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Four Common Reasons Why People
File for
Bankruptcy
by Suzy Vanstrusen
You have contacted one of the three credit report
agencies to get your credit records. As soon as you opened your credit file, you
were taken aback, then you felt troubled. You have seen a lot of outstanding
balances that need to be paid off as soon as possible. And, sad to say, your
debts will prove very difficult to settle since the payments on interest have
all ballooned out.
Add to your woes, you have just been laid off from your company. So how will
you handle all these debts and bills each month?
A lot of us encounter a similar problem. Recession has inflicted great
damage to our financial stability. We found it difficult to retire all our
debts. This problem may push us to finally decide on filing for bankruptcy.
After all, bankruptcy can wipe off some and even all of our debts. And for sure
having been discharged from bankruptcy, we can have a fresh start for us to
slowly work on rebuilding our credit reports.
Now, aside from getting retrenched, what other reasons push people to take
the course to bankruptcy? We will give you the four main reasons why people
choose to file for bankruptcy.
Reasons Why People File for Bankruptcy
1. A recent, bad divorce. Divorce proceedings are not only
time-consuming but also very expensive. People who underwent divorce settlements
usually find themselves struggling to regain their financial stability. The
reason is because a divorcee will need to pay a lot of charges. He or she must
pay alimony charges, provide child support, and also settle the bills from his
or her lawyers. And if a divorcee does not have a stable job, of course he or
she will find it hard to keep up with his or her obligations. So, this is the
main reason why divorcees commonly file for bankruptcy. They want to gain relief
from all the worries and stress brought about by their financial difficulties.
2. Stop the Foreclosure on your house. A Chapter 13 Bankruptcy filed
before the sheriff's sale can save your house from foreclosure. This is why most
people would rather have bankruptcy in their credit reports rather than lose
their homes to foreclosure. Still, this arrangement can only work if the person
who filed for bankruptcy can keep up with the repayment plan. Such plan gives
specific details on how the person can pay all his mortgage arrears over a
period of five years.
3. Provide Assistance in Repaying Student Loans. Though a student
loan can never be discharged, taking the bankruptcy option can provide an
opportunity for debt consolidation. This program will help you merge all your
student loans and submit just one payment each month. And you won't need to
worry about your monthly payments. This is because the repayment plan will be
based solely on your financial capability.
4. Challenge Fraudulent Claims of Creditors. Some lenders may try to
collect more than what you owe them. They can easily impose high interest rates
and fees since they can manipulate your credit accounts. Even if your credit
file from the three credit report bureaus can prove them wrong, they will still
insist that you pay the amount they have specified. You can free yourself from
these unscrupulous lenders simply by filing for bankruptcy.
© 2010 Suzy Vanstrusen . For people who want to
learn how to repair their own credit, Suzy Vanstrusen, a credit analyst and a
writer of
EzCreditRepairSolutions.com, has been providing consumers with tips
and tricks in repairing your credit. Check the site for more
free credit repair and
credit report score. |
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