Why do people claim bankruptcy:
Bankruptcy is considered to be an avenue to relieve oneself from debts, by
most people. Most people look forward to making a fresh start
when they are all surrounded with debts. It is important for
every individual to keep track of all his debts in terms of
the amount owed and the time needed for paying back, because
very often people forget about their affordability and due to
their bad spending habits land up with a bunch of debts. Keeping
good track of ones finances and spending can prevent an individual
from claiming for bankruptcy,
but then it is easier to say and too hard to follow.
However, when your debts have grown out of proportion, bankruptcy may be the only alternative left for you. But before you embark on claiming for bankruptcy, get acquainted with the pros and cons. The biggest advantage of declaring bankruptcy is to free oneself from debt so that his peace of mind can be restored, because his creditors will stop bugging him with repeated phone calls to get their money back. But alongside come some disadvantages such as the individual being relinquished of his assets and his financial problems becoming public. Claiming for bankruptcy can be very embarrassing for an individual and most people would not love to see themselves in that embarrassing spot.
All those who are thinking along the lines of claiming for bankruptcy should ideally begin by speaking to a bankruptcy lawyer before they make any major decisions. There are different types of bankruptcies that you can claim for, and only a lawyer can help you in making the right decision by investigating your specific case. At the same time you need to pay some attention towards the importance of good credit, because re-establishing a good credit can make you realize some of your goals while offering your financial stability and independence.
You need to have a good planning done to manage your finances before and after
the claiming for bankruptcy, to know exactly where you stand.
Claiming for bankruptcy is not an easy job, and you will have
to face a lot of losses before you can finally get back on your
feet. You must begin saving some money and restricting yourself
to purchasing items on cash basis only.
Every person may have his own conception about bankruptcy, and they may try to justify claiming for bankruptcy as a strategy to help themselves or their families out of debt. Here is a list of some reasons why people claim for bankruptcy.
• Eliminating legal obligation: claiming for bankruptcy allows you to get rid of some of your debts, which in technical terms is called discharge of debts. The basic objective is to shrink the amount of debts so as to make a fresh beginning. Whichever method you use, that is declaring straight bankruptcy under chapter seven or bankruptcy through reorganization under chapter thirteen, a major chunk of your debts can be cleared out.
• Preventing foreclosures: when your house is at the stake, with the foreclosure approaching, claiming bankruptcy under chapter thirteen will stop the foreclosure. However your mortgages dont get eliminated, rather a restructured plan is put forward to allow you to pay back for your mortgage arrears. Then your home is on the verge of foreclosure, the utility bills may also get terminated; but claiming for bankruptcy will take care that nothing of the sort happens.
• Preventing assets from being repossessed: when you have skipped out on payments and the lender repossesses your assets, claiming for bankruptcy can force them to return your assets, provided bankruptcy claiming is carried out quickly. In accordance with the chapter thirteen bankruptcy plan, the missed out payments will be consolidated. From then on all your payments to the finance company will be routed through the trustee of your chapter-thirteen bankruptcy.
• Reducing or eliminating medical bills: some serious
illness or an unfortunate accident can sometimes wreck the whole
family and its finances. The families may find it difficult
to keep up with the payments of the medical bills as well as
the other debts. In such cases claiming a bankruptcy under chapter
seven can help them in making major reductions to their medical
• Loss of employment: this is one of the most common reasons for claiming of bankruptcy. Any sudden event because of which the major income earner or may be both spouses lose their jobs, can lead a family into financial trouble. With the job gone, the insurance protection provided by the employer also vanishes and both these things combined together can make recovering nearly impossible without the help of bankruptcy.
• Stopping creditors harassment: there are some lenders who may not always stick to the justified course of action in their attempt to collect the debt. They can often resort to threatening and abusive behavior, quite often adopting unlawful methods. Even though through claiming bankruptcy, a hold on the demands of the creditors cannot be put, but the harassment and undignified behavior can be stopped.
• Assistance for student loan debt: though none of the student loan debts can be eliminated by claiming for bankruptcy, but it can help in consolidating student loan debts. The only benefit of claiming bankruptcy when the student loan debts are too large to manage is that under chapter thirteen the monthly payments can be adjusted to keep up with the financial ability of the debtor.
• Stop wage garnishment: wage garnishment is the practice of taking away your monthly earnings by your employer to pay for your debts, quite often leaving you without the basic necessities. Wage garnishment can be stopped with chapter-seven bankruptcy, which permits the debtor to keep sufficient wages so as to purchase necessities.
• Challenging fraudulent creditors: by claiming for bankruptcy, you
can challenge the false claims made by some creditors who are
trying to extract more money out of your pockets in an unjustified
manner. In such a situation, you would definitely need the services
of a bankruptcy lawyer who can even stop the creditors from
fraudulent credit reporting.
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