Here are six of the most common reasons that people file for bankruptcy:
1. Stop a foreclosure on your home: Bankruptcy doesn’t eliminate your mortgage, but it does restructure your payment plan so you can catch up on missed payments.
2. Reduce medical bills: Overwhelming medical bills incurred as a result of a serious illness is one of the most common reasons for filing for bankruptcy. Filing for bankruptcy can greatly reduce or even completely eliminate your medical bills.
3. Loss of employment: Loss of employment is another of the most common reasons that people file for bankruptcy. Without a regular salary, you have no way to pay your bills, and your debts simply continue to mount. In some cases, bankruptcy is the only way out.
4. Stop repossession of your vehicle: If you file for bankruptcy quickly enough, your creditor could be forced to return your vehicle even if it has already been repossessed.
5. Stop harassing calls from creditors: When you file for bankruptcy, an automatic stay is put in place that prevents your creditors from taking steps to collect on your debts.
6. Stop wage garnishments: Wage garnishment is a type of debt collection. Like the harassing calls from creditors, the automatic stay will put a stop to the garnishment of your wages.