Why does bankruptcy happen? Bankruptcy occurs when you are insolvent and can’t afford to pay off your debts. It is also the process of seeking legal advice from an attorney and from getting legal relief from your debts, and protection from your creditors. It can be the result of a lot of credit card debt, medical debt, and high interest loans.
The Top 10 reasons why bankruptcy happens
1. Medical Expenses (Last year 62% of personal bankruptcy filings in the US were because of medical expenses.)
2. Reduced Income
3. Job Loss
4. Credit Debt
6. Unexpected Expenses
7. Student Loans
8. Utility Payments
10. Bad Budgeting/Overspending
Medical bankruptcy is currently on of the major types of bankruptcy that we file in Utah. Excessive medical debts also leads to people supplementing their income with the use of credit cards. With average interest rates on credit cards hovering around 22% it doesn’t take a long time to sink deep into debt. Bankruptcy fortunately offers the chance to get a fresh financial start.
One of the stated fundamental goal of the bankruptcy laws enacted by Congress is to give the debtor a financial “fresh start” from burdensome debts. The Supreme Court made this point about the purpose of the bankruptcy law in a 1934 decision:
[I]t gives to the honest but unfortunate debtor…a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt. Local Loan Co. v. Hunt, 292 U.S. 234, 244 (1934).
This fresh start goal is accomplished through the bankruptcy discharge. The Discharge releases a debtors from personal liability on specific types of debts and even stops creditors from ever taking any action against the debtor to collect those debts.
However after Discharge becomes a very important chance at rebuilding a positive credit history. At the Utah Bankruptcy Guy this is a focus of our practice – to help you gain a 720 credit score after your bankruptcy discharge. In fact I have written a book and developed a game plan to help you accomplish this goal in the book: Life After Bankruptcy: The Game Plan to Rebuild, Restore and Renew your Credit After Bankruptcy. Click on the book below to buy one from an online retailer or let the Utah Bankruptcy Guy file your bankruptcy and we will five you a free copy and work with you to accomplish this goal.