Top 5 Reasons Why People File Bankruptcy.

  1. To stop a wage garnishment that is hindering the person’s ability to pay their regular monthly bills such as rent and car payments.
  2. To get a fresh start by ending their legal obligation to repay their dis-chargeable debts including: credit cards, medical bills, deficiency balances, payday loans and basically all other unsecured debts other than student loans. They person may also wish to surrender a home or vehicle in the bankruptcy. Certain tax debts may be eligible for discharge. The person may then begin rebuilding their credit within six months of filing.
  3. To stop foreclosure on a home and allow you to bring missed mortgage payments current by filing a chapter 13. If the debtor cannot afford their mortgage payments, they may file a chapter 7 to obtain temporary relief from foreclosure while working out other housing. It rarely makes sense to file bankruptcy simply to save a vehicle from repossession unless the vehicle is essential to the operation of their business such as a wrecker used in a tow truck business.
  4. To recover from a temporary loss of employment. By the time many people regain employment, their credit is already ruined because they fell behind on their minimum payments. In such cases the creditors demand payment in full or sell their debts to debt collectors. In such cases, these individuals may have nothing to lose from filing bankruptcy.
  5. For individuals with high student loan debt, a chapter 13 will stop payments on their student loans and allow them to pay down their other debts.