Why Do People And Businesses File Bankruptcy
| The myth about bankruptcy is that people use it as way of cheating the systems. Others believe that bankruptcy should not be provided, because you should be responsible for anything that happens to you. The reality of life is people make mistakes and face tragedies in their lives. Sometimes they do not have much control over it.
Why Do People File Bankruptcy?
There are numerous reasons why people and business file bankruptcy. The following are some of the most common reason for filing bankruptcy.
Discharge of Debt: One of the most common reasons for filing bankruptcy is the discharge of debt. Sometimes debts and credit card bills grow out of control, and people need a fresh start. Federal law offers a way out for people with financial hardship beyond control. Most of the unsecured debt will be discharged. However, there are some debts like federal tax, education loans, criminal fines that are non-dischargeable.
Stop Foreclosure: When you file for bankruptcy, you temporarily are protected from any debt collection attempt, including foreclosure. Filing bankruptcy under Chapter 13 can stop foreclosure process, if it is done before the sale of the property.
Stop Calls From Creditor: Creditor is not allowed to legally call you, if you file bankruptcy. In fact, all creditor harassment must stop when you file bankruptcy.
Unemployment: You can pay the bills if you don’t have money. People who lost their jobs often file for bankruptcy, after struggling with high amounts of debt.