There is a myth attached to declaring bankruptcy that it is done by people who have overspent their credit limits by living a lifestyle beyond their means. The stigma of bankruptcy signifying irresponsibility is swiftly fading from the public conscious as recent economic downturns have introduced more people to the safeguards and accountability of this debt protection option. There are many kinds of situations that will create the need for bankruptcy. Declaring bankruptcy should not be thought of as a last resort, but it should not be done without careful consideration.
One of the most common situations that create the need for bankruptcy is a loss of income or change in income earning ability. This can take the form of anything from a lay-off to a prolonged injury or illness. Unless you have insurance that provides for payments to be continued when you are without work or unable to work, you could quickly find yourself behind in debt repayments to the point the debt is being put into collections. Many loan and credit companies now offer a special program when you open an account with them that offers to cover your payments for 3 to 6 months in the event of job loss or disability. There are even life insurance policies and homeowner policy riders that will offer to do the same.
The other reason that people may find themselves considering bankruptcy is a change in marital status. Divorce, or the death of a partner, can radically change your ability to meet payments in a timely manner. Divorce can seriously impact debt repayment as responsibility for certain debts may be reassigned from a joint accountability to an individual during the divorce judgment. Divorce, or the death of a partner, can also limit the income coming in significantly and hamper ability to meet repayment agreements. Contact your fort worth bankruptcy attorney if you want to find out more.
Being an active duty service member can also cause significant interruption to debt repayment. While the Servicemember’s Civil Relief Act does much to help active duty service members to prevent having to declare bankruptcy, there is much it does not cover as well. The loss of income and benefits suspension that may occur when a reserve member is activated may surpass the protections of this act and threaten the safety and stability of their dependents without bankruptcy protection.
Businesses of all sizes may be faced with filing for bankruptcy in order to protect their assets and ability to stay in operation. Whether through an economic downturn or interruption to their market, declaring bankruptcy can allow a business to reorganize itself, rather than close its doors.