Although no one likes to admit it, financial problems are very common. Financial problems occur for a variety of different reasons. Whether it is because of overwhelming medical bills or being laid off work, financial troubles can easily occur. The question then becomes, when is filing for bankruptcy the only way out? People often wonder under what circumstances they should actually file bankruptcy. Here are some simple guidelines that can assist you in making that decision.
If you are overwhelmed with debt you can no longer pay, bankruptcy might be a viable option for you. When you wipe your debt completely clean, it is called discharge of debt. The goal of this is to help reduce your overall debt and allow you to start again with a clean slate. Whether you choose to go with Chapter 7 Bankruptcy (straight bankruptcy) or Chapter 13 Bankruptcy (reorganization), most, if not all of your debt will be wiped out.
If your home is currently in foreclosure, bankruptcy can help to stop the foreclosure process any time before the actual sale of the house. However, filing bankruptcy will by no means wipe out your current mortgage. Bankruptcy will help you create a repayment plan for the payments you are behind on.
Bankruptcy can help you keep your car and other processions from being repossessed. Even if your car has been repossessed by the bank, when you file bankruptcy you can actually force them to give you your car back. However, this is only the case if bankruptcy is filed promptly and quickly enough. Any payments you are behind on will then be consolidated into a bankruptcy plan. After you have filed bankruptcy and a plan has been made, your payments will go directly to a bankruptcy trustee, instead of going directly to a finance company.
Bankruptcy can help to eliminate extremely high medical bills. Unfortunately, there are times when medical bills, whether due to an accident or major illness, can get to the point where you can no longer pay for them. If you choose to file Chapter 13 bankruptcy, then your overall medical bills can dramatically be reduced.
One of the most common reasons people file bankruptcy is because loss of work. Families can easily become comfortable with the income they are making, whether it is a single or dual income family. Then, if the unthinkable occurs and you become unemployed, bills can quickly pile up. Often times, losing your job can be directly related to a medical reason. Therefore, with high medical bills and no income to pay them or other bills, bankruptcy may be the only viable option to get out from under the bills.
Bankruptcy can stop the harassing phone calls and letters from creditors. Often times, creditors do not follow the rules when trying to collect a debt. Creditors will continuously call the home and act very inappropriately with abusive and demeaning behavior.
If you are unable to pay your utility bills and are close to having them shut off or have already had them shut off, then bankruptcy may be your way out. Filing bankruptcy can help keep your electric and other utilities from being shut off.
Student loans are another source of overwhelming debt. Although student loans will not be completely eliminated through bankruptcy, it can help to consolidate your loan leaving you with a more manageable payment.
Wage garnishments can be stopped through Chapter 7 Bankruptcy. Wage garnishments often make it impossible to purchase essential items for your family. Bankruptcy can help keep food on the table by ending the wage garnishments.
Paul Sarwana offers information about how to file for bankruptcy to help debtors build confidence in improving their financial situation. He runs an informational website that provides tips on choosing a debt relief service, dealing with creditors, increasing credit score and choosing a good bankruptcy lawyer. Please visit http://www.debtfirms.com/ to get more quality file for bankruptcy information.
http://EzineArticles.com/?expert=Paul_Sarwana
