Here are some good reasons why people file for personal bankruptcy:

1. Eliminating legal obligation of debt – It is one of the main reasons why people go for Bankruptcy. Main goal of bankruptcy filing is to get a rid of debt and to have a fresh start. Either Chapter 7 Bankruptcy or Chapter 13 Bankruptcy helps people clear many debts.

1. Loss of employment – It can be identified as the other very important reason for filing bankruptcy. It is very common reason that loss of job forces people to file for bankruptcy. Suppose in a family there are 4 members, out of which 2 are earning members. If one of them loss his job for some reason then the financial planning of that family tear down. This is the time when they are forced to file for bankruptcy.

3. Stop foreclosure – Foreclosure of house can be stopped at any time prior to the sale with the help of Chapter 13 Bankruptcy. Through Chapter 13 Bankruptcy mortgage on property will not be eliminated without payment. Chapter 13 will restructure a suitable plan to repay mortgage arrears.

1. Stop repossession – Your car and other property can be prevented from being repossessed. If you file bankruptcy quickly enough then after being repossessed your car by the creditor, he will be bound to return it. Chapter 13 plan will consolidate due payments of car if you missed payments in the past. And then on you don’t have to pay to your finance company, rather you will have to pay to your trustee of Chapter 13 Bankruptcy and he will pay to the finance company.

1. Relief from harassing behavior of creditors – It is really tough to bear with the harassing behavior of the creditors and collection agencies. All creditors don’t follow appropriate course of action in the time of collecting debt from debtors. Many a times it has been found that creditors call to the home of the debtors with harassing words. They don’t stop after calling in the home but also harass in the work place which is unbearable. Bankruptcy can stop these harassing calls and give relief from the hand of the creditors and collection agencies.

1. Relief from huge medical bills – Huge amount of medical bills is also a big problem for many people. Through Chapter 7 Bankruptcy medical bills can be reduced which is another good reasons of filing Bankruptcy by people.

1. Stop Wage garnishment – Wage garnishment is also very important reason for filing bankruptcy. But chapter 7 bankruptcy can spot wage garnishment. Basically what happens is that wage garnishment takes away your monthly income without leaving enough amounts for your basic necessities. Filing bankruptcy helps people to purchase necessary goods.

1. Student loan consolidation – Chapter 13 Bankruptcy allows consolidate student loan debt. It is true that student loan debts can’t be eliminated like many other types of unsecured loan debts. But through chapter 13 you can pay this loan in monthly payments.

I may have missed some other reasons, so if you know more valid reasons then please share them with us through the comment section.

This entry was posted on Saturday, September 15th, 2007 at 9:46 am and is filed under Bankruptcy, Personal Finance. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.