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10 Most Common Reasons to File Bankruptcy

When considering filing bankruptcy, it is important to remember that it is a tool that is supposed to be used by those that have honestly tried to pay all their debts, but for one or more reasons find themselves in a situation where they cannot.  The reason our clients file for bankruptcy is to get help with debts, they cannot reasonably be expected to service and pay – whether it is a situation that developed over a long period of time, or is the result of a sudden event such as job loss.  Out clients often choose a Chapter 7, which is sometimes called a “straight bankruptcy” due to its speed and effectiveness; but others choose a Chapter 13 payment plan.   After filing hundreds of cases, it is our experience that for our clients, the ten most common reasons to file  bankruptcy are the following.

Their Home Is in Jeopardy
If it looks like the home you and your family live in is going to be foreclosed, filing for bankruptcy could delay that.  A chapter 13 bankruptcy will stop foreclosure and creditors by creating a structured plan for you to pay an affordable amount each month.  A Chapter 7 can also stop and delay a foreclosure, but will not include a payment plan.  An experienced attorney can help you decide what chapter is best for you.

Your Vehicles and Other Assets are in Jeopardy
A concern for most people is saving their automobile and other valuable property from being repossessed by lenders.  If you are behind on automobile payments, a Chapter 13 bankruptcy can consolidate your missed payments, which you would then pay to your trustee rather than the finance company.  A Chapter 7 bankruptcy case can stop / delay a repossession, giving you time to obtain another car and to surrender your current vehicle; or in the alternative – oftentimes just catch up the payments over a period of months.  The type of bankruptcy you file will determine what assets you can keep. However, the vast majority of our clients do not lose any assets whatsoever due the the exemptions allowed under Federal and Georgia bankruptcy law.

Student Loans are a Burden
Getting an education is important, but sometimes those student loan debts will hold you back. It is important to know that filing for bankruptcy will not eliminate them, but your loans can be consolidated into a monthly payment plan through a easier to manage chapter 13 bankruptcy.

Medical Bills Have Become a Burden
Having to choose on whether to pay a medical bill or helping the health of someone is indeed a very difficult choice.  Insurmountable debt from doctor and hospital bills can result from an unexpected illness or injury and affect all areas of your life.  Bankruptcy can eliminate all of your medical bills once your case is discharged; and this is a very common reason that people file bankruptcy.

Lost of Employment or Reduced Income
It is becoming a more difficult in some industries to obtain and keep a good paying job.   If you are spending money but not making enough money – bills, insurance costs, and other expenses can quickly wreak havoc on your finances and life.  Filing for bankruptcy can put you on the path to recovery helping you readjust to your new level of income.

Divorce or Separation
A divorce or legal separation can be quite expensive, along with the attorney’s fees and filing fees there is also the cost of finding a new home, child support, alimony and sometimes providing your own health insurance.  Divorce can add up quickly and have a serious impact on your finances.  A Chapters 7 or Chapter 13 bankruptcy are both options that an individual can consider if facing .

Personal Loans, Credit Card Debt and Other Unsecured Debts
Credit card debt and unsecured loans is the main reason most of our clients file bankruptcy.  It is not advisable to max out your credit cards and incur excessive debt that you cannot pay back.  However, if this is the situation you find yourself in, there is the possibility that all the debts can be discharged by filing a Chapter 7 bankruptcy

Harassment by Collection Agencies and Creditors
When you owe creditors debt and are not able to make payments in a timely manner, they will frequently use in house or paid collections agencies to call and harass you in attempts to collect the debt.  If you have not been able to pay a debt for several months or years – the creditor may have even sold the debt to companies that specialize in collecting debts; and they will also call, write and harass people to collect debts.  This is a major reason that many of our clients file bankruptcy.  Fortunately, filing for bankruptcy will stop all creditors from calling you at home, on your cell phone and at work.  It will also stop all threatening collection letters.

Garnishments and Lawsuits
In many cases, creditors will file a lawsuit and subsequently attempt to garnish your bank accounts and your wages.  This is a major motivating factor for many of our bankruptcy client.  When a creditor garnishes your checking and savings accounts – your accounts will frequently be empties – and any money you put into the accounts will also be taken – including automatic payroll deposits.  Obviously, this makes it very difficult to even maintain a bank account and to pay your most basic bills.  Also, with a judgment, your creditors can put liens on your home, car and other assets.  If this is a situation that you are facing, filing for bankruptcy can put an end to lawsuits and garnishments.

Getting a Second Chance and a Fresh Start
Most people know that negative items on your credit report can stay on there for many years until they are handled be either being settled, paid or discharged through bankruptcy.  The path to better credit can only begin when all outstanding debts and obligations are disposed of in one way or another.  Many of our clients report that their credit scores recovered much quicker than they anticipated and the availability of credit came faster than they thought it would also.  Getting a Fresh Start on credit, starting out debt free, is a major leading reason our clients file bankruptcy.

If you are facing bankruptcy and need help, call us at 770-609-1247 to speak with one of our trusted and experienced attorneys now.

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