There are countless reasons why millions of individuals and couples file for bankruptcy. While there are other options available for eliminating or managing debt, bankruptcy offers several advantages. Whether you are struggling with enormous credit card debt or your home is in foreclosure, bankruptcy could offer you the tools and protection necessary to reestablish your financial footing.
By evaluating an individual’s circumstances and goals, our experienced Roseville, CA bankruptcy lawyers will determine if filing is in your best interests. However, despite the advantages bankruptcy offers, many people are reluctant to file. Sometimes it is a sense of pride, and for others, it is a misunderstanding of the bankruptcy process.
Knowing some of the top reasons people file for bankruptcy might provide a sense of comfort that you are not alone. While every filer’s situation is unique, there are some common underlying reasons why people choose to file. If any of the reasons listed below sound familiar, you should call The Bankruptcy Group at 1-800-920-5351 to see if filing for bankruptcy is something you should consider.
The Top Five Reasons for Filing for Bankruptcy
There is no question that bankruptcy has a negative reputation. People experiencing financial difficulties are often reluctant to consider filing for bankruptcy based on what they believe it is. Many see it as a blemish on their character or a sort of failure. However, filing for bankruptcy is often the smartest financial decision a person can make. Below, we look at some of the top reasons why someone should file for bankruptcy.
Job Loss
For many people, losing their job sets off a domino effect of negative consequences. If you were living paycheck-to-paycheck, a sudden loss of income could not be replaced by unemployment. If you just made a major purchase before losing your job, such as a car, the effects could be even worse. The longer you are unemployed, the number of unpaid bills increases.
Creditors do not care about your circumstances. Credit card companies will begin sending collection letters and utilities will threaten you with shut-off notices. Even if you find another job, it might be impossible to catch up after months of being unable to pay your normal expenses. Filing for bankruptcy is often the quickest way to eliminate the debt that you have incurred.
Medical Expenses
You have probably read the horror stories of people suffering a catastrophic illness only to be overwhelmed with medical bills and expenses. Even if you have insurance, a severe medical condition could eat through your savings and put you and your family in a deep financial hole. Medical debt is unsecured and dischargeable in bankruptcy. If you are concerned about your health, it should not be complicated by worrying about your financial wellbeing.
Divorce
One of the primary reasons marriages break apart is because of financial difficulties. However, filing for divorce can also cause enormous economical problems. Going from two salaries to one could make your current lifestyle unmanageable. Creditors will treat you differently depending on whether the outstanding debt was shared or just in the name of one spouse. Additionally, divorce leads to more expenses, including attorneys’ fees, alimony, or child support.
Divorce and bankruptcy should be considered together. Our Sacramento bankruptcy lawyers will work closely with you to help determine if you should file for bankruptcy before or after your divorce.
Mortgage Foreclosure
There are many reasons why a homeowner falls behind on their mortgage. Three of them have already been discussed above, job loss, medical debt, and divorce. Whatever the underlying cause, working with a mortgage lender is difficult. Once a bank has started foreclosure proceedings, it is unlikely to negotiate with you. For people facing an inevitable sheriff’s sale, Chapter 13 might be the only available option. Fortunately, bankruptcy provides a mechanism to repay the money you are behind. It is not a feasible option for every homeowner, so you should speak with one of our experienced California Chapter 13 bankruptcy lawyers to discuss your unique situation.
Collection Lawsuits or Judgments
Creditors have rights. If you do not make your necessary payments, they will exercise them. While this might begin with some annoying phone calls and collection letters, eventually, a lawsuit will be filed against you. Depending on your jurisdiction, a court-ordered judgment could result in a wage garnishment, a frozen bank account, or a lien against your home. Once a creditor obtains a judgment, your one remaining option might be filing for bankruptcy. Another benefit of filing for bankruptcy is that you could stop any legal proceedings before a judgment is entered
Pro-Active Reasons for Filing for Bankruptcy
As stated above, not everyone’s circumstances are unique. Many people decide to file for bankruptcy because of a devastating financial event. However, there are reasons why you should consider filing before it is your final option.
To qualify for a Chapter 7 case, you need to prove you have limited income and resources. If you are going to be starting a higher-paying job, it might be smart to consider filing for bankruptcy if you have a significant amount of unsecured debt. Once you are making more money, you might not qualify for Chapter 7.
If you have a large amount of debt and are moving to a new state, you should consult with our California bankruptcy lawyers to determine if there are any advantages to filing before you move. Each state treats property exemptions differently. If your current state offers more generous exemptions, it might be smarter to file for bankruptcy before you move.
Call Our Experienced Bankruptcy Attorneys to Discuss the Advantages of Filing
Too many people continue to struggle with debt or fall further behind because they believe they have no other options. Bankruptcy’s negative reputation often frightens people away. However, there are many financial situations when filing for bankruptcy is the best option. At The Bankruptcy Group, our attorneys are dedicated to helping potential filers understand the benefits of bankruptcy. Call our law offices at 1-800-920-5351 to schedule a free consultation.