEVER helps the situation. When you are receiving only a small portion of your wages, you are not able to pay other bills or even pay for necessities. This means you must take on more debt to keep your head above water. Filing for bankruptcy will stop wage garnishment.
Stop creditors from harassing you – if you are overwhelmed by harassing creditors calling your home, cell phone, and even work trying to collect on a debt, bankruptcy can help. An automatic stay is entered as soon as you file your Chapter 7 or Chapter 13 bankruptcy, which prevents creditors and lenders from attempting to collect a debt while the bankruptcy is pending.
Provide help with student loans – while student loan debt is not dischargeable through bankruptcy, you can still get some relief. A Chapter 7 bankruptcy will eliminate all your unsecured debt, leaving you with more of our income to allocate to your student loans. Through a Chapter 13 bankruptcy, you can consolidate your student loan debt, making it so you have one payment that works within your budget.
Other reasons like stopping a foreclosure, eliminating medical debt, and prevent a repossession are also common. Whatever your reason, bankruptcy can help get your life back on track.