Sometimes for reasons that our out of our hands, our debts have spiraled out of control. That’s when a lot of us decide to finally file for bankruptcy. After all, this option assures us of the partial or even the total elimination of our debts. Bankruptcy is meant to be a fresh start for people who have no means to repay their current debt load.
But, aside from a job loss, what are the other reasons why people file for bankruptcy?
Reasons Why People File for Bankruptcy
1. A recent, bad divorce.
Divorce settlements are very costly. And most of the time, the partner who does not have a steady source of income, find him or herself unable to pay for his / her portion of the marital debts. The divorcee must pay his or her lawyers, provide child support, and make alimony payments. And paying all of these is not that easy to do.
A lot of divorcees choose the bankruptcy option for them to gain relief from the anxiety that comes with payments and debts.
2. Stop the Foreclosure on your house.
By filing for a Chapter 13 or Chapter 7 Bankruptcy before the sheriff’s sale, you can take advantage of what is called an “automatic stay” . That means ALL creditors must stop their collection efforts immediately while the bankruptcy court looks over your case. An automatic stay generally last 3 – 4 months. This works in most cases
- Foreclosure Notice already filed before you file for bankruptcy
- Foreclosure company makes a request to the bankruptcy court to lift the stay
When filing bankruptcy to avoid foreclosure most people choose to file a Chapter 13.
- Chapter 13 also allows you to discharge any 2nd or 3rd mortgages you may have.
- Chapter 13 allows you to propose a repayment plan to catch up on your past due mortgage payments. As long as you can make your regular payments along with the proposed repayment – and pay on time. You can avoid foreclosure.
3. Provide Assistance in Repaying Student Loans.
A student loan is a non-dischargeable debt. But a bankruptcy can help you consolidate your student loans. This consolidation program will allow you to make monthly based on your financial capability.
4. Challenge Fraudulent Claims of Creditors.
Some creditors will try to collect more money than what you really owe them. They can charge you with very high rates of interest and numerous fees. Even if you can get your accurate records from any of the three credit report agencies, these creditors will still demand you to pay the amount they specify. But through filing for bankruptcy you can get these unscrupulous creditors out of your life for good.
About the Author:
Suzy Vanstrusen is a credit analyst and a writer on the website EZCreditRepairSolutions.com. She has been providing consumers with tips and wise information about credit repair as well as helping you out more with your bad credit loans. Copyright © 2014