Top Twelve Reasons Why People File for Bankruptcy
1. Eliminate the Legal Obligation to Pay Most of Your Debts.
This process of wiping the slate clean is called the discharge of your debts. The goal of a bankruptcy discharge is to wipe out your debts to give you a fresh start. Whether it is through a straight bankruptcy that is called a Chapter 7, or through a reorganization that is called a Chapter 13, most or all of your debts can be wiped out for good.
2. Stop the Foreclosure on Your House and Allow You to Effectively Make Payments to Catch up on Missed Payments of Your Mortgage.
If your home is in a foreclosure, then a Chapter 13 will stop it if is filed before the sheriff’s sale. However, a bankruptcy does not eliminate your mortgages that are filed on your home. Instead, a bankruptcy will structure a repayment plan to enable you to repay your mortgage arrears over a five year period. Your mortgage arrears are the amount that you are behind on your mortgage.
3. Prevent Your Car or Other Property From Being Repossessed.
Even if the repo man has snatched your car, the filing of a bankruptcy can help you to save your car. However, your bankruptcy must be filed before the car is sold at the auction. The past payments you have missed will be consolidated into your Chapter 13 plan. After you file, you will no longer pay the bank or the finance company, instead you will make your monthly payments to the bankruptcy trustee. The bankruptcy trustee will then pay the finance company your missed payments over a three to five year period.
4. Reduce or Even Wipe Out High Medical Bills.
Sometimes an unfortunate accident or a major illness can totally emotionally destroy a family. Moreover, their financial health can also be wrecked as well. Many families have to make difficult choices on what bills to pay. Many New Jersey-ites rack up tens of thousands of dollars of medical bills if they become sick, or if their kids get sick. If you file for a chapter 7 then this legal process can wipe out your outrageous medical bills that simply won’t go away.
5. Recent Loss of a Job.
In my experience the loss of a job is one of the most common reason why New Jersey-ites are forced to file for bankruptcy. In most New Jersey families it is essential that both spouses work to just survive and make ends meat. If both spouses work, then the family can live a normal and reasonable middle class lifestyle. The family can take on a reasonable amount of consumer debt, join recreational clubs, and pay their normal everyday bills. However, if one spouse loses his or her job, then all of a sudden a family’s income is reduced from two salaries to one. The loss of employment is also intertwined with a family also incurring high medical bills. The loss of a job is closely tied to high medical bills. The loss of employment often means this family may be left without the protection of health insurance that was once provided by their employer based health plan. Often these two factors if combined create a perfect storm for a financial disaster for a typical New Jersey family.
6. Stop Harassing Phone Calls From Creditors
Some creditors try to harass the “living ####” out of you. Their goal is to harass you so that you “cry uncle” and pay their debt. Who can blame them. Our world is based on the credit system. Most creditors will relentlessly call you at home or at your job to try to get you to pay your debt. In essence, a bankruptcy filing will put immediately stop your creditors, and stop their harassing phone calls and other collection actions.
7. Restore or Prevent Your Utilities From Being Shut Off.
If your home is in risk of foreclosure then your utilities such as electric and heat may also be in risk of being terminated. Filing bankruptcy can prevent the utility company from leaving you in the dark and without heat.
8. Provide Help For Massive Amounts Of Student Loan Debt.
While it is true that your student loans will not be eliminated like several other types of unsecured debt, bankruptcy can consolidate your student loan debt. This consolidation will allow a debtor to make monthly payments through a chapter 13 plan, that is within the financial ability of the debtor.
9. Stop a Wage Garnishment.
A Chapter 7 case will immediately stop a wage garnishment. A wage garnishment basically takes away 10% of your weekly paycheck. After the wage garnishment eats up your paycheck, then you most likely will not have enough of your paycheck left to pay your rent, buy food, and support your kids. By filing for a Chapter 7 you will once again be able to support yourself and your family.
10. Challenge Certain Claims of Fraudulent Creditors or Padded Debts.
A bankruptcy will allow you to challenge these claims from creditors who are trying to collect more money from you than you really owe. Many creditors charge you so much interest, late fees, and attorney fees that they try to collect twice as much from you as you borrowed. This is insane! A bankruptcy can get these unscrupulous creditors out of your life for good!
11. You are recovering from a bad divorce.
Divorce is the major reason why many of my clients are forced to file for bankruptcy. Most men can’t survive if they have to pay high child support and alimony payments and then survive on their own. Moreover, divorce simply throws many people “out of whack” and they can’t function at their jobs as well as they could before they got divorced. The usual consequence is that many divorced people lose their jobs because they can’t focus, or their earnings are reduced.
12. You are trying to deal with a lawsuit that has been filed against you.
Many of my clients file bankruptcy to stop a lawsuit(s) that has been filed against them. Bankruptcy stops any litigation that has been filed against you. Bankruptcy stops credit card lawsuits, car accident cases, and any other small business related lawsuits.