Many people think of bankruptcy as an easy way out of debt. This isn’t at all the case. Bankruptcy is a method of last resort that people often feel bad about utilizing. Most people who file for bankruptcy aren’t trying to game the system. They didn’t purposely get into more debt than they could handle. They didn’t go out and buy things on credit in an effort to try to get free items.
Instead, one of the major causes of having to file for bankruptcy is health reasons. The health reason can be a serious condition that stopped the person from working. This is fairly common if a person has health insurance to cover the bills for the medical care, but can’t cover other bills and starts to rely on credit cards to pay regular bills.
Another possibility occurs when a person is unable to pay medical bills. Those medical bills continue to mount until the total is crippling. This can mean that the person eventually will face legal action from creditor attempting to recoup the money they are due.
In both of these cases, bankruptcy might be an answer to a person starting their financial life anew. The person will have to determine which type of bankruptcy is going to be most helpful to them. The options are typically Chapter 7 and Chapter 13, both of which are considerably different.
Filing bankruptcy does come at a cost. Your finances and your credit report will take hits because of the bankruptcy filing. Because of this, you should carefully consider every option available before you settle on one option to help you get your finances back on track.
Source: CreditCards.com, “14 key factors when considering bankruptcy,” Dana Dratch, accessed March 08, 2017