Bankruptcy is a legal process that allows a person or business to have their debts discharged when they no longer have the financial means to pay them. Filing for bankruptcy is possible under Chapters 7, 9, 11, 12, 13, and 15 of the Bankruptcy Code. This page explores the top reasons individuals file for bankruptcy under Chapter 7.
If you need help to understand your rights and options under the Bankruptcy Code, contact Loan Lawyers to schedule your free, confidential consultation today. Read on to learn more.
Why File for Chapter 7 Bankruptcy?
If you are considering filing for bankruptcy, you are not alone. Each year, hundreds of thousands of individuals and businesses file for bankruptcy throughout the United States. Chapter 7 bankruptcy allows you to sell off (“liquidate”) your non-exempt assets and use the proceeds to pay off as much of your debt as possible. At the end of the process, the presiding court will discharge any remaining eligible debts, meaning that you no longer need to pay them.
Individuals and businesses file for Chapter 7 bankruptcy instead of pursuing other forms of debt resolution when they fall so far behind on payments that they can no longer keep up with their financial obligations. Chapter 7 allows them to reset their finances from zero after all other options are exhausted. This course of action represents a last resort for individuals struggling to pay off debt.
Common Reasons People File for Chapter 7 Bankruptcy
Multiple factors can come together and leave someone in a precarious enough financial situation that they need to file for bankruptcy. No matter your situation, our legal team is ready to listen to your story and help you explore options. Some of the most common reasons why people file for Chapter 7 bankruptcy include:
- Loss of Income – In general, individuals may fall into debt experiencing a significant reduction in income due to the loss of a job, pay cut, or reduction in work hours.
- Unaffordable Mortgages – The largest source of debt for many individuals and families are loans taken out to purchase a home, known as mortgages. Falling behind on mortgage payments can ultimately lead you down a path toward bankruptcy.
- Credit card debt – People can find themselves with unmanageable debt after racking up significant credit card balances. Bankruptcy can provide a solution when they can no longer afford to make at least minimum payments for an extended period.
- Medical expenses – People who suffer serious injuries or become severely ill may incur significant debt to pay for medical expenses not covered by insurance, including co-pays, co-insurance, deductibles, and non-covered services.
- Divorce or separation – Separating from a significant other in a breakup or divorce can have a serious negative impact on your finances. For example, the need to maintain two separate households is a common source of financial strain after separating from a significant other.
These are just a few of the most common reasons you may find yourself considering Chapter 7 bankruptcy. No matter the circumstances, Loan Lawyers is here to help you evaluate your legal rights and options going forward.
Need Help Filing for Chapter 7 Bankruptcy? Contact Loan Lawyers Today
If you can no longer pay your debts and feel like you have exhausted your options, Chapter 7 bankruptcy may be the best option for you. Contact Loan Lawyers today for a free, confidential consultation to discuss your eligibility. Our legal team can evaluate your situation and work with you to find the best path toward financial health.
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Loan Lawyers is made up of experienced consumer rights attorneys who use every available resource to develop comprehensive debt solution strategies. Our goal is to take on those burdens, resolve those problems, and allow our clients to sleep soundly knowing they are on the path to a better future.
