Why Do People File for Bankruptcy?

With our present economy experiencing a slump, people from all walks of life are affected. It does not matter whether you have been a long-time employee for a solid company or a business owner, the fact is that no one is exempted from financial crisis and the consequences it brings.

Today, more than ever, people do seek out bankruptcy not just to get a chance to recover from bad debt but to save their families from being out in the streets as well. This article presents the reasons why people file for bankruptcy.

Sudden loss of employment. One of the worst damages brought about by recession is the unexpected loss of job. Obviously, getting laid off in the middle of a crisis can be very difficult especially if you are the breadwinner of the family. Aside from not having a regular means of income, being unemployed also means not getting the benefits that a company provides.

Illness or medical emergencies. It is very easy to get into deep debts because of an unexpected illness in the family. Your bill from hospitalization costs, medication and treatments can really soar in just a matter of days. If you do not have a health insurance plan to help you out with these expenses, you may be surprised to find yourself filing for bankruptcy.

Stopping repossession. Failing to keep up with your mortgage loan payments is a very dangerous situation to be in since you can lose your home to your bank or lender. Once the process of repossession has been started, the only way you may be able to stop it is to file for bankruptcy.

In some States, many people declared bankruptcy to keep their families safe from being out in the streets. Once the bankruptcy application has been approved, it gives a borrower the chance to catch up with the missed mortgage payments.

Get away from debt collection harassment. In reality, there are debt collection agencies that do violate the Fair Debt Collection Practices Act. Some collectors resort to harassment to force a borrower to make payments. For some people, filing for bankruptcy means getting some peace of mind so they can focus on paying off their debts one step at a time.

If you find yourself in any of these situations, do not lose hope. Bankruptcy doesn’t need to be the end of the road for you. In fact, it can very well be the first step of credit rehabilitation. As soon as you’ve been discharged from bankruptcy, order a copy of your bankruptcy credit report from the three credit report agencies. Checking your report will enable you to work out an effective credit repair plan based on the facts in your file.

 

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 © 2010
 

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