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Why File for Bankruptcy?

People have bad debts - that does not make them bad people. The majority of bankruptcies result from situations beyond the debtor's control. While the idea of bankruptcy can be frightening, in some situations, it is the opportunity you need to get back on your feet and start afresh.

According to a Harvard study, 62 percent of personal bankruptcies in the United States in 2007 were due to medical expenses. Of these people, 78 percent had insurance at the start of their illness, including 60.3 percent who had private coverage (not Medicare or Medicaid). Most declared bankruptcy because of the enormity of their medical bills or costs. Only percent went into debt because a medical problem caused them to lose work.

The second-biggest reason for bankruptcy is job loss, whether through layoff, termination or resignation. Today, layoffs are rarely accompanied by severance packages. People without emergency funds often resort to credit cards to cover their expenses. The problem is further compounded by the loss of insurance coverage and the high cost of COBRA.

The expense of divorce also strains personal finances. Legal fees, division of marital assets, child support, alimony or the cost of keeping two households can spell bankruptcy for many families.

Not being fully insured - or lacking insurance altogether - when disasters like tornadoes, hurricanes, floods and earthquakes strike pushes some people over the brink.

Using credit gets many people into trouble. Late or missed payments on credit cards, installment debt, car payments and other loan payments lead to late fees, ballooning credit rates and credit headaches. Job loss or temporary layoff or reduction of hours or pay rate also causes late or missed payments, increases in fees and interest rates, and ultimately an inability to make debt payments.

Many people file bankruptcy to safeguard important assets. Your home may be protected from foreclosure under Chapter 13 and you can be given time to get arrears caught up. Creditors may be forced to return your car if it has been repossessed. The utility company can no longer shut you down. Wage garnishments end. Although student debt usually cannot be discharged through bankruptcy, it can be consolidated into affordable payments.

If you are behind in your payments, creditors are harassing you or you are in danger of losing your home - or if you are already in foreclosure - contact the bankruptcy attorneys at Hess & Jendro Law Office, P.A. We can help.

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Hess & Jendro Law Office, P.A.
11070 183rd Circle NW
Suite A
Elk River, MN 55330

Phone: 763-200-6626
Fax: 763-274-1452
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