Insolvency or Repossession
One of the immediate benefits of filing for bankruptcy is the ability to cease collections and asset liquidation threats. If your home or vehicle is at risk of being repossessed by creditors, declaring bankruptcy can secure these assets while you work to resolve your missed payments. In nonjudicial foreclosure states, where a lender can initiate and complete the foreclosure process in as little as 30 days from the date of the first missed payment, the expeditious nature of the automatic stay protection is particularly essential. In addition, the bankruptcy process may provide a broader range of options for resolving your delayed payments through a Chapter 13 repayment plan or a reduction in the principal debt in a Chapter 7 filing.
Wedlock or Divorce
Money and debt become contentious issues in both marriage and divorce. Prior to strolling down the aisle, it may be a good idea to settle your debts if your ability to make payments is hampered by a heavy debt load. Prior to placing a potential companion in jeopardy as a result of your large debts, it is preferable to settle them. Creditors view spouses as additional sources of liability in a marriage and may attempt to collect your debt via your spouse. Divorce is an additional factor that can confound financial matters, particularly debts. If you divide responsibility for debts in your divorce decree, you agree to be equally responsible for the debt. If one spouse declares bankruptcy, the ex-spouse who did not file may be held solely responsible in the eyes of creditors. Consequently, resolving debt burdens in bankruptcy prior to a divorce or specifying sole debt liability in the divorce decree can better safeguard each member in the future.
Increasing Debt Burdens
When finances are limited, it is not uncommon for people to rely on multiple sources of credit to pay for daily expenses. Losing a job, a primary source of household income, or having medical problems that threaten one's capacity to work can make it difficult to maintain a healthy financial balance. However, borrowing money from one line of credit to pay another line of credit is a treacherous slope that could necessitate additional steps to regain financial control.
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