What Causes People To File For Bankruptcy?
Posted in: Eliminate Debt
Due to the pandemic and rise in unemployment rates, especially in Illinois, many people are struggling to make ends meet. Unfortunately, very few creditors are willing to work with debtors to help repay the debt owed to them or offer reasonable, affordable payment plans. Consequently, many people turn to bankruptcy for financial relief. Chapter 7 and Chapter 13 bankruptcy are both viable solutions for managing and eliminating your debt.
There are numerous causes that lead to people filing for bankruptcy. Everyone’s financial situation is different. When you call us a DebtPros, you will speak with an experienced bankruptcy attorney in Chicago who will extensively review your situation and advise you on the best way to get out of debt and a much needed fresh start.
Credit Card Debt
Most people who call our firm are struggling to keep up with their credit card payments. Due to the high interest rates associated with credit cards, making the minimum payments each month does little to nothing in paying off the underlying debt. Whether you file a Chapter 7 or Chapter 13 bankruptcy, however, you can eliminate this debt and not worry about the high interest rates anymore.
Medical Bills
Another major reason people turn to bankruptcy is the accumulation of high medical bills. Chronic illness and accidents can lead to medical bills that are nearly impossible to payoff if you are not making enough money. Even with insurance, many people drown in medical debt and turn to bankruptcy to solve their financial issues.
When you file for bankruptcy, the automatic stay prevents collection agencies acting on behalf of hospitals and doctors from collecting on the underlying medical debt. This means they cannot sue you or garnish your wages if you file for Chapter7 or Chapter 13 bankruptcy.
Unemployment
As stated earlier, covid has left many people without employment in Illinois. Even a brief loss of income can have devasting financial repercussions. Without steady income, families often use credit cards or payday / personal loans to maintain their monthly expenses. Due to the exorbitant interest rate on both of these, unemployed individuals dig themselves in a deep hole that they cannot get out of. Like with medical bills, Chapter 7 or 13 bankruptcy can help eliminate credit card debt and get you a fresh start.
Insolvent Businesses
Covid has not only caused a rise in unemployment rates but also a staggering increase in businesses failing. When a business is no longer profitable, people are forced to dissolve their business. If the business itself had debt you may not have to worry about it if you properly dissolved your business according to Illinois’ Business Corporation Act. However, if you personally signed on some of the debt, you will still be liable. Filing for bankruptcy may be the quickest path to financial recovery if that is the case.
Divorce
Marriage dissolution often doubles bills, like mortgages, rent, utilities, almost overnight. Coupled with owing attorney fees associated with getting divorced, divorce can severely impact an individual’s ability to stay out of debt. Although filing for divorce can be emotionally taxing, filing for bankruptcy often helps alleviate the financial burdens that come with getting divorced.
Call now to speak with an experienced bankruptcy lawyer!
Above are just a few of the causes that lead people to file for bankruptcy and not an exhaustive list. If you are struggling to pay your bills, including your mortgage/rent, car note, utilities, or credit cards, contact DebtPros today for a free consultation. When you call you will speak directly with a bankruptcy lawyer who will provide review your unique financial situation and determine the best path to eliminate your debt.