4 Biggest Reasons Why People Decide to Declare Personal Bankruptcy
There are a number of reasons why people decide to declare personal bankruptcy.
Of course, they all come down to being in a situation whereby even with significant changes in spending habits, the people in question are still in over their head with debt.
This article examines the four biggest reasons that people decide to declare personal bankruptcy in the USA.
1.
To avoid losing their home to foreclosure.
Chapter 7 bankruptcy has the potential to eradicate many debts altogether but absolutely does not guarantee that you will be able to keep your assets.
However, if your debts are unsecured debts, the homestead clause protects your home from reclaim.
However, if it is a debt secured against your house that you are behind on, such as your mortgage most commonly, then you might be required to file chapter 13 to arrange a payment plan, as chapter 7 will not eradicate this type of debt.
2.
To avoid losing their car.
Very much as with your home, if you have a car loan, this loan is secured against the car.
It is wise here again to declare bankruptcy of chapter 13 in order that you can formulate a repayment plan to enable you to keep your vehicle.
3.
To pay medical bills.
It is becoming increasingly common for people to declare bankruptcy as a result of medical bills they simply cannot afford to pay.
If you find yourself with an unforeseen medical emergency, particularly if you are under insured or even not insured at all, you can find yourself in absolutely abominable financial circumstances.
4.
Unemployment is at a record high and not having a job, therefore not having an income, is a very common reason for people deciding to declare bankruptcy.
And unfortunately, this reason is becoming ever more common in the current recession with unemployment rates soaring.
Of course, they all come down to being in a situation whereby even with significant changes in spending habits, the people in question are still in over their head with debt.
This article examines the four biggest reasons that people decide to declare personal bankruptcy in the USA.
1.
To avoid losing their home to foreclosure.
Chapter 7 bankruptcy has the potential to eradicate many debts altogether but absolutely does not guarantee that you will be able to keep your assets.
However, if your debts are unsecured debts, the homestead clause protects your home from reclaim.
However, if it is a debt secured against your house that you are behind on, such as your mortgage most commonly, then you might be required to file chapter 13 to arrange a payment plan, as chapter 7 will not eradicate this type of debt.
2.
To avoid losing their car.
Very much as with your home, if you have a car loan, this loan is secured against the car.
It is wise here again to declare bankruptcy of chapter 13 in order that you can formulate a repayment plan to enable you to keep your vehicle.
3.
To pay medical bills.
It is becoming increasingly common for people to declare bankruptcy as a result of medical bills they simply cannot afford to pay.
If you find yourself with an unforeseen medical emergency, particularly if you are under insured or even not insured at all, you can find yourself in absolutely abominable financial circumstances.
4.
Unemployment is at a record high and not having a job, therefore not having an income, is a very common reason for people deciding to declare bankruptcy.
And unfortunately, this reason is becoming ever more common in the current recession with unemployment rates soaring.
