Five Reasons to File for Bankruptcy

When a consumer is considering the option to file for bankruptcy to help with their financial crisis, they must carefully look at the long term effects of the bankruptcy.  Some consumers file bankruptcy for all the wrong reasons.  Today we’ll look at five good reasons to file for bankruptcy.

1. Insurmountable Medical Bills – When a person or family is faced with a medical emergency and is under or un-insured, the result is a pile of medical bills.  It is not uncommon for one medical emergency to cost tens, or even hundreds, of thousands of dollars.  If you are looking to file bankruptcy as a result of insurmountable medical bills, remember to try to fix the problem that put you in this predicament so that it isn’t repeated.  Find health insurance that will adequately cover you, and your family, for any future medical emergencies.

2. Prevent Foreclosure – In today’s housing climate, homeowners across the United States are being faced with the possibility that their house will be foreclosed on.  If your only debt is the mortgage and you can’t make that payment, then filing for bankruptcy won’t fix your situation.  If however your mortgage payment could be made without all of the additional debt you hold, filing for bankruptcy to prevent a foreclosure is a good solution. 

3. Divorce – One of the most frequent side-effects of a divorce is a petition to file for bankruptcy.  When one partner stays home with the children as opposed to working yet shares in the debt accounts, they may find themselves with the ability to only earn a small salary while having massive amounts of debt.  Filing for bankruptcy will allow the divorced parent a clean plate to start over.

4. Stop Garnishments – If your wages are being garnished to a point where you are unable to meet your other financial obligations, filing for bankruptcy may be a viable option.  Most judgments, including orders of garnishment, are dismissed in a bankruptcy.  Be sure to talk to your bankruptcy attorney about your specific garnishment/judgment situation.

5. Loss of Employment – Many consumers immediately think of filing for bankruptcy if they’ve lost their job.  However, waiting to file may be the best bet.  If the consumer does not own a house then they are essentially judgment proof as there is no property to file a lien and no wages to be garnished.  If the employment loss is permanent and the consumer owns property, filing for bankruptcy is a good way to be released of responsibility for his debts while protecting his property.

These are just five reasons that a consumer may use to file for bankruptcy.  Every person’s circumstances are different.  Do your research to confirm that filing for bankruptcy is the best option for you in your situation.