Bankruptcy is the process through which debtors can reorganize their debt to creditors. Depending on the circumstances, bankruptcy can result in a plan for making payments to creditors or a complete discharge of debt. Although there are many reasons why debtors file for bankruptcy, there are several prevalent explanations for why debtors begin the bankruptcy process.
Medical bills
Medical procedures can be extremely expensive, especially if patients require surgery, hospital stays and other intensive health care procedures. Although many people have health insurance, it may not cover all or part of their medical expenses. If debtors do not have health insurance coverage to cover the cost of expensive medical expenses, it may be necessary for them to declare bankruptcy.
Credit card bills
Credit cards can be a convenient way to make purchases. In addition, if individuals cannot pay for expensive items all at once, credit cards may enable them to pay for them over time. However, individuals can accumulate excessive credit card debt if they do not have the resources to pay their credit card bills each month. Such credit card debt may have high interest rates that may make this debt difficult to pay off. Bankruptcy may be one way to pay off credit card debt, so individuals facing insurmountable credit card debt should speak to an experienced Chapter 7 bankruptcy attorney.
Litigation
Individuals can be sued for all kinds of claims stemming from personal injuries, commercial issues and a variety of other matters. Sometimes, parties have insurance coverage that protects them for litigation, but other times, they must pay for litigation recoveries out of pocket. Bankruptcy may be one way that individuals can be free from financial liability stemming from litigation.
Student loans
It was traditionally very difficult to discharge student loans in bankruptcy. However, new rules may make it easier to discharge student loans if you meet a variety of requirements. As such, anyone who is experiencing exceptional hardship from student loans should contact an experienced Chapter 7 bankruptcy attorney to protect their rights.
