Top Reasons That People Claim Bankruptcy
Claiming bankruptcy is essentially a means of eliminating debts and being able to start over a new life, but it is a decision that should not be taken lightly. Living in a world where materialistic things distort our view of spending money and how we manage our finances, many people often find themselves overspending and not keeping track of some kind of household budget and more importantly, sticking to it. If the unfortunate happens and you are made redundant from your job, become ill and therefore unable to work, you may find yourself in a tight spot if you haven’t been looking after your finances.
It’s when things get out of hand that some people turn to bankruptcy. There are a number of pros associated with claiming bankruptcy such as freeing yourself of debts and not having your creditors bombard you with phone calls and having the ability to start over again on a clean slate. Of course, there are cons as well such as the possibility of having your financial problems aired to the public or having a bad credit report on file and the feeling of failure that things got as bad as they did. It is imperative to note that in any case you should consult with a bankruptcy lawyer before making any rash decisions that will affect you for the rest of your life.
Here are some of the top reasons why people claim bankruptcy:
• Discharge of debts – claiming bankruptcy will enable you to free yourself from some or possibly all of your debts depending on what they are.
• Stopping a foreclosure – if you have a property in your name then if you claim bankruptcy under Chapter 13 (a company claiming bankruptcy) your house will not be taken away from you. A repayment plan to pay back your mortgage and your arrears will be drawn up so your house will remain safe.
• Losing your job – if the main wage earner in the household loses his/her job this will naturally spell financial trouble.
• Consolidating student loans – this type of debt is exempt from being discharged. Under Chapter 13 of the bankruptcy law in the US a student may restructure their loan payments and begin to make more manageable monthly payments to pay off the debt due.
These are only a few of the main reasons for claiming bankruptcy and if you find yourself in this situation make sure that you seek professional advice before making a final determination.