The Reason Why People File for Bankruptcy

Bankruptcy is a state when a person becomes unable to pay his debts. In order to get a new start with one’s financial status, a person can decide to file for bankruptcy in order to make life a little easier. Once a person declares this state, he is able to get a temporary relief from his creditors. This is because filing for bankruptcy eliminates a debtor’s legal responsibility to pay his dues.

According to the US constitution, there are different chapters of the Bankruptcy Code in which a person can file in. The most common filings fall under chapter seven, which is liquidation. The cases under this chapter are resolved by appointing a trustee who has the right to sell the debtor’s non-exempt properties. The funds that are accumulated in the sales would be distributed to the creditors.

There are plenty of reasons why people file for bankruptcy. Some do it to prevent the foreclosure of their homes, some use it as a measure to prevent the repossession of their vehicles, and some use it as a means to alleviate the responsibility of paying high medical bills.

For some unfortunate people, the sudden loss of employment would be the cause to file bankruptcy. Unemployment can definitely lead to a difficult financial crisis. The working class often has loans to pay regularly. The absence of the monthly income may lead a jobless individual to be buried in huge amounts of debt.

Moreover, filing for bankruptcy can be a breath of fresh air for those debtors who suffer from the abusive treatment of their creditors. For some unlucky people, their creditors sometimes resort to harassment and other types of distasteful behavior in order to make the debtor’s life harder.

There are also creditors who often fool their debtors, they sometimes ask for more money than what is required. In order for debtor’s to be safe, they can choose to file for bankruptcy in Glendale in order to avoid dishonest creditors.

If you are having a difficult time in repaying your debts, you can opt to file for bankruptcy in Glendale. Since this is not a decision to be taken too lightly, it is best to consult with an attorney for legal advice. If you cannot afford one, there are various organizations and communities that are available on the internet that can offer free consultation.

Since there are also some people who abuse the benefits of filing for bankruptcy, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was enacted. This requires a compilation on the statistics of the debtors that are submitted yearly. These debtors are the ones who primarily have consumer loans, and are seeking relief under the various chapters of the Bankruptcy Code.

 

 

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