Top Seven Leading Situations of Bankruptcy

Bankruptcy is legal process where you are declaring that you are unable to pay your debts.  When people can’t pay their debts at that time bankruptcy is a suitable option for them. When people file for bankruptcy, bankruptcy allows them to start rebuilding their credit faster and putting them on track for a brighter financial future. According to US bankruptcy court statics every year in USA 1.5 million people file for bankruptcy.  Bankruptcy is a tool to help people tide over their financial hardships and this should never be taken up as a first choice, it needs to be the last option when all the doors to pay off your debt are closed. An experienced and skilled bankruptcy lawyer Mr. Brian Linnekens shares a few reasons and situations why people go bankrupt. You need to know these reasons of bankruptcy so that you can try and steer clear of these situations and ensure that you don’t have to ever file bankruptcy. After knowing your financial problems you can easily control your debts before they take control of you.

Job Loss –

Sometimes people might lose their job and in that time frame they might not be able to pay off their debts and credit card bills which might also lead to depression which further results in the piling up of the already accumulated debts.  Also decreasing salary is a big factor in increasing financial hardships. The end result is that more and more people are applying for bankruptcy. Unemployment is another big factor in the rising cases of bankruptcy. Watch out for any career and market changes that might affect you adversely.

Divorce –

Divorce is quite an emotional time for both partners. Divorce is an expensive process because of high attorney fees, court costs, child support and other hidden costs, that are hard to identify, but never fail to show up. At this time it is really important that you need to hire an experienced and skilled bankruptcy attorney who can help you manage and eliminate your debt in the most feasible way possible in case you are left with no option but to file for bankruptcy.

Unexpected Emergencies –

Emergencies can come anytime like – car accident, home expense, fire, tree falling on home. These types of unexpected expenses quickly drain the whole savings of the people and create more problems to pay other monthly important expenses, bills and loans.

Medical Expenses –

Recent studies say 62 percent of people are filing bankruptcy due to increasing medical expenses. Sometime family members suffer from medical issues like cancer or accidents. Health insurance plans do not cover the entire cost since the treatment time may prolong based on the gravity of the problem. Thus medical expenses shoot up and then some people can’t pay the already existing debts along with the already accumulated medical expenses. Better keep an emergency fund handy which can be used in times of medical emergencies. You can also look out of an insurance plan that covers the whole family for a sustainable and large amount of cover.

Poor or non-existent Financial Planning –

If your financial planning fails then you have to face numerous financial problems. Managing money is really hard, if you don’t pay your loan installment and bills on time then creditors will start hounding you with phone calls, messages and mails.  To stop creditor harassment you need to file bankruptcy. Better have robust financial plans in place and make sure to have a plan B is the main plan fails to avoid filing bankruptcy.

Student Loan –

Most students are unable to pay their loans timely. Whatever loan type if you do not pay loan installments on time then it will become a problem for you.  To avoid creditor harassment, students generally file for bankruptcy.

Avoiding Foreclosure on their homes-

In America 1% people file for bankruptcy in order to avoid foreclosure on their homes. And some people try to cut down and reorganize debt by filing for bankruptcy.

Brian Linnekens gives an insight on Different Types of Bankruptcy

Bankruptcy is a legal process that reduces debt and gives you a chance to reorganize your debts. According to Brain Linnekens by filing bankruptcy, you can easily overcome your bad financial situation. You can pay back your debt within 7-10 years with repayment plans. Bankruptcy has several types of chapters but in most cases, people file chapter 7 & 13 because these chapters are effective and easy to file.

When Chapter 7 Bankruptcy can be an option explains Brian Linnekens

Chapter 7 is very helpful for debtors who are not able to pay back their debt. It is very useful in those cases where majority of the debt is unsecured because in chapter 7 bankruptcy some of your property is sold to recover the debt one has incurred from creditors and in return your unsecured debt will be written off. Remember everyone does not file chapter 7 bankruptcy. In cases where the disposable income is enough to file a chapter 13-repayment plan after subtracting certain allowed expenses and monthly payments for certain debts you would not be allowed to use chapter 7 bankruptcy.

Chapter 9 Bankruptcy as explained by Brian Linnekens

Chapter 9 bankruptcy is designed for “municipalities.” The main purpose of chapter 9 is to safeguard a municipality from its creditors while it negotiates its debts. According to chapter 9 bankruptcy a creditor cannot take over the assets of the municipality from the municipality. Only a municipality can file for relief under chapter 9.

Chapter 11 Bankruptcy

Chapter 11 bankruptcy is very complicated and it used for those peoples who are struggling with their business and want to reorganize their finances. It is generally used only by those whose debts exceed chapter 13. In this process debtors continuously work and maintain owner ship of all assets and try to fulfill to pay off creditors. Chapter 11 is more expensive. Before filing chapter 11 you will need to talk to a bankruptcy lawyer like Brian Linnekens who will be able advice you professionally based on his experience and years of learning in the realm of Bankruptcy.

Chapter 12 Bankruptcy

Very few people use chapter 12 bankruptcies. It is specifically for farm owners. According this chapter the debtor maintains ownership of his assets and works out a repayment plan with the creditors. Similar to chapter 13, filing under chapter 12 bankruptcy you can pay back your debt within three to five years.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy is one of the most beneficial options for those people who are struggling with their debts. It is best for those debtors who are behind on secured debts such as home mortgages and car loans. Chapter 13 bankruptcy gives you a chance to keep all your assets and you can stop foreclosure with the repayment plan agreed upon in the Bankruptcy terms and conditions. According to the repayment plan, you can pay back your debt within three to five years. The time of three to five years can be increased by the bankruptcy process if you are not able to pay off your debt within three to five years. Since paying off the debt within a particular time period will depend on your present income. Chapter 13 will help you to reorganize and reduce your debt. It will also gives you a chance to create new plans to pay off your debts and gives you more time to fulfill your financial obligations.

Bankruptcy has provided us many options. If you are thinking of filing bankruptcy then you need to understand the various bankruptcy options and know which one is suitable for you. Before filing bankruptcy, you can talk to a bankruptcy lawyer since bankruptcy law is very complicated and with the help of an attorney you can easily know the difference between the various bankruptcy chapters. Filing for bankruptcy should be the last option. Before filing for bankruptcy you should check for other options like loan modification or loan settlement whichever is possible for you.