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The Most Common Reasons People File for Bankruptcy

By Phoenix Bankruptcy Attorney on November 20, 2022

The number of individuals filing for bankruptcy in the US continues to increase, especially in this pandemic era, as many lose their livelihoods. We at Hilltop Law Firm will help you file for Bankruptcy and relieve the stress of creditors constantly asking for payment.

What Is Bankruptcy?

Bankruptcy is a legal process of examining an individual, business, or partnership’s liabilities, which have become so overwhelming that they cannot pay. The process starts with the debtor filing a petition with the court, after which the court appoints a trustee to represent the creditor’s interests. The aim is to weigh the interests of both parties. The court then decides to discharge the debts, in which case, the debtor will not legally be bound to pay the debts they owe the creditor. If the court believes the debtor has enough assets to pay their bills, it could convert the case to a different chapter of bankruptcy, or it could dismiss the case.

Why You Should File for Bankruptcy

There are many assumptions about individuals who file for bankruptcy, with many of which blame their spending habits. While this could lead to bankruptcy, credit problems, loss of livelihood, medical costs, and unexpected emergencies are also common culprits. If you are experiencing such problems, filing for bankruptcy may be the right solution, and our team will help you with the process.

Medical debts pile up in most cases due to a lack of health insurance. Even with medical coverage, chronic illnesses and serious injuries can also increase your bills. Job loss without an immediate replacement will cause a financial crisis, and when you lack emergency savings, it will be challenging to keep up with your expenses. Lastly, poor financial decisions will cause overspending. Hence, track your spending to establish utilization of your earnings to avoid bankruptcy from overspending.

In addition to the above, you can file bankruptcy to receive the protection provided by the automatic stay. The automatic stay prevents creditor actions against the debtor. Some of the creditor practices that an automatic stay will shield you from include:

  • Debtor Collector Practices – These practices include letters, emails, and calls. After getting a notice of your bankruptcy, a creditor reaching out for payment will be violating the automatic stay and is liable for fines and penalties.
  • Foreclosure – An automatic stay will stop any foreclosures on your home or vehicles. Hence, unless a creditor seeks a permission from the court, it will violate the automatic stay.

An automatic stay will also stop other lawsuits you could face, except for divorce and criminal suits. If you had wage garnishments, your creditor, bound by the automatic stay, would return any wages garnished after the case was filed.

How Can a Lawyer Help You With this Process?

The complexity of bankruptcy law requires you to seek help from lawyers focusing on this field. Our team will help you discuss the critical areas in your lawsuit, such as determining the bankruptcy chapter that should be the basis of your filing. We will help you know whether you are eligible for Chapter 7 or Chapter 13. Our team will ask questions about your income, expenses, household, taxes, and previous bankruptcy filings to establish this. Depending on your responses, our team will advise on the exemptions that can cover your property. If the exemptions are inadequate, we will discuss whether a discharge will justify the loss of your nonexempt assets. We will explore your assets and determine your non-dischargeable assets since you may still benefit from delayed collection efforts even if you do not get a full discharge of debts.

If you need a bankruptcy attorney, reach out to Hilltop Law Firm at (602) 466-9631, and we will advise you on the best course of action and help you file your paperwork for debt relief.

Posted in: Bankruptcy

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