Top Five Reasons To File For Bankruptcy

Bankruptcy is a legal option individuals have in order to obtain court protection from creditors

. This occurs when the contracted financial obligations cannot be fulfilled with the income available for payment. The following are the top five reasons why individuals seek bankruptcy for their future.

a)Cancel Debts and other Obligations. One of the actions undertaken during bankruptcy proceedings is the identification of existing debts for the individual declaring bankruptcy. Afterwards, some of the debts identified can be cancelled, thus lowering the outstanding obligations payable for the individual. Here the court also reviews the debts outstanding and strikes off impositions that would seem to be unfair and unjust to the individual debtor. Here, the court would seek to protect the debtor, as providing credit is a risk taken by the creditor and not by the debtor.

b)Protect the Home from Foreclosure. Upon filing of bankruptcy petition in court, one of the protective measures provided by the court is protecting the individual's home from foreclosure. What the court provides though is not cancellation of the mortgage but allows the individual to catch up on missed or late payments through the imposition of a payment structure to repay outstanding arrears on your home mortgage.

c)Negotiate Debt Structure. During bankruptcy proceedings, all creditors would file their claims with the court having jurisdiction in the bankruptcy case. What the court would require is the formulation of a debt payment scheme to satisfy all the outstanding obligations payable to creditors. During this time, the debtor can also negotiate to lower the existing debt through cancellation of interest imposed or extending payment terms.

d)Avoid Harassment. Another protection provided an individual debtor once bankruptcy has been filed would be disallowing creditors from contacting the debtor as the case is already in court. This would provide the debtor time and peace of my mind, plus lowering the pressure and stress of incessant calls and letters from creditors and collecting agencies. Because the case is already in court, any further act of seeking collection or payment of debts extra legally would be penalized by the court.

As can be seen, there are five of top reasons why individuals seek the protection of the courts from creditors in bankruptcy proceedings. While there are many other reasons why individuals file for bankruptcy, once any of these five are used as a reason, the courts would assume jurisdiction of the case and provide protection for the individual debtor in bankruptcy proceedings.

by: Bobby Castro

POST COMMENT

Bankruptcy Faqs Bankruptcy Procedure In Canada Rebuilding Your Life After Losing A Job Or Bankruptcy A Bankruptcy Trustee Can Help Solve Your Money Problems Fighting Foreclosure With A Reliable Bankruptcy Attorney Roles You Ought To Know About A Bankruptcy Trustee Provo Bankruptcy Attorney - How Can Bankruptcy Help You. Needing A Bankruptcy Lawyer Is A Reality Bankruptcy Trustee, Friend Or Foe How Can Bankruptcy Affect A Mesothelioma Case? Sbarro's Bankruptcy Provo Bankruptcy Attorney - Understanding Bankruptcy Cash Loans With Bad Credit History Quick Monetary Relief Even After Bankruptcy