Consumers who file for bankruptcy tend to face a lot of the same problems, such as the loss of a job or a serious illness. For these individuals, bankruptcy is often a viable option for getting their finances back on track after a life-changing event.
Here are five of the most common financial pitfalls from which bankruptcy can help save a consumer.
1. Severe or prolonged illness
A prolonged or serious illness can lead to massive medical bills. Some families find themselves unable to get out from underneath mounting medical expenses. Bankruptcy is a legitimate way to eliminate medical-related debts.
Because medical bills are unsecured debts, they can be discharged in bankruptcy. In these cases, a Chapter 7 liquidation bankruptcy is often a viable option for eliminating your medical bills and getting your finances back under control.
2. Job loss
The poor economy has resulted in job loss and layoffs for countless individuals in Texas and across the United States. The reduction in income that comes from a job loss is one of the most common reasons for individuals filing bankruptcy.
Even if you find a new job, it can be difficult to catch up on your past overdue mortgage, car and credit card payments. Bankruptcy will stop the garnishment on your wages at your new job.
For individuals who find themselves suddenly without a job, bankruptcy may be the best solution.
3. Divorce
As a result of a divorce, debts are often apportioned between the two former spouses. One spouse may find themselves unable to repay their portion of the debt. Bankruptcy, be it Chapter 7 or Chapter 13, is one way that this individual can get back in charge of their finances.
Note that child support and alimony payments are not dischargeable debts in bankruptcy. Bankruptcy, however, can still wipe out unsecured debts incurred as a result of a divorce.
4. Massive consumer debt
Most consumers who file for Chapter 7 bankruptcy have between $50,000 and $75,000 in debt. With interest mounting on credit card debts, it can be difficult, if not impossible, for these consumers to catch up on their payments.
Rather than liquidating your retirement savings, you can consider filing for bankruptcy and have those debts discharged. Bankruptcy, in some cases, can be a matter of saving your financial future.
5. Impending foreclosure
Bankruptcy can be the solution for a homeowner who is facing imminent foreclosure. Filing for bankruptcy can put an immediate stop to a foreclosure. In many cases, due to exemptions, the homeowner will be able to keep their property.
If you are considering filing for bankruptcy in Texas for these other reasons, contact a qualified bankruptcy attorney today to receive expert advice on your options.