Personal bankruptcy is a tough decision for anyone. It is a legal process that helps individuals and businesses who cannot pay their debts to get a fresh start by liquidating their assets or creating a repayment plan. Personal bankruptcy is a difficult and emotional decision that follows a long period of financial stress and struggle. In this blog post, we will explore the top reasons why people file for personal bankruptcy and the implications of this decision according to the Law Office of Allan E. Dunaway PLC.
Medical Expenses
One of the leading reasons behind personal bankruptcy is unexpected medical expenses. Medical bills can quickly pile up, and health insurance might not cover enough. Falling ill or getting into an accident can leave individuals with enormous medical bills that they cannot afford. Even paying the deductibles alone can be overwhelming, especially if the individual is unable to work.
Job Loss
Losing a job can lead to a severe financial shortfall for many people. With no steady stream of income, bills start to pile up, and there might be no way out of the financial hole. In some cases, people might liquidate their assets or use their credit cards until they cannot afford to pay the bills anymore. Job loss is one of the principal reasons why people file for personal bankruptcy.
Foreclosures
When people default on their mortgage payments, they risk losing their homes. Foreclosure proceedings can take a long time, and in many cases, the mortgage lender might want to sell off the property to recover their debt. Personal bankruptcy can help people avoid foreclosure and restructure their mortgage payments.
Divorce
Ending a marriage often leads to significant changes in everyone’s financial life. Depending on the assets and liabilities at hand, divorce proceedings can be complicated, and the courts might order one spouse to pay alimony or child support. These instances can lead to an unsustainable financial burden, making filing for bankruptcy an attractive option.
Credit Card Debt
Accumulating too much credit card debt can culminate in a seemingly insurmountable financial burden. Purchases made on credit cards added with interests and fees create debts that can take years to clear. And sometimes, the interest rates on credit cards can go up, making it even harder to make payments. Bankruptcy can help individuals become debt-free and recover their credit scores.
Personal bankruptcy can provide a much-needed relief to individuals struggling with enormous financial burdens. While it is not an easy decision to make, bankruptcy can be the right choice when facing unexpected medical expenses, job loss, foreclosure, divorce, or credit card debt. With the help of a reputable and experienced bankruptcy attorney, individuals can navigate the legal process and move towards financial stability and a fresh start. If you are facing any of these issues, consult an expert to determine whether filing for personal bankruptcy is the right choice for you.
