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When met with late fees, interest rates, and past-due payments, it can be difficult for many individuals to take control of their finances. For many people, bankruptcy provides a light at the end of the tunnel. The court proceeding puts a hold on actions from creditors and bill collectors while debts are repaid. If you’re not sure whether to file, below are common reasons people go through with the process.    

What Life Circumstances Can Lead to Bankruptcy?

1. Medical Bills

Even with insurance, the out-of-pocket costs of ongoing medical treatment, surgery, and post-care can be expensive for policyholders. That’s why 19.3 percent of people who file for bankruptcy cite medical expenses as the cause.

Medical expenses are categorized as unsecured debt. With Chapter 7 bankruptcy filing, there is no limit to how much medical debt is discharged. With a Chapter 13 bankruptcy, medical expenses are incorporated in a repayment plan. There are limits, however, on how much unsecured debt can be paid this way.     

2. Unemployment

bankruptcyLay-offs, terminations, and resignations from jobs leave many people without a means to bring home a steady income to pay bills. Losing a job is a major contributing factor to why 67.5 percent of people file for bankruptcy.

Personal loans, credit card debt, and overdue bills will be discharged during bankruptcy. There’s no longer an obligation to eventually repay the dischargeable debt to creditors either. As an automatic stay is put on foreclosures and property repossession, people don’t have to worry about losing their homes, cars, and other necessary assets.

3. Divorce

Family issues cause 22.1 percent of people to file for bankruptcy. Divorce, for example, can cause financial hardship. That’s because going from a two-earner to a single-earner household often means people no longer have the income to pay their bills. Having the means to discharge debt through bankruptcy gives many people time to get their finances on track following their separation.

 

If you are experiencing any of the above financial hardships, contact Sam Turco Law Offices. With offices in Omaha and Lincoln, NE, the law firm has been serving clients throughout the state since 1992. The team of knowledgeable attorneys focuses on helping clients throughout the state put an end to their debt problems and start rebuilding their credit. Meet the lawyers online. Call (402) 614-7171 to discuss bankruptcy options. Find information to help with your finances on Facebook

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