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Bankruptcy basically means a legal declaration that an individual or business no longer pay their financial obligations to its creditors. There are many reasons why people would decide to declare bankruptcy, and here are some of the top causes:

1. Loss of a job – One of the most common causes why people file for bankruptcy is because a job loss. The current bad state of the economy has made a lot of people to leave their work, and therefore leaving them unable to provide for themselves and their family. A job loss may also mean losing insurance that would’ve been provided by their employer.

2. Medical bills – Sometimes, a terrible accident, illness or even just the loss of insurance caused by job loss, can be enough reason for a person to file for bankruptcy. Nowadays, medical costs are really high and could pile up to inconceivable amounts. Filing for Chapter 7 Bankruptcy can greatly reduce or even completely eliminate these debts.

3. Preventing repossession of properties – Be it a car, your home, or any other highly valuable item that has been repossessed, filing for Chapter 13 bankruptcy could force the creditor to return said items to you. After this, your past missed payments will be merged into your bankruptcy plan. You will no longer pay to your creditors, but to your trustee instead. In turn, they will pay the finance company for you.

4. Stop home foreclosure and catch up on missed mortgage payments – Filing for Chapter 13 Bankruptcy won’t get rid of your property mortgage, but it can stop foreclosure before sales or bidding will occur. It will then allow you to repay the mortgage amount left (also called mortgage arrears).

5. Put a halt to harassing calls and behavior from creditors – A lot of times, creditors tend to do debt collection in an unpleasant manner. Their abusive and oftentimes annoying behavior is very uncalled for, and in fact, unethical. Filing for bankruptcy can stop the demands of many creditors, thus ending the many harassing phone calls and bad behavior.

There are plenty of other reasons to file for bankruptcy. Consulting the legal department is of course the best way to handle whatever bad financial situation you may have.

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