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June 16, 2024

8 Reasons to File for Chapter 7 Bankruptcy

Chapter 7 bankruptcy is a powerful tool to get rid of substantial debt and acquire a fresh start. It is often considered the last resort for escaping money problems or gaining some financial stability. If your accumulated debt is overwhelming and you are running out of ways to manage day-to-day expenses, consulting Bankruptcy Attorney in Beverly, MA, is something you should definitely consider. The following situations can land you in a corner where Chapter 7 bankruptcy is your only hope to survive:

1. Loss of Employment

A large portion of the U.S population lives from paycheck to paycheck. Everything works out fine, as long as a regular salary is being obtained. Many people are working minimum wage, which makes it increasingly difficult to save any amount of money each month. If recession strikes, or an individual loses their job for some other reason, their finances are entirely disrupted.

2. Unanticipated Medical Expenses

Many U.S citizens do not have any savings to support them on a rainy day, and neither have they purchased health insurance. When an expected accident occurs and causes serious injuries, affording necessary medical treatment can be nearly impossible. When medical bills amount to thousands of dollars, Chapter 7 bankruptcy is an effective means to attain complete discharge.

3. Creditors are hot on trial

You may have multiple loans in your name, and failure to make timely payments will put you in a tight spot. When you miss a payment or two, your lenders will start knocking on your door. Some creditors may even begin to harass you for settling the debt you owe them. Chapter 7 bankruptcy will grant you automatic protection from all attempts of debt collection. You can either buy more time to compensate creditors or have debt discharged.

4. Potential Lawsuits

Some creditors may resort to sue you when their payments stop coming. If you a run a business, you could be at a risk of encountering various kinds of lawsuits that leave you penniless. By filing bankruptcy, you obtain immunity from legal proceedings against you.

5. The House and Car is slipping away

When you’re struggling to meet ends, holding onto the home and car can become a challenge. If you have adequate equity in your residential property and your car is an essential used for daily commute, Chapter 7 may help you keep them as exempt assets. You will also retain all your household items, unless you have something extraordinarily expensive lying around, such as an original Picasso painting.

6. Divorce is underway

Divorce is quite a common cause for going bankrupt. Many people are reduced to poverty when they lose half of their marital assets and the financial support of their spouse following divorce. If you were entirely dependent on your ex’s income, you are surely going to experience a hard time until and if alimony kicks in.

7. Credit Cards are maxed out

If you are literally living on credit cards, it won’t be long before you exhaust this emergency resource. If you’re using one credit card to pay the bill of another, you are not making any progress. Apply for bankruptcy while your credit score is still acceptable, or you might face allegations of credit card fraud.

8. Savings are depleting

If you are thinking about withdrawing cash from your retirement account or you have already used up a portion of your savings, you are indeed in an alarming situation. Chapter 7 cannot only erase most of your debt, but it will also protect your 401(k) accounts from debt collectors.

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