What are the various grounds that provoke people to file bankruptcy?

Filing bankruptcy is the last measure an individual can resort to if he/she is not able to pay the debts at all. It is the extreme step taken, to save the insult that an individual has to go through, for not being able to repay the loans taken. You generally tend to use this method when the amount to be repaid exceeds your income. Getting declared bankrupt is a viable practice as the government then takes control of the pending debts and liabilities. Generally, there are two ways of filing bankruptcy namely, Chapter 7 and Chapter 13.

Chapter 7 is a commonly used practice for filing bankruptcy. It deals with the situation where a debtor can sell-off its assets and pay back the creditors. Chapter 13 on the other hand, allows you to keep your assets and pay the loans at a lower interest rate or at no interest rate at all.

Enlisted below are some of the main reasons that provoke people to file bankruptcy.

• On the Grounds of Medical bills: The commonest of all reasons that invoke a sense to file a suit, is the increasing number of medical bills. According to recent studies by Harvard University and published in the journal Health Affair shows that 62% of all the personal bankruptcy cases filed are due to medical bills. This is the case because the limit up to which you are medically insured has exceeded. Savings are also wiped out as a result. The last option available is to file medical bill bankruptcy.
• Due to Unemployment: This reason gives rise to various other reasons for filing bankruptcy. Economic downturns easily affect your work status and can lead to unemployment. Loss of work can have adverse effects on your mental as well as emotional stability. This loss in income reduces the ability to pay your bills and debts on time and thus affects your credit score. So, you should opt for filing bankruptcy instead of exhausting your savings.
• Marital Distress: Sometimes the reason to file bankruptcy is divorce. On dissolving a marriage, both the petitioners tend to get affected leading to a situation where the debts increase and there is a simultaneous loss of income as well. Even the liabilities are reduced to half. Together with these, there is child support, alimony and legal fees involved. All these leads to high mental stress. Largely, the debt loan is not equally divided and the burden falls on a single spouse, forcing him/her to pay the entire amount.
• On the Basis of Credit Cards: Excess usage of credit cards can also result in adverse situations. These situations can further lead a person to file a case of bankruptcy. Credit cards create a tendency in people to spend more than they can actually do with real cash. This leads to excessive spending. In addition to  this, high interest rates and late payment fees increases the amount of debt incurred and adds to the burden.
• Business Overturns: Several companies crop up and several close down every day. Business decisions gone wrong and horrible ventures can lead to situations where you will have to file Chapter 7 bankruptcy. Flow of money is severely affected in all cases. This can lead to closing down your business and hence resort to getting declared bankrupt.

The above stated reasons are commonly seen and observed for people to file bankruptcy. Proper knowledge on all the legalities involved is limited. This calls the need to contact an expert Bankruptcy Lawyer in California.

This post is shared by Attorneyforbankruptcy.com, which a leading law firm of California. Here you can have detailed information on california bankruptcy lawyer and consumer dept consolidation.