What Makes People File a Petition for Bankruptcy?

If someone gets too far behind with the payments due to their creditors then it can start a chain reaction of events. Creditors will start sending out collection letters and making phone calls to your residence as well as your place of employment.

Consumers will file a petition for bankruptcy if they continue to receive what they perceive as harassment from creditors. Creditors never stop with their attempts when they are trying to collect a debt and some debtors will file to stop the harassment.

Creditors can garnish your wages. This is not a pleasant encounter. If someone is actively taking money out of your pay check every month this can really be disturbing especially if your budget won't allow it because of an excessive amount of debt. A lot of people will file for bankruptcy in a case like this. If a creditor is thinking of garnishing your wages they will have to stop. Creditors must also discontinue any garnishments against you if they have already started taking money out of your pay check.

If a debtor thinks their car is about to be repossessed they will file for bankruptcy in some cases. Some times you can save your car by signing a reaffirmation agreement which is basically another contract which re-establishes the debt. You can then continue to may payments on the new agreement and keep your car. If you miss payments on the new reaffirmation agreement the creditor can step in once again and repossess your car. In some cases a certain amount of assets are exempt in a bankruptcy filing. It's possible your car could be included. It is best to check with a bankruptcy attorney in your state to get more clarification. These laws can vary from state to state.

Sometimes there is an illness or a disability which causes a debtor to incur a number of medical bills. If this illness also keeps the debtor from returning to work filing a petition for bankruptcy could turn out to be the remedy needed to stop all actions of creditors.

If someone is going through a divorce this could lead to bankruptcy as well. There are situations where one spouse inherits the majority of the debt based on the arrangements made. Although if a divorce decree states that one party must pay a certain creditor it does not waive the right of the other spouse if they are signed on the contract. Even though the divorce decree states that the husband has to pay a certain debt the creditor can still go after the wife, if she is signed on the note, and the husband is not paying. A divorce decree does not waive a debtors legal responsibility to pay a debt.