- Personal Finance
Motivations for Bankruptcy
With the economy being rocked by a worsening recession, more and more people are being forced to consider filing bankruptcy. Although most Americans would prefer to avoid doing so, bankruptcy has become the only viable option for many people today. Skyrocketing unemployment, wage cuts, lost investments and other factors are teaming together to motivate more and more people to file. Here are some of the reasons they are choosing to do so.
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Relief of Stress
When you have debt collectors calling constantly, you don’t know how you’re going to pay the bills and feed the family, and you can’t make yourself open the mail, you’re under enormous pressure. Your mind and your body suffer. Depression is common and it is not unusual for your body to rebel. You have headaches and heartburn, upset stomachs and aching backs. You can’t sleep and you’re tired all the time.
One of the benefits people discover when they file for bankruptcy is a release of the unbearable pressure they are feeling. Knowing that they can eliminate many of their debts allows them to take a deep breath for the first time in a long time.
Stop Wage Garnishments
Oftentimes, creditors opt to attempt to collect the money owed them by having your wages garnisheed. That means they can take up to 25% of your take home pay and apply it to your debt. Most people simply can’t afford to have that money taken from them. They are struggling to make ends meet already and to lose a quarter of their take home pay is devastating.
When you file bankruptcy, however, the garnishments are ordered to stop. You will return to receiving all the money you earned. Providing your family with the daily necessities will be much easier once this happens.
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Discharge Unsecured Debts
If you qualify for Chapter 7 bankruptcy, you will be able to liquidate, or discharge, all unsecured debts. Medical bills, credit cards debts, and other unsecured debts will be erased and you will no longer be responsible to pay them. This will free up your income so you can focus on the important bills like the mortgage payment and the car loan, should you choose to reaffirm them. Even if you do not qualify for Chapter 7 and have to file Chapter 13, you will be able to reorganize and establish a new repayment plan that is more manageable for you.
Explanation Of Bankruptcy
Eliminate Harassment by Creditors
When you are struggling financially and fall behind on your payments, one of the most annoying consequences you must deal with is continuous harassment by creditors. You become afraid to answer the phone and the sight of the mail carrier makes your stomach clench.
A cease and desist order is issued as soon as you file your bankruptcy. The creditors must stop phoning you, writing you or contacting you in anyway. Peace can settle into your home again.
If you are one of the thousands of people considering bankruptcy, be sure to consult an experienced bankruptcy lawyer to guide you through the process.