If you have never experienced bankruptcy, consider yourself lucky for bankruptcy statistics in the US have taken alarming proportions. There has been a dramatic increase in the number of people who default on debt repayment. If you are unable to pay off your debts and are on the verge of bankruptcy, your best course of action will be to go in for bankruptcy consultation.
But, before we touch upon bankruptcy consultation, let’s see what can be the reasons for bankruptcy. If you are aware of them, you can preempt bankruptcy.
Factors leading to bankruptcy
#1 Mounting medical expenses
This is one of biggest causes of bankruptcy, according to a Harvard University study. Excessive medical bills constitute 62 percent of all personal bankruptcies. What’s more, almost 78 percent of people who file for bankruptcy have some form of health insurance. This busts the myth that only the uninsured are affected by medical bills.
#2 Losing job
Losing your job means loss of a steady income. This can be devastating, especially if you don’t get a severance package or maintain an emergency fund. In case you are unable to find gainful employment quickly, you may soon find yourself neck-deep in debt. This will leave you with little choice but to file for bankruptcy.
#3 Unrestrained use of credit cards
Of the $1 trillion worth of revolving debt balances being carried by Americans today, the majority is credit card debt. It was $830 billion at the end of 2017. Credit cards enable you to buy almost everything, from a needle to a car, just by the swipe of the card, depending upon your authorized credit limit.
Herein lies the pitfall; it tempts you to overstretch and get into the debt trap. The amount on your credit cards, with which you may have repaid your debt installments, may spiral out of control, making it difficult to even make the minimum payment. This may lead to bankruptcy.
#4 Marital issue
Separation or divorce puts tremendous strain on finances for both the partners. It is not only the high legal fees, but also money spent on child support, alimony and, at times, in maintaining two different households that prove financially disastrous. The liabilities accruing from separation or divorce may prevent you from repaying debts, resulting in default, leading to bankruptcy.
#5 Expenses not catered form
Natural calamities, such as floods, earthquakes, tornadoes, etc. can destroy your house. And if it is not insured, you may have to spend from your own pocket, spending all your savings. This may result in bankruptcy.
Bankruptcy consultation – a way out
If you think you are capable enough to file for bankruptcy on your own, think again. Filing for bankruptcy involves laws and acts, and a lot of paperwork. So, in case you are facing bankruptcy, your first move should be to go in for bankruptcy consultation with a competent and experienced bankruptcy lawyer.
A bankruptcy consultation will make you aware of your best course of action. It will also enlighten you about how bankruptcy works, what is the filing process, what are the chances of your getting a discharge and many other questions that crop up in your mind.
Requirements for bankruptcy consultation
If you go prepared to the bankruptcy lawyer for consultation, you will save your time and money, in case the consultation is not free. First and foremost, you should make a questionnaire of all you need to ask the lawyer.
It is better to carry all the relevant documents for consultation. This will help bankruptcy lawyer in determining your eligibility for bankruptcy proceedings. It will also indicate that you have all the documents required by the bankruptcy court.
The documents generally required during consultation include proof of income, income tax returns, list of debts and household expenses. You will also need to make the list of items that you want to protect during bankruptcy, such as your property, jewelry, retirement account and suchlike things.
Whatever may be your reason for filing for bankruptcy, consulting a bankruptcy lawyer is a must. This is because a lawyer is the right person to guide you through the intricacies of the bankruptcy process and also help you in getting a favorable verdict from the court, thereby saving your assets.