Why bankruptcy happens

why bankruptcy
Why bankruptcy happens

Bankruptcy happens as a result of being insolvent, or unable to pay back your debts. Bankruptcy is a legal status that lasts for a few month to several years depending on the kind of bankruptcy you pursue.  It is an alternative to get rid of debts that you are unable to pay by yourself. It doesn’t always happen because of bad money management or spending credit and money unwisely.  Sometimes unforeseen financial hardships happen and force innocent and hardworking people into bankruptcy. People file for bankruptcies to prevent foreclosures on their homes, to start over financially, and to get creditors to stop calling and pursuing for money and will even stop wage garnishments.

Bankruptcy is usually seen as a last resort and a way to be freed of your debt, but with some consequence such as being reported on your credit score for 7 to 10 years. In the long run though, it can be of benefit to you. Businesses also can file for a bankruptcy if there are no remaining ways to pay off debts, it can give them an opportunity to reorganize their finances and get back on their feet. Bankruptcy begins by filing a petition wit the bankruptcy court. The petition can either be presented by the debtor or the creditor(s). When you go bankrupt first your non-essential (usually non-exempt) assets will be sold off to pay your creditors, like your property and possessions. At the end of the bankruptcy, with a Chapter 7 and a Chapter 13, most of the debts are discharged. With a Chapter 7 your debts are discharged usually in a few months and with a Chapter 13 bankruptcy you go through a repayment plan and the remainder amount at the end is usually discharged.

If you decide you want to fill out your own bankruptcy petition there are a number of forms that you need to fill out, but it is highly recommended to get an experienced bankruptcy lawyer as bankruptcy is very complex. If you are finding yourself in Utah and in a situation where you have to consider bankruptcy call us at 801-221-9911 for a free bankruptcy consultation and we will help you make the best decision.

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